Document:

<PAGE>

                             MEMORANDUM AND ARTICLES

                                 OF ASSOCIATION

                                       OF

                        THE ROYAL BANK OF SCOTLAND GROUP

                             PUBLIC LIMITED COMPANY

<PAGE>

                           COURT OF SESSION, SCOTLAND

                                COPY INTERLOCUTOR

                                 in Petition of

      (First) THE ROYAL BANK OF SCOTLAND, a Company incorporated by Royal
      Charters of 1727 and subsequent years and having its head office at St.
      Andrew Square, Edinburgh; and (Second) NATIONAL COMMERCIAL BANK OF
      SCOTLAND LIMITED, a Company incorporated by Royal Charters of 1831 and
      1925 and registered under the Companies Acts 1862 to 1880 and having its
      registered office at 42, St. Andrew Square, Edinburgh,

                                       for

          Sanction of a Scheme of Arrangement under Section 206 of the
                              Companies Act 1948.

Edinburgh 12th July, 1968. The Lords having considered the Petition and
proceedings along with the Report by Mr I. R. Guild, W.S., Edinburgh Sanction
the Scheme of Arrangement appended to the petition: Direct the registration with
the Registrar of Companies in Scotland of this Order and of copies of the said
Scheme of Arrangement as certified by the Solicitors of The Royal Bank of
Scotland and the National Commercial Bank of Scotland Limited: Direct notice of
such registration, when made, to be given by advertisement once in the Edinburgh
Gazette and once in the Scotsman, Glasgow Herald, Dundee Courier and Advertiser,
Aberdeen Press and Journal, Times, Guardian, and Financial Times newspapers: and
decern.

                                                            "J. L. CLYDE I.P.D."

                                       1

<PAGE>

No. 45551

                                     [LOGO]

                                 CERTIFICATE OF
                                 INCORPORATION

                                I HEREBY CERTIFY

that National and Commercial Banking Group Limited
is this day incorporated under the Companies Act, 1948, and that this Company is
LIMITED.

SIGNED by me at Edinburgh, this Twenty-fifth day of March One Thousand Nine
Hundred and Sixty-eight

                                                         /s/ Signature
                                                         -----------------------
                                                         Registrar of Companies

<PAGE>

                                     [LOGO]

                          CERTIFICATE OF INCORPORATION
                               ON CHANGE OF NAME

                                    No. 45551

I hereby certify that

                 National and Commercial Banking Group Limited

having by special resolution and with the approval of the Department of Trade
changed its name, is now incorporated under the name of

                    THE ROYAL BANK OF SCOTLAND GROUP LIMITED

Given under my hand at Edinburgh the 3 September 1979

                                                         /s/ Signature
                                                         ---------------------
                                                         Registrar of Companies

<PAGE>

                                     [LOGO]

                          CERTIFICATE OF INCORPORATION
                               ON RE-REGISTRATION
                              AS A PUBLIC COMPANY

                                    No. 45551

                  I hereby certify that

            The Royal Bank of Scotland Group public limited company

has this day been re-registered under the Companies Acts 1948 to 1980 as a
public company, and that the Company is limited.

Dated at Edinburgh the 10 March 1982

                                                         /s/ Signature
                                                         ---------------------
                                                         Registrar of Companies

<PAGE>

No. 45551

                         THE COMPANIES ACTS 1948 TO 1967

                            COMPANY LIMITED BY SHARES

                               SPECIAL RESOLUTION
                                       OF
                             NATIONAL AND COMMERCIAL
                              BANKING GROUP LIMITED

                            Passed 30th December 1969

      At the ANNUAL GENERAL MEETING of the members of NATIONAL AND COMMERCIAL
BANKING GROUP LIMITED duly convened and held at the North British Hotel,
Edinburgh, on 30th December 1969 the following Resolution was duly passed as a
SPECIAL RESOLUTION:--

      "THAT the Bill intituled 'A Bill to provide for the transfer to Williams &
      Glyn's Bank Limited of the undertakings of Glyn, Mills & Co., The National
      Bank Limited and Williams Deacon's Bank Limited and for other purposes
      incidental thereto and consequential thereupon' applied for by National
      and Commercial Banking Group Limited in the month of November 1969 and as
      proposed to be presented to the House of Commons or introduced in the
      House of Lords is hereby approved subject to such additions, alterations
      and variations as Parliament may think fit to make therein."

                                                         J. O. BLAIR-CUNYNGHAME,
                                                                        Chairman

                                       2
<PAGE>

No. 45551

                         THE COMPANIES ACTS 1948 TO 1976

                               SPECIAL RESOLUTION
                                       OF
                             NATIONAL AND COMMERCIAL
                              BANKING GROUP LIMITED

                              PASSED 4TH JULY, 1979

      At an EXTRAORDINARY GENERAL MEETING of the members of NATIONAL AND
COMMERCIAL BANKING GROUP LIMITED duly convened and held at the Registered Office
of the Company at 36 St Andrew Square, Edinburgh, on 4th July, 1979 the
following Resolution was duly passed as a SPECIAL RESOLUTION:--

                                   RESOLUTION

      That the name of the company be changed from `National and Commercial
Banking Group Limited' to `The Royal Bank of Scotland Group Limited' with effect
from the 3rd day of September 1979 or as soon thereafter as the Department of
Trade may approve.

                                                               M. A. R. HERRIES,
                                                                        Chairman

                                       3

<PAGE>

No. 45551

                         THE COMPANIES ACTS 1948 TO 1981

                            COMPANY LIMITED BY SHARES

                                RESOLUTION OF THE
                               BOARD OF DIRECTORS
                                       OF
                           THE ROYAL BANK OF SCOTLAND
                                 GROUP LIMITED

                            Passed 28th January, 1982

At a Meeting of the Board of Directors of The Royal Bank of Scotland Group
Limited, duly convened and held at London on the 28th day of January 1982, the
following Resolution was duly passed:

                               RESOLUTION

That:--

(a)  in pursuance of section 8(3) of the Companies Act 1980, The Royal Bank of
     Scotland Group Limited be re-registered as a public company limited by
     shares under the name The Royal Bank of Scotland Group public limited
     company with effect from 10th March 1982, or as soon thereafter as the
     Registrar of Companies may issue to the Company a Certificate of
     Incorporation on Re-Registration as a Public Company; and

(b)  the Memorandum of Association of The Royal Bank of Scotland Group Limited
     be altered in accordance with paragraph (a) of this Resolution by:--

     (i)   the deletion of the words "NATIONAL AND COMMERCIAL BANKING GROUP
           LIMITED" in Clause 1 thereof and insertion of the words "The Royal
           Bank of Scotland Group public limited company" in place thereof;

     (ii)  the insertion therein of the following new Clause 2 and the
           re-numbering of the existing Clauses 2 to 5 thereof as Clauses 3 to
           6 thereof:--

           "2. The Company is to be a public company."

                                                              M. A. R. HERRIES,
                                                                       Chairman

                                       4

<PAGE>

No. 45551

                         THE COMPANIES ACTS 1948 TO 1983

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS
                                       OF
                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                          Passed on 12th January, 1984

At an EXTRAORDINARY GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND
GROUP PUBLIC LIMITED COMPANY duly convened and held at the North British Hotel,
Edinburgh on 12th January, 1984 the following Resolutions were duly passed; as
to Resolutions Nos. 1, 2 and 4 as SPECIAL RESOLUTIONS and as to Resolution No. 3
as an ORDINARY RESOLUTION of the Company*:--

                               SPECIAL RESOLUTION

1.    That the provisions of the Memorandum of Association of the Company be
      amended by deleting therefrom the whole of Clause 4 and by substituting
      therefor the following new Clause:

      "4...."**

                               SPECIAL RESOLUTION

2.    That the Articles of Association contained in the document submitted to
      this meeting and for the purposes of identification signed by the chairman
      thereof be and the same are hereby adopted as the Articles of Association
      of the Company in substitution for and to the exclusion of the existing
      Articles of Association thereof.

                                                               M. A. R. HERRIES,
                                                                        Chairman

      *Note--Resolutions Nos. 3 and 4 expired on 10th January, 1985 and are no
            longer in force.

      **Note--The substituted Clause appears as Clause 4 in the Memorandum of
Association and is not reproduced here.

                                       5

<PAGE>

No. 45551

                         THE COMPANIES ACTS 1948 TO 1983

                            COMPANY LIMITED BY SHARES

                               SPECIAL RESOLUTION
                                       OF
                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 10th January 1985

At an EXTRAORDINARY GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND
GROUP PUBLIC LIMITED COMPANY duly convened and held at the North British Hotel,
Edinburgh on 10th January 1985, the following Resolution was duly passed as a
SPECIAL RESOLUTION of the Company:--

      That the Bill intituled "A Bill to provide for the transfer of the
      undertakings of The Royal Bank of Scotland public limited company and
      Williams & Glyn's Bank public limited company to RBSG public limited
      company; and for purposes connected therewith", as applied for by The
      Royal Bank of Scotland Group plc, a copy of which has been produced to
      this meeting and for the purposes of identification signed by the chairman
      thereof, be and the same is hereby approved subject to such additions,
      alterations and variations as Parliament may think fit to make therein and
      as the directors of The Royal Bank of Scotland Group plc may approve.

                                                               M. A. R. HERRIES,
                                                                        Chairman

                                       6

<PAGE>

No. 45551

                         THE COMPANIES ACTS 1948 TO 1983

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS
                                       OF
                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 10th January 1985

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the North British Hotel,
Edinburgh on 10th January, 1985 the following Resolutions were duly passed; as
to Resolution No. 1 as an ORDINARY RESOLUTION and as to Resolution No. 2 as a
SPECIAL RESOLUTION of the Company:--

                               ORDINARY RESOLUTION

      That for the purposes of section 14 of the Companies Act 1980 the
      directors be and they are hereby generally and unconditionally authorised
      to exercise all the powers of the company to allot relevant securities
      (within the meaning of the said section 14) up to an aggregate nominal
      amount of L2,479,926 provided that this authority shall expire at
      the conclusion of the next annual general meeting of the company after the
      passing of this resolution except that the company may before the expiry
      of such period make an offer or agreement which would or might require
      relevant securities to be allotted after the expiry of such period and the
      directors may allot relevant securities in pursuance of any such offer or
      agreement as if the authority conferred hereby had not expired.

                               SPECIAL RESOLUTION

      That, subject to the passing of the preceding resolution, the directors be
      and they are hereby empowered pursuant to section 18 of the Companies Act
      1980 to allot equity securities (within the meaning of section 17 of the
      said

                                       7

<PAGE>

      Act) pursuant to the authority conferred upon them by the preceding
      resolution as if section 17(1) of the said Act did not apply to any such
      allotment provided that the power conferred by this resolution shall be
      limited:

      (a)   to the allotment of equity securities in connection with a rights
            issue in favour of ordinary shareholders where the equity securities
            respectively attributable to the interests of all such shareholders
            are proportionate (as nearly as may be) to the respective numbers of
            ordinary shares held by them, and

      (b)   to the allotment (otherwise than pursuant to sub-paragraph (a)
            above) of equity securities having, in the case of relevant shares
            (as defined for the purposes of the said section 17, as amended) a
            nominal amount or, in the case of other equity securities, giving
            the right to subscribe for or convert into relevant shares having a
            nominal amount not exceeding in aggregate L2,479,926.

      and shall expire at the conclusion of the next annual general meeting of
      the company after the passing of this resolution unless renewed or
      extended prior to or at such meeting except that the company may before
      the expiry of any power contained in this resolution make an offer or
      agreement which would or might require equity securities to be allotted
      after such expiry and the directors may allot equity securities in
      pursuance of such offer or agreement as if the power conferred hereby had
      not expired.

                                                               M. A. R. HERRIES,
                                                                        Chairman

                                       8

<PAGE>

No. 45551

                         THE COMPANIES ACTS 1948 TO 1983

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS
                                       OF
                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 8th February 1985

At an EXTRAORDINARY GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND
GROUP PUBLIC LIMITED COMPANY duly convened and held in The Royal Bank of
Scotland plc, Staff Training College, 11 Kilgraston Road, Edinburgh EH9 2DX on
8th February 1985 the following Resolutions were duly passed of which
Resolutions Nos. 1 and 2 were passed as ORDINARY RESOLUTIONS and of which
Resolution No. 3 was passed as a SPECIAL RESOLUTION of the Company:--

                              ORDINARY RESOLUTIONS

1.    That the acquisition by the Company of the whole of the issued fully-paid
      share capitals of each of The Charterhouse Group plc and Charterhouse
      Development Canada Limited or any part thereof upon the terms and
      conditions of two agreements each dated 14th January 1985 between, inter
      alia, the Company and Charterhouse J. Rothschild plc (copies of which,
      signed by the Chairman of the Meeting for the purposes of
      identification, have been produced to the Meeting) be and they are hereby
      approved.

2.    That subject to and conditional upon the passing of the preceding
      Resolution and the satisfaction of the conditions in the afore-mentioned
      sale and purchase agreement relating to the acquisition of the whole of
      the issued fully-paid share capital of The Charterhouse Group plc:

      (i)   the authorised share capital of the Company be and is hereby
            increased from L60,000,000 to L90,000,000 by the creation of
            120,000,000 Ordinary Shares of 25p. each;

                                       9

<PAGE>

      (ii)  for the purposes of section 14 of the Companies Act 1980. the
            directors be and they are hereby generally and unconditionally
            authorised to exercise all the powers of the Company to allot
            relevant securities (within the meaning of the said section 14) up
            to an aggregate nominal amount of L32,382,561 provided that
            this authority shall expire at the conclusion of the next annual
            general meeting of the Company after the passing of this Resolution
            except that the Company may before the expiry of such period make an
            offer or agreement which would or might require relevant securities
            to be allotted after the expiry of such period and the directors may
            allot relevant securities in pursuance of any such offer or
            agreement as if the authority conferred hereby had not expired.

                               SPECIAL RESOLUTION

3.    That subject to and conditional upon the passing of the preceding
      Resolution, the directors be and they are hereby empowered pursuant to
      section 18 of the Companies Act 1980 to allot equity securities (within
      the meaning of section 17 of the said Act) pursuant to the authority
      conferred upon them by the preceding Resolution as if section 17(1) of
      the said Act did not apply to any such allotment provided that the power
      conferred by this Resolution shall be limited:

      (i)   to the allotment of equity securities in connection with a rights
            issue in favour of ordinary shareholders where the equity securities
            respectively attributable to the interests of all such shareholders
            are proportionate (as nearly as may be) to the respective numbers of
            ordinary shares held by them; and

      (ii)  to the allotment (otherwise than pursuant to sub-paragraph (i)
            above) of equity securities having in the case of relevant shares
            (as defined for the purposes of the said section 17. as amended) a
            nominal amount or in the case of other equity securities, giving
            the right to subscribe for or convert into relevant shares having a
            nominal amount not exceeding in aggregate L4,455,000,

      and shall expire at the conclusion of the next annual general meeting of
      the Company unless renewed or extended prior to or at such meeting except
      that the Company may before the expiry of any power contained in this
      Resolution make an offer or agreement which would or might require equity
      securities to be allotted after such expiry and the directors may allot
      equity securities in pursuance of such offer or agreement as if the power
      conferred hereby had not expired.

                                                               M. A. R. HERRIES,
                                                                        Chairman

                                       10

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS
                                       OF
                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 9th January 1986

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the North British Hotel,
Edinburgh on 9th January, 1986 the following Resolutions were duly passed; as to
Resolution No. 1 as an ORDINARY RESOLUTION and as to Resolution No. 2 as a
SPECIAL RESOLUTION of the Company:-

                               ORDINARY RESOLUTION

      That for the purposes of section 80 of the Companies Act 1985 the
      directors be and they are hereby generally and unconditionally authorised
      to exercise all the powers of the company to allot relevant securities
      (within the meaning of the said section 80) up to an aggregate nominal
      amount of L18,203,202 provided that this authority shall expire at
      the conclusion of the next annual general meeting of the company after the
      passing of this resolution except that the company may before the expiry
      of such period make an offer or agreement which would or might require
      relevant securities to be allotted after the expiry of such period and the
      directors may allot relevant securities in pursuance of any such offer or
      agreement as if the authority conferred hereby had not expired.

                               SPECIAL RESOLUTION

      That, subject to the passing of the preceding resolution, the directors be
      and they are hereby empowered pursuant to section 95 of the Companies Act
      1985 to allot equity securities (as defined in section 94 of the said Act)
      pursuant to the authority conferred upon them by the preceding resolution
      as if section 89(1) of the said Act did not apply to any such allotment
      provided that the power conferred by this resolution shall be limited:

                                       11

<PAGE>

      (a)   to the allotment of equity securities in connection with a rights
            issue in favour of ordinary shareholders where the equity securities
            respectively attributable to the interests of all such shareholders
            are proportionate (as nearly as may be) to the respective numbers of
            ordinary shares held by them, and

      (b)   to the allotment (otherwise than pursuant to sub-paragraph (a)
            above) of equity securities having, in the case of relevant shares
            (as defined for the purposes of the said section 89) a nominal
            amount or, in the case of other equity securities, giving the right
            to subscribe for or convert into relevant shares having a nominal
            amount not exceeding in aggregate L4,455,000

      and shall expire at the conclusion of the next annual general meeting of
      the company after the passing of this resolution unless renewed or
      extended prior to or at such meeting except that the company may, before
      the expiry of any power contained in this resolution, make an offer or
      agreement which would or might require equity securities to be allotted
      after such expiry and the directors may allot equity securities in
      pursuance of such offer or agreement as if the power conferred hereby had
      not expired.

                                                               M. A. R. HERRIES,
                                                                        Chairman

                                       12

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS
                                       OF
                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 15th January 1987

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the North British Hotel,
Edinburgh on 15th January 1987, the following Resolutions were duly passed; as
to Resolution No. 1 as an ORDINARY RESOLUTION and as to Resolution No. 2 as a
SPECIAL RESOLUTION of the company:--

                               ORDINARY RESOLUTION

1.    That for the purposes of section 80 of the Companies Act 1985 the
      directors be and they are hereby generally and unconditionally authorised
      to exercise all the powers of the company to allot relevant securities
      (within the meaning of the said section 80) up to an aggregate nominal
      amount of L17,993,843 provided that this authority shall expire at
      the conclusion of the next annual general meeting of the company after the
      passing of this resolution except that the company may before the expiry
      of such period make an offer or agreement which would or might require
      relevant securities to be allotted after the expiry of such period and the
      directors may allot relevant securities in pursuance of any such offer or
      agreement as if the authority conferred hereby had not expired.

                               SPECIAL RESOLUTION

2.    That, subject to the passing of the preceding resolution, the directors be
      and they are hereby empowered pursuant to section 95 of the Companies Act
      1985 to allot equity securities(as defined in section 94 of the said
      Act) pursuant to the authority conferred upon them by the preceding
      resolution as if section 89(1) of the said Act did not apply to any such
      allotment provided that the power conferred by this resolution shall be
      limited:

      (a)   to the allotment of equity securities in connection with a rights
            issue in favour of ordinary shareholders where the equity securities
            respectively attributable to the interests of all such shareholders
            are proportionate (as nearly as may be) to the respective numbers of
            ordinary shares held by them, and

                                       13

<PAGE>

      (b)   to the allotment (otherwise than pursuant to sub-paragraph (a)
            above) of equity securities having, in the case of relevant shares
            (as defined for the purposes of the said section 89) a nominal
            amount or, in the case of other equity securities, giving the right
            to subscribe for or convert into relevant shares having a nominal
            amount not exceeding in aggregate L4,455,000

and shall expire at the conclusion of the next annual general meeting of the
company after the passing of this resolution unless renewed or extended prior to
or at such meeting except that the company may, before the expiry of any power
contained in this resolution, make an offer or agreement which would or might
require equity securities to be allotted after such expiry and the directors may
allot equity securities in pursuance of such offer or agreement as if the power
conferred hereby had not expired.

                                                               M. A. R. HERRIES,
                                                                        Chairman

                                       14

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS
                                       OF
                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 14th January 1988

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the Caledonian Hotel, Edinburgh
on 14th January 1988, the following Resolutions were duly passed; as to
Resolutions Nos. 1 and 4 as ORDINARY RESOLUTIONS and as to Resolutions Nos. 2, 3
and 5 as SPECIAL RESOLUTIONS of the Company: --

                               ORDINARY RESOLUTION

1.    That for the purposes of section 80 of the Companies Act 1985 the
      directors be and they are hereby generally and unconditionally authorised
      to exercise all the powers of the company to allot relevant securities
      (within the meaning of the said section 80) up to an aggregate nominal
      amount of (pound)17,483,459 provided that this authority shall expire at
      the conclusion of the next annual general meeting of the company after the
      passing of this resolution except that the company may before the expiry
      of such period make an offer or agreement which would or might require
      relevant securities to be allotted after the expiry of such period and the
      directors may allot relevant securities in pursuance of any such offer or
      agreement as if the authority conferred hereby had not expired.

                               SPECIAL RESOLUTION

2.    That, subject to the passing of the preceding resolution, the directors be
      and they are hereby empowered pursuant to section 95 of the Companies Act
      1985 to allot equity securities (as defined in section 94 of the said Act)
      pursuant to the authority conferred upon them by the preceding resolution
      as if section 89(1) of the said Act did not apply to any such allotment
      provided that the power conferred by this resolution shall be limited:

                                       15
<PAGE>

      (a)   to the allotment of equity securities in connection with a rights
            issue in favour of ordinary shareholders where the equity securities
            respectively attributable to the interests of all such shareholders
            are proportionate (as nearly as may be) to the respective numbers of
            ordinary shares held by them; and

      (b)   to the allotment (otherwise than pursuant to sub-paragraph (a)
            above) of equity securities having, in the case of relevant shares
            (as defined for the purposes of the said section 89) a nominal
            amount or, in the case of other equity securities, giving the right
            to subscribe for or convert into relevant shares having a nominal
            amount not exceeding in aggregate L3,580,827

      and shall expire at the conclusion of the next annual general meeting of
      the company after the passing of this resolution unless renewed or
      extended prior to or at such meeting except that the company may, before
      the expiry of any power contained in this resolution, make an offer or
      agreement which would or might require equity securities to be allotted
      after such expiry and the directors may allot equity securities in
      pursuance of such offer or agreement as if the power conferred hereby had
      not expired.

                               SPECIAL RESOLUTION

3.    That the articles of association of the company be amended by the
      insertion after article 133 of the following new article 133A:

      "133A. The Directors may, with the prior sanction of an Ordinary
      Resolution of the Company, offer the holders of Ordinary Shares the right
      to elect to receive Ordinary Shares, credited as fully paid, instead of
      cash in respect of all or part of such dividend or dividends as are
      specified by such resolution. The following provisions shall apply:--

      (A)   The said resolution may specify all or part of a particular dividend
            or may specify all or any dividends (or any part of such dividends)
            declared or to be declared or paid within a specified period, but
            such period may not end later than the beginning of the Annual
            General Meeting next following the date of the meeting at which such
            resolution is passed.

      (B)   The entitlement of each holder of Ordinary Shares to new Ordinary
            Shares shall be such that the Relevant Value thereof shall be as
            nearly as possible equal to (but not in excess of) the cash amount
            that such holders would have received by way of dividend. For this
            purpose the 'Relevant Value' of an ordinary share shall be the
            average of the middle market quotations for the Company's Ordinary
            Shares on The Stock Exchange, London, as derived from the Daily
            Official List, on the day when the Ordinary Shares are first quoted
            "ex" the relevant dividend and the four subsequent dealing days, or
            an amount determined in such other manner as may be determined by or
            in accordance with the said resolution. A certificate or report by
            the Auditor as to the amount of the Relevant Value in respect of any
            dividend shall be conclusive evidence of that amount.

      (C)   The basis of allotment shall be such that no member may receive a
            fraction of a share. The Directors may make such provisions as they
            think fit for any fractional entitlements, including provisions
            whereby, in whole or in part, the benefit thereof accrues to the
            Company.

      (D)   The Directors, after determining the basis of allotment, shall
            notify the holders of Ordinary Shares in writing of the right of
            election offered to them, and shall send with, or following, such
            notification, forms of election and specify the procedure to be
            followed and the place at which, and the latest date and time by
            which, duly completed forms of election must be lodged in order to
            be effective.

      (E)   The dividend (or that part of the dividend in respect of which a
            right of election has been offered) shall not be payable on
            Ordinary Shares in respect whereof the said election has been duly
            made ('the elected Ordinary Shares') and instead thereof additional
            Ordinary Shares shall be allotted to the holders of the elected
            Ordinary Shares on the basis of allotment

                                       16

<PAGE>

            determined as aforesaid. For such purpose the Directors shall
            capitalise out of such of the sums standing to the credit of any of
            the Company's reserves (including Share Premium Account and Capital
            Redemption Reserve) or any of the profits which could otherwise have
            been applied in paying dividends in cash as the Directors may
            determine, a sum equal to the aggregate nominal amount of the
            additional Ordinary Shares to be allotted on such basis and apply
            the same in paying up in full the appropriate number of unissued
            Ordinary Shares for allotment and distribution to and amongst the
            holders of the elected Ordinary Shares on such basis.

      (F)   The additional Ordinary Shares so allotted shall rank pari passu in
            all respects with the fully paid Ordinary Shares then in issue save
            only as regards participation in the relevant dividend.

      (G)   The Directors may undertake and do such acts and things as they may
            consider necessary or expedient for the purpose of giving effect to
            the provisions of this Article.

      (H)   The Directors may on any occasion determine that rights of election
            hereunder shall be subject to such exclusions, restrictions or
            other arrangements as the Directors may deem necessary or expedient
            in relation to legal or practical problems under the laws of, or the
            requirements of any recognised regulating body or any stock exchange
            in, any territory.

      (I)   This Article shall have effect without prejudice to the other
            provisions of these presents and such provisions shall also have
            effect without prejudice to the provisions of this Article."

                               ORDINARY RESOLUTION

4.    That, subject to the passing of the preceding resolution, the directors of
      the company be and they are hereby authorised:

      (a)   to exercise the power contained in article 133A of the articles of
            association of the company so that, to the extent determined by the
            directors, the holders of ordinary shares be permitted to elect to
            receive new ordinary shares of 25p each in the capital of the
            company, credited as fully paid, instead of all or part of any
            interim dividend or dividends declared by the directors before the
            annual general meeting to be held in 1989; and

      (b)   to capitalise the appropriate nominal amount of additional ordinary
            shares, falling to be allotted pursuant to elections made as
            aforesaid, out of the amount standing to the credit of any reserve
            of the company, to apply such sum in paying up such ordinary shares
            and to allot such ordinary shares to members of the company validly
            making such elections.

                               SPECIAL RESOLUTION

5.    That the articles of association of the company be altered as follows:

      (a)   by the addition of the following sentence at the end of article 17:

            "Notwithstanding the foregoing provisions of this Article, the
            Directors may by resolution determine, either generally or in any
            particular case or cases, that certificates for debentures shall
            bear the signatures or facsimile signatures of two authorised
            officers of the Company and need not be issued under the Seal or the
            Securities Seal or an official seal."

      (b)   by the insertion after article 101 of the following new article
            101A:

            "101 A. Without prejudice to the first sentence of Article 101, a
            meeting of the Directors or of a committee formed under Article 109
            may consist of a conference between Directors or members of the
            committee who are not all in one place but of whom each is able
            (directly or by telephonic, televisual or similar means of
            communication) to speak to each of the others and to be heard by
            each of the others simultaneously; and the word 'meeting' in these
            presents shall be construed accordingly."

                                                               M. A. R. HERRIES,
                                                                        Chairman

                                       17

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS
                                       OF
                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 12th January 1989

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the Caledonian Hotel, Edinburgh
on 12th January 1989, the following Resolutions were duly passed; as to
Resolution No. 1 as an ORDINARY RESOLUTION and as to Resolution No. 2 as a
SPECIAL RESOLUTION of the Company: -

                               ORDINARY RESOLUTION

1.    That for the purposes of section 80 of the Companies Act 1985 the
      directors be and they are hereby generally and unconditionally authorised
      to exercise all the powers of the company to allot relevant securities
      (within the meaning of the said section 80) up to an aggregate nominal
      amount of L15,242,046 provided that this authority shall expire at the
      conclusion of the next annual general meeting of the company after the
      passing of this resolution except that the company may before the expiry
      of such period make an offer or agreement which would or might require
      relevant securities to be allotted after the expiry of such period and the
      directors may allot relevant securities in pursuance of any such offer or
      agreement as if the authority conferred hereby had not expired.

                               SPECIAL RESOLUTION

2.    That, subject to the passing of the preceding resolution, the directors be
      and they are hereby empowered pursuant to section 95 of the Companies Act
      1985 to allot equity securities (as defined in section 94 of the said Act)
      pursuant to the authority conferred upon them by the preceding resolution
      as if section 89(1) of the said Act did not apply to any such allotment
      provided that the power conferred by this resolution shall be limited:

      (a)   to the allotment of equity securities in connection with a rights
            issue in favour of ordinary shareholders where the equity securities
            respectively attributable to the interests of all such shareholders
            are proportionate (as nearly as may be) to the respective numbers of
            ordinary shares held by them; and

                                       18

<PAGE>

      (b)   to the allotment (otherwise than pursuant to sub-paragraph (a)
            above) of equity securities having, in the case of relevant shares
            (as defined for the purposes of the said section 89) a nominal
            amount or, in the case of other equity securities, giving the right
            to subscribe for or convert into relevant shares having a nominal
            amount not exceeding in aggregate L3,692,898

      and shall expire at the conclusion of the next annual general meeting of
      the company after the passing of this resolution unless renewed or
      extended prior to or at such meeting except that the company may, before
      the expiry of any power contained in this resolution, make an offer or
      agreement which would or might require equity securities to be allotted
      after such expiry and the directors may allot equity securities in
      pursuance of such offer or agreement as if the power conferred hereby had
      not expired.

                                                               M. A. R. HERRIES,
                                                                        Chairman

                                       19

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS
                                       OF
                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 30th August 1989

At the EXTRAORDINARY GENERAL MEETING of the members of THE ROYAL BANK OF
SCOTLAND GROUP PUBLIC LIMITED COMPANY duly convened and held at the Staff
Training College, The Royal Bank of Scotland plc, 11 Kilgraston Road, Edinburgh
EH9 2DX on 30th August 1989, the following Resolutions were duly passed; as to
Resolution No. 2 is an ORDINARY RESOLUTION and as to Resolutions Nos. 1 and 3 as
SPECIAL RESOLUTIONS of the Company:--

                               SPECIAL RESOLUTION

1.(A) THAT the authorised share capital of the Company be and it is hereby
      increased by the creation of 16,000,000 Non-cumulative Dollar Preference
      Shares of US$0.01 each and by the creation of 200,000,000 Non-cumulative
      Sterling Preference Shares of L1 each, such shares having attached
      thereto the respective rights and being subject to the respective
      limitations set out in the Articles of Association of the Company as
      altered by paragraph (C) of this Resolution;

  (B) for the purposes of section 80 of the Companies Act 1985 the Directors be
      and they are hereby generally and unconditionally authorised to exercise
      all the powers of the Company to allot all the 16,000,000 Non-cumulative
      Dollar Preference Shares of US$0.01 each and the 200,000,000 Non-
      cumulative Sterling Preference Shares of L1 each created pursuant to
      paragraph (A) of this Resolution provided that this authority shall expire
      on the fifth anniversary of the passing of this Resolution except that the
      Company may before the expiry of such period make an offer or agreement
      which would or might require relevant securities (within the meaning of
      the said section 80) to be allotted after the expiry of such period and
      the Directors may allot relevant securities in pursuance of any such offer
      or agreement as if the authority conferred hereby had not expired; and

  (C) the Article of Association of the Company be and they are hereby amended
      as follows:--

                                       20

<PAGE>

      (a)   by the insertion in Article 2 of the following definitions:-

            5 1/2 per cent. Cumulative       The 400,000 5 1/2 per cent.
            Preference Shares                Cumulative Preference Shares of L1
                                             each in the capital of the Company.

            11 per cent. Cumulative          The 500,000 11 per cent. Cumulative
            Preference Shares                Preference Shares of L1 each in the
                                             capital of the Company.

            Non-cumulative Sterling          The 200,000,000 Non-cumulative
            Preference Shares                Sterling Preference Shares of L1
                                             each in the capital of the Company.

            Non-cumulative Dollar            The 16,000,000 Non-cumulative
            Preference Shares                Dollar Preference Shares of US$0.01
                                             each in the capital of the
                                             Company.

            Cumulative Preference Shares     The 5 1/2 per cent. Cumulative
                                             Preference Shares and the 11
                                             per cent. Cumulative Preference
                                             Shares.

            New Preference Shares            The Non-cumulative Sterling
                                             Preference Shares, the
                                             Non-cumulative Dollar Preference
                                             Shares and any other share in the
                                             capital of the Company which is
                                             expressed to rank as regards
                                             participation in the profits or
                                             assets of the Company in some or
                                             all respects pari passu therewith.

            New Shares                       New Preference Shares or any
                                             further shares in the capital of
                                             the Company issued subsequent to
                                             the date of amendment of this
                                             Article.

            US$ and Dollars                  The lawful currency for the time
                                             being of the United States of
                                             America.

            Directors                        The Directors from time to time of
                                             the Company, or an authorised
                                             Committee thereof.

            Applicable Exchange Rate         Such market rate of exchange as the
                                             Directors may consider appropriate
                                             for the purchase of any lawful
                                             currency with any other lawful
                                             currency at such time on such date
                                             as the Directors may consider
                                             appropriate.

            Foreign Currency                 Any lawful currency other than
                                             Sterling.

            The Stock Exchange               The International Stock Exchange of
                                             the United Kingdom and the Republic
                                             of Ireland Limited.

      (b)   by the deletion of the introductory paragraph in Article 4 and the
            substitution therefor of the following new paragraph:--

            "The share capital of the Company at 30th August 1989 being the date
            of amendment of this Article is L290,000,000 divided into 500,000 11
            per cent. Cumulative Preference Shares of L1 each, 400,000 5 1/2 per
            cent. Cumulative Preference Shares of L1 each, 200,000,000
            Non-cumulative Sterling Preference Shares of L1 each and 356,400,000
            Ordinary Shares of 25p each, and US$160,000 divided into 16,000,000
            Non-cumulative Dollar Preference Shares of US$0.01 each. The

                                       21

<PAGE>

            rights as regards participation in the profits and assets of the
            Company attaching to those shares shall be as follows:--"

      (c)   by the deletion of the last two sentences of Article 4( A) and the
            substitution therefor of the following new sentence:--

            "Such dividends shall rank pari passu and pro rata with each other
            and shall be paid in priority to any dividend on the New Preference
            Shares or on any other class of share."

      (d)   by the deletion of Article 4(B) and the substitution therefor of the
            following:--

            "(B) On a winding up or liquidation, voluntary or otherwise, the
            surplus assets of the Company available for distribution amongst the
            members shall be applied:--

            FIRSTLY -- in paying to the holders of the 11 per cent. Cumulative
            Preference Shares and the 5 1/2 per cent. Cumulative Preference
            Shares respectively the arrears (if any) of the fixed cumulative
            preferential dividends thereon (whether earned or declared or not
            and including (i) the amount of any dividend which is due for
            payment after the date of commencement of winding up or liquidation
            but which is payable in respect of a half-year period ending on or
            before such date and (ii) any further amount of dividend payable in
            respect of the period from the beginning of the half-year period
            then current to the date of commencement of winding up or
            liquidation) to the date on which repayment is made, in terms of the
            immediately succeeding paragraph or, if no such repayment is made,
            the date of payment of such arrears; and

            SECONDLY -- in repaying to the holders of the 11 per cent.
            Cumulative Preference Shares and the 5 1/2 per cent. Cumulative
            Preference Shares respectively the amounts paid up or credited as
            paid up on such shares together with a premium of 50p per share in
            the case of the 11 per cent. Cumulative Preference Shares and of 20p
            per share in the case of the 5 1/2 per cent. Cumulative Preference
            Shares.

            Any payments made to the holders of the 11 per cent. Cumulative
            Preference Shares and the 5 1/2 per cent. Cumulative Preference
            Shares in terms of paragraphs FIRSTLY or SECONDLY above shall rank
            pari passu and pro rata with each other and (in the case of payments
            in terms of paragraph FIRSTLY) in priority to and (in the case of
            repayments in terms of paragraph SECONDLY)pari passu and pro rata
            with any payments to be made to the holders of the Non-cumulative
            Sterling Preference Shares and the Non-cumulative Dollar Preference
            Shares pursuant to Articles 4(C)(2) and 4(D)(2) respectively below
            and to the holders of any other New Preference Shares."

      (e)   by the insertion after Article 4(B) of the following new
            sub-Articles 4(C), 4(D)and 4(E):--

            "(C) (1) The Non-cumulative Sterling Preference Shares shall rank
                     after the Cumulative Preference Shares to the extent
                     specified in this Article 4, and shall rank pari passu
                     inter se and (save as aforesaid) with the Cumulative
                     Preference Shares and with all other New Preference Shares.
                     They shall confer the rights and be subject to the
                     restrictions set out in this Article 4(C) and shall also
                     confer such further rights (not being inconsistent with the
                     rights set out in this Article 4(C)) as may be attached by
                     the Directors to such shares in accordance with this
                     Article 4(C)prior to allotment. Whenever the Directors have
                     power under this Article to determine any of the rights
                     attached to any of the Non-cumulative Sterling Preference
                     Shares, the rights so determined need not be the same as
                     those attached to the Non-cumulative Sterling Preference
                     Shares then allotted or in issue. The Non-cumulative
                     Sterling Preference Shares may be issued in one or more
                     separate

                                       22

<PAGE>
                     series, and each series shall be identified in such manner
                     as the Directors may determine without any such
                     determination or identification requiring any alteration to
                     these presents.

            (2)   Each Non-cumulative Sterling Preference Share shall confer the
                  following rights as to participation in the profits and assets
                  of the Company, receipt of notices, attendance and voting at
                  meetings and redemption:--

                  (a)   Income

                        The right (subject to the provisions of paragraph (b) of
                        this sub-Article, if applicable) to a non-cumulative
                        preferential dividend either fixed or not exceeding a
                        specified amount payable in Sterling at such rate on
                        such dates (each a "dividend payment date") in respect
                        of such periods (each a "dividend period") and on such
                        other terms and conditions as may be determined by the
                        Directors prior to allotment thereof. References in
                        these presents to a "dividend" on the Non-cumulative
                        Sterling Preference Shares include a reference to each
                        dividend in respect of each dividend period applicable
                        thereto and references in this Article 4(C) to dividend
                        payment dates and dividend periods are to dividend
                        payment dates and dividend periods in respect of the
                        Non-cumulative Sterling Preference Shares only. Such
                        dividends shall be paid in priority to the payment of
                        any dividends on the Ordinary Shares. The Non-cumulative
                        Sterling Preference Shares shall rank for dividend after
                        the Cumulative Preference Shares, pari passu with all
                        other New Preference Shares expressed to rank pari passu
                        therewith as regards participation in profits and
                        otherwise in priority to any other share capital in the
                        Company.

                  (b)   Further provisions as to income

                        All or any of the following provisions shall apply in
                        relation to any particular Non-cumulative Sterling
                        Preference Shares if so determined by the Directors
                        prior to allotment thereof:--

                        (i)   if, in the opinion of the Directors, the
                              distributable profits of the Company are
                              sufficient to cover the payment in full of
                              dividends on the Non-cumulative Sterling
                              Preference Shares on any dividend payment date,
                              and also the payment in full of all other
                              dividends stated to be payable on such date on any
                              other New Preference Share expressed to rank pari
                              passu therewith as regards participation in
                              profits, after payment in full, or the setting
                              aside of a sum to cover the payment in full,of all
                              dividends stated to be payable on such date on any
                              Cumulative Preference Share, then each such
                              dividend shall be declared and paid in full;

                        (ii)  if, in the opinion of the Directors, the
                              distributable profits of the Company are
                              insufficient to cover the payment in full of
                              dividends on the Non-cumulative Sterling
                              Preference Shares on any dividend payment date,
                              and also the payment in full of all other
                              dividends stated to be payable on such date on any
                              other New Preference Share expressed to rank
                              pari passu therewith as regards participation in
                              profits after payment in full, or the setting
                              aside of a sum to cover the payment in full, of
                              all dividends

                                       23

<PAGE>

                              stated to be payable on or before such date on any
                              Cumulative Preference Share, then dividends shall
                              be declared by the Directors pro rata for the
                              Non-cumulative Sterling Preference Shares and such
                              other New Preference Shares to the extent of the
                              available distributable profits (if any) to the
                              intent that the amount of dividend declared per
                              share on each such Non-cumulative Sterling
                              Preference Share and other New Preference Share
                              will bear to each other the same ratio as the
                              dividends accrued per share on each such
                              Non-cumulative Sterling Preference Share and other
                              New Preference Share bear to each other. If it
                              shall subsequently appear that any such dividend
                              which has been paid should not, in accordance with
                              the provisions of this sub-paragraph, have been so
                              paid, then provided the Directors shall have acted
                              in good faith, they shall not incur any liability
                              for any loss which any shareholder may suffer in
                              consequence of such payment having been made;

                        (iii) if, in the opinion of the Directors, the payment
                              of any dividend on any Non-cumulative Sterling
                              Preference Shares would breach or cause a breach
                              of the Bank of England's capital adequacy
                              requirements applicable to the Company and/or any
                              of its subsidiaries, then none of such dividend
                              shall be declared or paid;

                        (iv)  subject to sub-paragraphs (v) and (vi) below, the
                              Non-cumulative Sterling Preference Shares shall
                              carry no further right to participate in the
                              profits of the Company and if and to the extent
                              that any dividend or part thereof is on any
                              occasion not paid for the reasons described in
                              sub-paragraphs (ii) or (iii) above, the holders of
                              such shares shall have no claim in respect of such
                              non-payment;

                        (v)   if any dividend or part thereof on any
                              Non-cumulative Sterling Preference Share is not
                              payable for the reasons specified in
                              sub-paragraphs (ii) or (iii) above and if they so
                              resolve, the Directors may, subject to the
                              Statutes, pay a special non-cumulative
                              preferential dividend on the Non-cumulative
                              Sterling Preference Shares at a rate not exceeding
                              (pound)0.01 per share (but so that reference
                              elsewhere in this Article and in Article 4(D) to
                              any dividend payable on any Non-cumulative
                              Sterling Preference Shares shall not be treated as
                              including a reference to any such special
                              dividend);

                        (vi)  (A)  the provisions of this sub-paragraph (vi)
                                   shall apply where any dividend or any part
                                   thereof otherwise payable on a particular
                                   dividend payment date on any Non-cumulative
                                   Sterling Preference Shares ("a Relevant
                                   Payment") is, for the reasons specified in
                                   sub-paragraphs (ii) or (iii) above, not
                                   payable and the amounts (if any) standing to
                                   the credit of the Company's profit and loss
                                   account together with the amount of the
                                   reserves of the Company available for the
                                   purpose are in aggregate

                                       24

<PAGE>

                                   sufficient to be applied and capable of being
                                   applied in paying up in full at par
                                   additional Non-cumulative Sterling Preference
                                   Shares on the basis hereinafter provided in
                                   this sub-paragraph (vi);

                              (B)  on the date for payment of the Relevant
                                   Payment had such payment been payable in
                                   cash, the Directors shall, subject to the
                                   Statutes, allot and issue credited as fully
                                   paid to each holder of Non-cumulative
                                   Sterling Preference Shares such additional
                                   nominal amount of Non-cumulative Sterling
                                   Preference Shares as is equal to an amount
                                   determined by multiplying the cash amount of
                                   the Relevant Payment which would have been
                                   payable to him had such payment been made in
                                   cash (exclusive of any associated tax credit)
                                   by a factor to be determined by the Directors
                                   prior to allotment of the Non-cumulative
                                   Sterling Preference Shares;

                              (C)  for the purposes of paying up additional
                                   Non-cumulative Sterling Preference Shares to
                                   be allotted pursuant to this sub-paragraph
                                   (vi), the Directors shall capitalise, out of
                                   such of the accounts or reserves of the
                                   Company available for the purposes as they
                                   shall determine (including any Share Premium
                                   Account), a sum equal to the aggregate
                                   nominal amount of the additional
                                   Non-cumulative Sterling Preference Shares
                                   then to be allotted and shall make all
                                   appropriations and applications of such sum
                                   and all allotments and issues of fully paid
                                   Non-cumulative Sterling Preference Shares for
                                   the purpose of giving effect to this
                                   sub-paragraph (vi);

                              (D)  the additional Non-cumulative Sterling
                                   Preference Shares so allotted pursuant to
                                   this sub-paragraph (vi) shall confer the same
                                   rights and be subject to the same limitations
                                   as, and shall rank pari passu and pro rata in
                                   all respects with, the relevant
                                   Non-cumulative Sterling Preference Shares
                                   save only as regards participation in the
                                   Relevant Payment;

                              (E)  if any additional Non-cumulative Sterling
                                   Preference Shares falling to be allotted
                                   pursuant to this sub-paragraph (vi) cannot be
                                   allotted by reason of any insufficiency in
                                   the Company's authorised share capital or in
                                   the amount of relevant securities which the
                                   Directors are authorised to allot in
                                   accordance with Section 80 of the Companies
                                   Act 1985, the Directors shall convene a
                                   General Meeting, to be held as soon as
                                   practicable, for the purpose of considering
                                   a Resolution or Resolutions effecting an
                                   appropriate increase in the authorised share
                                   capital and granting the Directors
                                   appropriate authority to allot relevant
                                   securities; and

                              (F)  the Directors may undertake and do such
                                   acts

                                       25

<PAGE>

                                   and things as they may consider necessary or
                                   expedient for the purpose of giving effect to
                                   the provisions of this sub-paragraph (vi);

                        (vii) if any date on which dividends are payable on
                              Non-cumulative Sterling Preference Shares is not a
                              day on which banks in London are open for
                              business, and on which foreign exchange dealings
                              may be conducted in London ("a Sterling Business
                              Day"), then payment of the dividend payable on
                              such date will be made on the next succeeding
                              Sterling Business Day and without any interest or
                              other payment in respect of such delay unless such
                              day shall fall within the next calendar month
                              whereupon such payment will be made on the
                              preceding Sterling Business Day;

                        (viii) dividends payable on Non-cumulative Sterling
                              Preference Shares shall accrue from and to the
                              dates determined by the Directors prior to
                              allotment thereof, and the amount of dividend
                              payable in respect of any period shorter than a
                              full dividend period will be calculated on the
                              basis of a 365-day year and the actual number of
                              days elapsed in such period;

                        (ix)  if the dividend stated to be payable on the
                              Non-cumulative Sterling Preference Shares on the
                              most recent dividend payment date has not been
                              declared and paid in full, or if a sum has not
                              been set aside to provide for such payment in
                              full, no dividends may be declared on any other
                              share capital of the Company (other than the
                              Cumulative Preference Shares), and no sum may be
                              set aside for the payment thereof, unless, on the
                              date of declaration relative to any such payment,
                              an amount equal to the dividend stated to be
                              payable on the Non-cumulative Sterling Preference
                              Shares in respect of the then current dividend
                              period is set aside for the payment in full of
                              such dividend on the dividend payment date
                              relating to the then current dividend period; and

                        (x)   if any dividend stated to be payable on the
                              Non-cumulative Sterling Preference Shares on any
                              dividend payment date has not been declared and
                              paid in full, or if a sum has not been set aside
                              to provide for such payment in full, the Company
                              may not redeem or purchase or otherwise acquire
                              for any consideration any other share capital of
                              the Company and may not set aside any sum nor
                              establish any sinking fund for the redemption,
                              purchase or other such acquisition thereof, until
                              such time as dividends stated to be payable on the
                              Non-cumulative Sterling Preference Shares in
                              respect of successive dividend periods together
                              aggregating no less than twelve months shall
                              thereafter have been declared and paid in full.

                  (c)   Capital

                        The right on a winding up or liquidation, voluntary or
                        otherwise, other than (unless otherwise provided by the
                        terms of issue of such share) a redemption or purchase
                        by the Company of any shares of any class, to receive

                                       26

<PAGE>

                        in Sterling out of the surplus assets of the Company
                        available for distribution amongst the members: --

                        (i)   after payment of the arrears (if any) of the fixed
                              cumulative preferential dividends stated to be
                              payable on the Cumulative Preference Shares to the
                              holders thereof in accordance with Article 4(B)
                              FIRSTLY and pari passu with the holders of any
                              other New Preference Shares expressed to rank pari
                              passu therewith as regards participation in
                              profits and in priority to the holders of the
                              Ordinary Shares of the Company a sum equal to: --

                              (A)  the amount of any dividend which is due
                                   for payment after the date of commencement of
                                   winding up or liquidation but which is
                                   payable in respect of a period ending on or
                                   before such date; and

                              (B)  any further amount of dividend payable in
                                   respect of the period from the preceding
                                   dividend payment date to the date of payment
                                   in accordance with this sub-paragraph (i)

                              but only to the extent that any such amount or
                              further amount was, or would have been, payable as
                              a dividend in accordance with or pursuant to this
                              Article 4(C) (other than pursuant to this
                              provision); and

                        (ii)  subject thereto, pari passu with the holders of
                              the Cumulative Preference Shares and any other New
                              Preference Shares expressed to rank pari passu
                              therewith as regards participation in surplus
                              assets and in priority to the holders of the
                              Ordinary Shares of the Company, a sum equal to the
                              amount paid up or credited as paid up on the
                              Non-cumulative Sterling Preference Shares
                              (including any premium paid to the Company in
                              respect thereof on issue).

                        If upon any such winding up or liquidation, the amounts
                        available for payment are insufficient to cover the
                        amounts payable in full on the Cumulative Preference
                        Shares, the Non-cumulative Sterling Preference Shares
                        and on any other New Preference Share expressed to rank
                        pari passu therewith as regards participation in surplus
                        assets, then the holders of the Cumulative Preference
                        Shares, the Non-cumulative Sterling Preference Shares
                        and such other New Preference Shares will share rateably
                        in the distribution of surplus assets (if any) in
                        proportion to the full respective preferential amounts
                        to which they are entitled. No Non-cumulative Sterling
                        Preference Share shall confer any right to participate
                        in the surplus assets of the Company other than that set
                        out in this sub-paragraph (2)(c) of this Article 4(C).

                  (d)   Receipt of Notices

                        The right to have sent to the holder of each
                        Non-cumulative Sterling Preference Share (at the same
                        time as the same are sent to the holders of Ordinary
                        Shares) a copy of the Company's Annual Report and
                        Accounts and Interim Financial Statement, together with
                        Notice of any General Meeting of the Company at which
                        such holder is entitled to attend and vote.

                                       27

<PAGE>

                  (e)   Attendance and Voting at Meetings

                        The right to attend at a General Meeting of the Company
                        and to speak to or vote upon any Resolution proposed
                        thereat in the following circumstances: --

                        (i)   in respect of a Resolution which is to be proposed
                              at the Meeting either varying or abrogating any of
                              the rights attached to the Non-cumulative Sterling
                              Preference Shares or proposing the winding up of
                              the Company (and then in each such case only to
                              speak to and vote upon any such Resolution);

                        (ii)  in circumstances where the dividend stated to be
                              payable on the Non-cumulative Sterling Preference
                              Shares in respect of such number of dividend
                              periods as the Directors shall determine prior to
                              allotment thereof has not been declared and paid
                              in full, and until such date as the Directors
                              shall likewise determine; and

                        (iii) in such other circumstances as the Directors may
                              determine prior to allotment of the Non-cumulative
                              Sterling Preference Shares,

                        but not otherwise, together with the right, in such
                        circumstances, if any, as the Directors may determine
                        prior to allotment of the Non-cumulative Sterling
                        Preference Shares, to seek to requisition a General
                        Meeting of the Company for which purpose the
                        Non-cumulative Sterling Preference Shares will be deemed
                        to carry the number of votes determined pursuant to the
                        following sentence. Whenever holders of Non-cumulative
                        Sterling Preference Shares are entitled to vote on a
                        Resolution, on a show of hands every such holder who is
                        present in person shall have one vote and, on a poll,
                        every such holder who is present in person or by proxy
                        shall have such number of votes as may be determined by
                        the Directors prior to allotment of such Non-cumulative
                        Sterling Preference Shares.

                  (f)   Redemption

                        (i)   Unless the Directors shall, prior to the allotment
                              of any series of Non-cumulative Sterling
                              Preference Shares, determine that such series
                              shall be non-redeemable, each series of
                              Non-cumulative Sterling Preference Shares shall,
                              subject to the provisions of the Statutes, be
                              redeemable at the option of the Company in
                              accordance with the following provisions.

                        (ii)  In the case of any particular Non-cumulative
                              Sterling Preference Shares which are to be so
                              redeemable: --

                              (A)  the Company may, subject thereto, redeem on
                                   any Redemption Date (as hereinafter defined)
                                   all or some only of the Non-cumulative
                                   Sterling Preference Shares by giving to the
                                   holders of the Non-cumulative Sterling
                                   Preference Shares to be redeemed not less
                                   than 14 days' prior notice in writing (a
                                   "Notice of Redemption") of the relevant
                                   Redemption Date. "Redemption Date" means, in
                                   relation to a Non-cumulative Sterling
                                   Preference

                                       28

<PAGE>

                                   Share, any date which falls no earlier than
                                   five years and one day after the date of
                                   allotment of the Non-cumulative Sterling
                                   Preference Share to be redeemed;

                              (B)  there shall be paid on each Non-cumulative
                                   Sterling Preference Share so redeemed, in
                                   Sterling, the aggregate of the nominal amount
                                   thereof together with any premium paid on
                                   issue and together with arrears (if any) of
                                   dividends thereon (whether earned or declared
                                   or not) in respect of the period from the
                                   dividend payment date last preceding the
                                   Redemption Date to the Redemption Date;

                              (C)  in the case of a redemption of some only
                                   of the Non-cumulative Sterling Preference
                                   Shares in any series, the Company shall for
                                   the purpose of determining the particular
                                   Non-cumulative Sterling Preference Shares to
                                   be redeemed cause a drawing to be made at the
                                   Office or such other place as the Directors
                                   may approve in the presence of the Auditors
                                   for the time being of the Company;

                              (D)  any Notice of Redemption given under sub-
                                   paragraph (ii)(A) above shall specify the
                                   applicable Redemption Date, the particular
                                   Non-cumulative Sterling Preference Shares to
                                   be redeemed and the redemption price
                                   (specifying the amount of the accrued and
                                   unpaid dividend per share to be included
                                   therein and stating that dividends on the
                                   Non-cumulative Sterling Preference Shares to
                                   be redeemed will cease to accrue on
                                   redemption), and shall state the place or
                                   places at which documents of title in respect
                                   of such Non-cumulative Sterling Preference
                                   Shares are to be presented and surrendered
                                   for redemption and payment of the redemption
                                   monies is to be effected. Upon such
                                   Redemption Date, the Company shall redeem the
                                   particular Non-cumulative Sterling Preference
                                   Shares to be redeemed on that date subject to
                                   the provisions of this paragraph and of the
                                   Statutes. No defect in the Notice of
                                   Redemption or in the giving thereof shall
                                   affect the validity of the redemption
                                   proceedings;

                              (E)  the provisions of this and the following
                                   sub-paragraphs shall have effect in relation
                                   to Non-cumulative Sterling Preference Shares
                                   for the time being issued and registered in
                                   the Register of Members ("Registered Shares")
                                   and represented by certificates
                                   ("Certificates"). Payments in respect of the
                                   amount due on redemption of a Registered
                                   Share shall be made by Sterling cheque drawn
                                   on a bank in London or upon the request of
                                   the holder or joint holders not later than
                                   the date specified for the purpose in the
                                   Notice of Redemption by transfer to a
                                   Sterling account maintained by the payee with
                                   a bank in London. Such payment will be
                                   against presentation and

                                       29

<PAGE>

                                   surrender of the relative Certificate at the
                                   place or one of the places specified in the
                                   Notice of Redemption and if any Certificate
                                   so surrendered includes any Non-cumulative
                                   Sterling Preference Shares not to be redeemed
                                   on the relevant Redemption Date the Company
                                   shall within 14 days thereafter issue to the
                                   holder, free of charge, a fresh Certificate
                                   in respect of such Non-cumulative Sterling
                                   Preference Shares.

                                   All payments in respect of redemption monies
                                   will in all respects be subject to any
                                   applicable fiscal or other laws;

                              (F)  as from the relevant Redemption Date the
                                   dividend on the Non-cumulative Sterling
                                   Preference Shares due for redemption shall
                                   cease to accrue except on any such
                                   Non-cumulative Sterling Preference Share in
                                   respect of which, upon the due surrender of
                                   the Certificate in accordance with
                                   sub-paragraph (E) above, payment of the
                                   redemption monies due on such Redemption Date
                                   shall be improperly withheld or refused, in
                                   which case such dividend, at the rate then
                                   applicable, shall be deemed to have continued
                                   and shall accordingly continue to accrue from
                                   the relevant Redemption Date to the date of
                                   payment of such redemption monies. Such
                                   Non-cumulative Sterling Preference Share
                                   shall not be treated as having been redeemed
                                   until the redemption monies in question
                                   together with the accrued dividend thereon
                                   shall have been paid;

                              (G)  if the due date for the payment of the
                                   redemption monies on any Non-cumulative
                                   Sterling Preference Share is not a Sterling
                                   Business Day then payment of such monies will
                                   be made on the next succeeding day which is a
                                   Sterling Business Day and without any
                                   interest or other payment in respect of such
                                   delay unless such day shall fall within the
                                   next calendar month whereupon such payment
                                   will be made on the preceding Sterling
                                   Business Day; and

                              (H)  the receipt of the holder for the time
                                   being of any Registered Share (or in the case
                                   of joint holders the receipt of any one of
                                   them) in respect of the monies payable on
                                   redemption on such Registered Share shall
                                   constitute an absolute discharge to the
                                   Company.

                        (iii) Upon the redemption of any Non-cumulative Sterling
                              Preference Shares the nominal amount of such
                              shares comprised in the capital of the Company
                              shall thereafter be divided into, and reclassified
                              as, Ordinary Shares without any further resolution
                              or consent being required.

                  (g)   Purchase

                        (i)   Subject to the provisions of the Statutes and any
                              other applicable laws, the Company may at any

                                       30

<PAGE>

                              time and from time to time purchase any
                              Non-cumulative Sterling Preference Shares upon
                              such terms as the Directors shall determine
                              provided that, in the case of Non-cumulative
                              Sterling Preference Shares which are listed on The
                              Stock Exchange, the purchase price, exclusive of
                              expenses and accrued dividends, shall not exceed
                              (i) in the case of a purchase in the open market,
                              or by tender (which shall be available alike to
                              all holders of the Non-cumulative Sterling
                              Preference Shares), the average of the closing
                              middle market quotations of such Non-cumulative
                              Sterling Preference Shares on The Stock Exchange
                              (as derived from The Stock Exchange Daily Official
                              List) for the last 10 dealing days preceding the
                              date of purchase or(if higher), in the case of a
                              purchase in the open market only, the market price
                              on the date of purchase provided that such market
                              price is not more than 105 per cent, of such
                              average and (ii) in the case of a purchase by
                              private treaty, 120 per cent. of the closing
                              middle market quotation of such Non-cumulative
                              Sterling Preference Shares on The Stock Exchange
                              (as derived from The Stock Exchange Daily Official
                              List) for the last dealing day preceding the date
                              of purchase; but so that this proviso shall not
                              apply to any purchase of Non-cumulative Sterling
                              Preference Shares made in the ordinary course of a
                              business of dealing in securities.

                        (ii)  Upon the purchase of any Non-cumulative Sterling
                              Preference Shares the nominal amount of such
                              shares comprised in the capital of the Company
                              shall thereafter be divided into, and reclassified
                              as, Ordinary Shares without any further resolution
                              or consent being required.

            (3)   Save with the written consent of the holders of three-quarters
                  in nominal value of, or with the sanction of an Extraordinary
                  Resolution passed at a separate General Meeting of the holders
                  of the Non-cumulative Sterling Preference Shares, the
                  Directors shall not, pursuant to Articles 138 or 139,
                  capitalise any part of the amounts available for distribution
                  and referred to therein if after such capitalisation the
                  aggregate of such amounts would be less than such multiple, if
                  any, as may be determined by the Directors prior to the first
                  allotment of Non-cumulative Sterling Preference Shares, of the
                  aggregate amount of the dividends (exclusive of any associated
                  tax credit) payable in the twelve month period following such
                  capitalisation on the Non-cumulative Sterling Preference
                  Shares then in issue and any other New Preference Shares then
                  in issue expressed to rank pari passu therewith as regards
                  participation in profits.

            (4)   (a)   Save with the written consent of the holders of three-
                        quarters in nominal value of, or with the sanction of an
                        Extraordinary Resolution passed at a separate General
                        Meeting of the holders of, the Non-cumulative Sterling
                        Preference Shares, the Directors shall not authorise or
                        create, or increase the amount of, any shares of any
                        class or any security convertible into shares of any
                        class ranking as regards rights to participate in the
                        profits or assets of the Company (other than on a
                        redemption or

                                       31

<PAGE>

                        purchase by the Company of any such shares) in priority
                        to the Non-cumulative Sterling Preference Shares.

                  (b)   The special rights attached to any series of
                        Non-cumulative Sterling Preference Shares allotted or in
                        issue shall not (unless otherwise provided by their
                        terms of issue) be deemed to be varied by the creation
                        or issue of any New Shares ranking as regards
                        participation in the profits or assets of the Company in
                        some or all respects pari passu with or after such
                        Non-cumulative Sterling Preference Shares. Any New
                        Shares ranking pari passu with such Non-cumulative
                        Sterling Preference Shares in some or all respects may
                        without their creation or issue being deemed to vary the
                        special rights attached to any Non-cumulative Sterling
                        Preference Share then in issue either carry rights
                        identical in all respects with such Non-cumulative
                        Sterling Preference Shares or any of them or rights
                        differing therefrom in any respect, including, but
                        without prejudice to the generality of the foregoing, in
                        that: --

                          (a) the rate of or means of calculating the dividend
                              may differ and the dividend may be cumulative or
                              non-cumulative;

                          (b) the New Shares or any series thereof may rank for
                              dividend as from such date as may be provided by
                              the terms of issue thereof and the dates for
                              payment of dividend may differ;

                          (c) the New Shares may be denominated in Sterling or
                              in any Foreign Currency;

                          (d) a premium may be payable on return of capital or
                              there may be no such premium;

                          (e) the New Shares may be redeemable at the option of
                              the holder or of the Company, or may be
                              non-redeemable and if redeemable at the option of
                              the Company, they may be redeemable at different
                              dates and on different terms from those applying
                              to the Non-cumulative Sterling Preference Shares;
                              and

                          (f) the New Shares may be convertible into Ordinary
                              Shares or any other class of shares ranking as
                              regards participation in the profits and assets of
                              the Company pari passu with or after such
                              Non-cumulative Sterling Preference Shares in
                              each case on such terms and conditions as may be
                              prescribed by the terms of issue thereof.

            (D)(1) The Non-cumulative Dollar Preference Shares shall rank after
                   the Cumulative Preference Shares to the extent specified in
                   this Article 4, and shall rank pari passu inter se and (save
                   as aforesaid) with the Cumulative Preference Shares and with
                   all other New Preference Shares. They shall confer the rights
                   and be subject to the restrictions set out in this Article
                   4(D) and shall also confer such further rights (not being
                   inconsistent with the rights set out in this Article 4(D)) as
                   may be attached by the Directors to such shares in accordance
                   with this Article 4(D) prior to allotment. Whenever the
                   Directors have power under this Article to determine any of
                   the rights attached to any of the Non-cumulative Dollar
                   Preference Shares, the rights so determined need not be the
                   same as those attached to the Non-cumulative Dollar

                                       32
<PAGE>

                  Preference Shares then allotted or in issue. The
                  Non-cumulative Dollar Preference Shares may be issued in one
                  or more separate series, and each series shall be identified
                  in such manner as the Directors may determine without any such
                  determination or identification requiring any alteration to
                  these presents.

            (2)   Each Non-cumulative Dollar Preference Share shall confer the
                  following rights as to participation in the profits and assets
                  of the Company, receipt of notices, attendance and voting at
                  meetings and redemption:--

                  (a)   Income

                        The right (subject to the provisions of paragraph (b) of
                        this sub-Article, if applicable) to a non-cumulative
                        preferential dividend not exceeding a specified amount,
                        payable in Dollars at such rate on such dates (each a
                        "dividend payment date") in respect of such periods
                        (each a "dividend period") and on such other terms and
                        conditions as may be determined by the Directors prior
                        to allotment thereof. References in these presents to a
                        "dividend" on the Non-cumulative Dollar Preference
                        Shares include a reference to each dividend in respect
                        of each dividend period applicable thereto and
                        references in this Article 4(D) to dividend payment
                        dates and dividend periods are to dividend payment dates
                        and dividend periods in respect of the Non-cumulative
                        Dollar Preference Shares only. Such dividends shall be
                        paid in priority to the payment of any dividends on the
                        Ordinary Shares. The Non-cumulative Dollar Preference
                        Shares shall rank for dividend after the Cumulative
                        Preference Shares, pari passu with all other New
                        Preference Shares expressed to rank pari passu therewith
                        as regards participation in profits and otherwise in
                        priority to any other share capital in the Company.

                  (b)   Further provisions as to income

                        All or any of the following provisions shall apply in
                        relation to any particular Non-cumulative Dollar
                        Preference Shares if so determined by the Directors
                        prior to allotment thereof:

                           (i)   if, in the opinion of the Directors, the
                                 distributable profits of the Company are
                                 sufficient to cover the payment in full of
                                 dividends on the Non-cumulative Dollar
                                 Preference Shares on any dividend payment date
                                 and also the payment in full of all other
                                 dividends stated to be payable on such date on
                                 any other New Preference Share expressed to
                                 rank pari passu therewith as regards
                                 participation in profits, after payment in
                                 full, or the setting aside of a sum to cover
                                 the payment in full, of all dividends stated to
                                 be payable on such date on any Cumulative
                                 Preference Share, then each such dividend shall
                                 be declared and paid in full;

                           (ii)  if, in the opinion of the Directors, the
                                 distributable profits of the Company are
                                 insufficient to cover the payment in full of
                                 dividends on the Non-cumulative Dollar
                                 Preference Shares on any dividend payment date
                                 and also the payment in full of all other
                                 dividends stated to be payable on such date on
                                 any other New Preference Share expressed to

                                       33
<PAGE>
                                 rank pari passu therewith as regards
                                 participation in profits after payment in full,
                                 or the setting aside of a sum to cover the
                                 payment in full, of all dividends stated to be
                                 payable on or before such date on any
                                 Cumulative Preference Share, then dividends
                                 shall be declared by the Directors pro rata for
                                 the Non-cumulative Dollar Preference Shares and
                                 such other New Preference Shares to the extent
                                 of the available distributable profits (if any)
                                 to the intent that the amount of dividend
                                 declared per share on each such Non-cumulative
                                 Dollar Preference Share and other New
                                 Preference Share will bear to each other the
                                 same ratio as the dividends accrued per share
                                 on each such Non-cumulative Dollar Preference
                                 Share and other New Preference Share bear to
                                 each other. If it shall subsequently appear
                                 that any such dividend which has been paid
                                 should not, in accordance with the provisions
                                 of this sub-paragraph, have been so paid, then
                                 provided the Directors shall have acted in good
                                 faith, they shall not incur any liability for
                                 any loss which any shareholder may suffer in
                                 consequence of such payment having been made;

                           (iii) if, in the opinion of the Directors, the
                                 payment of any dividend on any Non-cumulative
                                 Dollar Preference Shares would breach or cause
                                 a breach of the Bank of England's capital
                                 adequacy requirements applicable to the Company
                                 and/or any of its subsidiaries, then none of
                                 such dividend shall be declared or paid;

                           (iv)  subject to sub-paragraph (v) below, the
                                 Non-cumulative Dollar Preference Shares shall
                                 carry no further right to participate in the
                                 profits of the Company and if and to the extent
                                 that any dividend or part thereof is on any
                                 occasion not paid for the reasons described in
                                 sub-paragraphs (ii) or (iii) above, the holders
                                 of such shares shall have no claim in respect
                                 of such non-payment;

                           (v)   if any dividend or part thereof on any
                                 Non-cumulative Dollar Preference Share is not
                                 payable for the reasons specified in
                                 sub-paragraphs (ii) or (iii) above and if they
                                 so resolve, the Directors may, subject to the
                                 Statutes, pay a special non-cumulative
                                 preferential dividend on the Non-cumulative
                                 Dollar Preference Shares at a rate not
                                 exceeding one (1) US cent per share (but so
                                 that reference elsewhere in this Article and in
                                 Article 4(C) to any dividend payable on any
                                 Non-cumulative Dollar Preference Shares shall
                                 not be treated as including a reference to any
                                 such special dividend);

                           (vi)  if any date on which dividends are payable on
                                 Non-cumulative Dollar Preference Shares is not
                                 a day on which banks in London and the City of
                                 New York are open for business, and on which
                                 foreign exchange dealings may be conducted in
                                 such cities ("a Dollar Business Day"), then
                                 payment of the dividend payable on such date
                                 will be made on the succeeding Dollar Business
                                 Day and without any interest or other payment
                                 in respect of such delay unless such day shall
                                 fall within the

                                       34
<PAGE>
                                 next calendar month whereupon such payment will
                                 be made on the preceding Dollar Business Day;

                           (vii) dividends payable on Non-cumulative Dollar
                                 Preference Shares shall accrue from and to the
                                 dates determined by the Directors prior to
                                 allotment thereof, and the amount of dividend
                                 payable in respect of any period shorter than a
                                 full dividend period will be calculated on the
                                 basis of twelve 30-day months, a 360-day year
                                 and the actual number of days elapsed in such
                                 period;

                           (viii)if the dividend stated to be payable on the
                                 Non-cumulative Dollar Preference Shares on the
                                 most recent dividend payment date has not been
                                 declared and paid in full, or if a sum has not
                                 been set aside to provide for such payment in
                                 full, no dividends may be declared on any other
                                 share capital of the Company (other than the
                                 Cumulative Preference Shares), and no sum may
                                 be set aside for the payment thereof, unless,
                                 on the date of declaration relative to any such
                                 payment, an amount equal to the dividend stated
                                 to be payable on the Non-cumulative Dollar
                                 Preference Shares in respect of the then
                                 current dividend period is set aside for the
                                 payment in full of such dividend on the
                                 dividend payment date relating to the then
                                 current dividend period; and

                           (ix)  if any dividend stated to be payable on the
                                 Non-cumulative Dollar Preference Shares on any
                                 dividend payment date has not been declared and
                                 paid in full, or if a sum has not been set
                                 aside to provide for such payment in full, the
                                 Company may not redeem or purchase or otherwise
                                 acquire for any consideration any other share
                                 capital of the Company, and may not set aside
                                 any sum nor establish any sinking fund for the
                                 redemption or purchase or other such
                                 acquisition thereof, until such time as
                                 dividends stated to be payable on the
                                 Non-cumulative Dollar Preference Shares in
                                 respect of successive dividend periods together
                                 aggregating no less than twelve months shall
                                 thereafter have been declared and paid in full.

                  (c)   Capital

                        The right on a winding up or liquidation, voluntary or
                        otherwise other than (unless otherwise provided by the
                        terms of issue of such share) a redemption or purchase
                        by the Company of any shares of any class, to receive in
                        Dollars out of the surplus assets of the Company
                        available for distribution amongst the members:--

                           (i)   after payment of the arrears (if any) of the
                                 fixed cumulative preferential dividends stated
                                 to be payable on the Cumulative Preference
                                 Shares to the holders thereof in accordance
                                 with Article 4(B) FIRSTLY and pari passu with
                                 the holders of any other New Preference Shares
                                 expressed to rank pari passu therewith as
                                 regards participation in profits and in
                                 priority to the holders of the Ordinary Shares
                                 of the Company a sum equal to:--

                                 (A)   the amount of any dividend which is due
                                       for payment after the date of
                                       commencement of

                                       35

<PAGE>

                              winding up or liquidation but which is payable in
                              respect of a period ending on or before such date;
                              and

                        (B)   any further amount of dividend payable in respect
                              of the period from the preceding dividend payment
                              date to the date of payment in accordance with
                              this sub-paragraph (i)

                        but only to the extent that any such amount or further
                        amount was, or would have been, payable as a dividend in
                        accordance with or pursuant to this Article 4(D) (other
                        than pursuant to this provision); and

                  (ii)  subject thereto, pari passu with the holders of the
                        Cumulative Preference Shares and any other New
                        Preference Shares expressed to rank pari passu therewith
                        as regards participation in surplus assets in priority
                        to the holders of the Ordinary Shares of the Company, a
                        sum equal to the amount paid up or credited as paid up
                        on the Non-cumulative Dollar Preference Shares
                        (including any premium paid to the Company in respect
                        thereof on issue).

            If upon any such winding up or liquidation, the amounts available
            for payment are insufficient to cover the amounts payable in full on
            the Cumulative Preference Shares, the Non-cumulative Dollar
            Preference Shares and on any other New Preference Share expressed to
            rank pari passu therewith as regards participation in surplus
            assets, then the holders of the Cumulative Preference Shares, the
            Non-cumulative Dollar Preference Shares and such other New
            Preference Shares will share rateably in the distribution of surplus
            assets (if any) in proportion to the full respective preferential
            amounts to which they are entitled. No Non-cumulative Dollar
            Preference Share shall confer any right to participate in the
            surplus assets of the Company other than that set out in this
            sub-paragraph (2)(c) of this Article 4(D).

      (d)   Receipt of Notices

            The right to have sent to the holder of each Non-cumulative Dollar
            Preference Share (at the same time as the same are sent to the
            holders of Ordinary Shares) a copy of the Company's Annual Report
            and Accounts and Interim Financial Statement together with notice of
            any General Meeting of the Company at which such holder is entitled
            to attend and vote.

      (e)   Attendance and Voting at Meetings

            The right to attend at a General Meeting of the Company and to speak
            to or vote upon any Resolution proposed thereat in the following
            circumstances:--

                  (i)   in respect of a Resolution which is to be proposed at
                        the Meeting either varying or abrogating any of the
                        rights attached to the Dollar Shares or proposing the
                        winding up of the Company (and then in each such case
                        only to speak to and vote upon any such Resolution);

                  (ii)  in circumstances where the dividend stated to be payable
                        on the Non-cumulative Dollar Preference Shares in
                        respect of such number of dividend

                                       36

<PAGE>

                        periods as the Directors shall determine prior to
                        allotment thereof has not been declared and paid in
                        full, and until such date as the Directors shall
                        likewise determine; and

                  (iii) in such other circumstances as the Directors may
                        determine prior to allotment of the Non-cumulative
                        Dollar Preference Shares,

            but not otherwise, together with the right, in such circumstances,
            if any, as the Directors may determine prior to allotment of the
            Non-cumulative Dollar Preference Shares, to seek to requisition a
            General Meeting of the Company for which purpose the Non-cumulative
            Dollar Preference Shares will be deemed to carry the number of votes
            determined pursuant to the following sentence. Whenever holders of
            Non-cumulative Dollar Preference Shares are so entitled to vote on a
            Resolution, on a show of hands every such holder who is present in
            person shall have one vote and, on a poll, every such holder who is
            present in person or by proxy shall have such number of votes for
            each Non-cumulative Dollar Preference Share held as may be
            determined by the Directors prior to allotment of such
            Non-cumulative Dollar Preference Shares.

      (f)   Redemption

                  (i)   Unless the Directors shall, prior to the allotment of
                        any series of Non-cumulative Dollar Preference Shares,
                        determine that such series shall be non-redeemable, each
                        series of Non-cumulative Dollar Preference Shares shall,
                        subject to the provisions of the Statutes, be redeemable
                        at the option of the Company in accordance with the
                        following provisions.

                  (ii)  In the case of any series of Non-cumulative Dollar
                        Preference Shares which are to be so redeemable:--

                        (A)   the Company may, subject thereto, redeem on any
                              Redemption Date (as hereinafter defined) all or
                              some only of the Non-cumulative Dollar Preference
                              Shares by giving to the holders of the
                              Non-cumulative Dollar Preference Shares to be
                              redeemed not less than 30 days' nor more than 60
                              days' prior notice in writing (a "Notice of
                              Redemption") of the relevant Redemption Date.
                              "Redemption Date" means, in relation to a
                              Non-cumulative Dollar Preference Share, any date
                              which falls no earlier than five years and one day
                              after the date of allotment of the Non-cumulative
                              Dollar Preference Share to be redeemed;

                        (B)   there shall be paid on each Non-cumulative Dollar
                              Preference Share so redeemed, in Dollars, the
                              aggregate of the nominal amount thereof together
                              with any premium paid on issue together with,
                              where applicable, the Relevant Redemption Premium
                              (defined below) and together with arrears (if any)
                              of dividends thereon (whether earned or declared
                              or not) in respect of the period from the dividend
                              payment date last preceding the

                                       37

<PAGE>

                              Redemption Date to the Redemption Date. "Relevant
                              Redemption Premium" means an amount calculated in
                              accordance with the following formula as applied
                              in relation to a Redemption Date notified under
                              sub-paragraph (A) above which falls within the
                              period of twelve months commencing on the day
                              following the fifth, sixth, seventh, eighth or
                              ninth anniversary of the relevant date of
                              allotment ("the Relevant Date"), as the case may
                              be.

                              The formula for calculation of the Relevant
                              Redemption Premium shall be A x B where:

                              "A" is the amount of dividend excluding any
                              associated tax credit (not expressed as a
                              percentage) calculated at the date of allotment
                              to which the holder of the Non-cumulative Dollar
                              Preference Share to be redeemed would become
                              entitled in respect of the twelve months following
                              allotment by virtue of the terms of issue thereof
                              on the assumption that such amount of dividend had
                              accrued on the Non-cumulative Dollar Preference
                              Share during such period and was payable at the
                              end of such period and on the further assumption
                              that there shall be no change in the associated
                              tax credit affecting the amount of dividend
                              payable in respect of such period; and

                              "B" in relation to a Redemption Date falling
                              within the period of twelve months commencing on
                              the day following the fifth anniversary of the
                              Relevant Date, is 66.66 per cent.,

                              or

                              in relation to a Redemption Date falling within
                              the period of twelve months commencing on the day
                              following the sixth anniversary of the Relevant
                              Date, is 53.33 per cent.,

                              or

                              in relation to a Redemption Date falling within
                              the period of twelve months commencing on the day
                              following the seventh anniversary of the Relevant
                              Date, is 40.00 per cent.,

                              or

                              in relation to a Redemption Date falling within
                              the period of twelve months commencing on the day
                              following the eighth anniversary of the Relevant
                              Date, is 26.66 per cent.,

                              or

                              in relation to a Redemption Date falling within
                              the period of twelve months commencing on the day
                              following the ninth anniversary of the Relevant
                              Date, is 13.33 per cent.

                              No Relevant Redemption Premium shall be payable
                              when the Redemption Date falls after the tenth
                              anniversary of the Relevant Date. The product of
                              the above formula in respect of a Non-cumulative
                              Dollar Preference Share

                                       38

<PAGE>

                              may, in the Directors' discretion, be rounded down
                              to the nearest whole cent;

                        (C)   in the case of a redemption of some only of the
                              Non-cumulative Dollar Preference Shares in any
                              series, the Company shall for the purpose of
                              determining the particular Non-cumulative Dollar
                              Preference Shares to be redeemed cause a drawing
                              to be made at the Office or such other place as
                              the Directors may approve in the presence of the
                              Auditors for the time being of the Company;

                        (D)   any Notice of Redemption given under sub-
                              paragraph (ii)(A) above shall specify the
                              applicable Redemption Date, the particular
                              Non-cumulative Dollar Preference Shares to be
                              redeemed and the redemption price (specifying the
                              amount of the accrued and unpaid dividend per
                              share to be included therein and stating that
                              dividends on the Non-cumulative Dollar Preference
                              Shares to be redeemed will cease to accrue on
                              redemption), and shall state the place or places
                              at which documents of title in respect of such
                              Non-cumulative Dollar Preference Shares are to be
                              presented and surrendered for redemption and
                              payment of the redemption monies is to be
                              effected. Upon such Redemption Date, the Company
                              shall redeem the particular Non-cumulative Dollar
                              Preference Shares to be redeemed on that date
                              subject to the provisions of this paragraph and of
                              the Statutes. No defect in the Notice of
                              Redemption or in the giving thereof shall affect
                              the validity of the redemption proceedings;

                        (E)   the provisions of this and the following sub-
                              paragraphs shall have effect in relation to Non-
                              cumulative Dollar Preference Shares for the time
                              being issued and registered in the Register of
                              Members ("Registered Shares") and represented by
                              certificates ("Certificates") and in relation to
                              Non-cumulative Dollar Preference Shares which, in
                              accordance with Article 51 of these presents, are
                              for the time being issued and represented by a
                              Warrant (as defined in the said Article 51)
                              ("Bearer Shares"). Payments in respect of the
                              amount due on redemption of a Registered Share
                              shall be made by Dollar cheque drawn on a bank in
                              London or in the City of New York or upon the
                              request of the holder or joint holders not later
                              than the date specified for the purpose in the
                              Notice of Redemption by transfer to a Dollar
                              account maintained by the payee with a bank in
                              London or in the City of New York. Such payment
                              will be against presentation and surrender of the
                              relative Certificate at the place or one of the
                              places specified in the Notice of Redemption and
                              if any Certificate so surrendered includes any
                              Non-cumulative Dollar Preference Shares not to be
                              redeemed

                                       39

<PAGE>

                              on the relevant Redemption Date the Company shall
                              within 14 days thereafter issue to the holder,
                              free of charge, a fresh Certificate in respect of
                              such Non-cumulative Dollar Preference Shares.

                              Payment in respect of the amount due on redemption
                              of a Bearer Share shall be made by Dollar cheque
                              drawn on a bank in London or in the City of New
                              York or upon the request of the holder not later
                              than the date specified for the purpose in the
                              Notice of Redemption by transfer to a Dollar
                              account maintained by the payee with a bank in
                              London or in the City of New York. Such payments
                              will be made against presentation and surrender of
                              the Warrant and all unmatured dividend coupons and
                              talons (if any) at the place or places specified
                              in the Notice of Redemption. Upon the relevant
                              Redemption Date all unmatured dividend coupons and
                              any talon for additional dividend coupons
                              appertaining thereto (whether or not returned)
                              shall become void and no payment will be made in
                              respect thereof. If the Warrant so surrendered
                              represents any Non-cumulative Dollar Preference
                              Shares not to be redeemed on the relevant
                              Redemption Date the Company shall issue, free of
                              charge, a fresh Warrant representing such Bearer
                              Shares which are not to be redeemed on such
                              Redemption Date.

                              All payments in respect of redemption monies will
                              in all respects be subject to any applicable
                              fiscal or other laws;

                        (F)   as from the relevant Redemption Date the dividend
                              on the Non-cumulative Dollar Preference Shares
                              due for redemption shall cease to accrue except on
                              any such Non-cumulative Dollar Preference Share in
                              respect of which, upon the due surrender of the
                              Certificate or, as the case may be, the Warrant
                              and all unmatured dividend coupons and talons (if
                              any) in respect thereof, in accordance with
                              sub-paragraph (E) above, payment of the redemption
                              monies due on such Redemption Date shall be
                              improperly withheld or refused, in which case such
                              dividend, at the rate then applicable, shall be
                              deemed to have continued and shall accordingly
                              continue to accrue from the relevant Redemption
                              Date to the date of payment of such redemption
                              monies. Such Non-cumulative Dollar Preference
                              Share shall not be treated as having been redeemed
                              until the redemption monies in question together
                              with the accrued dividend thereon shall have been
                              paid;

                        (G)   if the due date for the payment of the redemption
                              monies on any Non-cumulative Dollar Preference
                              Share is not a Dollar Business Day then payment of
                              such monies will be made on the next succeeding
                              day which is a Dollar

                                       40

<PAGE>

                              Business Day and without any interest or other
                              payment in respect of such delay unless such day
                              shall fall within the next calendar month
                              whereupon such payment will be made on the
                              preceding Dollar Business Day; and

                        (H)   the receipt of the holder for the time being of
                              any Registered Share (or in the case of joint
                              holders the receipt of any one of them) and the
                              receipt of the person delivering any Warrant to
                              the place or one of the places specified pursuant
                              to sub-paragraph (D) above in respect of the
                              monies payable on redemption on such Registered
                              Share or, as the case may be, such Bearer Share,
                              shall constitute an absolute discharge to the
                              Company.

              (g) Purchase

                  Subject to the provisions of the Statutes and any other
                  applicable laws, the Company may at any time and from time to
                  time purchase any Non-cumulative Dollar Preference Shares upon
                  such terms as the Directors shall determine provided that, in
                  the case of Non-cumulative Dollar Preference Shares which are
                  listed on The Stock Exchange, the purchase price, exclusive of
                  expenses and accrued dividends, shall not exceed (i) in the
                  case of a purchase in the open market, or by tender (which
                  shall be available alike to all holders of the Non-cumulative
                  Dollar Preference Shares), the average of the closing middle
                  market quotations of such Non-cumulative Dollar Preference
                  Shares on The Stock Exchange (as derived from The Stock
                  Exchange Daily Official List) for the last 10 dealing days
                  preceding the date of purchase or(if higher), in the case of a
                  purchase in the open market only, the market price on the date
                  of purchase provided that such market price is not more than
                  105 per cent. of such average and (ii) in the case of a
                  purchase by private treaty, 120 per cent. of the closing
                  middle market quotation of such Non-cumulative Dollar
                  Preference Shares on The Stock Exchange (as derived from The
                  Stock Exchange Daily Official List)for the last dealing day
                  preceding the date of purchase; but so that this proviso shall
                  not apply to any purchase of Non-cumulative Dollar Preference
                  Shares made in the ordinary course of a business of dealing in
                  securities.

           (3)(a) Save with the written consent of the holders of
                  three-quarters in nominal value of, or with the sanction of an
                  Extraordinary Resolution passed at a separate General Meeting
                  of the holders of, the Non-cumulative Dollar Preference
                  Shares, the Directors shall not authorise or create, or
                  increase the amount of, any shares of any class or any
                  security convertible into shares of any class ranking as
                  regards rights to participate in the profits or assets of the
                  Company (other than on a redemption or purchase by the Company
                  of any such shares) in priority to the Non-cumulative Dollar
                  Preference Shares.

              (b) The special rights attached to any series of Non-cumulative
                  Dollar Preference Shares allotted or in issue shall not
                  (unless otherwise provided by their terms of issue) be deemed
                  to be varied by the creation or issue

                                       41

<PAGE>

                  shall not (unless otherwise provided by their terms of issue)
                  be deemed to be varied by the creation or issue of any New
                  Shares ranking as regards participation in the profits or
                  assets of the Company in some or all respects pari passu with
                  or after such Non-cumulative Dollar Preference Shares. Any New
                  Shares ranking in some or all respects pari passu with such
                  Non-cumulative Dollar Preference Shares may without their
                  creation or issue being deemed to vary the special rights
                  attached to any Non-cumulative Dollar Preference Share then in
                  issue either carry rights identical in all respects with such
                  Non-cumulative Dollar Preference Shares or any of them or
                  carry rights differing there from in any respect, including,
                  but without prejudice to the generality of the foregoing, in
                  that:--

                        (i)   the rate or means of calculating the dividend may
                              differ and the dividend may be cumulative or
                              non-cumulative;

                        (ii)  the New Shares or any series thereof may rank for
                              dividend as from such date as may be provided by
                              the terms of issue thereof and the dates for
                              payment of dividend may differ;

                        (iii) the New Shares may be denominated in Sterling or
                              in any Foreign Currency;

                        (iv)  a premium may be payable on return of capital or
                              there may be no such premium;

                        (v)   the New Shares may be redeemable at the option of
                              the holder or of the Company, or may be
                              non-redeemable and if redeemable at the option of
                              the Company, they may be redeemable at different
                              dates and on different terms from those applying
                              to the Non-cumulative Dollar Preference Shares;
                              and

                        (vi)  the New Shares may be convertible into Ordinary
                              Shares or any other class of shares ranking as
                              regards participation in the profits and assets of
                              the Company pari passu with or after such
                              Non-cumulative Dollar Preference Shares in each
                              case on such terms and conditions as may be
                              prescribed by the terms of issue thereof.

            (E)   Subject to the provisions of Article 4 and to the special
                  rights attached to the Non-cumulative Sterling Preference
                  Shares and the Non-cumulative Dollar Preference Shares and to
                  any special rights which are or may be attached to any other
                  class of shares (i) the profits of the Company available for
                  dividend and resolved to be distributed shall be distributed
                  by way of dividend amongst the holders of the Ordinary Shares
                  and (ii) on a winding up or liquidation, voluntary or
                  otherwise, the residue, if any, of the surplus assets of the
                  Company available for distribution amongst the members shall
                  belong to the holders of the Ordinary Shares and be divided
                  amongst them in proportion to the amounts paid up or credited
                  as paid up on such shares held by them respectively."

      (f)   by the deletion in Article 5 of the words "dividend, return of
            capital", and the substitution therefor of the words "participation
            in the profits or assets of the Company"

            and by the insertion therein after the word "determination" of the
            words "or in pursuance of any power conferred on the Directors by
            these presents or by Ordinary Resolution,".

                                       42

<PAGE>

      (g)   by the insertion after the words "of such amounts," in Article 8 of
            the words "and denominated in such currencies".

      (h)   by the insertion at the end of Article 11 of the following: --

            "Unless otherwise provided by the terms of issue, the rights
            attached to any New Preference Share shall not be deemed to be
            varied or abrogated by the purchase or redemption by the Company of
            any of its shares ranking as regards participation in the profits or
            assets of the Company pari passu with or after such share".

      (i)   by the insertion at the end of Article 12 of the following: --

            "Unless otherwise provided by the terms of its issue, the rights
            attached to any New Preference Share shall not be deemed to be
            varied or abrogated by a reduction of any share capital ranking as
            regards participation in the profits and assets of the Company pari
            passu with or after such share".

      (j)   by the insertion at the end of Article 13 of the following: --

            "No share in the Company may be allotted (a) for cash in a currency
            other than that in which it is denominated or (b) for a
            consideration other than cash unless the value ascribed thereto is
            denominated in the same currency as such share."

      (k)   by the deletion of Article 51(A) and the substitution therefor of
            the following: --

            "(A)  Subject to the provisions of the Statutes, the Company may
                  issue share warrants to bearer (each a "Warrant") and the
                  Directors may accordingly, with respect to any share which is
                  fully paid up and with respect to any one or more such shares
                  as may be specified from time to time in a Warrant (in any
                  case in which they shall in their discretion think fit so to
                  do) issue under the Seal a Warrant stating that the bearer of
                  the Warrant is entitled to the shares therein specified, and
                  may in any case in which a Warrant is so issued provide by
                  coupons or otherwise for the payment of the future dividends
                  or other moneys in respect of the shares included in such
                  Warrant."

      (l)   by the deletion in Articles 51(B), (C), (D), (E), (F), (H) and (J)
            wherever they appear of the words "share warrant" or "warrant" and
            the substitution therefor of the word "Warrant".

      (m)   by the deletion of Article 51(G) and the substitution therefor of
            the following: --

            "(G)  The Directors may issue new Warrants or coupons in such
                  manner, subject to such conditions and in respect of such
                  number of shares as they think fit from time to time and the
                  Directors shall be empowered at any time and from time to time
                  to amend any Warrant then in issue so that by virtue of such
                  amendments the number of shares which such Warrant from time
                  to time represents is accurately shown therein provided that
                  no new Warrant or coupon shall be issued in place of one lost
                  unless the Directors are satisfied beyond reasonable doubt
                  that the original has been destroyed."

      (n)   by the deletion of Article 51(K) and the substitution therefor of
            the following: --

            "(K)  The Directors may from time to time as they think fit make and
                  vary the terms and conditions on which Warrants may be issued
                  and any matters incidental thereto. Subject to these presents
                  the bearer of any Warrant shall be subject to the conditions
                  for the time being in force relating to Warrants whether made
                  before or after the issue of such Warrant."

      (o)   by the insertion after the words "entitled to vote" in each of
            Articles 58 and 59 of the words "at such meeting".

      (p)   by the insertion after the words "the members present" in Article 60
            of the words "and entitled to vote at such meeting".

                                       43

<PAGE>

      (q)   by the redesignation of Articles 64(C) and (D) as Articles 64(D) and
            (E) respectively and by the insertion immediately before such
            Articles of the following:--

            "(C)  the depositary for the time being under any deposit agreement
                  between the Company and such depositary providing for the
                  deposit of any New Preference Shares, provided such depositary
                  is present in person and entitled to vote;"

      (r)   by the insertion after the words "recommended by the Directors" in
            Article 124 of the following:--

            ", or in contravention of the special rights attaching to any
            share." and by the insertion of the following sentences immediately
            before the last sentence of Article 124:--

            "The amounts of any such pro rata apportionments shall be determined
            by the Directors as they think fit in all respects including as to
            any Applicable Exchange Rate applied by them for the purposes of
            converting any amount denominated in one currency into another
            currency for such determination. Provided that the Directors act
            bona fide they shall not incur any responsibility to the holders of
            any share in respect of the determination of such pro rata
            apportionment."

      (s)   by the re-designation of Article 125 as Article 125(A), and by the
            deletion of Article 125(A) and the substitution therefor of
            the following:--

            "(A)  If and so far as in the opinion of the Directors the profits
                  of the Company justify such payment, the Directors may
                  (subject to the special rights attaching to any share and
                  provided that the Directors may in any event pay an interim
                  dividend on the Ordinary Shares at a rate not exceeding L0.01
                  per Ordinary Share) subject to the Statutes declare and pay
                  the fixed dividends or dividends not exceeding a specified
                  amount on any class of shares carrying a fixed dividend
                  or dividends not exceeding a specified amount expressed to be
                  payable on fixed dates on the half-yearly or other dates
                  prescribed for the payment thereof and may also from time to
                  time subject to the Statutes declare and pay interim dividends
                  on shares of any class of such amount and on such dates and in
                  respect of such periods as they think fit. For the purpose of
                  ascertaining the profits of the Company available for
                  distribution at any time and the extent to which the same may
                  cover fixed dividends or dividends not exceeding a specified
                  amount expressed to be payable at such time, the Directors may
                  convert any such profits or reserves denominated in, and any
                  fixed dividend or dividends not exceeding a specified amount
                  expressed to be payable in, a Foreign Currency into Sterling
                  at the Applicable Exchange Rate."

      (t)   by the insertion after Article 125(A) of the following new Article
            125(B):--

            "(B)  Provided that the Directors act bona fide, they shall not
                  incur any responsibility to the holders of any share
                  conferring a preference which may at any time be issued for
                  any damage they may suffer by reason of the payment of an
                  interim dividend on any shares ranking after such preference
                  shares. A resolution of the Directors declaring the interim
                  dividend shall (once announced) be irrevocable and have the
                  same effect in all respects as if such dividend had been
                  declared upon the recommendation of the Directors by an
                  Ordinary Resolution of the Company."

      (u)   by the insertion after the words "the Directors may" in Article
            133(A) of the following:--

            "subject to the rights attached to any class of share, and in
            addition to the provisions of Article 4(C)(2)(b)(vi),".

      (v)   by the insertion at the end of the first sentence of Article 134 of
            the following:--

                                       44
<PAGE>

            "or may be paid by such other means as the Directors may determine
            or think fit"

            and by the insertion at the beginning of the second sentence therein
            of the following:--

            "Where such dividends or other monies are or are to be paid by
            cheque or warrant,"

            and by the insertion at the end of Article 134 of the following new
            sentence:--

            "Subject to the provisions of these presents and to the rights
            attaching to or the terms of issue of any shares, any dividends or
            other monies on or in respect of a share may be paid in such
            currency on the basis of the Applicable Exchange Rate as the
            Directors may think fit or otherwise determine."

      (w)   by the re-designation of Article 137 as Article 137(A) and by the
            insertion therein after the words "from time to time" of the words
            "subject to the rights attaching to any share"

            and by the insertion therein after the words "such sums" of the
            words "in such currencies"

            and by the insertion therein after the words "special funds" of the
            words "denominated in such currencies"

            and by the insertion therein after the words "one fund" of the words
            "denominated in such currencies as they think fit"

            and by the insertion after the words "the Statutes" of the words
            "and these presents".

      (x)   by the insertion of new Articles 137(B) and (C) as follows:--

            "(B)  Notwithstanding the provisions of paragraph (A) of this
                  Article:--

                  (i) unless the Directors shall determine in relation to any
                  New Preference Shares prior to the allotment thereof that this
                  paragraph (B)(i) shall not apply thereto, the Directors shall
                  not set aside out of profits and carry to any reserve fund
                  referred to in paragraph (A), or carry forward in the manner
                  described in paragraph (A), any sum then required for the
                  payment of dividend payable on any New Preference Shares which
                  may be properly applied for that purpose; and

                  (ii) if at any time there shall be insufficient profits
                  standing to the credit of the profit and loss account (or any
                  other of the Company's accounts or reserves) and available for
                  distribution for the payment of any such dividend referred to
                  in paragraph (B)(i) above, the Directors shall (subject to the
                  Statutes) withdraw from any such reserve fund referred to in
                  paragraph (A) such sum (calculated at the Applicable Exchange
                  Rate) as may be required for payment of any such dividend (and
                  so that the Directors shall not require the consent of the
                  Company in General Meeting to such withdrawal). Subject to the
                  Statutes, any sum so withdrawn (and any profits previously
                  carried forward pursuant to paragraph (A) subsequently
                  required for the payment of any such dividend) may be applied
                  in or towards payment of such dividend.

            (C)   Any consolidation of or any credit to, debit from or other
                  transfer between reserves denominated in different currencies
                  shall be effected at the Applicable Exchange Rate."

      (y)   by the insertion at the beginning of Article 138 of the words
            "Subject to the Statutes and to the rights attaching to any share".
            and by the insertion therein after the words "resolved to be
            capitalised" of the words "either in accordance with the rights
            attaching to any share or".

      (z)   by the insertion at the end of the first sentence of Article 147 of
            the following:--

                                       45

<PAGE>

            "or, in respect of any shareholder, in accordance with any of the
            rights attaching to his shares for the time being or in accordance
            with any other arrangements approved by the Directors for the
            purpose".

                               ORDINARY RESOLUTION

2.(A) THAT the authorised share capital of the Company be and it is hereby
      increased by the creation of 683,600,000 Ordinary Shares of 25p each;

  (B) for the purposes of section 80 of the Companies Act 1985, and in addition
      to and without prejudice to the authority conferred by Ordinary Resolution
      at the Company's Annual General Meeting on 12th January 1989, the
      Directors be and they are hereby generally and unconditionally authorised
      to exercise all the powers of the Company to allot relevant securities
      (within the meaning of the said section 80) up to an aggregate nominal
      amount of L170,900,000 (which amount shall include any new Ordinary
      Shares to be issued credited as fully paid pursuant to paragraph (C) of
      this Resolution) provided that this authority shall expire at the
      conclusion of the next Annual General Meeting of the Company except that
      the Company may before the expiry of such period make an offer or
      agreement which would or might require relevant securities to be allotted
      after the expiry of such period and the Directors may allot relevant
      securities in pursuance of any such offer or agreement as if the authority
      conferred hereby had not expired; and

  (C) upon the recommendation of the Directors it is desirable to capitalise
      the sum of up to L119,180,749.50, being part of the amount standing to the
      credit of the revaluation reserves of the Company, and accordingly that
      such sum (being no greater than that required to effect the Capitalisation
      Issue referred to in the circular letter hereinafter mentioned) be
      capitalised and that the Directors be and are hereby authorised and
      directed, subject to the provisions regarding fractional entitlements set
      out in the circular letter to holders inter alia of Ordinary Shares of the
      Company dated 28th July 1989, to appropriate such sum to the holders of
      Ordinary Shares of the Company at the close of business on 31st August
      1989 and to apply such sum on behalf of such holders of Ordinary Shares in
      paying up in full up to L119,180,749.50 of the newly created Ordinary
      Shares of the Company and that such new Ordinary Shares credited as fully
      paid be allotted and issued to and amongst such holders of Ordinary Shares
      in the proportion of three newly created Ordinary Shares for every two
      Ordinary Shares then held by each of them respectively on that date, on
      the basis that the new Ordinary Shares so to be allotted shall rank in all
      respects pari passu with the existing issued Ordinary Shares of the
      Company, and to make all such other arrangements relating to such
      allotment and issue which they may consider necessary.

                               SPECIAL RESOLUTION

3.(A) THAT, subject to the passing of the preceding Resolution Number 2, in
      substitution for and to the exclusion of the authority conferred by
      Special Resolution at the Company's Annual General Meeting on 12th January
      1989 (which authority is hereby revoked) the Directors be and they are
      hereby empowered pursuant to section 95 of the Companies Act 1985 to allot
      equity securities (as defined in section 94 of the said Act) pursuant to
      the authority conferred upon them by the preceding Resolution as if
      section 89(1) of the said Act did not apply to any such allotment provided
      that the power conferred by this Resolution shall be limited:

      (a)   to the allotment of equity securities in connection with a rights
            issue in favour of holders of Ordinary Shares where the equity
            securities respectively attributable to the interests of all such
            shareholders are proportionate (as nearly as may be) to the
            respective numbers of Ordinary Shares held by them; and

                                       46

<PAGE>

      (b)   to the allotment (otherwise than pursuant to sub-paragraph (a)
            above) of equity securities having, in the case of relevant
            shares(as defined for the purposes of the said section 89) a nominal
            amount or, in the case of other equity securities, giving the right
            to subscribe for or convert into relevant shares having a nominal
            amount not exceeding in aggregate L3,755,902 and shall expire
            at the conclusion of the next Annual General Meeting of the Company
            unless renewed or extended prior to such date except that the
            Company may, before the expiry of any power contained in this
            Resolution, make an offer or agreement which would or might require
            equity securities to be allotted after such expiry and the Directors
            may allot equity securities in pursuance of such offer or agreement
            as if the power conferred hereby had not expired; and

  (B) there shall be substituted in Article 4 of the Company's Articles of
      Association the following: --

      (a)   if the Special Resolution numbered 1 in the Notice of Extraordinary
            General Meeting of which this Resolution forms a part shall have
            been passed, for the figures "L290,000,000" and "356,400,000"
            the figures "L460,900,000" and "1,040,000,000" respectively;
            and

      (b)   if such Special Resolution shall not have been passed, for the
            figures "L60,000,000" and "236,400,000" the figures
            "L260,900,000" and "1,040,000,000" respectively.

                                                               M. A. R. HERRIES,
                                                                       Chairman

                                      47

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 11th January 1990

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the Caledonian Hotel, Edinburgh
on 11th January 1990, the following Resolutions were duly passed; as to
Resolution No. 1 as an ORDINARY RESOLUTION and as to Resolution No. 2 as a
SPECIAL RESOLUTION of the Company: --

                               ORDINARY RESOLUTION

1.    That for the purposes of section 80 of the Companies Act 1985 and in
      addition to and without prejudice to the authority conferred by paragraph
      (B) of the special resolution number 1 passed at the extraordinary general
      meeting of the company on 30th August 1989, the directors be and they are
      hereby generally and unconditionally authorised to exercise all the powers
      of the company to allot relevant securities (within the meaning of the
      said section 80) up to an aggregate nominal amount of L 72,043,867
      provided that this authority shall expire at the conclusion of the next
      annual general meeting of the company after the passing of this resolution
      except that the company may before the expiry of such period make an offer
      or agreement which would or might require relevant securities to be
      allotted after the expiry of such period and the directors may allot
      relevant securities in pursuance of any such offer or agreement as if the
      authority conferred hereby had not expired.

                               SPECIAL RESOLUTION

2.    That, subject to the passing of the preceding resolution, the directors be
      and they are hereby empowered pursuant to section 95 of the Companies Act
      1985 to allot equity securities (as defined in section 94 of the said Act)
      pursuant to the authority conferred upon them by the preceding resolution
      as if section 89(1) of the said Act did not apply to any such allotment
      provided that the power conferred by this resolution shall be limited:

      (a)   to the allotment of equity securities in connection with a rights
            issue in favour of ordinary shareholders where the equity securities
            respectively attributable to the interests of all such shareholders
            are proportionate (as nearly as may be) to the respective numbers of
            ordinary shares held by them; and

                                       48

<PAGE>

      (b)   to the allotment (otherwise than pursuant to sub-paragraph (a)
            above) of equity securities having, in the case of relevant shares
            (as defined for the purposes of the said section 89), a nominal
            amount or, in the case of other equity securities, giving the right
            to subscribe for or convert into relevant shares having a nominal
            amount not exceeding in aggregate L4,955,302

and shall expire at the conclusion of the next annual general meeting of the
company after the passing of this resolution unless renewed or extended prior to
or at such meeting except that the company may, before the expiry of any power
contained in this resolution, make an offer or agreement which would or might
require equity securities to be allotted after such expiry and the directors may
allot equity securities in pursuance of such offer or agreement as if the power
conferred hereby had not expired.

                                                                M. A. R. HERRIES
                                                                        Chairman

                                       49

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 10th January 1991

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the Caledonian Hotel, Edinburgh
on 10th January 1991, the following Resolutions were duly passed; as to
Resolution No. 1 as an ORDINARY RESOLUTION and as to Resolutions Nos. 2, 3 and 4
as SPECIAL RESOLUTIONS of the Company: --

                               ORDINARY RESOLUTION

1.    That for the purposes of section 80 of the Companies Act 1985, and in
      addition to and without prejudice to the authority conferred by paragraph
      (B) of the special resolution number 1 passed at the extraordinary general
      meeting of the company on 30th August 1989, the directors be and they are
      hereby generally and unconditionally authorised to exercise all the powers
      of the company to allot relevant securities (within the meaning of the
      said section 80) up to an aggregate nominal amount of L71,111,436
      provided that this authority shall expire at the conclusion of the next
      annual general meeting of the company after the passing of this resolution
      except that the company may before the expiry of such period make an offer
      or agreement which would or might require relevant securities to be
      allotted after the expiry of such period and the directors may allot
      relevant securities in pursuance of any such offer or agreement as if the
      authority conferred hereby had not expired.

                               SPECIAL RESOLUTION

2.    That, subject to the passing of the preceding resolution, the directors be
      and they are hereby empowered pursuant to section 95 of the Companies Act
      1985 to allot equity securities (as defined in section 94 of the said Act)
      pursuant to the authority conferred upon them by the preceding resolution
      as if section 89(1) of the said Act did not apply to any such allotment
      provided that the power conferred by this resolution shall be limited:

      (a)   to the allotment of equity securities in connection with a rights
            issue in favour of ordinary shareholders where the equity securities
            respectively attributable to the interests of all such shareholders
            are proportionate (as nearly as may be) to the respective numbers of
            ordinary shares held by them;

                                       50

<PAGE>

      (b)   to the allotment of equity securities pursuant to the authority
            conferred upon the directors by the resolution numbered 10 below*;
            and

      (c)   to the allotment (otherwise than pursuant to sub-paragraphs (a) or
            (b) above) of equity securities having, in the case of relevant
            shares (as defined for the purposes of the said section 89), a
            nominal amount or, in the case of other equity securities, giving
            the right to subscribe for or convert into relevant shares having a
            nominal amount not exceeding in aggregate L9,444,428

      and shall expire at the conclusion of the next annual general meeting of
      the company after the passing of this resolution unless renewed or
      extended prior to or at such meeting except that the company may, before
      the expiry of any power contained in this resolution, make an offer or
      agreement which would or might require equity securities to be allotted
      after such expiry and the directors may allot equity securities in
      pursuance of such offer or agreement as if the power conferred hereby had
      not expired.

                               SPECIAL RESOLUTION

3.    That the articles of association of the company be and they are hereby
      amended by the deletion of Article 72(B), the re-numbering of Article
      72(A) as Article 72, and the insertion after Article 80 of the following
      new Article 80A:--

                 "RESTRICTIONS ON VOTING AND OTHER SHARE RIGHTS

      80A(A)Without prejudice to any other rights or remedies of the Company
            where, in respect of any shares in the Company, any registered
            holder of such shares or other person appearing to be interested in
            such shares fails to comply with any notice (in this Article called
            a "statutory notice") given to that holder or other person by the
            Company pursuant to Part VI of the 1985 Act or, in purported
            compliance with such a statutory notice, makes a statement which is
            false in a material particular, then not earlier than fourteen days
            (where the shares in question are Ordinary Shares representing at
            least 0.25 per cent. in nominal value of the issued ordinary share
            capital) or twenty-eight days (in any other case) after the service
            of such statutory notice, the Directors may serve upon such
            registered holder a notice (in this Article called a
            "disenfranchisement notice") stating or to the effect that such
            shares shall from the service of the disenfranchisement notice
            confer on him no right to attend or vote, in person or by proxy,
            either at any General Meeting of the Company or at any separate
            General Meeting of the holders of the shares of the relevant class.

      (B)   Where the shares in question are Ordinary Shares representing at
            least 0.25 per cent. in nominal value of the issued ordinary share
            capital, the disenfranchisement notice may also at the discretion
            of the Directors direct that all or any of the following
            restrictions shall also apply in respect of all or any of such
            shares:

            (i)   no transfer of any of the shares held by such registered
                  holder shall be registered unless (a) such registered holder
                  is not himself in default as regards supplying the information
                  requested and the transfer is part only of such registered
                  holder's holding and, when presented for registration, is
                  accompanied by a certificate by such registered holder in a
                  form satisfactory to the Directors to the effect that, after
                  due and careful enquiry, such registered holder is satisfied
                  that no person in default as regards supplying such
                  information is

* Note--Resolution Number 10 was an Ordinary Resolution which authorised the
        directors to offer a share dividend alternative.

                                       51

<PAGE>

                  interested in any of the shares the subject of the transfer or
                  (b) such transfer is an approved transfer; and

            (ii)  any dividend or other moneys which would otherwise be payable
                  on such shares shall be retained by the Company in whole or in
                  part without any liability to pay interest thereon when such
                  moneys are finally paid to such registered holder.

      (C)   The Directors may cancel a disenfranchisement notice, in whole or in
            part, at any time.

      (D)   A disenfranchisement notice shall cease to have effect on the date
            upon which the notice has been complied with and, in relation to any
            Ordinary Shares which are transferred by such member by means of an
            approved transfer, on the date of transfer thereof. A transfer of
            Ordinary Shares is an approved transfer if, but only if:

            (i)   it is a transfer to an offer or by way of or in pursuance of
                  acceptance of a takeover offer (as defined in Section 14 of
                  the Company Securities (Insider Dealing) Act 1985) for a
                  company; or

            (ii)  the Directors are satisfied that the transfer is made pursuant
                  to a bona fide sale of the whole of the beneficial ownership
                  of the shares to a person unconnected with the registered
                  holder or with any other person appearing to be interested in
                  such shares (including any such sale made through a recognised
                  investment exchange (as defined in the Financial Services Act
                  1986) or any other stock exchange outside the United Kingdom
                  on which the Company's Ordinary Shares are normally traded).
                  For the purposes of this paragraph (ii) any associate (as
                  defined in Section 435 of the Insolvency Act 1986) shall be
                  included amongst the persons who are connected with the
                  registered holder or any person appearing to be interested in
                  such shares.

      (E)   For the purposes of this Article 80A a person shall be treated as
            appearing to be interested in any shares if the registered holder of
            such shares has given to the Company a notification under Section
            212 of the 1985 Act which fails to establish the identities of those
            interested in the shares and if (after taking into account the said
            notification and any other relevant Section 212 notification) the
            Company knows or has reasonable cause to believe that the person in
            question is or may be interested in the shares."

                               SPECIAL RESOLUTION

4.    That the articles of association of the company be and they are hereby
      amended by the insertion in Article 144 of:--

      (a)   the words "or (where permitted by the Statutes and/or any applicable
            regulations and if the Directors so resolve from time to time) a
            copy of a summary financial statement instead of such balance sheet,
            profit and loss account and reports" after the words "Auditors'
            reports" in the first sentence thereof;

      (b)   the words "or this statement" after the words "these documents"
            wherever the latter words appear in the proviso thereto; and

      (c)   the words "and/or statements" after the words "such documents" in
            the second sentence thereof.

                                                                    K. C. FOSTER
                                                                       Secretary

                                     52

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 16th January 1992

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the Caledonian Hotel, Edinburgh
on 16th January 1992, the following Resolutions were duly passed; as to
Resolution No. 1 as an ORDINARY RESOLUTION and as to Resolutions No. 2, 3 and 4
as SPECIAL RESOLUTIONS of the Company:--

                               ORDINARY RESOLUTION

1.    That for the purposes of section 80 of the Companies Act 1985, and in
      addition to and without prejudice to the authorities conferred by
      paragraph (B) of the resolution numbered 18 below and paragraph (A) of the
      resolution numbered 19 below, the directors be and they are hereby
      generally and unconditionally authorised to exercise all powers of the
      company to allot relevant securities (within the meaning of the said
      section 80) up to an aggregate nominal amount of L66,913,874 provided
      that this authority shall expire at the conclusion of the next annual
      general meeting of the company after the passing of this resolution except
      that the company may before the expiry of such period make an offer or
      agreement which would or might require relevant securities to be allotted
      after the expiry of such period and the directors may allot relevant
      securities in pursuance of any such offer or agreement as if the authority
      conferred hereby had not expired.

                               SPECIAL RESOLUTION

2.    That, subject to the passing of the preceding resolution, the directors be
      and they are hereby empowered pursuant to section 95 of the Companies Act
      1985 to allot equity securities (as defined in section 94 of the said Act)
      pursuant to the authority conferred upon them by the preceding resolution
      as if section 89(1) of the said Act did not apply to any such allotment
      provided that the power conferred by this resolution shall be limited:--

      (a)   to the allotment of equity securities in connection with a rights
            issue in favour of ordinary shareholders where the equity securities
            respectively attributable to the interests of all such shareholders
            are proportionate (as nearly as may be) to the respective numbers
            of ordinary shares held by them;

                                       53

<PAGE>

      (b)   to the allotment of equity securities pursuant to the authority
            conferred upon the directors by the resolution numbered 17 below*;
            and

      (c)   to the allotment (otherwise than pursuant to sub-paragraphs (a) or
            (b) above) of equity securities having, in the case of relevant
            shares (as defined for the purposes of the said section 89), a
            nominal amount or, in the case of other equity securities, giving
            the right to subscribe for or convert into relevant shares having a
            nominal amount not exceeding in aggregate L9,654,306

      and shall expire at the conclusion of the next annual general meeting of
      the company after the passing of this resolution unless renewed or
      extended prior to or at such meeting except that the company may, before
      the expiry of any power contained in this resolution, make an offer or
      agreement which would or might require equity securities to be allotted
      after such expiry and the directors may allot equity securities in
      pursuance of such offer or agreement as if the power conferred hereby had
      not expired.

                               SPECIAL RESOLUTION

3.    That:--

      (A)   the authorised share capital of the company be and it is hereby
            increased by the creation of 16,000,000 Category II Non-cumulative
            Dollar Preference Shares of US$0.01 each, such shares having
            attached thereto the rights and being subject to the limitations set
            out in the articles of association of the company as altered by
            paragraph (C) of this resolution;

      (B)   for the purposes of section 80 of the Companies Act 1985 the
            directors be and they are hereby generally and unconditionally
            authorised to exercise all the powers of the company to allot all
            the 16,000,000 Category II Non-cumulative Dollar Preference Shares
            of US$0.01 each created pursuant to paragraph (A) of this resolution
            provided that this authority shall expire on the fifth anniversary
            of the passing of this resolution except that the company may before
            the expiry of such period make an offer or agreement which would or
            might require relevant securities (within the meaning of the said
            section 80) to be allotted after the expiry of such period and the
            directors may allot relevant securities in pursuance of any such
            offer or agreement as if the authority conferred hereby had not
            expired; and

      (C)   the articles of association of the company be and they are hereby
            amended as follows:--

            (1)   by the insertion after the words "the Non-cumulative Dollar
                  Preference Shares" in the definition of "New Preference
                  Shares" in Article 2 of the words ", the Category II
                  Non-cumulative Dollar Preference Shares (as defined in
                  Article 4(E)(1))".

            (2)   by the deletion of the first sentence of Article 4 and the
                  substitution therefor of the following new sentence:--

                  "The share capital of the Company at 16th January 1992, being
                  the latest date of amendment of this Article, is L460,900,000
                  divided into 500,000 11 per cent. Cumulative Preference Shares
                  of L1 each, 400,000 5 1/2 per cent. Cumulative Preference
                  Shares of L1 each, 200,000,000 Non-cumulative Sterling
                  Preference Shares of L1 each and 1,040,000,000 Ordinary Shares
                  of 25p each, and US$320,000 divided into 16,000,000
                  Non-cumulative Dollar Preference Shares of US$0.01 each and
                  16,000,000 Category II Non-cumulative Dollar Preference Shares
                  of US$0.01 each."

* Note--Resolution Number 17 was an Ordinary Resolution which authorised the
        directors to offer a share dividend alternative.

                                       54

<PAGE>

            (3)   by the redesignation of the existing Article 4(E) as Article
                  4(F) and by the insertion immediately before such article of
                  the following:--

                  "(E)(1) The rights as regards participation in profits and
                  assets of the Company, receipt of notice, attendance and
                  voting at meetings and redemption attaching to the 16,000,000
                  Category II Non-cumulative Dollar Preference Shares of US$0.01
                  each (the "Category II Non-cumulative Dollar Preference
                  Shares") shall be as provided by this Article 4(E).

                        (2) Article 4(D) (in its present form or as from time to
                  time altered) shall apply to the Category II Non-cumulative
                  Dollar Preference Shares but with the following
                  modifications:--

                  (a)   subject to (b) below, for any reference (however worded
                        and whether express or implied) to Non-cumulative Dollar
                        Preference Shares there shall be deemed to be
                        substituted a reference to Category II Non-cumulative
                        Dollar Preference Shares;

                  (b)   references to "New Preference Shares" shall be deemed to
                        include the Non-cumulative Dollar Preference Shares;

                  (c)   in relation to any Category II Non-cumulative Dollar
                        Preference Share allotted after the coming into force of
                        Section 133 of the 1989 Act ("the Relevant Section"),
                        the following sub-paragraph (x) shall be deemed to be
                        added at the end of Article 4(D)(2)(b):--

                        "(x)  notwithstanding any provision of this Article
                              4(D), but subject to sub-paragraphs (ii) and (iii)
                              above and the special rights attaching to any
                              other New Preference Shares, the Directors shall
                              pay a dividend on the Category II Non-cumulative
                              Dollar Preference Shares due to be redeemed on any
                              Redemption Date (as defined in sub-paragraph
                              (2)(f)(ii) of this Article 4(D)), payable on the
                              Dollar Business Day immediately preceding such
                              Redemption Date. The dividend payable pursuant to
                              this sub-paragraph (x) shall be the amount of any
                              dividend on the relevant Category II
                              Non-cumulative Dollar Preference Shares which
                              would (apart from the proposed redemption thereof)
                              be due for payment on the relevant Redemption
                              Date."

                  (d)   in Article 4(D)(2)(e) the words "and on such terms"
                        shall be deemed to be inserted after "such
                        circumstances" and the words "for which purpose the
                        Non-cumulative Dollar Preference Shares will be deemed
                        to carry the number of votes determined pursuant to the
                        following sentence" shall be deemed to be deleted;

                  (e)   in Article 4(D)(2)(f)(ii)(A) the last sentence shall be
                        deemed to be deleted and the following deemed to be
                        substituted therefor:--

                        ""Redemption Date" means, in relation to any Category
                        II Non-cumulative Dollar Preference Share, any date
                        which either (i) falls no earlier than such date (if
                        any) as may be fixed by the Directors, prior to
                        allotment of that share, as being the earliest date on
                        which the Company may redeem such share, and the date so
                        fixed shall be no earlier than five years and one day,
                        and no later than ten years and one day, after the
                        relevant date of allotment, or (ii) if no date is fixed
                        by the Directors as aforesaid under (i) above in
                        relation to that share, falls no earlier than five years
                        and one day after the date of allotment of the Category
                        II Non-cumulative Dollar Preference Share to be
                        redeemed;

                        provided that, in relation to any Category II
                        Non-cumulative Dollar Preference Share allotted after
                        the coming into force of

                                       55

<PAGE>

                        the Relevant Section, (i) subject to (ii) below, the
                        Directors may, prior to the allotment of that share, fix
                        the date on or by which, or dates between which, such
                        share is to be or may be redeemed and such date or dates
                        fixed by the Directors may be in place of or in addition
                        to any date derived from or fixed under the provisions
                        of sub-paragraph (A) above, (ii) the Redemption Date
                        shall be a dividend payment date (as defined in Article
                        4(D)(2)(a)), and (iii) the Company shall only redeem
                        such share if the Directors have applied the provisions
                        of Article 4(D)(2)(b)(x) thereto and such provisions
                        have been satisfied in full in relation to such share;"

                  (f)   in relation to any Category II Non-cumulative Dollar
                        Preference Share allotted as a redeemable share after
                        the coming into force of the Relevant Section, Article
                        4(D)(2)(f)(ii)(B) shall be deemed to be amended by (i)
                        deletion of the words from and including "and together
                        with arrears" to the end of the first sentence, (ii)
                        deletion of the words "the following formula" and
                        substitution therefor of the words "the provisions set
                        out below", and (iii) deletion of the words from and
                        including "The formula for calculation" to the end of
                        sub-paragraph (B) and the substitution therefor of the
                        following:--

                        "The basis for calculating the Relevant Redemption
                        Premium shall be as follows:--

                        in relation to a Redemption Date falling within the
                        period of twelve months from but excluding the fifth
                        anniversary of the Relevant Date to and including the
                        sixth anniversary of the Relevant Date, the Relevant
                        Redemption Premium shall, in respect of the Category II
                        Non-cumulative Dollar Preference Share, be 6.0 per cent.
                        of the aggregate of the nominal amount of such share
                        together with any premium paid on issue;

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months from but excluding the sixth
                        anniversary of the Relevant Date to and including the
                        seventh anniversary of the Relevant Date, the Relevant
                        Redemption Premium shall, in respect of the Category II
                        Non-cumulative Dollar Preference Share, be 4.8 per cent.
                        of the aggregate of the nominal amount of such share
                        together with any premium paid on issue;

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months from but excluding the seventh
                        anniversary of the Relevant Date to and including the
                        eighth anniversary of the Relevant Date, the Relevant
                        Redemption Premium shall, in respect of the Category II
                        Non-cumulative Dollar Preference Share, be 3.6 per cent.
                        of the aggregate of the nominal amount of such share
                        together with any premium paid on issue;

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months from but excluding the eighth
                        anniversary of the Relevant Date to and including the
                        ninth anniversary of the Relevant Date, the Relevant
                        Redemption Premium shall, in respect of the Category II
                        Non-cumulative Dollar Preference Share, be 2.4 per cent.
                        of the aggregate of the nominal amount of such share
                        together with any premium paid on issue;

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months from but excluding the ninth
                        anniversary of the

                                      56

<PAGE>

                        Relevant Date to and including the tenth anniversary of
                        the Relevant Date, the Relevant Redemption Premium
                        shall, in respect of the Category II Non-cumulative
                        Dollar Preference Share, be 1.2 per cent. of the
                        aggregate of the nominal amount of such share together
                        with any premium paid on issue. No Relevant Redemption
                        Premium shall be payable when the Redemption Date falls
                        after the tenth anniversary of the Relevant Date. The
                        Relevant Redemption Premium shall be rounded down to the
                        nearest whole cent;"

                  (g)   in relation to any Category II Non-cumulative Dollar
                        Preference Share allotted as a redeemable share after
                        the coming into force of the Relevant Section, Article
                        4(D)(2)(f)(ii)(D) shall be deemed to be amended by
                        deletion of the words from " (specifying the amount" to
                        and including "accrue on redemption)".

            (3)   For the avoidance of doubt, the Category II Non-cumulative
                  Dollar Preference Shares are, for the purposes of Articles
                  4(C) and 4(D), New Preference Shares expressed to rank pari
                  passu with the Non-cumulative Sterling Preference Shares and
                  the Non-cumulative Dollar Preference Shares as regards
                  participation in surplus profits and surplus assets."

            (4)   by the insertion after the words "the Non-cumulative Dollar
                  Preference Shares" in the redesignated Article 4(F) of the
                  words "and the Category II Non-cumulative Dollar Preference
                  Shares".

                               SPECIAL RESOLUTION

4.    That:--

      (A)   for the purposes of section 80 of the Companies Act 1985 the
            directors be and they are hereby generally and unconditionally
            authorised to exercise all the powers of the Company to allot all
            the 200,000,000 Non-cumulative Sterling Preference Shares of L1
            each in the capital of the Company provided that this authority
            shall expire on the fifth anniversary of the passing of this
            resolution except that the Company may before the expiry of such
            period make an offer or agreement which would or might require
            relevant securities (within the meaning of the said section 80) to
            be allotted after the expiry of such period and the directors may
            allot relevant securities in pursuance of any such offer or
            agreement as if the authority conferred hereby had not expired; and
            the foregoing authority shall be in substitution for the authority
            conferred on the directors in regard to the said Non-cumulative
            Sterling Preference Shares at the extraordinary general meeting of
            the company on 30th August 1989; and

      (B)   the articles of association of the company be and they are hereby
            amended as follows:--

            (a)   by the addition of the following sub-paragraph (xi) at the end
                  of Article 4(C)(2)(b):--

                  "(xi) notwithstanding any provision of this Article 4(C),
                  but subject to sub-paragraphs (ii) and (iii) above and the
                  special rights attaching to any other New Preference Shares,
                  the Directors shall, pay a dividend on any Non-cumulative
                  Sterling Preference Share allotted after the coming into force
                  of Section 133 of the 1989 Act ("the Relevant Section") and
                  due to be redeemed on any Redemption Date (as defined in
                  sub-paragraph (2)(f)(ii) of this Article 4(C)), payable on the
                  Sterling Business Day immediately preceding such Redemption
                  Date. The dividend payable pursuant to this sub-paragraph (xi)
                  shall be the amount of any dividend on the relevant
                  Non-cumulative Sterling Preference Shares which would (apart
                  from the proposed redemption thereof) be due for payment on
                  the relevant Redemption Date."

                                       57

<PAGE>

            (b)   by the insertion after the words "such circumstances" in
                  Article 4(C)(2)(e) of the words "and on such terms" and by the
                  deletion in such article of the words "for which purpose the
                  Non-cumulative Sterling Preference Shares will be deemed to
                  carry the number of votes determined pursuant to the following
                  sentence";

            (c)   by the deletion of the last sentence of Article
                  4(C)(2)(f)(ii)(A) and the substitution therefor of the
                  following:--

                  ""Redemption Date" means, in relation to any Non-cumulative
                  Sterling Preference Share, any date which either (i) falls no
                  earlier than such date (if any) as may be fixed by the
                  Directors, prior to allotment of that share, as being the
                  earliest date on which the Company may redeem such share, and
                  the date so fixed shall be no earlier than five years and one
                  day, and no later than ten years and one day, after the
                  relevant date of allotment, or (ii) if no date is fixed by the
                  Directors as aforesaid under (i) above in relation to that
                  share, falls no earlier than five years and one day after the
                  date of allotment of the Non-cumulative Sterling Preference
                  Share to be redeemed;

                  provided that, in relation to any Non-cumulative Sterling
                  Preference Share allotted after the coming into force of the
                  Relevant Section, (i) subject to (ii) below, the Directors
                  may, prior to the allotment of that share, fix the date on or
                  by which, or dates between which, such share is to be or may
                  be redeemed and such date or dates fixed by the Directors may
                  be in place of or in addition to any date derived from or
                  fixed under the provisions of sub-paragraph (A) above, (ii)
                  the Redemption Date shall be a dividend payment date (as
                  defined in Article 4(C)(2)(a)), and (iii) the Company shall
                  only redeem such share if the Directors have applied the
                  provisions of Article 4(C)(2)(b)(xi) thereto and such
                  provisions have been satisfied in full in relation to such
                  share"; and

            (d)   by the insertion of the words "(in the case of any
                  Non-cumulative Sterling Preference Shares allotted prior to
                  the coming into force of the Relevant Section)" between the
                  words "with" and "arrears" in sub-paragraph (B), and between
                  the words "specifying" and "the" in sub-paragraph (D), of
                  Article 4(C)(2)(f)(ii).

                                                                    K. C. FOSTER
                                                                       Secretary
                                       58

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 14th January 1993

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the Caledonian Hotel, Edinburgh
on 14th January 1993, the following Resolutions were duly passed; as to
Resolutions No. 1 and 3 as SPECIAL RESOLUTIONS and as to Resolution No. 2 as an
ORDINARY RESOLUTION of the Company:--

                               SPECIAL RESOLUTION

1.    That, should the directors of the company think fit, any securities of the
      company may be converted into uncertificated form and, where units of a
      security (existing or future) are at any time to be issued by the company,
      they may be issued in such form rather than certificated form.

                               ORDINARY RESOLUTION

2.    That, subject to the passing of Resolution 3 below:--

      (A)   the authorised share capital of the company be and it is hereby
            increased by the creation of 20 million additional Category II
            Non-cumulative Dollar Preference Shares of US$0.01 each, such shares
            having attached thereto the rights and being subject to the
            limitations set out in the Articles of Association of the company to
            be adopted pursuant to Resolution 3 below;

      (B)   for the purposes of section 80 of the Companies Act 1985 the
            directors be and they are hereby generally and unconditionally
            authorised to exercise all the powers of the company to allot all
            the 20 million Non-cumulative Dollar Preference Shares of US$0.01
            each created pursuant to paragraph (A) of this Resolution provided
            that this authority shall expire on the fifth anniversary of the
            passing of this Resolution except that the company may before the
            expiry of such period make an offer or agreement which would or
            might require relevant securities (within the meaning of the said
            section 80) to be allotted after the expiry of such period and the
            directors may allot relevant securities in pursuance of any such
            offer or agreement as if the authority conferred hereby had not
            expired.

                                      59

<PAGE>

                               SPECIAL RESOLUTION

3.    That:--

      (A)   the regulations contained in the document produced to the meeting.
            and for the purpose of identification signed by the chairman
            thereof be and are hereby adopted as the Articles of Association of
            the company in substitution for, and to the exclusion of, the
            existing Articles of Association of the company; and

      (B)   Clause 4 of the Memorandum of Association of the company be altered
            by the insertion, after paragraph (31) of the following new
            paragraph (32) and by the renumbering of subsequent paragraphs
            accordingly:--

            "(32)(i)  To purchase and maintain insurance for or for the benefit
                      of any persons who are or were at any time Directors,
                      officers or employees of the Company, or of any other
                      company which is its holding company or in which the
                      Company or such holding company or any of the predecessors
                      of the Company or of such holding company has any
                      interest, whether direct or indirect, or which is in any
                      way allied to or associated with the Company, or of any
                      subsidiary undertaking of or any other body, whether or
                      not incorporated ('body') owned by or in which an interest
                      is owned by the Company or any such other company, or who
                      are or were at any time trustees of any pension fund or
                      employees' share scheme in which employees of the company
                      or any such company or subsidiary undertaking or body are
                      interested, including (without prejudice to the generality
                      of the foregoing) insurance against any liability incurred
                      by such persons in respect of any act or omission in the
                      actual or purported execution and/or discharge of their
                      duties and/or the exercise or purported exercise of their
                      powers and/or otherwise in relation to or in connection
                      with their duties, powers or offices in relation to the
                      Company or any such other company, subsidiary undertaking,
                      body, pension fund or employees' share scheme; and

                 (ii) to such extent as may be permitted by law otherwise to
                      indemnify or to exempt any such person against or from any
                      such liability.

            For the purposes of this paragraph (32) "subsidiary undertaking" and
            "employees' share scheme" shall have the same meanings as in the
            Companies Act 1989 and the Companies Act 1985 respectively."

                                                                      K.C.FOSTER
                                                                       Secretary

                                       60

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTION

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 14th January 1993

At the SEPARATE CLASS MEETING OF HOLDERS OF ORDINARY SHARES OF 25p of the
members of THE ROYAL BANK OF SCOTLAND GROUP PUBLIC LIMITED COMPANY duly convened
and held at the Caledonian Hotel, Edinburgh on 14th January 1993, the following
Resolution was duly passed as an EXTRAORDINARY RESOLUTION of the Company:--

                            EXTRAORDINARY RESOLUTION

That conditional upon the passing of Resolution No. 1 to be proposed at the
annual general meeting of the company convened for 14th January 1993 (a copy of
which is produced to the meeting and signed by the chairman thereof for the
purposes of identification), this meeting of holders of the ordinary shares of
25p each in the capital of the company authorises the conversion of the shares
of that class into an uncertificated security.

                                                                    K. C. FOSTER
                                                                       Secretary

                                       61
<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTION

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 13th January 1994

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the Balmoral Hotel, Edinburgh
on 13th January 1994, the following Resolution was duly passed as a SPECIAL
RESOLUTION of the Company:--

                               SPECIAL RESOLUTION

That the power conferred on the directors by paragraph (2) of article 13(B) of
the company's Articles of Association be renewed for the period ending on the
day of the Annual General Meeting in 1995 or on 13th April 1995, whichever is
the earlier, and for that purpose the "Section 89 amount" shall be
L9,927,318.

                                                                    K. C. FOSTER
                                                                       Secretary

                                       62

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTION

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 12th January 1995

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the Balmoral Hotel, Edinburgh
on 12th January 1995, the following Resolution was duly passed as a SPECIAL
RESOLUTION of the Company:--

                               SPECIAL RESOLUTION

That the power conferred on the directors by paragraph (2) of article 13(B) of
the company's Articles of Association be renewed for the period ending on the
day of the Annual General Meeting in 1996 or on 12th April 1996, whichever is
the earlier, and for that purpose the "Section 89 amount" shall be L10,009,714.

                                                                   M. R. McLEAN
                                                                      Secretary

                                       63
<PAGE>

COMPANY No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTION

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 18th January 1996

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the Balmoral Hotel, Edinburgh
on 18th January 1996, the following Resolutions were duly passed; as to
Resolution No. 1 as an ORDINARY RESOLUTION and as to RESOLUTION No. 2 as a
SPECIAL RESOLUTION of the Company:--

                               ORDINARY RESOLUTION

1.(a) That the authorised share capital of the Company be and it is hereby
      increased by the creation of 15 million additional Category II
      Non-cumulative Dollar Preference Shares of US$0.01 each, such shares
      having attached thereto the rights and being subject to the limitations
      set out in the Articles of Association of the Company; and

  (b) that for the purposes of Section 80 of the Companies Act 1985 the
      directors be and they are hereby generally and unconditionally authorised
      to exercise all the powers of the Company to allot (1) all of the 15
      million Category II Non-cumulative Dollar Preference Shares of US$0.01
      each created pursuant to paragraph (a) of this resolution, and (2) all of
      the existing 13 million authorised but unissued Category II Non-cumulative
      Dollar Preference Shares of US$0.01 each of the Company, provided that
      this authority shall expire on the fifth anniversary of the passing of
      this Resolution except that the Company may before the expiry of such
      period make an offer or agreement which would or might require relevant
      securities (within the meaning of the said section 80) to be allotted
      after the expiry of such period and the directors may allot relevant
      securities in pursuance of any such offer or agreement as if the authority
      conferred hereby had not expired.

                               SPECIAL RESOLUTION

2.    That the power conferred on the directors by paragraph (2) of article
      13(B) of the Company's Articles of Association be renewed for the period
      ending on the day of the Annual General Meeting in 1997 or on 18th April
      1997, whichever is the earlier, and for that purpose the "Section 89
      amount" shall be L10,096,730.

                                                                    M. R. McLEAN
                                                                       Secretary
                                       64

<PAGE>

COMPANY NO. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTION

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                             Passed on 22nd May 1996

At a meeting of the Directors of THE ROYAL BANK OF SCOTLAND GROUP PUBLIC LIMITED
LIMITED duly convened and held at 42 St Andrew Square, Edinburgh on 22nd May
1996, the following Resolution was passed:-

                               ORDINARY RESOLUTION

(i)   THAT pursuant to Regulation 16(2) of the Uncertificated Securities
      Regulations 1995 ("the Regulations"):

       (1)  title to the ordinary shares of 25p each, the 5 1/2 per cent
            cumulative preference shares of L1 each and the 11 per cent
            cumulative preference shares of L1 each all in the capital of the
            Company (the "Shares"), in issue or to be issued, may be transferred
            by means of a relevant system (as defined in the Regulations);

      (2)   such relevant system shall include the relevant system of which
            CRESTCo Limited is to be the Operator (as defined in the
            Regulations);

      (3)   the Shares shall not include any shares referred to in Regulation
            17*; and

      (4)   this resolution ("the Resolution") shall become effective
            immediately prior to CRESTCo Limited granting permission for the
            Shares to be transferred by means of the CREST system.

            *Note: Regulation 17 relates to Bearer shares and therefore does not
                   apply to the Company.

                                                                      M R McLean
                                                                       Secretary

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                           Passed on 16th January 1997

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the Edinburgh International
Conference Centre, Edinburgh on 16th January 1997, the following Resolutions
were duly passed as SPECIAL RESOLUTIONS of the Company:--

                               SPECIAL RESOLUTIONS

1.    That the existing Article 98 of the Company's Articles of Association be
      deleted and replaced by the following new Article 98:--

      "98 Retirement of directors by rotation

      At each Annual General Meeting any Director bound to retire under Article
      104 and one-third of the other Directors for the time being (or, if their
      number is not three or a multiple of three, the number nearest to, but
      (except where less than three Directors are subject to retirement by
      rotation) not greater than, one-third) shall retire from office".

2.    That the power conferred on the directors by paragraph (2) of Article
      13(B) of the Company's Articles of Association be renewed for the period
      ending on the day of the Annual General Meeting in 1998 or on 16th April
      1998, whichever is the earlier, and for that purpose the "Section 89
      amount" shall be L10,205,073.

3.    That

      (a)   the authorised share capital of the Company be and it is hereby
            increased by the creation of 8 million additional Category II
            Non-cumulative Dollar Preference Shares of US$0.01 each, such
            shares having attached thereto the rights and being subject to the
            limitations set out in the Articles of Association of the Company;
            and

      (b)   for the purposes of Section 80 the Companies Act 1985 the directors
            be and they are hereby generally and unconditionally authorised to
            exercise all the powers of the Company to allot (1) all of the 8
            million Category II Non-cumulative Dollar Preference Shares of
            US$0.01 each created pursuant to paragraph (a) of this resolution,
            and (2) all of the existing 20 million authorised but unissued
            Category II Non-cumulative Dollar Preference Shares of US$0.01 each
            of the Company, provided that this authority shall expire on the
            fifth anniversary of the passing of this Resolution except that the
            Company may before the

                                       65

<PAGE>

            expiry of such period make an offer or agreement which would or
            might require relevant securities (within the meaning of the said
            section 80) to be allotted after the expiry of such period and the
            directors may allot relevant securities in pursuance of any such
            offer or agreement as if the authority conferred hereby had not
            expired.

      (c)   the existing Article 4(E) of the Company's Articles of Association
            be and it is hereby amended as follows:--

            (i)   by the deletion of sub-paragraph (2)(c) and the consequential
                  renumbering of the existing sub-paragraphs (2)(d) and (2)(e)
                  as sub-paragraphs (2)(c) and (2)(d) respectively;

            (ii)  by the insertion of the words "in relation to any Category II
                  Non-cumulative Dollar Preference Shares allotted prior to the
                  date of the passing of resolution number 12 set out in
                  Appendix I to the circular letter to shareholders dated 12th
                  December 1996, "at the beginning of the renumbered
                  sub-paragraph (2)(d), and by the deletion of the proviso to
                  that sub-paragraph;

            (iii) by the insertion after the renumbered sub-paragraph (2)(d) of
                  the following:--

                  "(e)  in relation to any Category II Non-cumulative Dollar
                        Preference Shares allotted on or after the date of the
                        passing of the resolution number 12 set out in Appendix
                        I to the circular letter to shareholders dated 12th
                        December 1996, sub-paragraphs (A) and (B) of Article
                        4(D)(2)(f) shall be deemed to be deleted and the
                        following deemed to be substituted therefor:--

                        "(A)  the Company may, subject thereto, redeem on any
                              Redemption Date (as hereinafter defined) all or
                              some only of the Category II Non-cumulative Dollar
                              Preference Shares by giving to the holders of the
                              Category II Non-cumulative Dollar Preference
                              Shares to be redeemed not less than 30 days nor
                              more than 60 days prior notice in writing (a
                              "Notice of Redemption") of the relevant Redemption
                              Date. "Redemption Date" means, in relation to a
                              Category II Non-cumulative Dollar Preference
                              Share, any date which falls no earlier than three
                              years and one day after the date of allotment of
                              the Category II Non-cumulative Dollar Preference
                              Share to be redeemed ("the Relevant Date");

                        (B)   there shall be paid on each Category II
                              Non-cumulative Dollar Preference Share so
                              redeemed, in Dollars, the aggregate of the
                              nominal amount thereof together with any premium
                              paid on issue together with, where applicable, the
                              Relevant Redemption Premium (defined below) and
                              together with arrears (if any) of dividends
                              thereon (whether earned or declared or not) in
                              respect of the period from the dividend payment
                              date last preceding the Redemption Date to the
                              Redemption Date. "Relevant Redemption Premium"
                              means an amount calculated in accordance with such
                              one (if any) of the following three formulae as
                              applied in relation to a Redemption Date notified
                              under sub-paragraph (A) above which falls within
                              the period of twelve months commencing on the date
                              following the third, fourth, fifth, sixth or
                              seventh anniversary of the Relevant Date, as the
                              case

                                       66

<PAGE>

                              may be, as may be determined by the Directors
                              prior to the Relevant Date. The formula for
                              calculation of the Relevant Redemption Premium
                              shall be

                              (a)   AxB

                                    where:--

                                    "A" is the amount of dividend excluding any
                                    associated tax credit (not expressed as a
                                    percentage) calculated at the date of
                                    allotment to which the holder of the
                                    Category II Non-cumulative Dollar Preference
                                    Share to be redeemed would become entitled
                                    in respect of the twelve months following
                                    allotment by virtue of the terms of issue
                                    thereof on the assumption that such amount
                                    of dividend had accrued on the Category II
                                    Non-cumulative Dollar Preference Share
                                    during such period and was payable at the
                                    end of such period and on the further
                                    assumption that there shall be no change in
                                    the associated tax credit affecting the
                                    amount of dividend payable in respect of
                                    such period; and

                                    "B" in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the third
                                    anniversary of the Relevant Date, is 66.66
                                    per cent.,

                                    or

                                    in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the fourth
                                    anniversary of the Relevant Date, is 53.33
                                    per cent.,

                                    or

                                    in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the fifth
                                    anniversary of the Relevant Date, is 40.00
                                    per cent.,

                                    or

                                    in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the sixth
                                    anniversary of the Relevant Date, is 26.66
                                    per cent.,

                                    or

                                    in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the seventh
                                    anniversary of the Relevant Date is 13.33
                                    per cent.; or

                              (b)   CxD

                                    where:--

                                    "C" is the amount of dividend excluding any
                                    associated tax credit (not expressed as a
                                    per-

                                       67

<PAGE>

                                    centage) calculated at the date of allotment
                                    to which the holder of the Category II
                                    Non-cumulative Dollar Preference Share to be
                                    redeemed would become entitled in respect of
                                    the twelve months following allotment by
                                    virtue of the terms of issue thereof on the
                                    assumption that such amount of dividend had
                                    accrued on the Category II Non-cumulative
                                    Dollar Preference Share during such period
                                    and was payable at the end of such period
                                    and on the further assumption that there
                                    shall be no change in the associated tax
                                    credit affecting the amount of dividend
                                    payable in respect of such period; and

                                    "D" in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the third
                                    anniversary of the Relevant Date, is 50 per
                                    cent.,

                                    or

                                    in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the fourth
                                    anniversary of the Relevant Date, is 40 per
                                    cent.,

                                    or

                                    in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the fifth
                                    anniversary of the Relevant Date, is 30 per
                                    cent.,

                                    or

                                    in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the sixth
                                    anniversary of the Relevant Date, is 20 per
                                    cent.,

                                    or

                                    in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the seventh
                                    anniversary of the Relevant Date, is 10
                                    per cent.;

                              (c)   ExF

                                    where:--

                                    "E" is the amount of US$25; and

                                    "F" in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the third
                                    anniversary of the Relevant Date, is 33.33
                                    per cent.,

                                    or

                                    in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the fourth
                                    anniversary of the Relevant Date, is 26.66
                                    per cent.,

                                       68

<PAGE>

                                    or

                                    in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the fifth
                                    anniversary of the Relevant Date, is 20 per
                                    cent.,

                                    or

                                    in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the sixth
                                    anniversary of the Relevant Date, is 13.33
                                    per cent.,

                                    or

                                    in relation to a Redemption Date falling
                                    within the period of twelve months
                                    commencing on the day following the seventh
                                    anniversary of the Relevant Date, is 6.66
                                    per cent.

                        No Relevant Redemption Premium shall be payable when the
                        Redemption Date falls after the eighth anniversary of
                        the Relevant Date. The product of any of the above
                        formulae in respect of a Category II Non-cumulative
                        Dollar Preference Share may, in the Directors'
                        discretion, be rounded down to the nearest whole cent.

                        The Directors may, in their discretion, determine in
                        relation to any Category II Non-cumulative Dollar
                        Preference Share, prior to the Relevant Date, that none
                        of the above formulae shall apply, in which event no
                        Relevant Redemption Premium shall be payable;""; and

                  (iv)  by the deletion of Articles 4(E)(2)(f) and 4(E)(2)(g).

                                                                      M.R.McLEAN
                                                                       Secretary

                                       69

<PAGE>

No. 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                          PASSED ON 15TH JANUARY 1998

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at the Edinburgh International
Conference Centre, Edinburgh on 15th January 1998 the following Resolutions were
duly passed; as to Resolutions No. 1 and 3 as SPECIAL RESOLUTIONS and as to
Resolution No. 2 as an ORDINARY RESOLUTION of the Company:-

                               SPECIAL RESOLUTION

1.    That, the power conferred on the directors by paragraph (2) of Article
      13(B) of the Company's Articles of Association be renewed for the period
      ending on the day of the Annual General Meeting in 1999 or on 15th April
      1999, whichever is the earlier, and for that purpose the "Section 89"
      amount" shall be L10,751,951.

                               ORDINARY RESOLUTION

2.    (a)   That the authorised share capital of the Company be and it is hereby
            increased by the creation of 8 million additional Category II
            Non-cumulative Dollar Preference Shares of US$0.01 each, such shares
            having attached thereto the rights and being subject to the
            limitations set out in the Articles of Association of the Company;

      (b)   That for the purposes of Section 80 of the Companies Act 1985 the
            directors/

<PAGE>

            directors be and they are hereby generally and unconditionally
            authorised to exercise all the powers of the Company to allot (1)
            all of the 8 million Category II Non-cumulative Dollar Preference
            Shares of US$0.01 each created pursuant to paragraph (a) of this
            resolution, and (2) all of the existing 20 million authorised but
            unissued Category II Non-cumulative Dollar Preference Shares of
            US$0.01 each of the Company, provided that this authority shall
            expire on the fifth anniversary of the passing of this Resolution
            except that the Company may before the expiry of such period make an
            offer or agreement which would or might require relevant securities
            (within the meaning of the said section 80 (to be allotted after the
            expiry of such period and the directors may allot relevant
            securities in pursuance of any such offer or agreement as it the
            authority conferred hereby had not expired.

                               SPECIAL RESOLUTION

3.    That, the regulations contained in the document produced to the Meeting,
      and for the purposes of identification signed by the Chairman thereof, be
      and are hereby adopted as the Articles of Association of the Company in
      substitution for, and to the exclusion of, the existing Articles of
      Association of the Company.

                                                              /s/ M R McLean
                                                           --------------------
                                                                     M R McLean
                                                                      Secretary

<PAGE>

No 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                               ORDINARY RESOLUTION

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                            PASSED ON 14 JANUARY 1999

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at THE Edinburgh International
Conference Centre, Edinburgh on 14 January 1999 the following Resolution was
duly passed as an ORDINARY RESOLUTION of the
Company:-

                               SPECIAL RESOLUTION

1.    "THAT: The power conferred on the directors by paragraph (2) of Article
      13(B) of the Company's Articles of Association be renewed for the period
      ending on the day of the Annual General Meeting in 2000 or on 14th April
      2000, whichever is the earlier, and for that purpose the "Section 89
      amount" shall be L10,945,036.

                               ORDINARY RESOLUTION

2.    (a)   "THAT: The authorised share capital of the Company be and it is
            hereby increased by the creation of 30,000,000 additional Category
            II Non-cumulative Dollar Preference Shares of US$0.01 each, such
            shares

            having attached thereto the rights and being subject to the
            limitations set out in the Articles of Association of the Company;
            and

<PAGE>

      (b)   "THAT: For the purposes of Section 80 of the Companies Act 1985 the
            Directors be and they are hereby generally and unconditionally
            authorised to exercise all the powers of the Company to allot (1)
            all of the 30,000,000 Category II Non-cumulative Dollar Preference
            Shares of US$0.01 each created pursuant to paragraph (a) of this
            Resolution, and (2) all of the existing 18,000,000 authorised but
            unissued Category II Non-cumulative Dollar Preference Shares of
            US$0.01 each of the Company, provided that this authority shall
            expire on the fifth anniversary of the passing of this Resolution,
            except that the Company may before the expiry of such period, make
            an offer or agreement which would or might require relevant
            securities (within the meaning of the said Section 80) to be
            allotted after the expiry of such period and the directors may allot
            relevant securities in pursuance of any such offer or agreement as
            if the authority conferred hereby had not expired.

                                                                      M R McLean
                                                                       Secretary

<PAGE>

45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS

                                       OF

             THE ROYAL BANK OF SCOTLAND GROUP PUBLIC LIMITED COMPANY

                             PASSED 13 JANUARY 2000

At the annual general meeting of the above company, duly convened and held at
Edinburgh on 13 January 2000 at 11.00 am, the following resolutions were passed:

SPECIAL RESOLUTION

That the Articles of Association of the Company be amended by:--

(i)   the adoption and insertion after Article 88 of the following new Article
      88A:--

      88A   APPOINTMENT OF PROXY BY ELECTRONIC MAIL

      The Directors may decide that a proxy can (without prejudice to any other
      specified method of appointment) be appointed by electronic mail, subject
      to such terms and conditions as the Directors specify. If the Directors
      decide that a proxy can be appointed by electronic mail, notice of the
      appointment must be received in such way as the Directors specify, and
      must be received not later than the deadline which applies to instruments
      appointing a proxy under Article 84(A). The Directors may require evidence
      of authority to appoint a proxy by electronic mail, and the relevant
      documents must be received not later than the said deadline under Article
      84(A). References in the second sentence of Article 84(A), Articles 85, 87
      and 88 to any instrument appointing a proxy shall be deemed to include
      references to any valid appointment of a proxy by electronic mail, and in
      relation to the appointment of a proxy by electronic mail, the reference
      in the proviso to Article 88 to intimation being received at the Transfer
      Office or other place specified for delivery of instruments of proxy shall
      be deemed to be a reference to intimation being received in any way
      specified for the appointment of proxies. The appointment of a proxy by
      electronic mail will cease to be valid 12 months after the date notice of
      appointment was received. References in this Article to electronic mail
      include any electronic transmission in any form through any medium.

(ii)  the deletion of the existing Article 102 and the substitution therefor of
      the following new Article 102:--

      At the Annual General Meeting in each year any Director bound to retire
      under Article 108 and one-third of the other Directors for the time being
      (or, if their number is not three or a multiple of three, the number
      nearest to one-third) shall retire from office, but:--

<PAGE>

                                     - 2 -

      (a)   if any Director has at the start of the Annual General Meeting in
            any year been in office for three years or more since his last
            appointment or re-appointment (or would be if the Annual General
            Meeting in that year was on a date numerically corresponding to the
            date of his last appointment or re-appointment), he shall retire;
            and

      (b)   if there is only one Director who is subject to retirement by
            rotation, he shall retire.

(iii) the deletion of the words "one leading London daily newspaper" in Article
      163 and the substitution therefor of the words "one newspaper with a
      national circulation in the United Kingdom".

SPECIAL RESOLUTION

That the power conferred on the Directors by paragraph (2) of Article 13(B) of
the Company's Articles of Association be renewed for the period ending on the
day of the Annual General Meeting in 2001 or on 13th April 2001, whichever is
the earlier, and for that purpose the "Section 89 amount" shall be
L11,149,638.

ORDINARY RESOLUTION

(a)   That the authorised share capital of the Company be and it is hereby
      increased by the creation of 43 million additional Category II
      Non-cumulative Dollar Preference Shares of US$0.01 each, such shares
      having attached thereto the rights and being subject to the limitations
      set out in the Articles of Association of the Company; and

(b)   That for the purposes of Section 80 of the Companies Act 1985 the
      Directors be and they are hereby generally and unconditionally authorised
      to exercise all the powers of the Company to allot(1) all of the 43
      million Category II Non-cumulative Dollar Preference Shares of US$0.01
      each created pursuant to paragraph (a) of this resolution, and (2) all of
      the existing 15 million authorised but unissued Category II Non-cumulative
      Dollar Preference Shares of US$0.01 each of the Company, provided that
      this authority shall expire on the fifth anniversary of the passing of
      this Resolution except that the Company may before the expiry of such
      period make an offer or agreement which would or might require relevant
      securities (within the meaning of the said Section 80) to be allotted
      after the expiry of such period and the Directors may allot relevant
      securities in pursuance of any such offer or agreement as if the authority
      conferred hereby had not expired, and shall be in addition to any other
      authority conferred on the Directors pursuant to the said Section 80.

SPECIAL RESOLUTION

(a)   That the authorised share capital of the Company be and it is hereby
      increased by the creation of 25 million Non-cumulative Euro Preference
      Shares of E0.01 each, such shares having attached thereto the rights
      and being subject to the limitations set out in the Articles of
      Association of the Company as amended by this Resolution;

(b)   That for the purposes of Section 80 of the Companies Act 1985 the
      Directors be and they are hereby generally and unconditionally authorised
      to exercise all the powers of the Company to allot all of the 25 million
      Non-cumulative Euro Preference Shares of E0.01 each created pursuant
      to paragraph (a) of this resolution provided that this authority shall
      expire on the fifth anniversary of the passing of this Resolution except
      that the Company may before the expiry of such period make an offer or
      agreement which would or might require relevant securities (within the
      meaning of the said Section 80) to be allotted after the expiry of such
      period and the Directors may allot relevant securities in pursuance of any
      such offer or

<PAGE>

                                      - 3 -

      agreement as if the authority conferred hereby had not expired, and shall
      be in addition to any other authority conferred on the Directors pursuant
      to the said Section 80; and

(c)   the Articles of Association of the Company be amended by:--

      (i)   the adoption and insertion after Article 4 of the following new
            Article 4A:--

            4A NON-CUMULATIVE EURO PREFERENCE SHARES

            Each Non-cumulative Euro Preference Share of E0.01 forming part
            of the share capital of the Company (a "Non-cumulative Euro
            Preference Share") shall confer the rights as to participation in
            the profits and assets of the Company, receipt of notices,
            attendance and votings at meetings and redemption specified or
            referred to in Schedule 1 to these presents ("Schedule 1", which
            Schedule shall be regarded as part of these presents);

      (ii)  the adoption and inclusion, after Article 169, of the Schedule set
            out in Part 2 of Appendix 3 to the Letter to Shareholders dated 10th
            December 1999 of which the Notice of this meeting forms part; and

      (iii) the addition of the following definition to Article 2:--

            "Euro" and "E"           The single currency of those member states
                                     of the European Union participating in
                                     European Monetary Union from time to time.

/s/ Hew Campbell
----------------------------
Deputy Secretary

<PAGE>

45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTION

                                       OF

             THE ROYAL BANK OF SCOTLAND GROUP PUBLIC LIMITED COMPANY

                             PASSED 13 JANUARY 2000

At an extraordinary general meeting of the above company, duly convened and held
at Edinburgh on 13 January 2000 at 12.30 pm, the following resolution was passed
as a special resolution:

THAT:

(A)   the offer to shareholders of National Westminster Bank plc ("National
      Westminster") being made by Merrill Lynch International and Goldman Sachs
      International on behalf of the company to acquire the whole of the issued
      and to be issued ordinary share capital of National Westminster upon the
      terms and subject to the conditions set out in the offer document dated 16
      December 1999 (the "Offer Document") and the related Form of Acceptance
      or upon the terms and subject to the conditions of any amended, revised,
      extended, additional or other offer or offers as may be approved by the
      board of directors of the company or any duly constituted committee
      thereof (the "Board") (the "Offer") be and is hereby approved and that
      the Board be authorised to waive, amend, vary or extend any of the terms
      and conditions of the Offer, provided that any such waiver, amendment,
      variation or extension shall not in the opinion of the Board be material
      in the context of the Offer and to do all such things as the Board may
      consider necessary or expedient in connection with the Offer including,
      without limitation, making and implementing proposals to the holders of
      options over the ordinary share capital of National Westminster granted
      under any National Westminster share or share option scheme on such terms
      and subject to such conditions as the Board may, in its absolute
      discretion, consider appropriate;

(B)   subject to and conditional upon the Offer becoming or being declared
      unconditional in all respects (other than as regards the conditions
      relating to the passing of this resolution and the admission of the new
      ordinary shares in the capital of the company issued under the Offer to
      the Official List of the London Stock Exchange becoming effective):

      (i)   the authorised share capital of the company be increased by the
            creation of 3,039,375,406 new ordinary shares of 25 pence each in
            the capital of the company, such shares forming one class with the
            existing ordinary shares and having attached thereto the respective
            rights and privileges and being subject to the limitations and
            restrictions set out in the articles of association of the company
            (save that the new ordinary shares to be issued to shareholders of
            National Westminster in connection with the Offer will carry an
            additional entitlement to a dividend of 20.3 pence per new ordinary
            share payable at the same time as the Offer consideration);

<PAGE>

                                     - 2 -

      (ii)  in addition to any authority conferred by paragraph (D) or (E) of
            this resolution, the authority conferred on the directors of the
            company by paragraph (1) of article 13(B) of the company's articles
            of association be renewed for a period of five years commencing on
            the date of passing of this resolution and for that purpose the
            "Section 80 amount" shall be L671,851,084; and

      (iii) in addition to any power conferred by paragraph (F) of this
            resolution, and in substitution for any power conferred at the
            Annual General Meeting of the company on 13 January 2000, the power
            conferred on the directors of the company by paragraph (2) of
            article 13 (B) of the company's articles of association be renewed
            for the period ending at the conclusion of the day of the annual
            general meeting in 2001 or 15 months after the date of the passing
            of this resolution, whichever is the earlier, and for that purpose
            the "Section 89 amount" shall be L31,917,988;

(C)   the authorised share capital of the company be and it is hereby further
      increased by the creation of:

      (i)   82,500,000 additional Category II Non-cumulative Dollar Preference
            Shares of US$0.01 each;

      (ii)  (subject to the proviso aftermentioned) 41,000,000 additional
            Non-cumulative Euro Preference Shares of E0.01 each;

      (iii) 500,000 Non-cumulative Convertible Sterling Preference Shares
            of L0.01 each;

      (iv)  2,000,000 Non-cumulative Convertible Dollar Preference Shares of
            US$0.01 each; and

      (v)   2,000,000 Non-cumulative Convertible Euro Preference Shares
            of E0.01 each,

      such shares having attached thereto the respective rights and being
      subject to the respective limitations and restrictions set out in the
      articles of association of the company, as amended by this resolution;
      provided that the creation of the additional Non-cumulative Euro
      Preference Shares referred to in sub-paragraph (ii) above is contingent
      upon the resolution numbered 14 set out in the notice dated 10 December
      1999 convening an annual general meeting of the company for 13 January
      2000 being passed as a special resolution at that meeting (or any
      adjournment thereof);

(D)   for the purposes of section 80 of the Companies Act 1985 the directors be
      and they are hereby generally and unconditionally authorised to exercise
      all the powers of the company to allot all of the 82,500,000 Category II
      Non-cumulative Dollar Preference Shares of US$0.01 each, 41,000,000
      Non-cumulative Euro Preference Shares of E0.01 each, 500,000
      Non-cumulative Convertible Sterling Preference Shares of L0.01 each,
      2,000,000 Non-cumulative Convertible Dollar Preference Shares of US$0.01
      each, and 2,000,000 Non-cumulative Convertible Euro Preference Shares of
      E0.01 each created pursuant to paragraph (C) of this resolution; provided
      that this authority shall expire on the fifth anniversary of the passing
      of this resolution, except that the company may before the expiry of such
      period make an offer or agreement which would or might require relevant
      securities (within the meaning of the said section 80) to be allotted
      after the expiry of such period and the directors may allot relevant
      securities in pursuance of any such offer or agreement as if the authority
      conferred hereby had not expired, and shall be in addition to any other
      authority conferred on the directors of the company pursuant to the said
      section 80;

<PAGE>

                                      - 3 -

(E)   for the purposes of section 80 of the Companies Act 1985 the directors be
      and they are hereby generally and unconditionally authorised to exercise
      all the powers of the company to allot rights to convert into up to
      500,000,000 new ordinary shares of 25 pence each in the capital of the
      company in connection with the issue and allotment of the Non-cumulative
      Convertible Sterling Preference Shares, Non-cumulative Convertible Dollar
      Preference Shares and Non-cumulative Convertible Euro Preference Shares
      created pursuant to paragraph (C) of this resolution; provided that this
      authority shall expire on the fifth anniversary of the passing of this
      resolution, except that the company may before the expiry of such period
      make an offer or agreement which would or might require relevant
      securities (within the meaning of the said section 80) to be allotted
      after the expiry of such period and the directors may allot relevant
      securities in pursuance of any such offer or agreement as if the authority
      conferred hereby had not expired, and shall be in addition to any other
      authority conferred on the directors of the company pursuant to the said
      section 80;

(F)   the directors be and they are hereby empowered pursuant to section 95(1)
      of the Companies Act 1985 to allot equity securities (within the meaning
      of section 94(2) of the Companies Act 1985) pursuant to the authority
      conferred by paragraph (E) of this resolution for cash as if section 89
      (1) of the Companies Act 1985 did not apply to the allotment. This power:

      (a)   expires at the conclusion of the day of the annual general meeting
            of the company in 2001 or 15 months after the date of the passing of
            this resolution, whichever is the earlier, save that the company may
            make an offer or agreement which would or might require equity
            securities to be allotted after such expiry of this power and the
            directors may allot equity securities in pursuance of that offer or
            agreement notwithstanding that this power has expired;

      (b)   shall be limited to allotments of equity securities for cash up to
            an aggregate nominal amount equal to L5,000, US$20,000 and
            E20,000; and

      shall be in addition to any other power conferred on the directors of the
      company pursuant to article 13 (B) (2) of the company's articles of
      association (including any power conferred by paragraph (B) of this
      resolution);

(G)   the articles of association of the company be amended by:

      (i)   the adoption and insertion, immediately before article 5, of the
            following new article as article 4B:

            4B    NON-CUMULATIVE CONVERTIBLE PREFERENCE SHARES

                  (1)   NON-CUMULATIVE CONVERTIBLE STERLING PREFERENCE SHARES:
                        Each Non-cumulative Convertible Sterling Preference
                        Share of L0.01 forming part of the share capital of the
                        Company (a "Non-cumulative Convertible Sterling
                        Preference Share") shall confer the rights as to
                        participation in the profits and assets of the Company,
                        receipt of notices, attendance and voting at meetings,
                        redemption and conversion specified or referred to in
                        Parts 1 and 4 of Schedule 2 to these presents ("Schedule
                        2" which schedule shall be regarded as part of these
                        presents).

                  (2)   NON-CUMULATIVE CONVERTIBLE DOLLAR PREFERENCE SHARES:
                        Each Non-cumulative Convertible Dollar Preference Share
                        of US$0.01 forming part of the share capital of the
                        Company (a "Non-cumulative Convertible Dollar
                        Preference Share") shall confer the rights as to
                        participation in the profits and assets of the Company,

<PAGE>

                                      - 4 -

                        receipt of notices, attendance and voting at meetings,
                        redemption and conversion specified or referred to in
                        Parts 2 and 4 of Schedule 2.

                  (3)   NON-CUMULATIVE CONVERTIBLE EURO PREFERENCE SHARES: Each
                        Non-cumulative Convertible Euro Preference Share of
                        E0.01 forming part of the share capital of the Company
                        (a "Non-cumulative Convertible Euro Preference Share")
                        shall confer the rights as to participation in the
                        profits and assets of the Company, receipt of notices,
                        attendance and voting at meetings, redemption and
                        conversion specified or referred to in Parts 3 and 4 of
                        Schedule 2.

                  (4)   In Schedule 2, "Convertible Preference Shares" means all
                        or any of the Non-cumulative Convertible Sterling
                        Preference Shares, the Non-cumulative Convertible Dollar
                        Preference Shares and the Non-cumulative Convertible
                        Euro Preference Shares (each a "Convertible Preference
                        Share").

      (ii)  the adoption and inclusion, at the end of the articles of
            association, of the schedule set out in Part 4 of the Circular dated
            16 December 1999 of which the notice of this meeting forms part (the
            purpose of such schedule being to set forth the rights, limitations
            and restrictions attaching to the Non-cumulative Convertible
            Sterling Preference Shares, Non-cumulative Convertible Dollar
            Preference Shares and Non-cumulative Convertible Euro Preference
            Shares created by paragraph (C) of this resolution);

      (iii) the substitution of the words "thirty" for "ten" in article
            4(C)(2)(f)(ii)(A);

      (iv)  the adoption and insertion after article 4(E)(2)(e) of the following
            new sub-paragraph (f):

            (f)   notwithstanding the terms of sub-paragraph (e) above, in
                  relation to any Category II Non-cumulative Dollar Preference
                  Shares allotted on or after 14 January 2000 (other than on
                  exchange of any Exchangeable Capital Securities, Series A of
                  the Company) the provisions of sub-paragraph (A) and (B) set
                  out in sub-paragraph (e) above shall have effect subject to
                  the following modifications:

                  (i)   the reference in sub-paragraph (A) to three years and
                        one day shall be deemed to be a reference to five years
                        and one day;

                  (ii)  notwithstanding the terms of sub-paragraph (B), a
                        Relevant Redemption Premium shall only be payable when
                        the relevant Redemption Date falls after the tenth
                        anniversary of the Relevant Date and on or prior to the
                        twentieth anniversary of the Relevant Date (the
                        "redemption premium period "). The formula for
                        calculation of such Relevant Redemption Premium (subject
                        to rounding down as specified in sub-paragraph (B))
                        shall be as specified in (iii) below. The Directors may,
                        in their discretion, determine in relation to any
                        Category II Non-cumulative Dollar Preference Share,
                        prior to the Relevant Date, that no Relevant Redemption
                        Premium shall be payable;

                  (iii) the formula for calculating the Relevant Redemption
                        Premium shall be:

<PAGE>

                                      - 5 -

                                              A x B

                        where:

                        "A" is as defined in sub-paragraph (e) above;

                        "B" is, in relation to any Redemption Date falling
                        within the redemption premium period, a percentage
                        determined from the table below by reference to the
                        anniversary of the Relevant Date specified in the
                        left-hand column which is the latest to occur prior to
                        that Redemption Date:

<TABLE>
<CAPTION>
ANNIVERSARY OF THE
  RELEVANT DATE                         PERCENTAGE
<S>                                     <C>
tenth                                       50%
eleventh                                    45%
twelfth                                     40%
thirteenth                                  35%
fourteenth                                  30%
fifteenth                                   25%
sixteenth                                   20%
seventeenth                                 15%
eighteenth                                  10%
nineteenth                                   5%
</TABLE>

(H)   in accordance with article 93 of the company's articles of association,
      the maximum aggregate fees of the directors who do not hold executive
      office for their services, be and is hereby increased from L250,000 per
      annum to L500,000 per annum.

/s/ Hew Campbell
------------------------
Deputy Secretary

<PAGE>

No 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                               SPECIAL RESOLUTION

                                       OF

                        THE ROYAL BANK OF SCOTLAND GROUP
                             PUBLIC LIMITED COMPANY

                           PASSED ON 28 FEBRUARY 2000

At the EXTRAORDINARY GENERAL MEETING of the members of THE ROYAL BANK OF
SCOTLAND GROUP PUBLIC LIMITED COMPANY duly convened and held at The Balmoral
Hotel, Edinburgh on 28 February 2000 the following Resolution was duly passed as
a SPECIAL RESOLUTION of the Company:-

                               SPECIAL RESOLUTION

"THAT:

(A)   the offer to shareholders of National Westminster Bank Plc ("NatWest")
      being made by Merrill Lynch International and Goldman Sachs International
      on behalf of the company to acquire the whole of the issued and to be
      issued ordinary share capital of NatWest upon the terms and subject to the
      conditions set out in the Increased Offer Document and the Key Information
      Sheet dated 31 January 2000 (together the "Increased Offer Document") and
      the related Form of Acceptance or upon the terms and subject to the
      conditions of any amended, revised, extended, additional or other offer or
      offers as may be approved by the board of directors of the company or any
      duly constituted committee thereof (the "Board") (the "Increased Offer")
      be and is hereby approved and that the Board be authorised to waive,
      amend, vary or extend any of the terms and conditions of the Increased
      Offer, provided that any such waiver, amendment, variation or extension
      shall not in the opinion of the Board be material in the context of the
      Increased Offer and to do all such things as the Board may consider
      necessary or expedient in connection with the Increased Offer including,
      without limitation, making and implementing

<PAGE>

      proposals to the holders of options over the ordinary share capital of
      NatWest granted under any NatWest share or share option scheme on such
      terms and subject to such conditions as the Board may, in its absolute
      discretion, consider appropriate;

(B)   subject to and conditional upon the Increased Offer becoming or being
      declared unconditional in all respects (other than as regards the
      conditions relating to the passing of this resolution and the admission of
      the new ordinary shares in the capital of the company issued under the
      Increased Offer to the Official List of the London Stock Exchange becoming
      effective):

      (i)   the authorised share capital of the company be increased by the
            creation of 3,039,375,406 new ordinary shares of 25 pence each in
            the capital of the company, such shares forming one class with the
            existing ordinary shares and having attached thereto the respective
            rights and privileges and being subject to the limitations and
            restrictions set out in the articles of association of the company;

      (ii)  in addition to any authority conferred by paragraph (D) or (E) of
            the resolution approved by shareholders of the company at the
            Extraordinary General Meeting held on 13 January 2000, the authority
            conferred on the directors of the company by paragraph (1) of
            article 13(B) of the company's articles of association be renewed
            for a period of five years commencing on the date of passing of this
            resolution and for that purpose the "Section 80 amount" shall be
            L671,851,084; and

      (iii) in addition to any power conferred by paragraph (F) of the
            resolution approved by shareholders of the company at the
            Extraordinary General Meeting held on 13 January 2000, and in
            substitution for any power conferred at the Annual General Meeting
            of the company on 13 January 2000, the power conferred on the
            directors of the company by paragraph (2) of article 13(B) of the
            company's articles of association be renewed for the period ending
            at the conclusion of the day of the annual general meeting in 2001
            or 15 months after the date of the passing of this resolution,
            whichever is the earlier, and for that purpose the "Section 89
            amount" shall be L33,556,645;

            and that paragraph (B) of the special resolution approved by
            shareholders at the Extraordinary General Meeting on 13 January 2000
            is superseded by approval of paragraph (B) of this present
            resolution;

(C)   subject to and conditional upon the Offer becoming or being declared
      unconditional in all respects (other than as regards the conditions
      relating to the passing of this resolution and the admission of the new
      ordinary shares in the capital of the company issued under the Offer to
      the Official List of the London Stock Exchange becoming effective) the
      authorised share capital of the company be and it is hereby further
      increased by the creation of 900,000,000 Category II Non-cumulative
      Convertible Sterling Preference Shares of L0.25 each, such shares
      having attached thereto the rights and being

<PAGE>

      subject to the limitations and restrictions set out in the articles of
      association of the company, as amended by this resolution.

(D)   for the purposes of section 80 of the Companies Act 1985 the directors be
      and they are hereby generally and unconditionally authorised to exercise
      all the powers of the company to allot all of the 900,000,000 Category II
      Non-cumulative Convertible Sterling Preference Shares created pursuant to
      paragraph (C) of this resolution; provided that this authority shall
      expire on the fifth anniversary of the passing of this resolution, except
      that the company may before the expiry of such period make an offer or
      agreement which would or might require relevant securities (within the
      meaning of the said section 80) to be allotted after the expiry of such
      period and the directors may allot relevant securities in pursuance of any
      such offer or agreement as if the authority conferred hereby had not
      expired, and shall be in addition to any other authority conferred on the
      directors of the company pursuant to the said section 80;

(E)   for the purposes of section 80 of the Companies Act 1985 the directors be
      and they are hereby generally and unconditionally authorised to exercise
      all the powers of the company to allot rights to convert into up to
      180,000,000 new ordinary shares of 25 pence each in the capital of the
      company in connection with the issue and allotment of the Category II
      Non-cumulative Convertible Sterling Preference Shares created pursuant to
      paragraph (C) of this resolution; provided that this authority shall
      expire on the fifth anniversary of the passing of this resolution, except
      that the company may before the expiry of such period make an offer or
      agreement which would or might require relevant securities (within the
      meaning of the said section 80) to be allotted after the expiry of such
      period and the directors may allot relevant securities in pursuance of any
      such offer or agreement as if the authority conferred hereby had not
      expired, and shall be in addition to any other authority conferred on the
      directors of the company pursuant to the said section 80;

(F)   the directors be and they are hereby empowered pursuant to section 95(1)
      of the Companies Act 1985 to allot equity securities (within the meaning
      of section 94(2) of the Companies Act 1985) pursuant to the authority
      conferred by paragraph (C) of this resolution for cash as if section 89(1)
      of the Companies Act 1985 did not apply to the allotment. This power:

      (a)   expires at the conclusion of the day of the annual general meeting
            of the company in 2001 or 15 months after the date of the passing of
            this resolution, whichever is the earlier, save that the company may
            make an offer or agreement which would or might require equity
            securities to be allotted after such expiry of this power and the
            directors may allot equity securities in pursuance of that offer or
            agreement notwithstanding that this power has expired;

      (b)   shall be limited to allotments of equity securities for cash up to
            an aggregate nominal amount equal to L45,000,000; and

<PAGE>

            shall be in addition to any other power conferred on the directors
            of the company pursuant to article 13 B (2) of the company's
            articles of association and such additional authorities conferred on
            the directors at the Extraordinary General Meeting of the Company on
            13 January 2000;

(G)   the articles of association of the company be amended by:

      (i)   the adoption and insertion, immediately before article 5, of the
            following new article as article 4C:

            "4C CATEGORY II NON-CUMULATIVE CONVERTIBLE STERLING PREFERENCE
            SHARES

            Each Category II Non-cumulative Convertible Sterling Preference
            Share of L0.25 forming part of the share capital of the
            Company (a "Category II Non-cumulative Convertible Sterling
            Preference Share") shall confer the rights as to participation in
            the profits and assets of the Company, receipt of notices,
            attendance and voting at meetings, redemption and conversion
            specified or referred to in Schedule 3 to these presents ("Schedule
            3" which schedule shall be regarded as part of these presents)";

      (ii)  the adoption and inclusion, at the end of the articles of
            association, of the schedule set out in Part 5 of the Circular dated
            31 January 2000 of which the notice of this meeting forms part (the
            purpose of such schedule being to set forth the rights, limitations
            and restrictions attaching to the Category II Non-cumulative
            Convertible Sterling Preference Shares created by paragraph (C) of
            this resolution);

      (iii) the insertion in article 4(D)(2)(a) after "at such rate" of the
            words "(which may be fixed or variable and may be subject to
            recalculation at fixed intervals)";

      (iv)  the addition at the end of article 4(E)(2)(e)(A) of the words
            "(provided that the Directors may determine prior to allotment that
            a Redemption Date must, in addition to falling as aforesaid, fall on
            such anniversary (or on such anniversaries) of the date of allotment
            as may be fixed by the Directors prior to allotment)";

      (v)   the insertion in article 4(F) after "Category II Non-cumulative
            Dollar Preference Shares" of the words "and the Non-cumulative Euro
            Preference Shares and the Convertible Preference Shares (as defined
            in article 4B) and the Category II Non-cumulative Convertible
            Sterling Preference Shares";

      (vi)  the substitution of the second sentence of paragraph 2.6(A) of Part
            2 of Schedule 2 with the following: ""Redemption Date" means, in
            relation to a Non-cumulative Convertible Dollar Preference Share,
            any date

<PAGE>

            which falls no earlier than five years and one day (or such longer
            period (if any) as may be fixed by the Directors prior to allotment
            of such Share) after the date of allotment of the Non-cumulative
            Convertible Dollar Preference Shares to be redeemed";

      (vii) the substitution of the second sentence of paragraph 2.6(A) of Part
            3 of Schedule 2 with the following: ""Redemption Date" means, in
            relation to a Non-cumulative Convertible Euro Preference Share, any
            date which falls no earlier than five years and one day (or such
            longer period (if any) as may be fixed by the Directors prior to
            allotment of such Share) after the date of allotment of the
            Non-cumulative Convertible Euro Preference Shares to be redeemed";

      (viii) the substitution of "five" for "ten" in paragraph 2(A) of Part 4 of
            Schedule 2;

      (ix)  the substitution of the phrase set out in paragraph 3(A) of Part 4
            of Schedule 2: "95% of the weighted average closing price per
            Ordinary Share on the London Stock Exchange during the Broker Bid
            Period (the "Base Price"))" by the phrase "either:

            (aa)  95% of the weighted average closing price per Ordinary Share
                  on the London Stock Exchange during the Broker Bid Period; or

            (bb)  their nominal amount.

The Directors shall specify prior to the allotment of any particular series of
Convertible Preference Shares which of (aa) or (bb) shall apply in respect of
that series (the "Base Price"))."

                                                   /s/ Hew Campbell
                                                   -----------------------------
                                                       Hew Campbell
                                                       Deputy Secretary

<PAGE>

No 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS

                                       OF

                        THE ROYAL BANK OF SCOTLAND GROUP
                             PUBLIC LIMITED COMPANY

                               PASSED 20 JUNE 2000

At an extraordinary general meeting of the above company convened and held by
Edinburgh on 20 June 2000 at 11.00 am, the following resolutions were passed as
special resolutions:

                               SPECIAL RESOLUTION

THAT:

(A)   subject to and conditional upon the admission of the Additional Value
      Shares in the capital of the Company to the Official List of the Financial
      Services Authority and admission to trading with the London Stock Exchange
      becoming effective, the authorised share capital of the Company be and it
      is hereby increased by the creation of Additional Value Shares of L0.01
      each, having an aggregate nominal value of L27 million, and Non-Voting
      Deferred Shares of L0.01 each, having an aggregate nominal value of L323
      million, such shares having attached thereto the rights and being subject
      to the limitations and restrictions set out in the articles of association
      of the Company, as amended by this resolution;

(B)   for the purposes of section 80 of the Companies Act 1985 the directors be
      and they are hereby generally and unconditionally authorised to exercise
      all the powers of the Company to allot all of the Additional Value Shares
      created pursuant to paragraph (A) of this resolution; provided that this
      authority shall expire on the fifth anniversary of the passing of this
      resolution, except that the Company may before the expiry of such period
      make an offer or agreement which would or might require relevant
      securities (within the meaning of the said section 80) to be allotted
      after the expiry of such period and the directors may allot relevant
      securities in pursuance of any such offer or agreement as if the authority
      conferred hereby had not expired, and shall be in addition to any other
      authority conferred on the directors of the Company pursuant to the said
      section 80;

(C)  for the purposes of section 80 of the Companies Act 1985 the directors be
     and they are hereby generally and unconditionally authorised to exercise
     all the powers of the Company to allot rights to convert the Additional
     Value Shares created pursuant to paragraph (A) of this resolution into

<PAGE>

                                      - 2 -

      up to 1.4 billion new Ordinary Shares of L0.25 each in the capital of the
      Company and to allot Non-Voting Deferred Shares of L0.01 each up to an
      aggregate nominal amount of L323 million for the purposes of such
      conversion provided that this authority shall expire on the fifth
      anniversary of the passing of this resolution, except that the Company may
      before the expiry of such period make an offer or agreement which would or
      might require relevant securities (within the meaning of the said section
      80) to be allotted after the expiry of such period and the directors may
      allot relevant securities in pursuance of any such offer or agreement as
      if the authority conferred hereby had not expired, and shall be in
      addition to any other authority conferred on the directors of the Company
      pursuant to the said section 80;

(D)   the directors be authorised, in accordance with regulation 148(A) of the
      articles of association of the Company (as amended by this resolution), to
      capitalise such sum (not exceeding L27 million) being part of the amount
      standing to the credit of such part of the Company's share premium account
      as the Directors may specify or merger reserve (as determined by the
      Directors), and to appropriate such sum and apply it in allotting to the
      holders of Ordinary Shares of L0.25 each, as shown in the register of
      members of the Company at 5.00 p.m. on 20 June 2000 (the "Record Date") or
      as they may direct, Additional Value Shares credited as fully paid at par,
      on the basis of one such Additional Value Share for every Ordinary Share
      held by them at the close of business on the Record Date;

(E)   in any case where in accordance with the new Article 4D to be adopted
      pursuant to paragraph (F) of this resolution, any Additional Value Shares
      are to be consolidated, or to be consolidated with Non-Voting Deferred
      Shares, into a consolidated share, and that consolidated share is to be
      subdivided into Ordinary Shares or into Ordinary Shares and Non-Voting
      Deferred Shares, such shares be consolidated and sub-divided in accordance
      with the provisions of the said Article;

(F)   the articles of association of the Company be amended by:

      (i)   the adoption and insertion, immediately before article 5, of the
            following new article as article 4D:

            "4D Additional Value Shares

                  Each Additional Value Share of L0.01 forming part of the share
                  capital of the Company (an "Additional Value Share") shall
                  confer the rights as to participation in the profits and
                  assets of the Company, receipt of notices, attendance and
                  voting at meetings and conversion specified or referred to in
                  Schedule 4 to these presents ("Schedule 4") which schedule
                  shall be regarded as part of these presents";

      (ii)  the adoption and inclusion, at the end of the articles of
            association of the Company, of the schedule set out in Part 9 of the
            Circular dated 23 May 2000 of which the notice of this meeting forms
            part (the purpose of such schedule being to set forth the rights and
            restrictions attaching to the Additional Value Shares created by
            paragraph (A) of this resolution);

      (iii) the adoption and inclusion of the following definition in Article 2:

            ""London Stock Exchange dealing day"  a day, other than a Saturday,
                                                  Sunday or public holiday in
                                                  the UK when the London Stock
                                                  Exchange is open or was due to
                                                  be open for trading ";

      (iv)  the redesignation of Article 148 as 148(A) and adoption and
            inclusion of the following Article 148(B):

<PAGE>

                                      - 3 -

            "148(B)In addition and without limiting the generality of paragraph
                  (A) of this Article, the Directors may at any time without any
                  resolution of the shareholders capitalise any profit or
                  reserve which may be capitalised pursuant to paragraph (A) of
                  this Article and which is required to be capitalised to enable
                  the Company to allot and issue fully paid shares to the
                  holders of convertible securities pursuant to the rights of
                  conversion conferred upon such holders and in any such case
                  the Directors shall apply any sum so capitalised in paying up
                  and issuing to such holders such number of shares of such
                  nominal amounts and conferring such rights and being subject
                  to such restrictions as shall be required to enable the
                  Company to comply with its obligations.";

      (v)   the deletion of the existing definition of "New Preference Shares"
            in Article 2, and the adoption and inclusion of the following
            definitions to that article:

            ""Additional Value Share"              The meaning given in Article
                                                   4D.

            "Non-cumulative Euro Preference Share" The meaning given in Article
                                                   4A.

            "Non-cumulative Convertible
            Sterling Preference Share"             The meaning given in Article
                                                   4B(1).

            "Non-cumulative Convertible
            Dollar Preference Share"               The meaning given in Article
                                                   4B(2).

            "Non-cumulative Convertible Euro
            Preference Share"                      The meaning given in Article
                                                   4B(3).

            "Convertible Preference Shares"        The meaning given in Article
                                                   4B(4).

            "Category II Non-cumulative Dollar
            Preference Shares"                     The meaning given in Article
                                                   4(E)(1).

            "Category II Non-cumulative
            Convertible Sterling Preference Share" The meaning given in Article
                                                   4C.

            "New Preference Shares"                The Non-cumulative Sterling
                                                   Preference Shares, the
                                                   Non-cumulative Dollar
                                                   Preference Shares, the
                                                   Non-cumulative Euro
                                                   Preference Shares, the
                                                   Category II Non-cumulative
                                                   Dollar Preference Shares, the
                                                   Convertible Preference Shares
                                                   and the Category II
                                                   Non-cumulative Convertible
                                                   Sterling Preference Shares
                                                   (which classes of
                                                   non-cumulative preference
                                                   shares all rank pari passu
                                                   inter se as regards
                                                   participation in the profits
                                                   and assets of the Company),
                                                   together with any other share
                                                   in the capital of the Company
                                                   (other than the Cumulative
                                                   Preference Shares) which is
                                                   expressed to rank as regards
                                                   participation in the profits
                                                   or assets of the Company in
                                                   some or all respects pari
                                                   passu therewith."

<PAGE>

                                      - 4 -

                               SPECIAL RESOLUTION

THAT:

(A)   the payment of the ordinary and preference dividends more particularly set
      out in the schedule following Part 8 of the Circular dated 23 May 2000 of
      which this notice of meeting forms part (the DIVIDENDS), and the entries
      in the audited accounts of the Company for the years ended 30 September
      1996 to 30 September 1999 inclusive for Dividends paid between such dates,
      and in the interim accounts made up to 31 December 1999 for Dividends paid
      in the financial quarter ending on that date, whereby distributable
      profits of the Company were appropriated to the payments of the Dividends
      be and they are hereby ratified and confirmed;

(B)   any and all claims which the Company may have in respect of the payments
      of the Dividends or any of them against its shareholders who appeared on
      the register of shareholders on the relevant record dates be released and
      a deed of release in favour of such shareholders be entered into by the
      Company in the form of the deed produced to this meeting and signed by the
      Chairman for the purposes of identification and thereafter be delivered to
      the Secretary of the Company for retention by him on behalf of the said
      shareholders;

(C)   any distribution involved in the giving of any such release in relation to
      any particular Dividend be made out of the profits appropriated to such
      Dividend as aforesaid by reference to a record date identical to the
      record date for the Dividend concerned; and

(D)   any and all claims which the Company may have against its directors (both
      past and present) arising out of the payment of the Dividends be released
      and that a deed of release in favour of the Company's directors be entered
      into by the Company in the form of the deed produced to this meeting and
      signed by the Chairman for the purposes of identification and thereafter
      be delivered to the Secretary of the Company for retention by him on
      behalf of the said directors.

/s/ Hew Campbell
------------------
Hew Campbell
Deputy Secretary

<PAGE>

N0 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                               SPECIAL RESOLUTIONS

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                             PASSED ON 11 APRIL 2001

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at The Edinburgh International
Conference Centre, Edinburgh on 11 April 2001 the following Resolutions was duly
passed as SPECIAL RESOLUTIONS of the Company:-

                               SPECIAL RESOLUTIONS

1.    "THAT: the Articles of Association of the Company be and they are hereby
      amended as follows:

      (1)   In Article 2 (Definitions and Interpretation):

            (a)   insert the following definitions at the appropriate places:

                  "communication" The same meaning as in the Electronic
                  Communications Act 2000;

                  "electronic communication" The same meaning as in the
                  Electronic Communications Act 2000;"

            (b)   at the end insert the following:

<PAGE>

                                        2

                  "In Articles 84(A), 88, 110(A), 157 and 158 to 161 (inclusive)
                  `address', in relation to electronic communications, includes
                  any number or address used for the purposes of such
                  communications.";

      (2)   at the end of Article 56 (period of notice of general meetings)
            insert the following:

            "For the purposes of this Article (and without prejudice to the
            other provisions of these presents), the cases in which notice in
            writing is to be taken as given to a member include any case in
            which the notice of meeting is sent, or treated as given, using
            electronic communications in accordance with Section 369(4A) and
            (4B) of the 1985 Act, and the provisions of subsection(4D) of that
            Section shall apply in respect of the publication of such notice on
            a web site.";

      (3)   in Article 57(c) (contents of notice), for the word "instruments",
            in all places where it occurs, substitute the words "forms for
            appointment";

      (4)   in Article 68 (adjournment of general meetings), after the words
            "may nevertheless", insert the words "(without prejudice to the
            other provisions of these presents)";

      (5)   in Article 83 (form and execution of proxies), for the words
            "instrument appointing" substitute the words "appointment of",
            delete the words "in writing", after the words "accept and" insert
            the words ", in the case of an instrument in writing", and at the
            end insert "An appointment of a proxy may be contained in an
            electronic communication in accordance with these presents,
            authenticated or executed in such manner as is specified by the
            Directors.";

      (6)   for Article 84(A) (delivery of forms of proxy), substitute the
            following:

            "(A) An appointment of a proxy (together with any evidence of
            authority required by the directors pursuant to the immediately
            preceding Article) must:

            (a)   in the case of an instrument in writing, be delivered to such
                  place or one of such places (if any) as may be specified for
                  that purpose in, or by way of note to, or in any documents
                  accompanying, the notice convening the meeting or any notice
                  of any adjournment (or, if no place is so specified, to the
                  Transfer Office); and

            (b)   in the case of an appointment contained in an electronic
                  communication, be received at such address as may have been
                  specified for that purpose in (i) the notice convening the
                  meeting or notice of any adjournment, (ii) any instrument of
                  proxy sent out by the Company in relation to the meeting or

<PAGE>

                                        3

                  adjourned meeting, or (iii) any invitation contained in an
                  electronic communication to appoint a proxy issued by the
                  Company in relation to the meeting or adjourned meeting, in
                  each case not later than forty-eight hours before the time
                  appointed for the holding of the meeting or adjourned meeting
                  or (in the case of a poll taken otherwise than at, or on the
                  same day as, the meeting or adjourned meeting) for the taking
                  of the poll at which it is to be used, and, subject to
                  paragraph (B) of this Article, in default shall not be treated
                  as valid; provided that an appointment of a proxy relating to
                  more than one meeting (including any adjournment thereof)
                  having once been so delivered or received for the purposes of
                  any meeting shall not require again to be delivered or
                  received in relation to any subsequent meetings to which it
                  relates. No appointment of a proxy shall be valid after the
                  expiration of twelve months from the date stated in it as the
                  date of its execution or, in the case of an appointment
                  contained in an electronic communication, the date it was
                  sent.";

      (7)   in Article 84(B) (delivery of forms of proxy), after the word "may"
            insert the words ", in the case of an instrument appointing a proxy
            in writing";

      (8)   in Article 85 (differing proxies), for the word "instruments"
            substitute the word "appointments", and after the words "last
            delivered", in both places where they occur, insert the words "or
            received";

      (9)   in Article 87 (rights conferred by form of proxy), for the words
            "instrument appointing", in all places where they occur, substitute
            the words "appointment of";

      (10)  in Article 88 (intervening events), for the word "instrument", in
            both places where it occurs, substitute the word "appointment",
            delete the words "in writing" and after the words "instruments of
            proxy" insert the words ", or, in the case of an appointment of
            proxy contained in an electronic communication, at the address at
            which such appointment was duly received, in each case";

      (11)  delete Article 88A;

      (12)  in Article 110(A) (meetings of directors), after the words "in
            writing", in both places where they occur, insert the words "or by
            electronic communication";

      (13)  in Article 143(D) (scrip dividend), delete the words "in writing"
            and at the end insert ". Electronic communications may, if the
            Directors so determine, be used in accordance with these presents
            (instead of documents in writing) for the notification of the right
            of election and the sending of completed forms of election";

<PAGE>

                                        4

      (14)  at the end of Article 154 (accounts to be sent to members) insert
            the following:

            "Reference in this Article (other than in the immediately preceding
            sentence) to copies of the above-mentioned documents and/or
            statements being sent to any person include (without prejudice to
            any other provision of these presents) references to copies of such
            documents and/or statements being sent, or treated as sent, to such
            person using electronic communications in accordance with Section
            238(4A) and (4B) or Section 251(2A) and (2B) of the 1985 Act, and
            the provisions of Sections 238 (4D) and 251 (2D) of the 1985 Act
            shall apply in respect of the publication of such documents and/or
            statements on a web site.";

      (15)  in Article 156 (rights of auditors), at the end add "Notwithstanding
            the references to notice in writing in Article 56, electronic
            communications may be used by the Company pursuant to Section
            390(1A) of the 1985 Act (and the provisions of the 1985 Act therein
            referred to) to give notice of General Meetings to the Auditors.";

      (16)  in Article 157 (notices to be in writing), at the end insert the
            words "or be given using electronic communications to an address for
            the time being notified for that purposes to the person giving the
            notice";

      (17)  in Article 158(A) (service of notices):

            (a)   after the words "relevant system", insert the words ", or by
                  sending it using electronic communications to an address for
                  the time being notified to the Company by the member";

            (b)   delete the words "in writing"; and

            (c)   after the words "member concerned" insert the words "(which
                  may consist of the Company placing such notice or document on
                  a web site and sending the member concerned notification of
                  the notice or document on the web site in lieu of sending the
                  notice or document)";

      (18)  in Article 158(B) (when notice deemed served):

            (a)   after the penultimate sentence insert the words "Any notice or
                  document sent by using electronic communication shall be
                  deemed to be served or delivered at the expiration of
                  forty-eight hours after the time it was sent, and in proving
                  such service or delivery, proof that a notice or document
                  contained in an electronic communication was sent in
                  accordance with guidance issued by the Institute of Chartered
                  Secretaries and

<PAGE>

                                        5

                  Administrators shall be conclusive evidence that the notice or
                  document was served or delivered."; and

            (b)   delete the words "in writing";

      (19)  in Article 162, after the word "Company" insert the words ", and
            given in writing,";

      (20)  in Article 166, at the end add "Nothing in any of the preceding nine
            Articles shall prevent or restrict the Company using any method of
            sending, or giving access to, any particular offer, notice or other
            document which the Statutes or any other provision of these presents
            permits or enables the Company to use."

2.    "THAT: the power conferred on the directors by paragraph (2) of Article
      13(B) of the Company's Articles of Association be renewed for the period
      ending on the day of the Annual General Meeting in 2002 or on 11th July
      2002, whichever is the earlier, and for that purpose the "Section 89
      amount" shall be L33,487,950."

3.    "THAT:, pursuant to Article 11 of the Articles of Association of the
      Company, the Company is generally and unconditionally authorised to make
      market purchases (within the meaning of Section 163(3) of the Companies
      Act 1985) of ordinary shares of 25p each in the capital of the Company,
      provided that:

      (i)   the maximum number of ordinary shares to be purchased is 267,903,600
            (representing 10 per cent. of the issued ordinary share capital);

      (ii)  the minimum price which may be paid for an ordinary share is 25p per
            share which amount shall be exclusive of expenses;

      (iii) the maximum price which may be paid for an ordinary share is, in
            respect of an ordinary share contracted to be purchased on any day,
            an amount (exclusive of expenses) equal to 105 per cent. of the
            average of the mid-market quotations for an ordinary share of the
            Company as derived from The Daily Official List of The London Stock
            Exchange for the 5 business days immediately preceding the day on
            which the ordinary share is contracted to be purchased;

      (iv)  the authority hereby conferred shall expire at the conclusion of the
            next Annual General Meeting of the Company following the passing of
            this resolution, unless such authority is renewed prior to such
            time; and

      (v)   the Company may conclude a contract to purchase ordinary shares
            under the authority hereby conferred prior to the expiry of such
            authority which will or may be executed wholly or partly after such
            expiry, and may make a purchase of ordinary shares in pursuance of
            any such contract as if the authority hereby conferred had not
            expired."

<PAGE>

                                        6

4.    "THAT:

      (A)   the authorised share capital of the Company be and it is hereby
            increased by the creation of 900,000 additional Non-cumulative
            Convertible Dollar Preference Shares of US$0.01 each, having
            attached thereto the rights and being subject to the limitations and
            restrictions set out in the Articles of Association of the Company;

      (B)   for the purposes of section 80 of the Companies Act 1985 ("section
            80") the directors be and they are hereby generally and
            unconditionally authorised to exercise all the powers of the Company
            to allot all of the 900,000 Non-cumulative Convertible Dollar
            Preference Shares of US$0.01 each created pursuant to paragraph (A)
            of this resolution ("the New Preference Shares"); provided that this
            authority shall expire on 13th January 2005, except that the Company
            may before that date make an offer or agreement which would or might
            require relevant securities (within the meaning of section 80) to be
            allotted after such date, and the directors may allot relevant
            securities in pursuance of any such offer or agreement as if the
            authority conferred hereby had not expired; this authority shall be
            in addition to any other authority conferred on the directors of the
            Company pursuant to section 80;

      (C)   the general and unconditional authority conferred on the directors
            of the Company for the purposes of section 80 by paragraph (E) of
            the special resolution passed at the extraordinary general meeting
            of the Company held on 13th January 2000 ("the Section 80
            Authority") be and it is hereby varied so that it shall take effect
            as if the reference in the said paragraph (E) to Non-cumulative
            Convertible Dollar Preference Shares included the New Preference
            Shares; subject to the foregoing variation, the Section 80 Authority
            shall continue in full force and effect;

      (D)   the directors be and they are hereby empowered pursuant to section
            95(1) of the Companies Act 1985 to allot equity securities (within
            the meaning of section 94(2) of the Companies Act 1985) pursuant to
            the Section 80 Authority, as varied by paragraph (C) of this
            resolution, for cash as if section 89(1) of the Companies Act did
            not apply to the allotment. This power:

            (a)   expires at the conclusion of the day of the annual general
                  meeting of the Company in 2002 or 15 months after the date of
                  the passing of this resolution, whichever is the earlier, save
                  that the Company may make an offer or arrangement which would
                  or might require equity securities to be allotted after such
                  expiry of this power and the directors may allot equity
                  securities in pursuance of that offer or agreement
                  notwithstanding that this power has expired;

<PAGE>

                                        7

            (b)   shall be limited to the allotment of equity securities for
                  cash up to an aggregate nominal amount equal to L3,000,
                  US$10,000 and E12,500;

            and shall be in addition to any other power conferred on the
            directors of the Company pursuant to Article 13(B)(2) of the
            Company's Articles of Association;

      (E)   the authorised share capital of the Company be and is hereby further
            increased by the creation of:

            (i)   500,000 additional Non-cumulative Convertible Sterling
                  Preference Shares of L0.01 each;

            (ii)  1,000,000 additional Non-cumulative Convertible Dollar
                  Preference Shares of US$0.01 each; and

            (iii) 1,000,000 additional Non-cumulative Convertible Euro
                  Preference Shares of E0.01 each;

            such shares having attached thereto the respective rights and being
            subject to the respective limitations and restrictions set out in
            the Articles of Association of the Company; and

      (F)   for the purposes of section 80, the directors be and they are hereby
            generally and unconditionally authorised to exercise all the powers
            of the Company to allot all of the 500,000 Non-cumulative
            Convertible Sterling Preference Shares of L0.01 each, 1,000,000
            Non-cumulative Convertible Dollar Preference Shares of US$0.01 each
            and 1,000,000 Non-cumulative Convertible Euro Preference Shares of
            E0.01 each created pursuant to paragraph (E) of this resolution;
            provided that this authority shall expire on the fifth anniversary
            of the passing of this resolution, except that the Company may,
            before the expiry of such period, make an offer or agreement which
            would or might require relevant securities (within the meaning of
            section 80) to be allotted after the expiry of such period, and the
            directors may allot relevant securities in pursuance of any such
            offer or agreement as if the authority conferred hereby had not
            expired; this authority shall be in addition to any other authority
            conferred on the directors of the Company pursuant to section 80."

5.    "THAT:      Schedule 2 to the Articles of Association of the Company be
                  and it is hereby amended as follows:

                  (1)   in paragraph 2.6 of Part 1 of the Schedule, after sub-
                        paragraph (A), insert the following sub-paragraph:

                        "(AA) notwithstanding the foregoing, in relation to any
                        series of Non-cumulative Convertible Sterling

<PAGE>

                                        8

                        Preference Shares allotted after 11th April 2001, sub-
                        paragraph (A) above shall have effect as if the
                        references to ten years, in both places where they
                        occur, were references to five years;"; and

                  (2)   in paragraph 2.1 of each of Parts 1, 2 and 3 of the
                        Schedule, after the words "at such rate", insert the
                        words "(which, in the case of any series allotted after
                        11th April 2001, may be fixed or variable and may be
                        subject to recalculation at fixed intervals)".

                                                        /s/ Hew Campbell
                                                        ----------------------
                                                        Hew Campbell
                                                        Deputy Secretary

<PAGE>

No 45551

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                               SPECIAL RESOLUTIONS

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                             PASSED ON 26 APRIL 2002

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK OF SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at The Edinburgh International
Conference Centre, Edinburgh on 26 April 2002 the following Resolutions were
duly passed as SPECIAL RESOLUTIONS of the Company:-

                               SPECIAL RESOLUTIONS

1.    "THAT: the power conferred on the directors by paragraph (2) of Article
      13(B) of the Company's Articles of Association be renewed for the period
      ending on the day of the Annual General Meeting in 2003 or on 26th July
      2003, whichever is the earlier, and for that purpose the "Section 89
      amount" shall be L35,750,676."

2.    "THAT:, pursuant to Article 11 of the Articles of Association of the
      Company, the Company is generally and unconditionally authorised to make
      market purchases (within the meaning of Section 163(3) of the Companies
      Act 1985) of ordinary shares of 25p each in the capital of the Company,
      provided that:

      (i)   the maximum number of ordinary shares to be purchased is 286,005,407
            (representing 10% of the issued ordinary share capital);

<PAGE>

      (ii)  the minimum price which may be paid for an ordinary share is 25p per
            share which amount shall be exclusive of expenses;

      (iii) the maximum price which may be paid for an ordinary share is, in
            respect of an ordinary share contracted to be purchased on any day,
            an amount (exclusive of expenses) equal to 105% of the average of
            the mid-market quotations for an ordinary share of the Company as
            derived from The Daily Official List of The London Stock Exchange
            for the 5 business days immediately preceding the day on which the
            ordinary share is contracted to be purchased;

      (iv)  the authority hereby conferred shall expire at the conclusion of the
            next Annual General Meeting of the Company following the passing of
            this resolution, unless such authority is renewed prior to such
            time; and

      (v)   the Company may conclude a contract to purchase ordinary shares
            under the authority hereby conferred prior to the expiry of such
            authority which will or may be executed wholly or partly after such
            expiry, and may make a purchase of ordinary shares in pursuance of
            any such contract as if the authority hereby conferred had not
            expired."

                                                        /s/ Hew Campbell
                                                        ------------------------
                                                        Hew Campbell
                                                        Deputy Secretary

<PAGE>

No 45551
                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                               SPECIAL RESOLUTIONS

                                       OF

                           THE ROYAL BANK OF SCOTLAND
                          GROUP PUBLIC LIMITED COMPANY

                             PASSED ON 28 APRIL 2003

At the ANNUAL GENERAL MEETING of the members of THE ROYAL BANK SCOTLAND GROUP
PUBLIC LIMITED COMPANY duly convened and held at The Edinburgh International
Conference Centre, Edinburgh on 28 April 2003 the following Resolutions were
duly passed as SPECIAL RESOLUTIONS of the Company:-

                               SPECIAL RESOLUTIONS

1.    "THAT: the power conferred on the directors by paragraph (2) of Article
      13(B) of the Company's Articles of Association be renewed for the period
      ending on the day of the Annual General Meeting in 2004 or on 28th July
      2004, whichever is the earlier, and for that purpose the "Section 89
      amount" shall be L36,263,574."

2.    "That, pursuant to Article 11 of the Articles of Association of the
      Company, the Company is generally and unconditionally authorised to make
      market purchases (within the meaning of Section 163(3) of the Companies
      Act 1985) of ordinary shares of 25p each in the capital of the Company,
      provided that:

      (i)   the maximum number of ordinary shares to be purchased is 290,108,59
            (representing 10% of the issued ordinary share capital);

<PAGE>

      (ii)  the minimum price which may be paid for an ordinary share is 25p per
            share which amount shall be exclusive of expenses;

      (iii) the maximum price which may be paid for an ordinary share is, in
            respect of an ordinary share contracted to be purchased on any day,
            an amount (exclusive of expenses) equal to 105% of the average of
            the mid-market quotations for an ordinary share of the Company as
            derived from The Daily Official List of The London Stock Exchange
            for the five business days immediately preceding the day on which
            the ordinary share is contracted to be purchased;

      (iv)  the authority hereby conferred shall expire at the conclusion of the
            next Annual General Meeting of the Company following the passing of
            this resolution, unless such authority is renewed prior to such
            time; and

      (v)   the Company may conclude a contract to purchase ordinary shares
            under the authority hereby conferred prior to the expiry of such
            authority which will or may be executed wholly or partly after such
            expiry, and may make a purchase of ordinary shares in pursuance of
            any such contract as if the authority hereby conferred had not
            expired.

                                                        /s/ Hew Campbell
                                                        ------------------------
                                                        Hew Campbell
                                                        Deputy Secretary

<PAGE>

                             THE COMPANIES ACT 1985

                            COMPANY LIMITED BY SHARES

                                   RESOLUTIONS

                                       of

                    The Royal Bank of Scotland Group Limited
                            (Registered Number 45551)

                             Passed on 29 April 2004

At an ANNUAL GENERAL MEETING of the Company duly convened and held at Edinburgh
International Conference Centre, The Exchange, Morrison Street, Edinburgh on 29
April 2004, the following RESOLUTIONS were duly passed:-

Ordinary Resolutions

I     That the power conferred on the Directors by paragraph (1) of Article
      13(B) of the Company's Articles of Association be renewed for a period
      commencing on the date of passing of this resolution and ending at the
      conclusion of the Annual General Meeting in 2005 and for that purpose the
      "Section 80 amount" shall be L247,120,127.

II    a)    That the authorised share capital of the Company be and it is hereby
            increased by the creation of 110 million additional Category II
            Non-cumulative Dollar Preference Shares of US$0.01 each, such shares
            having attached thereto the rights and being subject to the
            limitations set out in the Articles of Association of the Company;
            and

      b)    That for the purposes of Section 80 of the Companies Act 1985 the
            Directors be and they are hereby generally and unconditionally
            authorised to exercise all the powers of the Company to allot:

            (1)   all of the 110 million Category II Non-cumulative Dollar
                  Preference Shares of US$0.01 each created pursuant to
                  paragraph (a) of this resolution;

            (2)   all of the existing 140 million authorised but unissued
                  Category II Non-cumulative Dollar Preference Shares of
                  US$0.01 each;

            (3)   all of the existing 66 million authorised but unissued
                  Non-cumulative Euro Preference Shares of E0.01 each; and

            (4)   all of the existing 300 million authorised but unissued
                  Non-cumulative Sterling Preference Shares of L1 each;

<PAGE>

            provided that this authority shall expire on the fifth anniversary
            of the passing of this Resolution except that the Company may before
            the expiry of such period make an offer or agreement which would or
            might require relevant securities (within the meaning of the said
            Section 80) to be allotted after the expiry of such period and the
            Directors may allot relevant securities in pursuance of any such
            offer or agreement as if the authority hereby conferred had not
            expired. This authority is in addition to the authority conferred by
            resolution number I above, but in substitution for all other
            subsisting authorities, to the extent unused.

Special Resolutions

I     That (i) the power conferred on the Directors by paragraph (2) of Article
      13(B) of the Company's Articles of Association be renewed for the period
      ending at the conclusion of the Annual General Meeting in 2005 or on 29th
      July 2005, whichever is the earlier, and for that purpose the "Section 89
      amount" shall be L37,068,019, and (ii) the said paragraph (2) of Article
      13(B) be amended by deleting the words "pursuant to and within the terms
      of the said authority" and substituting the words "(pursuant to and within
      the terms of the said authority, by way of sales of treasury shares, or
      both)".

II    That, pursuant to Article 11 of the Articles of Association of the
      Company, the Company is generally and unconditionally authorised to make
      market purchases (within the meaning of Section 163(3) of the Companies
      Act 1985) of ordinary shares of 25p each in the capital of the Company,
      provided that:

      (i)   the maximum number of ordinary shares to be purchased is 296,544,152
            (representing 10% of the issued ordinary share capital);

      (ii)  the minimum price which may be paid for an ordinary share is 25p per
            share which amount shall be exclusive of expenses;

      (iii) the maximum price which may be paid for an ordinary share is, in
            respect of an ordinary share contracted to be purchased on any day,
            an amount (exclusive of expenses) equal to 105% of the average of
            the mid-market quotations for an ordinary share of the Company as
            derived from The Daily Official List of The London Stock Exchange
            for the five business days immediately preceding the day on which
            the ordinary share is contracted to be purchased;

      (iv)  the authority hereby conferred shall expire at the conclusion of the
            next Annual General Meeting of the Company following the passing of
            this resolution, unless such authority is renewed prior to such
            time; and

      (v)   the Company may conclude a contract to purchase ordinary shares
            under the authority hereby conferred prior to the expiry of such
            authority which will or may be executed wholly or partly after such
            expiry, and may make a purchase of ordinary shares in pursuance of
            any such contract as if the authority hereby conferred had not
            expired.

III   That the Articles of Association of the Company be amended by:

      (A)   the adoption and insertion after Article 4(C)(2)(b) of the following
            new paragraph (bb):

<PAGE>

            "(bb) ABROGATION OF ENTITLEMENT TO DIVIDEND

                  In relation to any particular Non-cumulative Sterling
                  Preference Shares allotted on or after the date of passing of
                  resolution 17 set out in Appendix 2 to the circular letter to
                  shareholders dated 15th March 2004, all of the following
                  provisions shall apply if (but only if) the Directors so
                  determine prior to allotment thereof:

                  (i)   the Directors may, in their sole and absolute
                        discretion, resolve prior to any dividend payment date
                        that the dividend on such Non-cumulative Sterling
                        Preference Shares, or part thereof, shall not be paid on
                        that dividend payment date. If the Directors resolve as
                        aforesaid, then none or (as the case may be) part only
                        of the dividend shall be declared and/or paid. The
                        Directors shall not be bound to give their reasons for
                        exercising their discretion under this sub-paragraph,
                        and the Directors may exercise their discretion in
                        respect of a dividend notwithstanding the previous
                        setting aside of a sum to provide for payment of that
                        dividend;

                  (ii)  to the extent that any dividend or part of a dividend on
                        any Non-cumulative Sterling Preference Shares is, on
                        any occasion, not paid by reason of the exercise of the
                        Directors' discretion pursuant to sub-paragraph (i)
                        above, the holders of such shares shall have no claim in
                        respect of such non-payment;

                  (iii) if any dividend or part of a dividend on any
                        Non-cumulative Sterling Preference Shares has, on any
                        occasion, not been paid by reason of the exercise of the
                        Directors' discretion under sub-paragraph (i) above:

                        (1)   the provisions of sub-paragraphs (2)(b)(ix) and
                              (x) of this Article 4(C) shall not apply in
                              respect of such non-payment;

                        (2)   such non-payment shall not prevent or restrict (a)
                              the declaration and payment of dividends on any
                              other Non-cumulative Sterling Preference Shares,
                              or on any preference share capital of the Company
                              expressed to rank PARI PASSU with the
                              Non-cumulative Sterling Preference Shares, (b) the
                              setting aside of sums for the payment of such
                              dividends, (c) (subject to (4) below) the
                              redemption, purchase or other acquisition of
                              shares in the Company by the Company, or (d)
                              (subject to (4) below) the setting aside of sums,
                              or the establishment of sinking funds, for any
                              such redemption, purchase or other acquisition by
                              the Company;

                        (3)   no dividend may be declared or paid on any share
                              capital ranking after the Non-cumulative Sterling
                              Preference Shares as regards participation in
                              profits (including the Ordinary Shares) until such
                              time as the dividend stated to be payable on the
                              Non-cumulative Sterling Preference Shares to which
                              the non-payment relates in respect of a dividend
                              period has thereafter been declared and paid in
                              full; and

<PAGE>

                        (4)   the Company may not redeem or purchase or
                              otherwise acquire for any consideration any share
                              capital ranking after the Non-cumulative Sterling
                              Preference Shares, and may not set aside any sum
                              nor establish any sinking fund for the redemption,
                              purchase or other such acquisition thereof, until
                              such time as dividends stated to be payable on the
                              Non-cumulative Sterling Preference Shares to
                              which the non-payment relates in respect of
                              successive dividend periods together aggregating
                              no less than twelve months shall thereafter have
                              been declared and paid in full;

                  (iv)  if there is any conflict between the provisions of this
                        paragraph (bb), as they apply to any Non-cumulative
                        Sterling Preference Shares, and any other provisions of
                        this Article 4(C) applying to such Non-cumulative
                        Sterling Preference Shares (including sub-paragraph
                        (2)(b)(xi)), the provisions of this paragraph (bb) shall
                        prevail. In paragraph (2)(a) of this Article 4(C), the
                        words ", and subject to the provisions of paragraph (bb)
                        below, if applicable" shall be deemed to be inserted
                        after "if applicable" in the first sentence, and in
                        paragraph (2)(b) of this Article 4(C) the words
                        "(subject to the provisions of paragraph (bb) below, if
                        applicable)" shall be deemed to be inserted after "such
                        dividend shall" in sub-paragraph (i) and after
                        "dividends shall" in sub-paragraph (ii);

                  (v)   in determining the sum payable on any Non-cumulative
                        Sterling Preference Shares pursuant to Article
                        4(C)(2)(c)(i) on a winding up or liquidation, the
                        Directors' discretion under sub-paragraph (i) above
                        shall be disregarded save in so far as such discretion
                        was actually exercised prior to the making of the
                        determination;

                  (vi)  in calculating the aggregate amount of dividends payable
                        in respect of any Non-cumulative Sterling Preference
                        Shares for the purposes of Article 4(C)(3), such
                        calculation shall be made on the assumption that there
                        shall be no exercise by the Directors of their
                        discretion under sub-paragraph (i) above in respect of
                        such Non-cumulative Sterling Preference Shares (or any
                        equivalent discretion in respect of any other New
                        Preference Shares); and

                  (vii) for the avoidance of doubt, no series of Non-cumulative
                        Sterling Preference Shares shall be treated as ranking
                        after any other New Preference Shares with which it is
                        expressed to rank PARI PASSU as regards participation in
                        profits, by reason only of the provisions set out in
                        this paragraph (bb) being included in the terms of issue
                        applicable to that series, or any dividend on that
                        series not being paid by virtue of this paragraph
                        (bb).";

(B)   the adoption and insertion after Article 4(E)(2)(f) of the following new
      Article 4(E)(2)(g):

<PAGE>

      "(g)  in relation to any particular Category II Non-cumulative Dollar
            Preference Shares allotted on or after the date of passing of
            resolution 17 set out in Appendix 2 to the circular letter to
            shareholders dated 15th March 2004, all of the following provisions
            shall apply if (but only if) the Directors so determine prior to
            allotment thereof:

            (i)   the Directors may, in their sole and absolute discretion,
                  resolve prior to any dividend payment date that the dividend
                  on such Category II Non-cumulative Dollar Preference Shares,
                  or part thereof, shall not be paid on that dividend payment
                  date. If the Directors resolve as aforesaid, then none or (as
                  the case may be) part only of the dividend shall be declared
                  and/or paid. The Directors shall not be bound to give their
                  reasons for exercising their discretion under this
                  sub-paragraph, and the Directors may exercise their discretion
                  in respect of a dividend notwithstanding the previous setting
                  aside of a sum to provide for payment of that dividend;

            (ii)  to the extent that any dividend or part of a dividend on any
                  Category II Non-cumulative Dollar Preference Shares is, on any
                  occasion, not paid by reason of the exercise of the Directors'
                  discretion pursuant to sub-paragraph (i) above, the holders of
                  such shares shall have no claim in respect of such
                  non-payment;

            (iii) if any dividend or part of a dividend on any Category II Non-
                  cumulative Dollar Preference Shares has, on any occasion, not
                  been paid by reason of the exercise of the Directors'
                  discretion under sub-paragraph (i) above:

                  (1)   the provisions of sub-paragraphs (viii) and (ix) of
                        Article 4(D)(2)(b) shall not apply in respect of such
                        non-payment;

                  (2)   such non-payment shall not prevent or restrict (a) the
                        declaration and payment of dividends on any other
                        Category II Non-cumulative Dollar Preference Shares, or
                        on any preference share capital of the Company expressed
                        to rank PARI PASSU with the Category II Non-cumulative
                        Dollar Preference Shares, (b) the setting aside of sums
                        for the payment of such dividends, (c) (subject to (4)
                        below) the redemption, purchase or other acquisition of
                        shares in the Company by the Company, or (d) (subject to
                        (4) below) the setting aside of sums, or the
                        establishment of sinking funds, for any such redemption,
                        purchase or other acquisition by the Company;

                  (3)   no dividend may be declared or paid on any share capital
                        ranking after the Category II Non-cumulative Dollar
                        Preference Shares as regards participation in profits
                        (including the Ordinary Shares) until such time as the
                        dividend stated to be payable on the Category II
                        Non-cumulative Dollar Preference Shares to which the
                        non-payment relates in respect of a dividend period has
                        thereafter been declared and paid in full; and

<PAGE>

                  (4)   the Company may not redeem or purchase or otherwise
                        acquire for any consideration any share capital ranking
                        after the Category II Non-cumulative Dollar Preference
                        Shares, and may not set aside any sum nor establish any
                        sinking fund for the redemption, purchase or other such
                        acquisition thereof, until such time as dividends stated
                        to be payable on the Category II Non-cumulative Dollar
                        Preference Shares to which the non-payment relates in
                        respect of successive dividend periods together
                        aggregating no less than twelve months shall thereafter
                        have been declared and paid in full;

            (iv)  if there is any conflict between the provisions of this
                  Article 4(E)(2)(g), as they apply to any Category II
                  Non-cumulative Dollar Preference Shares, and any other
                  provisions of Article 4(D) or this Article 4(E) applying to
                  such Category II Non-cumulative Dollar Preference Shares, the
                  provisions of this Article 4(E)(2)(g) shall prevail. In
                  Article 4(D)(2)(a), the words ", and subject to the provisions
                  of Article 4(E)(2)(g), if applicable" shall be deemed to be
                  inserted after "if applicable" in the first sentence, and in
                  Article 4(D)(2)(b) the words "(subject to the provisions of
                  Article 4(E)(2)(g), if applicable)" shall be deemed to be
                  inserted after "such dividend shall" in sub-paragraph (i) and
                  after "dividends shall" in sub-paragraph (ii);

            (v)   in determining the sum payable on any Category II
                  Non-cumulative Dollar Preference Shares pursuant to Article
                  4(D)(2)(c)(i) on a winding up or liquidation, the Directors'
                  discretion under sub-paragraph (i) above shall be disregarded
                  save in so far as such discretion was actually exercised prior
                  to the making of the determination;

            (vi)  in calculating the Relevant Redemption Premium (if any)
                  payable in respect of any Category II Non-cumulative Dollar
                  Preference Shares, the component "A" in the formula for such
                  calculation shall be determined on the assumption that there
                  shall be no exercise by the Directors of their discretion
                  under sub-paragraph (i) above in respect of such Category II
                  Non-cumulative Dollar Preference Shares; and

            (vii) for the avoidance of doubt, no series of Category II
                  Non-cumulative Dollar Preference Shares shall be treated as
                  ranking after any other New Preference Shares with which it is
                  expressed to rank PARI PASSU as regards participation in
                  profits, by reason only of the foregoing provisions of this
                  Article 4(E)(2)(g) being included in the terms of issue
                  applicable to that series, or any dividend on that series not
                  being paid by virtue of this Article 4(E)(2)(g)."; and

      (C)   the adoption and insertion after paragraph 2.2 of schedule 1 to the
            Articles of Association of the following new paragraph 2.2A:

            "2.2A ABROGATION OF ENTITLEMENT TO DIVIDEND

<PAGE>

            In relation to any particular Non-cumulative Euro Preference Shares
            allotted on or after the date of passing of resolution 17 set out in
            Appendix 2 to the circular letter to shareholders dated 15th March
            2004, all of the following provisions shall apply if (but only if)
            the Directors so determine prior to allotment thereof:

            (i)   the Directors may, in their sole and absolute discretion,
                  resolve prior to any dividend payment date that the dividend
                  on such Non-cumulative Euro Preference Shares, or part
                  thereof, shall not be paid on that dividend payment date. If
                  the Directors resolve as aforesaid, then none or (as the case
                  may be) part only of the dividend shall be declared and/or
                  paid. The Directors shall not be bound to give their reasons
                  for exercising their discretion under this sub-paragraph, and
                  the Directors may exercise their discretion in respect of a
                  dividend notwithstanding the previous setting aside of a sum
                  to provide for payment of that dividend.

            (ii)  to the extent that any dividend or part of a dividend on any
                  Non-cumulative Euro Preference Shares is, on any occasion,
                  not paid by reason of the exercise of the Directors'
                  discretion pursuant to sub-paragraph (i) above, the holders
                  of such shares shall have no claim in respect of such
                  non-payment;

            (iii) if any dividend or part of a dividend on any Non-cumulative
                  Euro Preference Shares has, on any occasion, not been paid by
                  reason of the exercise of the Directors' discretion under
                  sub-paragraph (i) above:

                  (1)   the provisions of sub-paragraphs (viii) and (ix) of
                        paragraph 2.2 shall not apply in respect of such
                        non-payment;

                  (2)   such non-payment shall not prevent or restrict (a) the
                        declaration and payment of dividends on any other Non-
                        cumulative Euro Preference Shares, or on any preference
                        share capital of the Company expressed to rank PARI
                        PASSU with the Non-cumulative Euro Preference Shares,
                        (b) the setting aside of sums for the payment of such
                        dividends, (c) (subject to (4) below) the redemption,
                        purchase or other acquisition of shares in the Company
                        by the Company, or (d) (subject to (4) below) the
                        setting aside of sums, or the establishment of sinking
                        funds, for any such redemption, purchase or other
                        acquisition by the Company;

                  (3)   no dividend may be declared or paid on any share capital
                        ranking after the Non-cumulative Euro Preference Shares
                        as regards participation in profits (including the
                        Ordinary Shares) until such time as the dividend stated
                        to be payable on the Non-cumulative Euro Preference
                        Shares to which the non-payment relates in respect of a
                        dividend period has thereafter been declared and paid in
                        full; and

                  (4)   the Company may not redeem or purchase or otherwise
                        acquire for any consideration any share capital ranking
                        after

<PAGE>

                        the Non-cumulative Euro Preference Shares, and may not
                        set aside any sum nor establish any sinking fund for the
                        redemption, purchase or other such acquisition thereof,
                        until such time as dividends stated to be payable on the
                        Non-cumulative Euro Preference Shares to which the
                        non-payment relates in respect of successive dividend
                        periods together aggregating no less than twelve months
                        shall thereafter have been declared and paid in full;

            (iv)  if there is any conflict between the provisions of this
                  paragraph 2.2A, as they apply to any Non- cumulative Euro
                  Preference Shares, and any other provisions of this Schedule
                  applying to such Non-cumulative Euro Preference Shares, the
                  provisions of this paragraph 2.2A shall prevail. In paragraph
                  2.1, the words ", and subject to the provisions of paragraph
                  2.2A, if applicable" shall be deemed to be inserted after "if
                  applicable" in the first sentence, and in paragraph 2.2 the
                  words "(subject to the provisions of paragraph 2.2A, if
                  applicable)" shall be deemed to be inserted after "such
                  dividend shall" in sub-paragraph (i) and after "dividends
                  shall" in sub-paragraph (ii);

            (v)   in determining the sum payable on any Non-cumulative Euro
                  Preference Shares pursuant to paragraph 2.3(i) below on a
                  winding up or liquidation, the Directors' discretion under
                  sub-paragraph (i) above shall be disregarded save in so far as
                  such discretion was actually exercised prior to the making of
                  the determination;

            (vi)  in calculating any Relevant Redemption Premium payable in
                  respect of any Non-cumulative Euro Preference Shares pursuant
                  to paragraph 2.6(ii)(B) below, the components "A" and "C" in
                  the formulae for such calculation shall be determined on the
                  assumption that there shall be no exercise by the Directors of
                  their discretion under sub-paragraph (i) above in respect of
                  such Non-cumulative Euro Preference Shares; and

            (vii) for the avoidance of doubt, no series of Non-cumulative Euro
                  Preference Shares shall be treated as ranking after any other
                  New Preference Shares with which it is expressed to rank PARI
                  PASSU as regards participation in profits, by reason only of
                  the provisions set out in this paragraph 2.2A being included
                  in the terms of issue applicable to that series, or any
                  dividend on that series not being paid by virtue of this
                  paragraph 2.2A."

                                                        /s/  Hew Campbell
                                                        ------------------------
                                                             Deputy Secretary

<PAGE>

                         THE COMPANIES ACTS 1948 to 1983

                       A PUBLIC COMPANY LIMITED BY SHARES

                            MEMORANDUM OF ASSOCIATION
                                       of
                        THE ROYAL BANK OF SCOTLAND GROUP
                             public limited company

    (amended by Resolution of the Directors passed on 28th January, 1982, by
  Special Resolutions passed on 12th January, 1984 and 14th January, 1993 and
                                29th April 2004)

1.    The name of the Company is "The Royal Bank of Scotland Group public
      limited company".(1)

2.    The Company is to be a public company.

3.    The registered office of the Company will be situate in Scotland.

4.    The objects for which the Company is established are(2):-

      (1)   To carry on in any part of the world the business of banking in all
            or any of its aspects, conformably with the laws relating to banking
            whether passed before or after the date of adoption of this clause
            in any of the territories in which the powers hereby conferred are
            exercised, and generally in carrying on its said business and as
            ancillary thereto to do all acts and things which may seem desirable
            to be done in the conduct of the businesses of banking or dealing in
            money and securities for money or which may conduce or be calculated
            directly or indirectly to facilitate or render profitable the
            prosecution or such businesses or may be calculated to promote the
            profitable employment or use of the assets of the Company; and, in
            particular, and without prejudice to such generality:-

            (i)   to issue notes of all denominations or amounts payable to
                  bearer subject to compliance with any legal requirements from
                  time to time applicable thereto and to any special liability
                  which may attach by law thereto and to perform the obligations
                  thereby undertaken;

            (ii)  to receive, collect, obtain, and retain money on deposit,
                  current or savings account or on loan or otherwise, and
                  whether at interest or otherwise, and to obtain the use and
                  control of money and securities and to transmit the same and
                  to employ and use the same in any manner thought fit;

            (iii) to advance, lend, place or deposit money, securities or any
                  other property of every kind whether without security or with
                  security of any nature or kind

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

(1) The Company was incorporated under the name "National and Commercial Banking
Group Limited" and its name was changed to The Royal Bank of Scotland Group
Limited" by Special Resolution passed on 4th July, 1979. By Resolution of the
Directors passed on 28th January, 1982, pursuant to section 8 of the Companies
Act, 1980, the name of the Company was changed to "The Royal Bank of Scotland
Group public limited company".

(2) This clause was substituted by Special Resolution passed on 12th January,
1984.

<PAGE>

                  whatsoever, heritable or moveable, real or personal or
                  otherwise, and generally to grant credit or credit facilities
                  of any nature and to make or negotiate loans and advances,
                  whether to be made by the Company, by the Company and others
                  or by others, to any company or person, all upon such terms as
                  to interest or otherwise as may be thought fit;

            (iv)  to draw, accept, endorse, grant, discount, acquire, tender
                  for, subscribe, buy, sell, issue, negotiate, transfer, hold,
                  invest or deal in and borrow against, secure, retire, pay or
                  otherwise dispose of or deal with cheques, orders, drafts,
                  bills of exchange, promissory notes, and other instruments,
                  securities and obligations of every kind (whether or not
                  transferable or negotiable);

            (v)   to grant, issue, negotiate, honour, retire, pay and meet
                  obligations arising from bankers' cards, cheque, guarantee and
                  cash cards, credit cards, letters of credit, circular notes,
                  travel and travellers cheques, drafts and other instruments,
                  and all other cheques, instruments, cards or devices (whether
                  evidenced or recorded by visible, electronic or other means)
                  used for the payment of debts, discharge of obligations or the
                  transfer of funds, certificates and securities, whether to
                  bearer or otherwise, and whether providing for the payment of
                  money or the delivery of bullion or otherwise; to make the
                  same or any of them assignable absolutely or otherwise; and
                  generally to transact business in relation to all kinds of
                  payment or transfer systems or methods used by bankers or
                  others for the transfer of funds and settlement of debts or
                  transactions (whether in securities or otherwise);

            (vi)  to buy, hold, sell and deal in foreign exchange, currency,
                  bullion, specie, commodities and futures of any description
                  and precious and other metals;

            (vii) to receive money, valuables, securities, deeds, and any other
                  items or documents on deposit or for safe custody or
                  otherwise, and with or without undertaking liability for any
                  loss thereof or injury thereto and with or without
                  remuneration.

      (2)   To carry on the business of a holding company in all its aspects and
            to co-ordinate, finance, assist, subsidise and manage all or any
            part of the businesses and operations of any and all companies in
            which the Company is interested whether as a shareholder or
            otherwise and whether directly or indirectly.

      (3)   To finance or assist in financing the purchase, improvement,
            retention, hire, lease or sale of any heritable or moveable, real or
            personal property of all and every kind or description by way of
            hire purchase, instalment finance, rental finance, deferred payment,
            factoring or leasing or otherwise, and to institute, enter into,
            carry on, subsidise, finance or assist in subsidising or financing
            the purchase, improvement, retention, hire, lease, sale or
            maintenance of any heritable or moveable, real or personal property
            of all and every kind and description upon any terms whatsoever, to
            acquire and discount agreements or any rights thereunder, by way of
            hire purchase, instalment finance, rental finance, deferred payment
            or otherwise, whether proprietary or contractual, and to acquire by
            assignation, charge, assignment, or otherwise debts due and owing to
            any company or person and to collect such debts.

      (4)   To subscribe, enter into or tender for, purchase or otherwise
            acquire, and to hold, dispose of and deal with the shares, stock,
            securities and evidence of indebtedness or of the right to
            participate in profits or assets or other similar documents issued
            by any

<PAGE>

            company or person or any other kind of heritable or moveable, real
            or personal property including (but without limitation) futures
            contracts or arrangements of any nature and interest exchange
            arrangements and any options or other rights in respect of any
            securities or any other kind of heritable or moveable, real or
            personal property as aforesaid and generally both in relation to
            securities and in relation to any other kind of heritable or
            moveable, real or personal property to carry on the business of a
            dealing company in all its aspects; and to promote, effect, insure,
            guarantee, underwrite, secure the subscription or placing of,
            subscribe or tender for or procure subscription of (whether
            conditionally or absolutely), participate in, manage (whether on
            commission or not) carry out or perform any other function in
            relation to any issue (public or private) of the securities of any
            company or person, and any options or rights in respect thereof and
            to lend money for the purposes of or to facilitate any such issue.

      (5)   To enter into any guarantee, bond, recognisance or contract of
            warranty or indemnity or suretyship of any nature whatsoever and
            generally, whether with or without the Company receiving any
            consideration, to guarantee or to grant any indemnity in respect of
            or to secure or support or otherwise be responsible or liable for
            (whether by way of bond, guarantee or otherwise and with or without
            a personal covenant and with or without a heritable security or
            other fixed security or assignation in security or assignation or
            assignment or other conveyance or mortgage or pledge of or charge
            over or set-off against or lien upon all or any part of the
            undertaking and assets, present and future, and the uncalled capital
            of the Company or in any other manner) the performance of any
            contracts, obligations or commitments of any company or person
            (including but without limitation any company which is for the time
            being a subsidiary or a holding company of the Company or another
            subsidiary of a holding company of the Company or which is in any
            way whatsoever allied to or associated with the Company or with any
            such holding company or subsidiary or in which the Company or any
            such holding company, subsidiary or allied or associated company is
            interested whether as a shareholder or otherwise and whether
            directly or indirectly) and in particular (but without prejudice to
            the generality of the foregoing) by all or any of such methods or in
            any other manner to guarantee, provide security for, support and
            become responsible or liable for or in respect of the validity,
            reliability or authenticity of all kinds of titles, securities,
            instruments, deeds and documents and the payment of capital,
            principal, premiums, dividends, interest and other moneys and the
            performance of any obligations secured by or payable or performable
            under or in respect of any securities, to undertake the insurance,
            counter- insurance and reinsurance of all kinds of risks, to obtain
            and receive all kinds of guarantees, counter-guarantees, indemnities
            and counter-indemnities, to take all other kinds of security whether
            by way of bond, personal covenant, heritable or other fixed
            security, assignation in security, assignment, mortgage, pledge, or
            charge or otherwise howsoever for or in respect of the performance
            or implementation of any obligations of any person or company and
            generally to carry on the business of a guarantee and indemnity
            company in all its aspects.

      (6)   To undertake and carry on business as promoters, agents, financiers,
            managers, traders, importers, exporters, concessionaires, jobbers,
            brokers, including commodity and mortgage brokers and stockbrokers,
            merchants, factors, mercantile agents, shipbrokers, underwriters,
            warehousemen, surveyors, auctioneers, valuers, property consultants
            and managers, land and estate agents, contractors, travel agents and
            aircraft, ship, hovercraft, and road and rail transport owners,
            hirers, charterers and operators; to undertake insurance and
            reinsurance and generally carry on the business of insurance in all
            its aspects; to act as agent, broker or underwriter for the placing
            of

<PAGE>

            life, marine, fire, accident, fidelity, travel and all other classes
            of insurance; to act as agent or representative of owners or other
            persons having or claiming to have, any interest in vessels,
            aircraft, hovercraft, cargoes, freights, motor or railway vehicles
            or other machinery or other general merchandise, and any other
            subjects of insurance; and generally to undertake and carry on every
            kind of professional, mercantile, property or agency business in all
            its aspects and to become a subscriber to or member of or otherwise
            associated with any exchange or similar organisation or trade or
            other association.

      (7)   To act as and to undertake and execute the office and duties of
            executor, administrator, trustee or custodian trustee, and to
            undertake the duties and exercise the rights of a trust corporation
            and to undertake and execute trusts of all kinds, whether private or
            public, and whether inter vivos, contractual or mortis causa,
            including religious, educational or charitable trusts, and generally
            to carry on what is usually known as trustee and executor business,
            and in particular and without prejudice to the foregoing generality
            to undertake and execute the office of trustee or executor or
            administrator of wills, estates or settlements, trustee of deeds or
            documents securing debentures, debenture stock or other securities
            of any company or person or of pension, superannuation, benevolent
            or other funds or unit trusts, to establish, promote, continue and
            manage unit trusts, investment trusts, mutual funds and
            corporations, associations and partnerships of all types and to act
            as agent, factor, attorney, tutor, curator, judicial factor,
            receiver, liquidator, guardian, manager, member of committee or any
            other office of trust or responsibility with or without
            remuneration; and to make deposits, enter into recognisances and
            bonds of caution or security and otherwise give security for the due
            execution, and performance of the duties, of any of the said
            offices; with the power to the Company to charge interest at such
            rates as the Company may from time to time fix on all or any
            advances made or debts incurred by the Company while acting in any
            of such capacities.

      (8)   To accept, carry on, manage, sell, realise, transfer, dispose of and
            deal with any business comprised or included in any trust,
            settlement or estate of which the Company is trustee, executor,
            administrator, agent, factor, attorney, tutor, curator, judicial
            factor, guardian, liquidator, receiver, manager, member of committee
            or otherwise.

      (9)   To undertake on behalf of customers and others the investment,
            holding and management, realisation and re-investment of moneys,
            securities, investments and property of every kind upon such terms
            as may be thought desirable, to provide investment management
            services, to accept and hold either in the name of the Company or in
            any of its subsidiaries, or in any other manner moneys, securities,
            investments and property of any description paid, transferred,
            assigned or conveyed to or vested in the Company for management by
            it.

      (10)  To provide management, advisory, consultancy, secretarial,
            accountancy, statistical, legal and any technical, executive,
            supervisory or business services of any kind whatsoever for or in
            relation to any company, person, business or property of any
            description whatsoever.

      (11)  To undertake the office of treasurer, factor, registrar, director,
            secretary and transfer agent and to keep for any company or person
            any register relating to any stocks, funds, shares, or securities,
            and to undertake any duties in relation to the registration of
            transfers, the issue of certificates or otherwise.

<PAGE>

      (12)  To create and issue any securities for any purpose including (but
            without limitation) by way of security or indemnity for or in
            respect of or by way of satisfaction of any liability whether of the
            Company or of any other company or person.

      (13)  To carry on the business of acquiring, selling, installing,
            operating, leasing, renting and providing data processing, storage
            and retrieval equipment and systems, computers, programs and other
            software, bureaux services and communication and information storage
            and retrieval systems of every kind.

      (14)  To apply for and take out, purchase or otherwise acquire any trade
            and service marks and names, designs, patents, patent rights,
            inventions, secret processes, copyrights, concessions, licences,
            grants or other exclusive or non-exclusive rights of any kind and to
            develop and turn to account and deal with the same in such manner as
            may be thought fit and to make experiments and tests and to carry on
            all kinds of research and development work.

      (15)  To seek for and secure and to utilise and develop any openings for
            the employment of capital and if thought fit to engage and employ
            specialists to investigate, explore and examine, whether
            specifically or generally, the prospects, character, situation,
            conditions and circumstances of any businesses, undertakings and
            concerns and any concessions, rights, properties or assets of any
            nature whatsoever.

      (16)  To establish and maintain branches, agencies and representative or
            other offices in any part of the world and to act as agents, and to
            act for and represent, or employ as agents, any company or person
            resident in the United Kingdom or elsewhere.

      (17)  To procure the Company to be registered, licensed or otherwise
            legally recognised in or under the laws of any place outside
            Scotland.

      (18)  To procure the quotation, registration or listing of securities of
            the Company or securities derived from or related to securities of
            the Company on any stock exchange or other market for securities in
            any part of the world.

      (19)  To take or concur in any steps or proceedings (including the
            undertaking of any obligation, monetary or otherwise) calculated to
            uphold or support the credit of the Company or any business with
            which it is associated directly or indirectly or to obtain,
            maintain, restore or justify public confidence, or to avert or
            minimise damage directly or indirectly affecting or likely to affect
            the business of the Company or any such other business as aforesaid.

      (20)  To borrow or raise money in any manner and on any terms whatsoever
            including (but without limitation) by the issue of securities, and
            to secure the repayment of any money borrowed, raised or owing or
            the performance of any obligation or guarantee by granting floating
            charges, heritable or other fixed securities, assignations in
            security, assignations or other conveyances or assignments or by
            mortgage or pledge of or charge over or lien upon, the whole or any
            part of the Company's property or assets (present and future) and
            any uncalled capital of the Company.

      (21)  To purchase or otherwise acquire or undertake the whole or any part
            of, or any interest in, the business, property, assets and
            liabilities of any company or person carrying on or interested in
            any business which the Company is empowered to carry on or possessed
            of property or assets suitable for the purposes of the Company which
            the Company is empowered to hold or deal in or with, and to continue
            or participate

<PAGE>

            in the continuance of any such whole, part or interest so purchased,
            acquired or undertaken.

      (22)  To invest or lend or employ the funds of the Company in or upon such
            investments, securities, futures contracts or other arrangements and
            all other kinds of property (whether heritable or moveable, real or
            personal), rights or options or in such other manner as may be
            thought fit, to hold, sell or otherwise deal with such investments,
            securities, futures contracts, arrangements and other kinds of
            property, rights or options as aforesaid and generally to carry on
            the business of an investment company in all its aspects.

      (23)  To enter into such agreements and arrangements with bankers and
            others as to the general principles to be applied and method or
            procedure to be adopted in carrying out banking or other business in
            any country or district, or for regulating any of the details of
            such business, as may be proper and convenient.

      (24)  To enter into partnership or into any arrangement for sharing
            profits, union of interests, co-operation, joint adventure,
            reciprocal concession or otherwise with any company or person
            carrying on or engaged in or about to carry on or engage in any
            business or transaction capable of being conducted so as directly or
            indirectly to benefit the Company and to lend money to, guarantee
            the contracts and obligations of, or otherwise assist any such
            company or person and to take or otherwise acquire shares and
            securities of any such company or person, and to sell, hold,
            re-issue with or without guarantee or otherwise deal with the same.

      (25)  To amalgamate the Company with or to make arrangements for securing
            reciprocity of interests between the Company and any other company
            or person having objects similar to the objects of the Company or
            any of them, and that by the issue or sale to such other company or
            person of any of the securities of the Company or by purchase of all
            or any of the securities or other interest in the business of any
            such other company or person or by an arrangement of the nature of
            partnership or by an exchange of such securities or interests or by
            the sale of the whole or any part of the assets of the Company for
            the time being or by the purchase or acquisition of the whole or any
            part of the assets of such other company or person, and to exchange
            any of the assets of the Company for the time being for any other
            assets which the Company is entitled to hold; and to promote and
            facilitate any arrangements by way of sale or otherwise of shares
            and securities of the Company by the holders thereof having for its
            eventual object all or any of these purposes.

      (26)  To acquire and carry on any business carried on by a subsidiary or a
            holding company of the Company or another subsidiary of a holding
            company of the Company.

      (27)  To promote or join in the promotion of any company whether or not
            having objects similar (wholly or in part) to those of the Company
            including (but without limitation) the promotion of any company for
            the purpose of acquiring or taking over any part of the property and
            assets and liabilities of the Company or any subsidiary of the
            Company or of any other person or company.

      (28)  To purchase, take on lease, hire, take options over, exchange or
            otherwise acquire and to hold, administer, sell, feu, excamb, lease,
            grant options over, pledge, burden, charge, realise, invest,
            improve, manage, build, construct, equip, work, develop, turn to
            account and otherwise dispose of and deal with assets, moneys,
            lands, buildings,

<PAGE>

            estates, works, structures, facilities, rights, concessions,
            licences, grants, patents, trade marks and other property, heritable
            and moveable, real and personal of every kind and wherever situated,
            and all or any part of the undertaking, properties, assets and
            rights of the Company or any undertaking, properties, assets and
            rights in which the Company may be interested with others.

      (29)  To subscribe, donate or guarantee money or provide sponsorship for
            any international, national, charitable, benevolent, educational,
            social, sporting, public, general or useful object or for any
            exhibition or trade or other association or for any purpose which
            may be considered likely directly or indirectly to further the
            interests of the Company or of its members or of any business with
            which the Company is associated directly or indirectly.

      (30)  To establish and maintain, take over, contribute to or otherwise
            subsidise or support any pension, superannuation, benevolent,
            sickness, medical or life assurance fund, scheme or arrangement
            (whether contributory or otherwise) for the benefit of, and to pay,
            give or procure the payment or giving of donations, gratuities,
            pensions, allowances, bonuses, emoluments or any other benefits to,
            any individuals who are or were at any time Directors, officers,
            employees, servants or agents of the Company or of any other company
            which is or was at any time its holding company or which is or was
            at any time a subsidiary of the Company or of any such holding
            company or which is or was at any time in any way whatsoever allied
            to or associated with the Company or with any such holding company
            or subsidiary or in which the Company or any such holding company or
            subsidiary or allied or associated company is or was at any time
            interested whether as a shareholder or otherwise and whether
            directly or indirectly or of any predecessor in business of the
            Company or of any subsidiary of the Company or of any such other
            company and the husbands, wives, widowers, widows, children,
            families, dependants and personal representatives of any such
            individuals as aforesaid and any other persons whose service or
            services have directly or indirectly been of benefit to the Company
            or to any such other company or to any such predecessor in business
            or who are considered to have any moral claim on the Company or on
            any such other company or on any such predecessor in business and to
            establish and maintain, take over, contribute to or otherwise
            subsidise or support any companies, institutions, associations,
            clubs, schools, buildings, housing schemes, trusts or funds which
            may be considered likely to benefit any such persons as aforesaid or
            to further the interests of the Company or of any such other company
            or of any such predecessor in business and make or provide for or
            procure the making of payments for or towards insuring any such
            persons as aforesaid against risks of all kinds.

      (31)  To establish, maintain, take over, operate, contribute to, subsidise
            and support any scheme, arrangement, fund or trust under or pursuant
            to which individuals who are or were at any time Directors,
            officers, employees, servants or agents of the Company or of any
            other company which is or was at any time its holding company or
            which is or was at any time a subsidiary of the Company or of any
            such holding company or which is or was at any time in any way
            whatsoever allied to or associated with the Company or with any such
            holding company or subsidiary or in which the Company or any such
            holding company or subsidiary or allied or associated company is or
            was at any time interested whether as a shareholder or otherwise
            howsoever and whether directly or indirectly or of any predecessor
            in business of the Company or of any such holding company or
            subsidiary or of any such other company and the husbands, wives,
            widowers, widows, children, families, dependants and personal
            representatives of any such individuals as aforesaid may share or
            participate in the

<PAGE>

            profits of the Company or of any such holding company or subsidiary
            or of any such other company or may in any other manner whatsoever
            acquire rights or benefits which are referable to or dependent upon
            or otherwise connected with the success or prosperity of the Company
            or of any such holding company or subsidiary or of any such other
            company or under or pursuant to which trustees may acquire shares in
            or other securities of the Company or any other company to be held
            for the benefit of such persons as aforesaid or any of them and
            (without prejudice to the generality of the foregoing) to such
            extent and in such manner as shall be legally permissible to lend or
            otherwise provide or procure or subsidise the lending or other
            provision of money to or directly or indirectly for the benefit of
            any such persons as aforesaid with a view to shares in or any other
            securities of the Company or of any such holding company or
            subsidiary or of any such other company being acquired or held by or
            directly or indirectly for the benefit of any such persons as
            aforesaid.

      (32)  (i)   To purchase and maintain insurance for or for the benefit of
                  any persons who are or were at any time Directors, officers or
                  employees of the Company, or of any other company which is its
                  holding company or in which the Company or such holding
                  company or any of the predecessors of the Company or of such
                  holding company has any interest, whether direct or indirect,
                  or which is in any way allied to or associated with the
                  Company, or of any subsidiary undertaking of or any other
                  body, whether or not incorporated ("body") owned by or in
                  which an interest is owned by the Company or any such other
                  company, or who are or were at any time trustees of any
                  pension fund or employees' share scheme in which employees of
                  the company or any such company or subsidiary undertaking or
                  body are interested, including (without prejudice to the
                  generality of the foregoing) insurance against any liability
                  incurred by such persons in respect of any act or omission in
                  the actual or purported execution and/or discharge of their
                  duties and/or the exercise or purported exercise of their
                  powers and/or otherwise in relation to or in connection with
                  their duties, powers or offices in relation to the Company or
                  any such other company, subsidiary undertaking, body, pension
                  fund or employees' share scheme; and

            (ii)  to such extent as may be permitted by law otherwise to
                  indemnify or to exempt any such person against or from any
                  such liability.

            For the purposes of this paragraph (32) "subsidiary undertaking" and
            "employees' share scheme" shall have the same meanings as in the
            Companies Act 1989 and the Companies Act 1985 respectively.

      (33)  To take over, accept, acquire, carry on or procure the carrying on
            of, the whole or any part of, or any interest in, any business or
            undertaking in which any customers or debtors (contingent or
            otherwise) of the Company or of any predecessor in business or
            subsidiary of the Company may be engaged or interested or the
            carrying on of which may be beneficial to the Company or any
            property or assets which any such customer or debtor may be
            possessed of or interested in, and to enter into and perform any
            obligations in connection therewith.

      (34)  To distribute among members of the Company in specie whether by way
            of dividend, bonus or otherwise any property of the Company or any
            proceeds of sale or other disposal of any property or assets of the
            Company, provided that no such distribution shall be made amounting
            to a reduction of capital, except with the sanction, if any, for the
            time being required by law.

<PAGE>

      (35)  To accept all charters, dispositions, leases, charges, securities,
            conveyances, transfers, mortgages, assignations, assignments,
            surrenders or other deeds or instruments affecting heritable or
            moveable, real or personal property to be granted to the Company,
            and to execute and subscribe all charters, dispositions, leases,
            charges, securities, conveyances, transfers, mortgages,
            assignations, assignments, surrenders or other deeds or instruments
            to be granted by the Company.

      (36)  To enter into any arrangements with any Governments or authorities
            international, supreme, municipal, local or otherwise and to obtain
            from any such Government or authority any rights, privileges,
            charters, contracts, licences, or concessions which it may seem
            desirable to obtain and to carry out, exercise and comply therewith.

      (37)  To take, make, execute, enter into, commence, carry on, prosecute
            and defend all actions, steps, contracts, agreements, negotiations,
            legal and other proceedings, compromises, arrangements and schemes,
            and to apply for, promote and obtain any Acts of Parliament, Orders
            in Council, Provisional Orders, Statutory Instruments or other
            legislation or any acts, enactments, decrees, licences, concessions,
            orders or authorities of any Government or authority, international,
            supreme, municipal, local or otherwise, which may seem desirable for
            the purpose of extending or varying the objects or powers of the
            Company, or altering its constitution, or better enabling the
            Company to carry out its objects or otherwise advancing the
            Company's interests or those of any of its subsidiaries or of any
            person or company associated in business with the Company or with
            any of its subsidiaries and to oppose any bills, instruments,
            orders, proceedings or applications or other matters whatsoever
            which may seem likely directly or indirectly to prejudice any such
            interests.

      (38)  To do all or any of such things in any part of the world as
            principals, agents, nominees, attorneys, contractors, trustees or
            otherwise and by or through agents, nominees, subsidiaries,
            attorneys, contractors, trustees or otherwise and either alone or in
            conjunction with others.

      (39)  To carry on any other business or activity and do anything of any
            nature which may seem capable of being conveniently carried on or
            done in connection or in conjunction with or as ancillary to the
            above or by way of extension thereof, or likely directly or
            indirectly to enhance the value of or render profitable or more
            profitable all or any part of the Company's undertaking, property or
            assets or any property in which the Company may be interested or to
            utilise its know-how or expertise or to further any of its objects
            or otherwise to advance the interests of the Company or of its
            members.

      (40)  To do all such other things as may be deemed incidental or conducive
            to the attainment of the above objects or any of them.

      And it is hereby declared that (i) "company" in this clause, except where
      used in reference to this Company, shall include any Government or any
      authority or body (whether statutory, international, supreme, local,
      municipal, public or otherwise), association, partnership, syndicate or
      other body of persons, whether incorporated or not incorporated, and
      whether formed, incorporated, domiciled or resident in the United Kingdom
      or elsewhere, (ii) "person" shall include any person acting in any
      capacity whatsoever, (iii) "subsidiary" and "holding company" shall be
      construed in accordance with Section 154 of the Companies Act, 1948 (or
      any provision of any Act amending, extending or re-enacting the same),
      (iv) "securities" shall include any fully, partly or nil paid or no par
      value share, stock, unit,
<PAGE>

      debenture, debenture or loan stock perpetual, redeemable or otherwise,
      deposit receipt, certificate of title, certificate of deposit, depositary
      receipt, bill, bond, note, warrant, coupon, option, right to subscribe or
      convert, fund or similar right, interest or obligation payable to bearer
      or otherwise, (v) references in this clause (express or implied and
      howsoever worded) to money, debts, payments, securities, loans, advances,
      credits, drafts, cheques, instruments, devices, letters of credit,
      obligations, funds or transactions of any kind shall be construed
      respectively as references to money, debts, payments, securities, loans,
      advances, credits, drafts, cheques, instruments, devices, letters of
      credit, obligations, funds or transactions of any kind expressed or
      payable in sterling or in any other currency or in any combination of
      currencies, (vi) "and" and "or" shall mean "and/or" where the context so
      permits, (vii) "other" and "otherwise" shall not be construed ejusdem
      generis where a wider construction is possible, and (viii) the objects
      specified in the different paragraphs of this clause shall not, except
      where the context expressly so requires, be in any way limited or
      restricted by reference to or inference from the terms of any other
      paragraph or the order in which the paragraphs occur or by reference to
      the name of the Company, but may be carried out in as full and ample a
      manner and shall be construed in as wide a sense as if each of the said
      paragraphs defined the objects of a separate, distinct and independent
      company.

5.    The liability of the members is limited.

6.    The share capital* of the Company is L2 divided into eight Ordinary Shares
      of 5s. each.

-------------------------
* The share capital of the Company was increased by:-

(i)   Special Resolution passed on 2nd April, 1968 to L6 by the creation of two
      11 per cent Cumulative Preference Shares of L1 each and two 5-1/2 per cent
      Cumulative Preference Shares of L1 each, and

(ii)  Ordinary Resolutions passed on 17th July, 1968 to L30,000,000 by the
      creation of 116,399,992 additional Ordinary Shares of 5s each, 499,998
      additional 11 per cent Cumulative Preference Shares of L1 each and 399,998
      additional 5-1/2 per cent Cumulative Preference Shares of L1 each.

(iii) Ordinary Resolution passed on 10th January, 1974 to L60,000,000 by the
      creation of 120,000,000 additional Ordinary Shares of 25p each.

(iv)  Ordinary Resolution passed on 8th February, 1985 to L90,000,000 by the
      creation of 120,000,000 additional Ordinary Shares of 25p each.

(v)   Special Resolution passed on 30th August, 1989 to L290,000,000 by the
      creation of 200,000,000 Non-cumulative Sterling Preference Shares of L1
      each.

(vi)  Ordinary Resolution passed on 30th August, 1989 to L460,900,000 by the
      creation of 683,600,000 additional Ordinary Shares of 25p each.

(vii) Special Resolution passed on 30th August, 1989 by US$160,000 by the
      creation of 16,000,000 Non-cumulative Dollar Preference Shares of US$0.01
      each.

(viii)Special Resolution passed on 16th January, 1992 by US$160,000 by the
      creation of 16,000,000 Category II Non-cumulative Dollar Preference Shares
      of US$0.01 each.

(ix)  Special Resolution passed on 14th January, 1993 by US$200,000 by the
      creation of 20,000,000 additional Category II Non-cumulative Dollar
      Preference Shares of US$0.01 each.

(x)   Ordinary Resolution passed on 18th January, 1996 the creation of
      15,000,000 additional Category II Non-cumulative Dollar Preference Shares
      of US$0.01 each.

(xi)  Special Resolution passed on 16th January, 1997 the creation of 8,000,000
      additional Category II Non-cumulative Dollar Preference Shares of US$0.01
      each.

(xii) Ordinary Resolution passed on 16th January, 1997 the creation of
      100,000,000 additional Non-cumulative Sterling Preference Shares of L1
      each.

(xiii)Ordinary Resolution passed on 15th January, 1998 the creation of 8,000,000
      additional Category II Non-cumulative Dollar Preference Shares of US$0.01
      each.

(xiv) Ordinary Resolution passed on 14th January, 1999 the creation of
      30,000,000 additional Category II Non-cumulative Dollar Preference Shares
      of US$0.01 each.

(xv)  Ordinary Resolution passed on 13th January, 2000 the creation of
      43,000,000 additional Category II Non-cumulative Dollar Preference Shares
      of US$0.01 each.

(xvi) Special Resolutions passed on 13th January, 2000 the creation of
      25,000,000 Non-cumulative Euro Preference Shares of E0.01 each, the
      creation of 82,500,000 additional Category II Non-cumulative

<PAGE>

        Dollar Preference Shares of US$0.01 each, the creation of 41,000,000
        additional Non-cumulative Euro Preference Shares of E0.01 each, the
        creation of 500,000 Non-cumulative Convertible Sterling Preference
        Shares of L0.01 each, 2,000,000 Non-cumulative Convertible Dollar Shares
        of US$0.01 and 2,000,000 Non-cumulative Convertible Euro Preference
        Shares of E0.01 each.

(xv)    Special Resolution passed on 28th February, 2000 the creation of
        3,039,375,406 additional Ordinary Shares of 25p each, the creation of
        900,000 Category II Non-cumulative Convertible Preference Shares of
        L0.25 each.

(xvi)   Special Resolution passed on 20th June, 2000 the creation of 2,700,000
        Additional Value Shares of L0.01 each and 32,300,000,000 Non-Voting
        Deferred Shares of L0.01 each.

(xvii)  Special Resolution passed on 11th April 2001 the creation of 900,000
        additional Non-cumulative Convertible Dollar Preference Shares of
        US$0.01 each, 500,000 additional Non-cumulative Convertible Sterling
        Preference Shares of L0.01 each, 1,000,000 additional Non-cumulative
        Convertible Dollar Preference Shares of US$0.01 each and 1,000,000
        additional Non-cumulative Convertible Euro Preference Shares of E0.01
        each.

(xviii) Special Resolution passed on 29 April 2004 the authorised share capital
        of the Company was increased by the creation of 110 million additional
        non-cumulative dollar preference shares of US$0.01 each.

<PAGE>

   WE, the several persons whose names and addresses are subscribed, are
   desirous of being formed into a Company, in pursuance of this Memorandum of
   Association, and we respectively agree to take the number of Shares in the
   capital of the Company set opposite our respective names.

<TABLE>
<CAPTION>
Names, Addresses and Descriptions                      Number of Shares taken by
        of Subscribers                                       each Subscriber
---------------------------------                      -------------------------
<S>                                                    <C>
THOMAS GORDON WATERLOW,                                        ONE
Belhaven House, Dunbar,
Deputy Chairman,
The Royal Bank of Scotland

ALEXANDER PATERSON ROBERTSON,                                  ONE
Bridgend, 116 Bo'ness Road, Grangemouth,
Director and Deputy General Manager,
The Royal Bank of Scotland

ALFRED GEORGE CAMPBELL,                                        ONE
9 Barnton Avenue, Edinburgh,
Director and Assistant General Manager,
The Royal Bank of Scotland

JAMES THOMSON,                                                 ONE
32 Telford Road, Edinburgh,
Assistant General Manager,
The Royal Bank of Scotland

IAN WILSON MACDONALD,                                          ONE
24 Hermitage Drive, Edinburgh 10,
Chairman,
National Commercial Bank of Scotland Limited

GEORGE TURCAN CHIENE,                                          ONE
74 Ravelston Dykes, Edinburgh,
Writer to the Signet

PATRICK JAMES OLIPHANT,                                        ONE
Strathaird, Easter Belmont Road, Edinburgh,
Deputy Keeper of the Signet

JOHN GREIG DUNBAR,                                             ONE
23 Corrennie Gardens, Edinburgh,
Company Director
                                                              -----
   TOTAL SHARES TAKEN                                         EIGHT
                                                              -----
</TABLE>

DATED the 18th day of March, 1968

WITNESS to the above signatures

            ROBERT DAVID DARNEY BERTRAM
            1 St Colme Street, Edinburgh
            Apprentice Writer to the Signet

<PAGE>

                        THE COMPANIES ACTS 1985 AND 1989

                       A PUBLIC COMPANY LIMITED BY SHARES

                          NEW ARTICLES OF ASSOCIATION

                                       OF

                        THE ROYAL BANK OF SCOTLAND GROUP
                             PUBLIC LIMITED COMPANY

   ADOPTED BY SPECIAL RESOLUTION PASSED ON THE 15TH DAY OF JANUARY, 1998 (AS
     AMENDED BY SPECIAL RESOLUTIONS PASSED ON THE 13TH DAY OF JANUARY 2000,
           THE 28TH DAY OF FEBRUARY 2000, THE 20TH DAY OF JUNE 2000,
           THE 11TH DAY OF APRIL 2001 AND THE 29TH DAY OF APRIL 2004)

                                  PRELIMINARY

1.    NON-APPLICATION OF STATUTORY REGULATIONS

      The regulations in Table A in the Companies (Tables A to F) Regulations
      1985 (and any Table A applicable to the Company under any former enactment
      relating to companies) shall not apply to the Company.

2.    DEFINITIONS AND INTERPRETATION

      In these presents (if not inconsistent with the subject or context) the
      words standing in the first column of the table next hereinafter contained
      shall bear the meanings set opposite to them respectively in the second
      column thereof.

<TABLE>
<CAPTION>
          Words                                    Meanings
<S>                                     <C>
"Additional Value Shares"               The meaning given in Article 4D.

"Applicable Exchange Rate"              Such market rate of exchange as the
                                        Directors may consider appropriate for
                                        the purchase of any relevant Foreign
                                        Currency for Sterling or for any other
                                        Foreign Currency on such date as the
                                        Directors may consider appropriate.

"Category II Non-cumulative             The meaning given in Article 4C.
Convertible Sterling Preference
Share"
</TABLE>

<PAGE>

                                     - 2 -

<TABLE>
<S>                                     <C>
"Category II Non-cumulative             The meaning given in Article 4(E)(1).
Dollar Preference Share"

"Certificated share"                    A share which is not an uncertificated
                                        share.

"communication"                         The same meaning as in the Electronic
                                        Communications Act 2000.

"Convertible Preference Shares"         The meaning given in Article 4B(4).

"Cumulative Preference Shares"          The 5-1/2 per cent Cumulative Preference
                                        Shares and the 11 per cent Cumulative
                                        Preference Shares.

"Directors"                             The Board of Directors of the Company,
                                        or an authorised Committee thereof.

"Dividend"                              Dividend and/or bonus.

"electronic communication"              The same meaning as in the Electronic
                                        Communications Act 2000.

"Euro" and "E"                          The single currency of those member
                                        states of the European Union
                                        participating in European Monetary Union
                                        from time to time.

"Foreign Currency"                      Any lawful currency other than Sterling.

"In Writing"                            Written, or produced by any legible and
                                        non-transitory substitute for writing,
                                        or partly one and partly another.

"The London Stock Exchange"             The London Stock Exchange Limited.

"London Stock Exchange dealing          A day, other than a Saturday, Sunday or
day"                                    public holiday in the UK when the London
                                        Stock Exchange is open or was due to be
                                        open for trading.

"Month"                                 Calendar month.
</TABLE>

<PAGE>

                                     - 3 -

<TABLE>
<S>                                     <C>
"New Preference Shares"                 The Non-cumulative Sterling Preference
                                        Shares, the Non-cumulative Dollar
                                        Preference Shares, the Non- cumulative
                                        Euro Preference Shares, the Category II
                                        Non-cumulative Dollar Preference Shares,
                                        the Convertible Preference Shares and
                                        the Category II Non-cumulative
                                        Convertible Sterling Preference Shares
                                        (which classes of non-cumulative
                                        preference shares all rank pari passu
                                        inter se as regards participation in the
                                        profits and assets of the Company),
                                        together with any other share in the
                                        capital of the Company (other than the
                                        Cumulative Preference Shares) which is
                                        expressed to rank as regards
                                        participation in the profits or assets
                                        of the Company in some or all respects
                                        pari passu therewith.

"New Shares"                            New Preference Shares or any further
                                        shares in the capital of the Company
                                        issued subsequent to 30th August 1989.

"Non-cumulative Convertible Dollar      The meaning given in Article 4B(2).
Preference Share"

"Non-cumulative Convertible Euro        The meaning given in Article 4B(3).
Preference Share"

"Non-cumulative Convertible Sterling    The meaning given in Article 4B(1).
Preference Share"

"Non-cumulative Dollar Preference       The 16,000,000 Non-cumulative Dollar
Shares"                                 Preference Shares of US$0.01 each in
                                        the capital of the Company.

"Non-cumulative Euro Preference         The meaning given in Article 4A.
Share"

"Non-cumulative Sterling Preference     The 200,000,000 Non-cumulative Sterling
Shares"                                 Preference Shares of L1 each in the
                                        capital of the Company.

"Office"                                The registered office of the Company for
                                        the time being.

"Operator"                              A person approved by the Treasury as
                                        operator of a relevant system under the
                                        Uncertificated Securities Regulations.

"Paid"                                  Paid or credited as paid.

"Participating class"                   A class of shares title to which is
                                        permitted by an Operator to be
                                        transferred by means of a relevant
                                        system.
</TABLE>

<PAGE>

                                     - 4 -

<TABLE>
<S>                                     <C>
"Relevant Section"                      Section 133 of the 1989 Act.

"Relevant system"                       Any computer-based system and
                                        procedures, permitted by the
                                        Uncertificated Securities Regulations
                                        and the rules of the London Stock
                                        Exchange, which enable title to units of
                                        a security to be evidenced and
                                        transferred without a written instrument
                                        and which facilitate supplementary and
                                        incidental matters and shall include,
                                        without limitation, the relevant system
                                        of which CRESTCO Limited is the
                                        Operator.

"Seal"                                  The Common Seal of the Company.

"Securities Seal"                       An official seal kept by the Company by
                                        virtue of Section 40 of the 1985 Act.

"The Statutes"                          The 1985 Act, the 1989 Act and every
                                        other Act for the time being in force
                                        concerning companies and affecting the
                                        Company.

"Subsidiary undertaking"                A subsidiary undertaking as defined in
                                        Section 258 of the 1985 Act.

"These presents"                        These Articles of Association in their
                                        present form or as from time to time
                                        altered.

"Transfer Office"                       The place where the Register of Members
                                        is situate for the time being.

"Uncertificated share"                  A share of a class which is for the time
                                        being a participating class title to
                                        which is recorded in the Register of
                                        Members as being held in uncertificated
                                        form.

"The Uncertificated Securities          The Uncertificated Securities
Regulations"                            Regulations 1995 as amended from time to
                                        time and any provisions of or
                                        under the Statutes which supplement or
                                        replace such Regulations.

"Undertaking"                           An undertaking as defined in Section 259
                                        of the 1985 Act.

"The United Kingdom"                    Great Britain and Northern Ireland.

"US$" and "Dollars"                     The lawful currency for the time being
                                        of the United States of America.

"Year"                                  Calendar Year.

"5 1/2 per cent Cumulative              The 400,000 5 1/2 per cent Cumulative
Preference Shares"                      Preference Shares of L1 each in the
                                        capital of the Company.
</TABLE>

<PAGE>

                                     - 5 -

<TABLE>
<S>                                     <C>
"11 per cent Cumulative Preference      The 500,000 11 per cent Cumulative
Shares"                                 Preference Shares of L1 each in the
                                        capital of the Company.
</TABLE>

The word "Act" related to a particular year refers to the Companies Act of that
year.

The expressions "debenture" and "debenture-holder" shall include "debenture
stock" and "debenture stockholder" respectively.

The expression "Base Rate" means the Base Rate from time to time of The Royal
Bank of Scotland public limited company.

The expression "Secretary" shall (subject to the provisions of the Statutes)
include any deputy secretary, assistant secretary and any other person appointed
by the Directors to perform any of the duties of the Secretary and where two or
more persons are appointed to act as joint secretaries shall include any one of
those persons.

The expressions "recognised clearing house" and "recognised investment exchange"
shall mean any clearing house or investment exchange (as the case may be)
granted recognition under the Financial Services Act 1986.

All such of the provisions of these presents as are applicable to paid up shares
(other than those relating to share warrants) shall apply to stock, and the
words "share" and "shareholder" shall be construed accordingly.

Words denoting the singular shall include the plural and vice versa. Words
denoting the masculine gender shall include the feminine gender. Words denoting
persons shall include partnerships, companies and corporations.

References to any statute or statutory provision shall (if not inconsistent with
the subject or context) include any statutory modification or re-enactment
thereof for the time being in force.

Any words or expressions defined in the 1985 Act or the 1989 Act or the
Uncertificated Securities Regulations shall (if not inconsistent with the
subject or context) bear the same meaning in these presents, save that the word
"company" shall include any body corporate.

Headings and sub-headings to Articles are inserted for convenience only and
shall not affect the construction of these presents.

Where for any purpose an Ordinary Resolution of the Company is expressed to be
required under the provisions of these presents, a Special or Extraordinary
Resolution shall also be effective, and where an Extraordinary Resolution is so
expressed to be required a Special Resolution shall also be effective.

In Articles 84(A), 88, 110(A), 157 and 158 to 161 (inclusive) "address", in
relation to electronic communications, includes any number or address used for
the purposes of such communications.

<PAGE>

                                     - 6 -

                                    BUSINESS

3.    BUSINESS ACTIVITIES

      Any activity or kind of business which the Company is either expressly or
      by implication authorised to undertake may be undertaken by the Directors
      at such time or times as they shall think fit, and further may be suffered
      by them to be in abeyance, whether such activity or kind of business may
      have been actually commenced or not, so long as the Directors may deem it
      expedient not to commence or proceed with the same.

                                     CAPITAL

4.    SHARE CAPITAL(1)

      The share capital of the Company at the date of adoption of these presents
      is L560,900,000 divided into 500,000 11 per cent Cumulative Preference
      Shares of L1 each*, 400,000 5-1/2 per cent Cumulative Preference Shares of
      L1 each, 300,000,000 Non-cumulative Sterling Preference Shares of L1 each
      and 1,040,000,000 Ordinary Shares of 25p each, and US$830,000 divided into
      16,000,000 Non-cumulative Dollar Preference Shares of US$0.01 each and
      67,000,000 Category II Non-cumulative Dollar Preference Shares of US$0.01
      each. The rights as regards participation in the profits and assets of
      the Company attaching to those shares shall be as follows:-

      (A)   DIVIDEND RIGHTS OF CUMULATIVE PREFERENCE SHARES

            The 11 per cent Cumulative Preference Shares and the 5-1/2 per cent
            Cumulative Preference Shares shall confer the right to a fixed
            cumulative preferential dividend at the rate of 11 per cent and
            5-1/2 per cent per annum respectively on the amounts for the

-----------
1 Article 4 was adopted by Special Resolution passed on 15 January 1998 and
further amended:

(i)   At the Annual General Meeting held on 14th January 1999 the share capital
      of the Company was increased by the creation of 30,000,000 additional
      Category II Non-cumulative Dollar Preference Shares of US$0.01 each.

(ii)  At the annual general meeting and an extraordinary general meeting of the
      Company held on 13th January 2000 the share capital of the Company was
      increased by the creation of 125,500,000 additional Category II
      Non-cumulative Dollar Preference Shares of US$0.01 each; 66,000,000
      Non-cumulative Euro Preference Shares of E0.01 each; 500,000
      Non-cumulative Convertible Sterling Preference Shares of L0.01 each;
      2,000,000 Non-cumulative Convertible Dollar Preference Shares of US$0.01
      each; and 2,000,000 Non-cumulative Convertible Euro Preference Shares of
      E0.01 each.

(iii) At an extraordinary general meeting of the Company held on 28th February
      2000 the share capital of the Company was further increased by the
      creation of 3,039,375,406 additional Ordinary Shares of 25p each and
      900,000,000 Category II Non-cumulative Convertible Sterling Preference
      Shares of 25p each.

(iv)  At an extraordinary general meeting of the Company held on 20 June 2000,
      the share capital of the company was further increased by the creation of
      2.7 billion Additional Value Shares of L0.01 each and 32.3 billion
      Non-Voting Deferred Shares of L0.01 each.

(v)   At the annual general meeting of the Company held on 11th April 2001, the
      share capital of the Company was further increased by the creation of
      900,000 additional Non-cumulative Convertible Dollar Preference Shares of
      US$0.01 each; 500,000 additional Non-cumulative Convertible Sterling
      Preference Shares of L0.01 each; 1,000,000 additional Non-cumulative
      Convertible Dollar Preference Shares of US$0.01 each; and 1,000,000
      additional Non-cumulative Convertible Euro Preference Shares of E0.01
      each.

(vi)  At the annual general meeting of the Company held on 29 April 2004 the
      authorised share capital of the Company was increased by the creation of
      110 million additional Category II Non-cumulative Dollar Preference Shares
      of US$0.01 each.

* NOTE: The rates of dividend specified in this Article in relation to the 11
per cent Cumulative Preference Shares and the 5-1/2 per cent Cumulative
Preference Shares are the rates which were in force to 6th April 1973; at 30th
August, 1989 the rates of dividend on such shares are 7 per cent plus tax credit
and 3.85 per cent plus tax credit respectively.

<PAGE>

                                     - 7 -

      time being paid up or credited as paid up on such shares, to be paid if
      and so far as in the opinion of the Directors the profits of the Company
      justify such payments on the 31st day of May and the 31st day of December
      in every year in respect of the half-years ending on the last preceding
      day of March or September. Such dividends shall rank pari passu and pro
      rata with each other and shall be paid in priority to any dividend on the
      New Preference Shares or on any other class of share.

(B)   CAPITAL RIGHTS OF CUMULATIVE PREFERENCE SHARES

      On a winding up or liquidation, voluntary or otherwise the surplus assets
      of the Company available for distribution amongst the members shall be
      applied:-

      FIRSTLY - in paying to the holders of the 11 per cent Cumulative
      Preference Shares and the 5-1/2 per cent Cumulative Preference Shares
      respectively the arrears (if any) of the fixed cumulative preferential
      dividends thereon (whether earned or declared or not and including (i) the
      amount of any dividend which is due for payment after the date of
      commencement of winding up or liquidation but which is payable in respect
      of a half-year period ending on or before such date and (ii) any further
      amount of dividend payable in respect of the period from the beginning of
      the half-year period then current to the date of commencement of winding
      up or liquidation) to the date on which repayment is made, in terms of the
      immediately succeeding paragraph or, if no such repayment is made, the
      date of payment of such arrears; and

      SECONDLY - in repaying to the holders of the 11 per cent Cumulative
      Preference Shares and the 5-1/2 per cent Cumulative Preference Shares
      respectively, the amounts paid up or credited as paid up on such shares
      together with a premium of 50p per share in the case of the 11 per cent
      Cumulative Preference Shares and of 20p per share in the case of the 5-1/2
      per cent Cumulative Preference Shares.

      Any payments made to the holders of the 11 per cent Cumulative Preference
      Shares and the 5-1/2 per cent Cumulative Preference Shares in terms of
      paragraphs FIRSTLY or SECONDLY above shall rank pari passu and pro rata
      with each other and (in the case of payments in terms of paragraph
      FIRSTLY) in priority to and (in the case of repayments in terms of
      paragraph SECONDLY) pari passu and pro rata with any payments to be made
      to the holders of the Non-cumulative Sterling Preference Shares and the
      Non-cumulative Dollar Preference Shares pursuant to Articles 4(C)(2) and
      4(D)(2) respectively below and to the holders of any other New Preference
      Shares.

(C)   NON-CUMULATIVE STERLING PREFERENCE SHARES

      (1)   The Non-cumulative Sterling Preference Shares shall rank after the
            Cumulative Preference Shares to the extent specified in this Article
            4, and shall rank pari passu inter se and (save as aforesaid) with
            the Cumulative Preference Shares and with all other New Preference
            Shares. They shall confer the rights and be subject to the
            restrictions set out in this Article 4(C) and shall also confer such
            further rights (not being inconsistent with the rights set out in
            this Article 4(C)) as may be attached by the Directors to such
            shares in accordance with this Article 4(C) prior to allotment.
            Whenever the Directors have power under this Article to determine
            any of the rights attached to any of the Non-cumulative Sterling
            Preference Shares, the rights so determined need not be the same as
            those attached to the Non-cumulative Sterling Preference Shares then
            allotted or in issue. The Non-cumulative Sterling Preference Shares
            may be issued in one or more separate series, and

<PAGE>

                                     - 8 -

      each series shall be identified in such manner as the Directors may
      determine without any such determination or identification requiring any
      alteration to these presents.

(2)   Each Non-cumulative Sterling Preference Share shall confer the following
      rights as to participation in the profits and assets of the Company,
      receipt of notices, attendance and voting at meetings and redemption:-

      (a)   Income

            the right (subject to the provisions of paragraph (b) of this
            sub-Article, if applicable) to a non-cumulative preferential
            dividend either fixed or not exceeding a specified amount payable in
            Sterling at such rate on such dates (each a "dividend payment date")
            in respect of such periods (each a "dividend period") and on such
            other terms and conditions as may be determined by the Directors
            prior to allotment thereof. References in these presents to a
            "dividend" on the Non-cumulative Sterling Preference Shares include
            a reference to each dividend in respect of each dividend period
            applicable thereto and references in this Article 4(C) to dividend
            payment dates and dividend periods are to dividend payment dates and
            dividend periods in respect of the Non-cumulative Sterling
            Preference Shares only. Such dividends shall be paid in priority to
            the payment of any dividends on the Ordinary Shares. The
            Non-cumulative Sterling Preference Shares shall rank for dividend
            after the Cumulative Preference Shares, pari passu with all other
            New Preference Shares expressed to rank pari passu therewith as
            regards participation in profits and otherwise in priority to any
            other share capital in the Company.

      (b)   Further provisions as to income

            All or any of the following provisions shall apply in relation to
            any particular Non-cumulative Sterling Preference Shares if so
            determined by the Directors prior to allotment thereof:-

            (i)   if, in the opinion of the Directors, the distributable profits
                  of the Company are sufficient to cover the payment in full of
                  dividends on the Non-cumulative Sterling Preference Shares on
                  any dividend payment date, and also the payment in full of all
                  other dividends stated to be payable on such date on any other
                  New Preference Share expressed to rank pari passu therewith as
                  regards participation in profits, after payment in full, or
                  the setting aside of a sum to cover the payment in full, of
                  all dividends stated to be payable on such date on any
                  Cumulative Preference Share, then each such dividend shall be
                  declared and paid in full;

            (ii)  if, in the opinion of the Directors, the distributable profits
                  of the Company are insufficient to cover the payment in full
                  of dividends on the Non-cumulative Sterling Preference Shares
                  on any dividend payment date, and also the payment in full of
                  all other dividends stated to be payable on such date on

<PAGE>

                                     - 9 -

                  any other New Preference Share expressed to rank pari passu
                  therewith as regards participation in profits, after payment
                  in full, or the setting aside of a sum to cover the payment in
                  full, of all dividends stated to be payable on or before such
                  date on any Cumulative Preference Share, then dividends shall
                  be declared by the Directors pro rata for the Non-cumulative
                  Sterling Preference Shares and such other New Preference
                  Shares to the extent of the available distributable profits
                  (if any) to the intent that the amount of dividend declared
                  per share on each such Non-cumulative Sterling Preference
                  Share and other New Preference Share will bear to each other
                  the same ratio as the dividends accrued per share on each such
                  Non-cumulative Sterling Preference Share and other New
                  Preference Share bear to each other. If it shall subsequently
                  appear that any such dividend which has been paid should not,
                  in accordance with the provisions of this sub-paragraph, have
                  been so paid, then provided the Directors shall have acted in
                  good faith, they shall not incur any liability for any loss
                  which any shareholder may suffer in consequence of such
                  payment having been made;

            (iii) if, in the opinion of the Directors, the payment of any
                  dividend on any Non-cumulative Sterling Preference Shares
                  would breach or cause a breach of the Bank of England's
                  capital adequacy requirements applicable to the Company and/or
                  any of its subsidiaries, then none of such dividend shall be
                  declared or paid;

            (iv)  subject to sub-paragraphs (v) and (vi) below, the
                  Non-cumulative Sterling Preference Shares shall carry no
                  further right to participate in the profits of the Company and
                  if and to the extent that any dividend or part thereof is on
                  any occasion not paid for the reasons described in
                  sub-paragraph (ii) or (iii) above, the holders of such shares
                  shall have no claim in respect of such non-payment;

            (v)   if any dividend or part thereof on any Non-cumulative Sterling
                  Preference Share is not payable for the reasons specified in
                  sub-paragraph (ii) or (iii) above and if they so resolve, the
                  Directors may, subject to the Statutes, pay a special
                  non-cumulative preferential dividend on the Non-cumulative
                  Sterling Preference Shares at a rate not exceeding L0.01 per
                  share (but so that reference elsewhere in this Article and in
                  Article 4(D) to any dividend payable on any Non-cumulative
                  Sterling Preference Shares shall not be treated as including a
                  reference to any such special dividend);

           (vi)(A)the provisions of this sub-paragraph (vi) shall apply where
                  any dividend or any part thereof otherwise payable on a
                  particular dividend payment date on any Non-cumulative
                  Sterling Preference Shares ("a Relevant Payment") is, for the

<PAGE>

                                     - 10 -

                  reasons specified in sub-paragraph (ii) or (iii) above, not
                  payable and the amounts (if any) standing to the credit of the
                  Company's profit and loss account together with the amount of
                  the reserves of the Company available for the purpose are in
                  aggregate sufficient to be applied and capable of being
                  applied in paying up in full at par additional Non-cumulative
                  Sterling Preference Shares on the basis hereinafter provided
                  in this sub-paragraph (vi);

            (B)   on the date for payment of the Relevant Payment had such
                  payment been payable in cash, the Directors shall, subject to
                  the Statutes, allot and issue credited as fully paid to each
                  holder of Non-cumulative Sterling Preference Shares such
                  additional nominal amount of Non-cumulative Sterling
                  Preference Shares as is equal to an amount determined by
                  multiplying the cash amount of the Relevant Payment which
                  would have been payable to him had such payment been made in
                  cash (exclusive of any associated tax credit) by a factor to
                  be determined by the Directors prior to allotment of the
                  Non-cumulative Sterling Preference Shares;

            (C)   for the purposes of paying up additional Non-cumulative
                  Sterling Preference Shares to be allotted pursuant to this
                  sub-paragraph (vi), the Directors shall capitalise, out of
                  such of the accounts or reserves of the Company available for
                  the purpose as they shall determine (including any Share
                  Premium Account), a sum equal to the aggregate nominal amount
                  of the additional Non-cumulative Sterling Preference Shares
                  then to be allotted and shall make all appropriations and
                  applications of such sum and all allotments and issues of
                  fully paid Non-cumulative Sterling Preference Shares for the
                  purpose of giving effect to this sub-paragraph (vi);

            (D)   the additional Non-cumulative Sterling Preference Shares so
                  allotted pursuant to this sub-paragraph (vi) shall confer the
                  same rights and be subject to the same limitations as, and
                  shall rank pari passu and pro rata in all respects with, the
                  relevant Non-cumulative Sterling Preference Shares save only
                  as regards participation in the Relevant Payment;

            (E)   if any additional Non-cumulative Sterling Preference Shares
                  falling to be allotted pursuant to this sub-paragraph (vi)
                  cannot be allotted by reason of any insufficiency in the
                  Company's authorised share capital or in the amount of
                  relevant securities which the Directors are authorised to
                  allot in accordance with Section 80 of the 1985 Act, the
                  Directors shall convene a General Meeting, to be held as soon
                  as practicable, for the purpose of considering a Resolution or
                  Resolutions effecting an appropriate increase in the
                  authorised share capital and granting the Directors
                  appropriate authority to allot relevant securities; and

<PAGE>

                                     - 11 -

            (F)   the Directors may undertake and do such acts and things as
                  they may consider necessary or expedient for the purpose of
                  giving effect to the provisions of this sub-paragraph (vi);

            (vii) if any date on which dividends are payable on Non-cumulative
                  Sterling Preference Shares is not a day on which banks in
                  London are open for business, and on which foreign exchange
                  dealings may be conducted in London ("a Sterling Business
                  Day"), then payment of the dividend payable on such date will
                  be made on the next succeeding Sterling Business Day and
                  without any interest or other payment in respect of such delay
                  unless such day shall fall within the next calendar month
                  whereupon such payment will be made on the preceding Sterling
                  Business Day;

            (viii)dividends payable on Non-cumulative Sterling Preference
                  Shares shall accrue from and to the dates determined by the
                  Directors prior to allotment thereof, and the amount of
                  dividend payable in respect of any period shorter than a full
                  dividend period will be calculated on the basis of a 365 day
                  year and the actual number of days elapsed in such period;

            (ix)  if the dividend stated to be payable on the Non-cumulative
                  Sterling Preference Shares on the most recent dividend payment
                  date has not been declared and paid in full, or if a sum has
                  not been set aside to provide for such payment in full, no
                  dividends may be declared on any other share capital of the
                  Company (other than the Cumulative Preference Shares), and no
                  sum may be set aside for the payment thereof, unless, on the
                  date of declaration relative to any such payment, an amount
                  equal to the dividend stated to be payable on the
                  Non-cumulative Sterling Preference Shares in respect of the
                  then current dividend period is set aside for the payment in
                  full of such dividend on the dividend payment date relating to
                  the then current dividend period;

            (x)   if any dividend stated to be payable on the Non-cumulative
                  Sterling Preference Shares on any dividend payment date has
                  not been declared and paid in full, or if a sum has not been
                  set aside to provide for such payment in full, the Company may
                  not redeem or purchase or otherwise acquire for any
                  consideration any other share capital of the Company and may
                  not set aside any sum nor establish any sinking fund for the
                  redemption, purchase or other such acquisition thereof, until
                  such time as dividends stated to be payable on the
                  Non-cumulative Sterling Preference Shares in respect of
                  successive dividend periods together aggregating no less than
                  twelve months shall thereafter have been declared and paid in
                  full; and

            (xi)  notwithstanding any provision of this Article 4(C), but
                  subject to sub-paragraphs (ii) and (iii) above and the special
                  rights attaching to any other New Preference Share, the

<PAGE>

                                     - 12 -

                  Directors shall pay a dividend on any Non-cumulative Sterling
                  Preference Shares allotted after the coming into force of the
                  Relevant Section and due to be redeemed on any Redemption Date
                  (as defined in sub-paragraph (2)(f)(ii) of this Article 4(C)),
                  payable on the Sterling Business Day immediately preceding
                  such Redemption Date. The dividend payable pursuant to this
                  sub-paragraph (xi) shall be the amount of any dividend on the
                  relevant Non-cumulative Sterling Preference Shares which would
                  (apart from the proposed redemption thereof) be due for
                  payment on the relevant Redemption Date.

      (bb)  Abrogation of entitlement to dividend

            In relation to any particular Non-cumulative Sterling Preference
            Shares allotted on or after the date of passing of resolution 17 set
            out in Appendix 2 to the circular letter to shareholders dated 15th
            March 2004, all of the following provisions shall apply if (but only
            if) the Directors so determine prior to allotment thereof.

            (i)   the Directors may, in their sole and absolute discretion,
                  resolve prior to any dividend payment date that the dividend
                  on such Non-cumulative Sterling Preference Shares, or part
                  thereof, shall not be paid on that dividend payment date. If
                  the Directors resolve as aforesaid, then none or (as the case
                  may be) part only of the dividend shall be declared and/or
                  paid. The Directors shall not be bound to give their reasons
                  for exercising their discretion under this sub-paragraph, and
                  the Directors may exercise their discretion in respect of a
                  dividend notwithstanding the previous setting aside of a sum
                  to provide for payment of that dividend;

            (ii)  to the extent that any dividend or part of a dividend on any
                  Non-cumulative Sterling Preference Shares is, on any occasion,
                  not paid by reason of the exercise of the Directors'
                  discretion pursuant to sub-paragraph (i) above, the holders of
                  such shares shall have no claim in respect of such
                  non-payment;

            (iii) if any dividend or part of a dividend on any Non-cumulative
                  Sterling Preference Shares has, on any occasion, not been paid
                  by reason of the exercise of the Directors' discretion under
                  sub-paragraph (i) above:

                  (1)   the provisions of sub-paragraphs (2)(b)(ix) and (x) of
                        this Article 4(C) shall not apply in respect of such
                        non-payment;

                  (2)   such non-payment shall not prevent or restrict (a) the
                        declaration and payment of dividends on any other
                        Non-cumulative Sterling Preference Shares, or on any
                        preference shares capital of the Company expressed to
                        rank pari passu with the Non-

<PAGE>

                                     - 13 -

                        cumulative Sterling Preference Shares, (b) the setting
                        aside of sums for the payment of such dividends, (c)
                        (subject to (4) below) the redemption, purchase or other
                        acquisition of shares in the Company by the Company, or
                        (d) (subject to (4) below) the setting aside of sums, or
                        the establishment of sinking funds, for any such
                        redemption, purchase or other acquisition by the
                        Company;

                  (3)   no dividend may be declared or paid on any share capital
                        ranking after the Non-cumulative Sterling Preference
                        Shares as regards participation in profits (including
                        the Ordinary Shares) until such time as the dividend
                        stated to be payable on the Non-cumulative Sterling
                        Preference Shares to which the non-payment relates in
                        respect of a dividend period has thereafter been
                        declared and paid in full; and

                  (4)   the Company may not redeem or purchase or otherwise
                        acquire for any consideration any share capital ranking
                        after the Non-cumulative Sterling Preference Shares, and
                        may not set aside any sum nor establish any sinking fund
                        for the redemption, purchase or other such acquisition
                        thereof, until such time as dividends stated to be
                        payable on the Non-cumulative Sterling Preference Shares
                        to which the non-payment relates in respect of
                        successive dividend periods together aggregating no less
                        than twelve months shall thereafter have been declared
                        and paid in full;

            (iv)  if there is any conflict between the provisions of this
                  paragraph (bb), as they apply to any Non-cumulative Sterling
                  Preference Shares, and any other provisions of this Article
                  4(C) applying to such Non-cumulative Sterling Preference
                  Shares (including sub-paragraph (2)(b)(xi)), the provisions of
                  this paragraph (bb) shall prevail. In paragraph (2)(a) of this
                  Article 4(C), the words ", and subject to the provisions of
                  paragraph (bb) below, if applicable" shall be deemed to be
                  inserted after "if applicable" in the first sentence, and in
                  paragraph(2)(b) of this Article 4(C), the words "(subject to
                  the provisions of paragraph (bb) below, if applicable)" shall
                  be deemed to be inserted after "such dividend shall" in
                  sub-paragraph (i) and after "dividends shall" in sub-paragraph
                  (ii);

            (v)   in determining the sum payable on any Non-cumulative Sterling
                  Preference Shares pursuant to Article 4(C)(2)(c)(i) on a
                  winding up or liquidation, the Directors' discretion under
                  sub-paragraph (i) above shall be disregarded save in so far as
                  such discretion was actually exercised prior to the making of
                  the determination;

<PAGE>

                                     - 14 -

            (vi)  in calculating the aggregate amount of dividends payable in
                  respect of any Non-cumulative Sterling Preference Shares for
                  the purpose of Article 4(C)(3), such calculation shall be made
                  on the assumption that there shall be no exercise by the
                  Directors of their discretion under sub-paragraph (i) above in
                  respect of such Non-cumulative Sterling Preference Shares (or
                  any equivalent discretion in respect of any other New
                  Preference Shares); and

            (vii) for the avoidance of doubt, no series of Non-cumulative
                  Sterling Preference Shares shall be treated as ranking after
                  any other New Preference Shares with which it is expressed to
                  rank pari passu as regards participating in profits, by reason
                  only of the provisions set out in this paragraph (bb) being
                  included in the terms of issue applicable to that series, or
                  any dividend on that series not being paid by virtue of this
                  paragraph (bb).

      (c)   Capital

            The right on a winding up or liquidation, voluntary or otherwise,
            other than (unless otherwise provided by the terms of issue of such
            share) a redemption or purchase by the Company of any shares of any
            class, to receive in Sterling out of the surplus assets of the
            Company available for distribution amongst the members:-

            (i)   after payment of the arrears (if any) of the fixed cumulative
                  preferential dividends stated to be payable in the Cumulative
                  Preference Shares to the holders thereof in accordance with
                  Article 4(B) FIRSTLY, and pari passu with the holders of any
                  other New Preference Shares expressed to rank pari passu
                  therewith as regards participation in profits and in priority
                  to the holders of the Ordinary Shares of the Company a sum
                  equal to:-

                  (A)   the amount of any dividend which is due for payment
                        after the date of commencement of winding up or
                        liquidation but which is payable in respect of a period
                        ending on or before such date; and

                  (B)   any further amount of dividend payable in respect of the
                        period from the preceding dividend payment date to the
                        date of payment in accordance with sub-paragraph (i);

                  but only to the extent that any such amount or further amount
                  was, or would have been, payable as a dividend in accordance
                  with or pursuant to this Article 4(C) (other than pursuant to
                  this provision); and

            (ii)  subject thereto, pari passu with the holders of the Cumulative
                  Preference Shares and any other New Preference

<PAGE>

                                     - 15 -

                  Shares expressed to rank pari passu therewith as regards
                  participation in surplus assets and in priority to the holders
                  of the Ordinary Shares of the Company, a sum equal to the
                  amount paid up or credited as paid up on the Non-cumulative
                  Sterling Preference Shares (including any premium paid to the
                  Company in respect thereof on issue).

            If upon any such winding-up or liquidation, the amounts available
            for payment are insufficient to cover the amounts payable in full on
            the Cumulative Preference Shares, the Non-cumulative Sterling
            Preference Shares and on any other New Preference Shares expressed
            to rank pari passu therewith as regards participation in surplus
            assets, then the holders of the Cumulative Preference Shares, the
            Non-cumulative Sterling Preference Shares and such other New
            Preference Shares will share rateably in the distribution of surplus
            assets (if any) in proportion to the full respective preferential
            amounts to which they are entitled. No Non-cumulative Sterling
            Preference Share shall confer any right to participate in the
            surplus assets of the Company other than that set out in this
            sub-paragraph (2)(c) of this Article 4(C).

      (d)   Receipt of Notice

            The right to have sent to the holder of each Non-cumulative Sterling
            Preference Share (at the same time as the same are sent to the
            holders of Ordinary Shares) a copy of the Company's Annual Report
            and Accounts and Interim Financial Statement, together with notice
            of any General Meeting of the Company at which such holder is
            entitled to attend and vote.

      (e)   Attendance and Voting at Meetings

            The right to attend at a General Meeting of the Company and to speak
            to or vote upon any Resolution proposed thereat in the following
            circumstances:-

            (i)   in respect of a Resolution which is to be proposed at the
                  Meeting either varying or abrogating any of the rights
                  attached to the Non-cumulative Sterling Preference Shares or
                  proposing the winding up of the Company (and then in each such
                  case only to speak to and vote upon any such Resolution);

            (ii)  in circumstances where the dividend stated to be payable on
                  the Non-cumulative Sterling Preference Shares in respect of
                  such number of dividend periods as the Directors shall
                  determine prior to allotment thereof has not been declared and
                  paid in full, and until such date as the Directors shall
                  likewise determine; and

            (iii) in such other circumstances as the Directors may determine
                  prior to allotment of the Non-cumulative Sterling Preference
                  Shares,

<PAGE>

                                     - 16 -

            but not otherwise, together with the right, in such circumstances
            and on such terms, if any, as the Directors may determine prior to
            allotment of the Non-cumulative Sterling Preference Shares, to seek
            to requisition a General Meeting of the Company. Whenever holders of
            Non-cumulative Sterling Preference Shares are entitled to vote on a
            Resolution, on a show of hands every such holder who is present in
            person shall have one vote and, on a poll, every such holder who is
            present in person or by proxy shall have such number of votes as may
            be determined by the Directors prior to allotment of such
            Non-cumulative Sterling Preference Shares.

      (f)   Redemption

            (i)   Unless the Directors shall, prior to the allotment of any
                  series of Non-cumulative Sterling Preference Shares, determine
                  that such series shall be non-redeemable, each series of
                  Non-cumulative Sterling Preference Shares shall, subject to
                  the provisions of the Statutes, be redeemable at the option of
                  the Company in accordance with the following provisions.

            (ii)  In the case of any particular Non-cumulative Sterling
                  Preference Shares which are to be so redeemable:-

                  (A)   the Company may, subject thereto, redeem on any
                        Redemption Date (as hereinafter defined) all or some
                        only of the Non-cumulative Sterling Preference Shares by
                        giving to the holders of the Non-cumulative Sterling
                        Preference Shares to be redeemed not less than 14 days'
                        prior notice in writing (a "Notice of Redemption") of
                        the relevant Redemption Date. "Redemption Date" means,
                        in relation to any Non-cumulative Sterling Preference
                        Share, any date which either (i) falls no earlier than
                        such date (if any) as may be fixed by the Directors,
                        prior to allotment of that share, as being the earliest
                        date on which the Company may redeem such share, and the
                        date so fixed shall be no earlier than five years and
                        one day, and no later than thirty years and one day,
                        after the relevant date of allotment, or (ii) if no date
                        is fixed by the Directors as aforesaid under (i) above
                        in relation to that share, falls no earlier than five
                        years and one day after the date of allotment of the
                        Non-cumulative Sterling Preference Share to be redeemed;

                        provided that in relation to any Non-cumulative Sterling
                        Preference Share allotted after the coming into force of
                        the Relevant Section, (i) subject to (ii) below, the
                        Directors may, prior to the allotment of that share, fix
                        the date on or by which, or dates between which, such
                        share is to be or may be

<PAGE>

                                     - 17 -

                        redeemed and such date or dates fixed by the Directors
                        may be in place of or in addition to any date derived
                        from or fixed under the provisions of sub-paragraph (A)
                        above, (ii) the Redemption Date shall be a dividend
                        payment date (as defined in Article 4(C)(2)(a)), and
                        (iii) the Company shall only redeem such share if the
                        Directors have applied the provisions of Article
                        4(C)(2)(b)(xi) thereto and such provisions have been
                        satisfied n full in relation to such share;

                  (B)   there shall be paid on each Non-cumulative Sterling
                        Preference Share so redeemed, in Sterling, the aggregate
                        of the nominal amount thereof together with any premium
                        paid on issue and together with (in the case of any
                        Non-cumulative Sterling Preference Shares allotted prior
                        to the coming into force of the Relevant Section)
                        arrears (if any) of dividends thereon (whether earned or
                        declared or not) in respect of the period from the
                        dividend payment date last preceding the Redemption Date
                        to the Redemption Date;

                  (C)   in the case of a redemption of some only of the
                        Non-cumulative Sterling Preference Shares in any series,
                        the Company shall for the purpose of determining the
                        particular Non-cumulative Sterling Preference Shares to
                        be redeemed cause a drawing to be made at the Office or
                        such other place as the Directors may approve in the
                        presence of the Auditors for the time being of the
                        Company;

                  (D)   any Notice of Redemption given under sub-paragraph
                        (ii)(A) above shall specify the applicable Redemption
                        Date, the particular Non-cumulative Sterling Preference
                        Shares to be redeemed and the redemption price
                        (specifying (in the case of any Non-cumulative Sterling
                        Preference Shares allotted prior to the coming into
                        force of the Relevant Section) the amount of the accrued
                        and unpaid dividend per share to be included therein and
                        stating that dividends on the Non-cumulative Sterling
                        Preference Shares to be redeemed will cease to accrue on
                        redemption), and shall state the place or places at
                        which documents of title in respect of such
                        Non-cumulative Sterling Preference Shares are to be
                        presented and surrendered for redemption and payment of
                        the redemption monies is to be effected. Upon such
                        Redemption Date, the Company shall redeem the particular
                        Non-cumulative Sterling Preference Shares to be redeemed
                        on that date subject to the provisions of this paragraph
                        and of the Statutes. No defect in the Notice of
                        Redemption or

<PAGE>

                                     - 18 -

                        in the giving thereof shall affect the validity of the
                        redemption proceedings;

                  (E)   subject to sub-paragraph (I) below, the provisions of
                        this and the following sub-paragraph shall have effect
                        in relation to Non-cumulative Sterling Preference Shares
                        for the time being issued and registered in the Register
                        of Members ("Registered Shares") and represented by
                        certificates ("Certificates"). Payments in respect of
                        the amount due on redemption of a Registered Share shall
                        be made by Sterling cheque drawn on a bank in London or
                        upon the request of the holder or joint holders not
                        later than the date specified for the purpose in the
                        Notice of Redemption by transfer to a Sterling account
                        maintained by the payee with a bank in London. Such
                        payment will be against presentation and surrender of
                        the relative Certificate at the place or one of the
                        places specified in the Notice of Redemption and if any
                        Certificate so surrendered includes any Non-cumulative
                        Sterling Preference Shares not to be redeemed on the
                        relevant Redemption Date the Company shall within 14
                        days thereafter issue to the holder, free of charge, a
                        fresh Certificate in respect of such Non-cumulative
                        Sterling Preference Shares. All payments in respect of
                        redemption monies will in all respects be subject to any
                        applicable fiscal or other laws;

                  (F)   as from the relevant Redemption Date the dividend on the
                        Non-cumulative Sterling Preference Shares due for
                        redemption shall cease to accrue except on any such
                        Non-cumulative Sterling Preference Share in respect of
                        which, upon the due surrender of the Certificate in
                        accordance with sub-paragraph (E) above, payment of the
                        redemption monies due on such Redemption Date shall be
                        improperly withheld or refused, in which case such
                        dividend, at the rate then applicable, shall be deemed
                        to have continued and shall accordingly continue to
                        accrue from the relevant Redemption Date to the date of
                        payment of such redemption monies Such Non-cumulative
                        Sterling Preference Share shall not be treated as having
                        been redeemed until the redemption monies in question
                        together with the accrued dividend thereon shall have
                        been paid;

                  (G)   if the due date for the payment of the redemption monies
                        on any Non-cumulative Sterling Preference Share is not a
                        Sterling Business Day then payment of such monies will
                        be made on the next succeeding day which is a Sterling
                        Business Day and without any interest or other payment
                        in respect of such

<PAGE>

                                     - 19 -

                        delay unless such day shall fall within the next
                        calendar month whereupon such payment will be made on
                        the preceding Sterling Business Day;

                  (H)   the receipt of the holder for the time being of any
                        Registered Share (or in the case of joint holders the
                        receipt of any one of them) in respect of the monies
                        payable on redemption on such Registered Share shall
                        constitute an absolute discharge to the Company; and

                  (I)   subject as aftermentioned, the provisions of
                        sub-paragraphs (E) and (F) above shall have effect in
                        relation to Registered Shares which are in
                        uncertificated form within the meaning of the
                        Uncertificated Securities Regulations 1995 (as in force
                        on the date of adoption of this Article) in the same
                        manner as they have effect in relation to Registered
                        Shares represented by Certificates, save that (i) any
                        provision of the said paragraphs requiring presentation
                        and surrender of a Certificate shall be satisfied in the
                        manner prescribed or permitted by the said Regulations
                        (or by any enactment or subordinate legislation which
                        amends or supersedes those Regulations) or (subject to
                        those Regulations or such enactment or subordinate
                        legislation) in such manner as may from time to time be
                        prescribed by the Directors), and (ii) the Company shall
                        not be under any obligation to issue a fresh Certificate
                        under sub-paragraph (E);

            (iii) upon the redemption of any Non-cumulative Sterling Preference
                  Share the nominal amount of such shares comprised in the
                  capital of the Company shall thereafter be divided into, and
                  reclassified as, Ordinary Shares without any further
                  resolution or consent being required.

      (g)   Purchase

            (i)   Subject to the provisions of the Statutes and any other
                  applicable laws, the Company may at any time and from time to
                  time purchase any Non-cumulative Sterling Preference Shares
                  upon such terms as the Directors shall determine provided
                  that, in the case of Non-cumulative Sterling Preference Shares
                  which are listed on the London Stock Exchange, the purchase
                  price, exclusive of expenses and accrued dividends, shall not
                  exceed (a) in the case of a purchase in the open market, or by
                  tender (which shall be available alike to all holders of the
                  Non-cumulative Sterling Preference Shares), the average of the
                  closing middle market quotations of such Non-cumulative
                  Sterling Preference Shares on the London Stock Exchange (as
                  derived from The London Stock Exchange Daily Official List)
                  for the last 10

<PAGE>

                                     - 20 -

                  dealing days preceding the date of purchase or (if higher), in
                  the case of a purchase in the open market only, the market
                  price on the date of purchase provided that such market price
                  is not more than 105 per cent of such average and (b) in the
                  case of a purchase by private treaty, 120 per cent of the
                  closing middle market quotation of such Non-cumulative
                  Sterling Preference Shares on the London Stock Exchange (as
                  derived from The London Stock Exchange Daily Official List)
                  for the last dealing day preceding the date of purchase; but
                  so that this proviso shall not apply to any purchase of
                  Non-cumulative Sterling Preference Shares made in the ordinary
                  course of a business of dealing in securities.

            (ii)  Upon the purchase of any Non-cumulative Sterling Preference
                  Shares the nominal amount of such shares comprised in the
                  capital of the Company shall thereafter be divided into, and
                  reclassified as, Ordinary Shares without any further
                  resolution or consent being required.

      (3)   Save with the written consent of the holders of three-quarters in
            nominal value of, or with the sanction of an Extraordinary
            Resolution passed at a separate General Meeting of the holders of
            the Non-cumulative Sterling Preference Shares, the Directors shall
            not, pursuant to Article 148 or 149, capitalise any part of the
            amounts available for distribution and referred to therein if after
            such capitalisation the aggregate of such amounts would be less than
            such multiple, if any, as may be determined by the Directors prior
            to the first allotment of Non-cumulative Sterling Preference Shares,
            of the aggregate amount of the dividends (exclusive of any
            associated tax credit) payable in the twelve month period following
            such capitalisation on the Non-cumulative Sterling Preference Shares
            then in issue and any other New Preference Shares then in issue
            expressed to rank pari passu therewith as regards participation in
            profits.

      (4)(a) Save with the written consent of the holders of three-quarters in
            nominal value of, or with the sanction of an Extraordinary
            Resolution passed at a separate General Meeting of the holders of,
            the Non-cumulative Sterling Preference Shares, the Directors shall
            not authorise or create, or increase the amount of, any shares of
            any class or any security convertible into shares of any class
            ranking as regards rights to participate in the profits or assets of
            the Company (other than on a redemption or purchase by the Company
            of any such shares) in priority to the Non-cumulative Sterling
            Preference Shares;

      (b)   The special rights attached to any series of Non-cumulative Sterling
            Preference Shares allotted or in issue shall not (unless otherwise
            provided by their terms of issue) be deemed to be varied by the
            creation or issue of any New Shares ranking as regards participation
            in the profits or assets of the Company in some or all respects pari
            passu with or after such Non-cumulative Sterling Preference Shares.
            Any New Shares ranking pari passu with such Non-cumulative Sterling
            Preference Shares in some or all respects may without their creation
            or issue being deemed to vary the special rights attached to any
            Non-cumulative Sterling Preference Share then in issue either
            carrying rights identical in all respects with such Non-cumulative
            Sterling

<PAGE>

                                     - 21 -

            Preference Shares or any of them or rights differing therefrom in
            any respect, including, but without prejudice to the generality of
            the foregoing, in that:-

            (i)   the rate of or means of calculating the dividend may differ
                  and the dividend may be cumulative or non-cumulative;

            (ii)  the New Shares or any series thereof may rank for dividend as
                  from such date as may be provided by the terms of issue
                  thereof and the dates for payment of dividend may differ;

            (iii) the New Shares may be denominated in Sterling or in any
                  Foreign Currency;

            (iv)  a premium may be payable on return of capital or there may be
                  no such premium;

            (v)   the New Shares may be redeemable at the option of the holder
                  or of the Company, or may be non-redeemable and if redeemable
                  at the option of the Company, they may be redeemable at
                  different dates and on different terms from those applying to
                  the Non-cumulative Sterling Preference Shares; and

            (vi)  the New Shares may be convertible into Ordinary Shares or any
                  other class of shares ranking as regards participation in the
                  profits and assets of the Company pari passu with or after
                  such Non-cumulative Sterling Preference Shares in each case on
                  such terms and conditions as may be prescribed by the terms of
                  issue thereof.

(D)   NON-CUMULATIVE DOLLAR PREFERENCE SHARES

      (1)   The Non-cumulative Dollar Preference Shares shall rank after the
            Cumulative Preference Shares to the extent specified in this Article
            4, and shall rank pari passu inter se and (save as aforesaid) with
            the Cumulative Preference Shares and with all other New Preference
            Shares. They shall confer the rights and be subject to the
            restrictions set out in this Article 4(D) and shall also confer such
            further rights (not being inconsistent with the rights set out in
            this Article 4(D)) as may be attached by the Directors to such
            shares in accordance with this Article 4(D) prior to allotment.
            Whenever the Directors have power under this Article to determine
            any of the rights attached to any of the Non-cumulative Dollar
            Preference Shares, the rights so determined need not be the same as
            those attached to the Non-cumulative Dollar Preference Shares then
            allotted or in issue. The Non-cumulative Dollar Preference Shares
            may be issued in one or more separate series, and each series shall
            be identified in such manner as the Directors may determine without
            any such determination or identification requiring any alteration to
            these presents.

      (2)   Each Non-cumulative Dollar Preference Share shall confer the
            following rights as to participation in the profits and assets of
            the Company, receipt of notices, attendance and voting at meetings
            and redemption:-

<PAGE>

                                     - 22 -

      (a)   Income

            the right (subject to the provisions of paragraph (b) of this
            sub-Article, if applicable) to a non-cumulative preferential
            dividend not exceeding a specified amount payable in Dollars at such
            rate (which may be fixed or variable and may be subject to
            recalculation at fixed intervals) on such dates (each a "dividend
            payment date") in respect of such periods (each a "dividend period")
            and on such other terms and conditions as may be determined by the
            Directors prior to allotment thereof. References in these presents
            to a "dividend" on the Non-cumulative Dollar Preference Shares
            include a reference to each dividend in respect of each dividend
            period applicable thereto and references in this Article 4(D) to
            dividend payment dates and dividend periods are to dividend payment
            dates and dividend periods in respect of the Non-cumulative Dollar
            Preference Shares only. Such dividends shall be paid in priority to
            the payment of any dividends on the Ordinary Shares. The
            Non-cumulative Dollar Preference Shares shall rank for dividend
            after the Cumulative Preference Shares, pari passu with all other
            New Preference Shares expressed to rank pari passu therewith as
            regards participation in profits and otherwise in priority to any
            other share capital in the Company.

      (b)   Further provisions as to income

            All or any of the following provisions shall apply in relation to
            any particular Non-cumulative Dollar Preference Shares if so
            determined by the Directors prior to allotment thereof:-

            (i)   if, in the opinion of the Directors, the distributable profits
                  of the Company are sufficient to cover the payment in full of
                  dividends on the Non-cumulative Dollar Preference Shares on
                  any dividend payment date and also the payment in full of all
                  other dividends stated to be payable on such date on any other
                  New Preference Share expressed to rank pari passu therewith as
                  regards participation in profits, after payment in full, or
                  the setting aside of a sum to cover the payment in full, of
                  all dividends stated to be payable on such date on any
                  Cumulative Preference Share, then each such dividend shall be
                  declared and paid in full;

            (ii)  if, in the opinion of the Directors, the distributable profits
                  of the Company are insufficient to cover the payment in full
                  of dividends on the Non-cumulative Dollar Preference Shares on
                  any dividend payment date and also the payment in full of all
                  other dividends stated to be payable on such date on any other
                  New Preference Share expressed to rank pari passu therewith as
                  regards participation in profits, after payment in full, or
                  the setting aside of a sum to cover the payment in full, of
                  all dividends stated to be payable on or before such date on
                  any Cumulative Preference Share, then dividends shall be
                  declared by the Directors pro rata for the Non-cumulative
                  Dollar Preference Shares and such other New

<PAGE>

                                     - 23 -

                  Preference Shares to the extent of the available distributable
                  profits (if any) to the intent that the amount of dividend
                  declared per share on each such Non-cumulative Dollar
                  Preference Share and other New Preference Share will bear to
                  each other the same ratio as the dividends accrued per share
                  on each such Non-cumulative Dollar Preference Share and other
                  New Preference Share bear to each other. If it shall
                  subsequently appear that any such dividend which has been paid
                  should not, in accordance with the provisions of this
                  sub-paragraph, have been so paid, then provided the Directors
                  shall have acted in good faith, they shall not incur any
                  liability for any loss which any shareholder may suffer in
                  consequence of such payment having been made;

            (iii) if in the opinion of the Directors, the payment of any
                  dividend on any Non-cumulative Dollar Preference Shares would
                  breach or cause a breach of the Bank of England's capital
                  adequacy requirements applicable to the Company and/or any of
                  its subsidiaries, then none of such dividend shall be declared
                  or paid;

            (iv)  subject to sub-paragraph (v) below, the Non-cumulative Dollar
                  Preference Shares shall carry no further right to participate
                  in the profits of the Company and if and to the extent that
                  any dividend or part thereof is on any occasion not paid for
                  the reasons described in sub-paragraph (ii) or (iii) above,
                  the holders of such shares shall have no claim in respect of
                  such non-payment;

            (v)   if any dividend or part thereof on any Non-cumulative Dollar
                  Preference Share is not payable for the reasons specified in
                  sub-paragraphs (ii) or (iii) above and if they so resolve, the
                  Directors may, subject to the Statutes, pay a special
                  non-cumulative preferential dividend on the Non-cumulative
                  Dollar Preference Shares at a rate not exceeding one (1) US
                  cent per share (but so that reference elsewhere in this
                  Article and in Article 4(C) to any dividend payable on any
                  Non-cumulative Dollar Preference Shares shall not be treated
                  as including a reference to any such special dividend);

            (vi)  if any date on which dividends are payable on Non-cumulative
                  Dollar Preference Shares is not a day on which banks in London
                  and the City of New York are open for business, and on which
                  foreign exchange dealings may be conducted in such cities ("a
                  Dollar Business Day"), then payment of the dividend payable on
                  such date will be made on the succeeding Dollar Business Day
                  and without any interest or other payment in respect of such
                  delay unless such day shall fall within the next calendar
                  month whereupon such payment will be made on the preceding
                  Dollar Business Day;

<PAGE>

                                     - 24 -

            (vii) dividends payable on Non-cumulative Dollar Preference Shares
                  shall accrue from and to the dates determined by the Directors
                  prior to allotment thereof, and the amount of dividend payable
                  in respect of any period shorter than a full dividend period
                  will be calculated on the basis of twelve 30 day months, a 360
                  day year and the actual number of days elapsed in such period;

            (viii)if any dividend stated to be payable on the Non-cumulative
                  Dollar Preference Shares on the most recent dividend payment
                  date has not been declared and paid in full, or if a sum has
                  not been set aside to provide for such payment in full, no
                  dividends may be declared on any other share capital of the
                  Company (other than the Cumulative Preference Shares), and no
                  sum may be set aside for the payment thereof, unless, on the
                  date of declaration relative to any such payment, an amount
                  equal to the dividend stated to be payable on the
                  Non-cumulative Dollar Preference Shares in respect of the then
                  current dividend period is set aside for the payment in full
                  of such dividend on the dividend payment date relating to the
                  then current dividend period; and

            (ix)  if any dividend stated to be payable on the Non-cumulative
                  Dollar Preference Shares on any dividend payment date has not
                  been declared and paid in full, or if a sum has not been set
                  aside to provide for such payment in full, the Company may not
                  redeem or purchase or otherwise acquire for any consideration
                  any other share capital of the Company, and may not set aside
                  any sum nor establish any sinking fund for the redemption or
                  purchase or other such acquisition thereof, until such time as
                  dividends stated to be payable on the Non-cumulative Dollar
                  Preference Shares in respect of successive dividend periods
                  together aggregating no less than twelve months shall
                  thereafter have been declared and paid in full.

      (c)   Capital

            The right on a winding up or liquidation, voluntary or otherwise
            other than (unless otherwise provided by the terms of issue of such
            share) a redemption or purchase by the Company of any shares of any
            class to receive in Dollars out of the surplus assets of the Company
            available for distribution amongst the members:-

            (i)   after payment of the arrears (if any) of the fixed cumulative
                  preferential dividends stated to be payable on the Cumulative
                  Preference Shares to the holders thereof in accordance with
                  Article 4(B) FIRSTLY and pari passu with the holders of any
                  other New Preference Shares expressed to rank pari passu
                  therewith as regards participation in profits and in priority
                  to the holders of the Ordinary Shares of the Company a sum
                  equal to:-

<PAGE>

                                     - 25 -

                  (A)   the amount of any dividend which is due for payment
                        after the date of commencement of the winding up or
                        liquidation but which is payable in respect of a period
                        ending on or before such date; and

                  (B)   any further amount of dividend payable in respect of the
                        period from the preceding dividend payment date to the
                        date of payment in accordance with this sub-paragraph
                        (i);

                  but only to the extent that any such amount or further amount
                  was, or would have been payable as a dividend in accordance
                  with or pursuant to this Article 4(D) (other than pursuant to
                  this provision); and

            (ii)  subject thereto, pari passu with the holders of the Cumulative
                  Preference Shares and any other New Preference Shares
                  expressed to rank pari passu therewith as regards
                  participation in surplus assets in priority to the holders of
                  the Ordinary Shares of the Company, a sum equal to the amount
                  paid up or credited as paid up on the Non-cumulative Dollar
                  Preference Shares (including any premium paid to the Company
                  in respect thereof on issue).

            If upon any such winding-up or liquidation, the amounts available
            for payment are insufficient to cover the amounts payable in full on
            the Cumulative Preference Shares, the Non-cumulative Dollar
            Preference Shares and on any other New Preference Shares expressed
            to rank pari passu therewith as regards participation in surplus
            assets, then the holders of the Cumulative Preference Shares, the
            Non-cumulative Dollar Preference Shares and such other New
            Preference Shares will share rateably in the distribution of surplus
            assets (if any) in proportion to the full respective preferential
            amounts to which they are entitled. No Non-cumulative Dollar
            Preference Share shall confer any right to participate in the
            surplus assets of the Company other than that set out in this
            sub-paragraph (2)(c) of this Article 4(D).

      (d)   Receipt of Notices

            The right to have sent to the holder of each Non-cumulative Dollar
            Preference Share (at the same time as the same are sent to the
            holders of Ordinary Shares) a copy of the Company's Annual Report
            and Accounts and Interim Financial Statement together with notice of
            any General Meeting of the Company at which such holder is entitled
            to attend and vote.

      (e)   Attendance and Voting at Meetings

            The right to attend at a General Meeting of the Company and to speak
            to or vote upon any Resolution proposed thereat in the following
            circumstances:-

<PAGE>

                                     - 26 -

            (i)   in respect of a Resolution which is to be proposed at the
                  Meeting either varying or abrogating any of the rights
                  attached to the Non-cumulative Dollar Preference Shares or
                  proposing the winding up of the Company (and then in each such
                  case only to speak to and vote upon any such Resolution);

            (ii)  in circumstances where the dividend stated to be payable on
                  the Non-cumulative Dollar Preference Shares in respect of such
                  number of dividend periods as the Directors shall determine
                  prior to allotment thereof has not been declared and paid in
                  full, and until such date as the Directors shall likewise
                  determine; and

            (iii) in such other circumstances as the Directors may determine
                  prior to allotment of the Non-cumulative Dollar Preference
                  Shares,

            but not otherwise, together with the right, in such circumstances,
            if any, as the Directors may determine prior to allotment of the
            Non-cumulative Dollar Preference Shares, to seek to requisition a
            General Meeting of the Company for which purpose the Non-cumulative
            Dollar Preference Shares will be deemed to carry the number of votes
            determined pursuant to the following sentence. Whenever holders of
            Non-cumulative Dollar Preference Shares are so entitled to vote on a
            Resolution, on a show of hands every such holder who is present in
            person shall have one vote and, on a poll, every such holder who is
            present in person or by proxy shall have such number of votes for
            each Non-cumulative Dollar Preference Share held as may be
            determined by the Directors prior to allotment of such
            Non-cumulative Dollar Preference Shares.

      (f)   Redemption

            (i)   Unless the Directors shall, prior to the allotment of any
                  series of Non-cumulative Dollar Preference Shares, determine
                  that such series shall be non-redeemable, each series of
                  Non-cumulative Dollar Preference Shares shall, subject to the
                  provisions of the Statutes, be redeemable at the option of the
                  Company in accordance with the following provisions.

            (ii)  In the case of any series of Non-cumulative Dollar Preference
                  Shares which are to be so redeemable:-

                  (A)   the Company may, subject thereto, redeem on any
                        Redemption Date (as hereinafter defined) all or some
                        only of the Non-cumulative Dollar Preference Shares by
                        giving to the holders of the Non-cumulative Dollar
                        Preference Shares to be redeemed not less than 30 days'
                        nor more than 60 days' prior notice in writing (a
                        "Notice of Redemption") of the

<PAGE>

                                      - 27 -

                        relevant Redemption Date. "Redemption Date" means, in
                        relation to a Non-cumulative Dollar Preference Share,
                        any date which falls no earlier than five years and one
                        day after the date of allotment of the Non-cumulative
                        Dollar Preference Share to be redeemed;

                  (B)   there shall be paid on each Non-cumulative Dollar
                        Preference Share so redeemed, in Dollars, the aggregate
                        of the nominal amount thereof together with any premium
                        paid on issue together with, where applicable, the
                        Relevant Redemption Premium (defined below) and together
                        with arrears (if any) of dividends thereon (whether
                        earned or declared or not) in respect of the period from
                        the dividend payment date last preceding the Redemption
                        Date to the Redemption Date. "Relevant Redemption
                        Premium" means an amount calculated in accordance with
                        the following formula as applied in relation to a
                        Redemption Date notified under sub-paragraph (A) above
                        which falls within the period of twelve months
                        commencing on the date following the fifth, sixth,
                        seventh, eighth or ninth anniversary of the relevant
                        date of allotment ("the Relevant Date"), as the case may
                        be. The formula for calculation of the Relevant
                        Redemption Premium shall be

                        A x B

                        where:-

                        "A" is the amount of dividend excluding any associated
                        tax credit (not expressed as a percentage) calculated at
                        the date of allotment to which the holder of the
                        Non-cumulative Dollar Preference Share to be redeemed
                        would become entitled in respect of the twelve months
                        following allotment by virtue of the terms of issue
                        thereof on the assumption that such amount of dividend
                        had accrued on the Non-cumulative Dollar Preference
                        Share during such period and was payable at the end of
                        such period and on the further assumption that there
                        shall be no change in the associated tax credit
                        affecting the amount of dividend payable in respect of
                        such period; and

                        "B" in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the fifth anniversary of the Relevant Date, is 66.66 per
                        cent,

                        or

<PAGE>

                                     - 28 -

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the sixth anniversary of the Relevant Date, is 53.33 per
                        cent,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the seventh anniversary of the Relevant Date, is 40.00
                        per cent,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the eighth anniversary of the Relevant Date, is 26.66
                        per cent,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the ninth anniversary of the Relevant Date is 13.33 per
                        cent. No Relevant Redemption Premium shall be payable
                        when the Redemption Date falls after the tenth
                        anniversary of the Relevant Date. The product of the
                        above formula in respect of a Non-cumulative Dollar
                        Preference Share may, in the Directors' discretion, be
                        rounded down to the nearest whole cent;

                  (C)   in the case of a redemption of some only of the
                        Non-cumulative Dollar Preference Shares in any series,
                        the Company shall for the purpose of determining the
                        particular Non-cumulative Dollar Preference Shares to be
                        redeemed cause a drawing to be made at the Office or
                        such other place as the Directors may approve in the
                        presence of the Auditors for the time being of the
                        Company;

                  (D)   any Notice of Redemption given under sub-paragraph (ii)
                        (A) above shall specify the applicable Redemption Date,
                        the particular Non-cumulative Dollar Preference Shares
                        to be redeemed and the redemption price (specifying the
                        amount of the accrued and unpaid dividend per share to
                        be included therein and stating that dividends on the
                        Non-cumulative Dollar Preference Shares to be redeemed
                        will cease to accrue on redemption), and shall state the
                        place or places at which documents of title in respect
                        of such Non-cumulative Dollar

<PAGE>

                                     - 29 -

                        Preference Shares are to be presented and surrendered
                        for redemption and payment of the redemption monies is
                        to be effected. Upon such Redemption Date, the Company
                        shall redeem the particular Non-cumulative Dollar
                        Preference Shares to be redeemed on that date subject to
                        the provisions of this paragraph and of the Statutes. No
                        defect in the Notice of Redemption or in the giving
                        thereof shall affect the validity of the redemption
                        proceedings;

                  (E)   the provisions of this and the following sub-paragraphs
                        shall have effect in relation to Non-cumulative Dollar
                        Preference Shares for the time being issued and
                        registered in the Register of Members ("Registered
                        Shares") and represented by certificates
                        ("Certificates") and in relation to Non-cumulative
                        Dollar Preference Shares which, in accordance with
                        Article 52 of these presents, are for the time being
                        issued and represented by a Warrant (as defined in the
                        said Article 52) ("Bearer Shares"). Payments in respect
                        of the amount due on redemption of a Registered Share
                        shall be made by Dollar cheque drawn on a bank in London
                        or in the City of New York or upon the request of the
                        holder or joint holders not later than the date
                        specified for the purpose in the Notice of Redemption by
                        transfer to a Dollar account maintained by the payee
                        with a bank in London or in the City of New York. Such
                        payment will be against presentation and surrender of
                        the relative Certificate at the place or one of the
                        places specified in the Notice of Redemption and if any
                        Certificate so surrendered includes any Non-cumulative
                        Dollar Preference Shares not to be redeemed on the
                        relevant Redemption Date the Company shall within
                        fourteen days thereafter issue to the holder, free of
                        charge, a fresh Certificate in respect of such
                        Non-cumulative Dollar Preference Shares. Payment in
                        respect of the amount due on redemption of a Bearer
                        Share shall be made by Dollar cheque drawn on a bank in
                        London or in the City of New York or upon the request of
                        the holder not later than the date specified for the
                        purpose in the Notice of Redemption by transfer to a
                        Dollar account maintained by the payee with a bank in
                        London or in the City of New York. Such payments will be
                        made against presentation and surrender of the Warrant
                        and all unmatured dividend coupons and talons (if any)
                        at the place or the places specified in of Redemption.
                        Upon the Redemption Date all unmatured dividend coupons
                        and any talon for additional dividend coupons
                        appertaining thereto (whether or not returned) shall

<PAGE>

                                     - 30 -

                        become void and no payment will be made in respect
                        thereof. If the Warrant so surrendered represents any
                        Non-cumulative Dollar Preference Shares not to be
                        redeemed on the relevant Redemption Date the Company
                        shall issue, free of charge, a fresh Warrant
                        representing such Bearer Shares which are not to be
                        redeemed on such Redemption Date.

                        All payments in respect of redemption monies will in all
                        respects be subject to any applicable fiscal or other
                        laws;

                  (F)   as from the relevant Redemption Date the dividend on the
                        Non-cumulative Dollar Preference Shares due for
                        redemption shall cease to accrue except on any such
                        Non-cumulative Dollar Preference Share in respect of
                        which, upon the due surrender of the Certificate or, as
                        the case may be, the Warrant and all unmatured dividend
                        coupons and talons (if any) in respect thereof, in
                        accordance with sub-paragraph (E) above, payment of the
                        redemption monies due on such Redemption Date shall be
                        improperly withheld or refused, in which case such
                        dividend, at the rate then applicable, shall be deemed
                        to have continued and shall accordingly continue to
                        accrue from the relevant Redemption Date to the date of
                        payment of such redemption monies. Such Non-cumulative
                        Dollar Preference Share shall not be treated as having
                        been redeemed until the redemption monies in question
                        together with the accrued dividend thereon shall have
                        been paid;

                  (G)   if the due date for the payment of the redemption monies
                        on any Non-cumulative Dollar Preference Shares is not a
                        Dollar Business Day then payment of such monies will be
                        made on the next succeeding day which is a Dollar
                        Business Day and without any interest or other payment
                        in respect of such delay unless such day shall fall
                        within the next calendar month whereupon such payment
                        will be made on the preceding Dollar Business Day; and

                  (H)   the receipt of the holder for the time being of any
                        Registered Share (or in the case of joint holders the
                        receipt of any one of them) and the receipt of the
                        person delivering any Warrant to the place or one of the
                        places specified pursuant to sub-paragraph (D) above in
                        respect of the monies payable on redemption on such
                        Registered Share or, as the case may be, such Bearer
                        Share, shall constitute an absolute discharge to the
                        Company.

<PAGE>

                                     - 31 -

            (g)   Purchase

                  Subject to the provisions of the Statutes and any other
                  applicable laws, the Company may at any time and from time to
                  time purchase any Non-cumulative Dollar Preference Shares upon
                  such terms as the Directors shall determine provided that, in
                  the case of Non-cumulative Dollar Preference Shares which are
                  listed on the London Stock Exchange, the purchase price,
                  exclusive of expenses and accrued dividends, shall not exceed
                  (i) in the case of a purchase in the open market, or by tender
                  (which shall be available alike to all holders of the
                  Non-cumulative Dollar Preference Shares), the average of the
                  closing middle market quotations of such Non-cumulative Dollar
                  Preference Shares on the London Stock Exchange (as derived
                  from The London Stock Exchange Daily Official List) for the
                  last ten dealing days preceding the date of purchase or (if
                  higher), in the case of a purchase in the open market only,
                  the market price on the date of purchase provided that such
                  market price is not more than 105 per cent of such average and
                  (ii) in the case of a purchase by private treaty, 120 per cent
                  of the closing middle market quotation of such Non-cumulative
                  Dollar Preference Shares on the London Stock Exchange (as
                  derived from The London Stock Exchange Daily Official List)
                  for the last dealing day preceding the date of purchase: but
                  so that this proviso shall not apply to any purchase of
                  Non-cumulative Dollar Preference Shares made in the ordinary
                  course of a business of dealing in securities.

      (3)(a) Save with the written consent of the holders of three-quarters in
             nominal value of, or with the sanction of an Extraordinary
             Resolution passed at a separate General Meeting of the holders of,
             the Non-cumulative Dollar Preference Shares, the Directors shall
             not authorise or create, or increase the amount of, any shares of
             any class or any security convertible into shares of any class
             ranking as regards rights to participate in the profits or assets
             of the Company (other than on a redemption or purchase by the
             Company of any such shares) in priority to the Non-cumulative
             Dollar Preference Shares.

         (b) The special rights attached to any series of Non-cumulative Dollar
             Preference Shares allotted or in issue shall not (unless otherwise
             provided by their terms of issue) be deemed to be varied by the
             creation or issue of any New Shares ranking as regards
             participation in the profits or assets of the Company in some or
             all respects pari passu with or after such Non-cumulative Dollar
             Preference Shares. Any new shares ranking in some or all respects
             pari passu with such Non-cumulative Dollar Preference Shares may
             without their creation or issue being deemed to vary the special
             rights attached to any Non-cumulative Dollar Preference Share then
             in issue either carry rights identical in all respects with such
             Non-cumulative Dollar Preference Shares or any of them or carry
             rights differing therefrom in any respect, including, but without
             prejudice to the generality of the foregoing, in that:-

             (i)   the rate or means of calculating the dividend may differ and
                   the dividend may be cumulative or non-cumulative;

<PAGE>

                                     - 32 -

            (ii)  the New Shares or any series thereof may rank for dividend as
                  from such date as may be provided by the terms of issue
                  thereof and the dates for payment of dividend may differ;

            (iii) the New Shares may be denominated in Sterling or in any
                  Foreign Currency;

            (iv)  a premium may be payable on return of capital or there may be
                  no such premium;

            (v)   the New Shares may be redeemable at the option of the holder
                  or of the Company, or may be non-redeemable and if redeemable
                  at the option of the Company, they may be redeemable at
                  different dates and on different terms from those applying to
                  the Non-cumulative Dollar Preference Shares; and

            (vi)  the New Shares may be convertible into Ordinary Shares or any
                  other class of shares ranking as regards participation in the
                  profits and assets of the Company pari passu with or after
                  such Non-cumulative Dollar Preference Shares in each case on
                  such terms and conditions as may be prescribed by the terms of
                  issue thereof.

(E)   CATEGORY II NON-CUMULATIVE DOLLAR PREFERENCE SHARES

      (1)   The rights as regards participation in profits and assets of the
            Company, receipt of notice, attendance and voting at meetings and
            redemption attaching to the Category II Non-cumulative Dollar
            Preference Shares of US$0.01 each in the capital of the Company(
            "Category II Non-cumulative Dollar Preference Shares") shall be as
            provided by this Article 4(E).

      (2)   Article 4(D) (in its present form or as from time to time altered)
            shall apply to the Category II Non-cumulative Dollar Preference
            Shares but with the following modifications:-

            (a)   subject to (b) below, for any reference (however worded and
                  whether express or implied) to Non-cumulative Dollar
                  Preference Shares there shall be deemed to be substituted a
                  reference to Category II Non-cumulative Dollar Preference
                  Shares;

            (b)   references to "New Preference Shares" shall be deemed to
                  include the Non-cumulative Dollar Preference Shares;

            (c)   in Article 4(D)(2)(e) the words "and on such terms" shall be
                  deemed to be inserted after "such circumstances" and the words
                  "for which purpose the Non-cumulative Dollar Preference Shares
                  will be deemed to carry the number of votes determined
                  pursuant to the following sentence" shall be deemed to be
                  deleted;

            (d)   in relation to any Category II Non-cumulative Dollar
                  Preference share allotted prior to 16 January 1997 or allotted
                  on exchange of any Exchangeable Capital Securities, Series A
                  of the Company, in Article 4(D)(2)(f)(ii)(A) the last sentence
                  shall be deemed to be deleted and the following deemed to be
                  substituted therefor:-

<PAGE>

                                     - 33 -

                  ""Redemption Date" means, in relation to any Category II
                  Non-cumulative Dollar Preference Share, any date which either
                  (i) falls no earlier than such date (if any) as may be fixed
                  by the Directors, prior to allotment of that share, as being
                  the earliest date on which the Company may redeem such share,
                  and the date so fixed shall be no earlier than five years and
                  one day, and no later than ten years and one day, after the
                  relevant date of allotment, or (ii) if no date is fixed by the
                  Directors as aforesaid under (i) above in relation to that
                  share, falls no earlier than five years and one day after the
                  date of allotment of the Category II Non-cumulative Dollar
                  Preference Share to be redeemed";

            (e)   in relation to any Category II Non-cumulative Dollar
                  Preference Shares allotted on or after 16 January 1997 (other
                  than on exchange of any Exchangeable Capital Securities,
                  Series A of the Company), sub-paragraphs (A) and (B) of
                  Article 4(D)(2)(f)(ii) shall be deemed to be deleted and the
                  following deemed to be substituted therefor:-

                  "(A)  the Company may, subject thereto, redeem on any
                        Redemption Date (as hereinafter defined) all or some
                        only of the Category II Non-cumulative Dollar Preference
                        Shares by giving to the holders of the Category II
                        Non-cumulative Dollar Preference Shares to be redeemed
                        not less than 30 days nor more than 60 days prior notice
                        in writing (a "Notice of Redemption") of the relevant
                        Redemption Date."Redemption Date" means, in relation to
                        a Category II Non-cumulative Dollar Preference Share,
                        any date which falls no earlier than three years and one
                        day (or such longer period (if any) as may be fixed by
                        the Directors prior to allotment of such Share) after
                        the date of allotment of the Category II Non-cumulative
                        Dollar Preference Share to be redeemed ("the Relevant
                        Date") (provided that the Directors may determine prior
                        to allotment that a Redemption Date must, in addition to
                        falling as aforesaid, fall on such anniversary (or on
                        such anniversaries) of the date of allotment as may be
                        fixed by the Directors prior to allotment);

                  (B)   there shall be paid on each Category II Non-cumulative
                        Dollar Preference Share so redeemed, in Dollars, the
                        aggregate of the nominal amount thereof together with
                        any premium paid on issue together with, where
                        applicable, the Relevant Redemption Premium (defined
                        below) and together with arrears (if any) of dividends
                        thereon (whether earned or declared or not) in respect
                        of the period from the dividend payment date last
                        preceding the Redemption Date to the Redemption Date.
                        "Relevant Redemption Premium" means an amount calculated
                        in accordance with such one (if any) of the following
                        three formulae as applied in relation to a Redemption
                        Date notified under sub-paragraph (A) above which falls
                        within the period of twelve months commencing on the
                        date following the third, fourth, fifth, sixth or
                        seventh anniversary of the Relevant Date, as the case
                        may be, as may

<PAGE>

                                     - 34 -

                  be determined by the Directors prior to the Relevant Date. The
                  formula for calculation of the Relevant Redemption Premium
                  shall be:-

                  (a)   A x B

                        where:-

                        "A" is the amount of dividend excluding any associated
                        tax credit (not expressed as a percentage) calculated at
                        the date of allotment to which the holder of the
                        Category II Non-cumulative Dollar Preference Share to be
                        redeemed would become entitled in respect of the twelve
                        months following allotment by virtue of the terms of
                        issue thereof on the assumption that such amount of
                        dividend had accrued on the Category II Non-cumulative
                        Dollar Preference Share during such period and was
                        payable at the end of such period and on the further
                        assumption that there shall be no change in the
                        associated tax credit affecting the amount of dividend
                        payable in respect of such period; and

                        "B" in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the third anniversary of the Relevant Date, is 66.66 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the fourth anniversary of the Relevant Date, is 53.33
                        per cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the fifth anniversary of the Relevant Date, is 40.00 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the sixth anniversary of the Relevant Date, is 26.66 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day

<PAGE>

                                     - 35 -

                        following the seventh anniversary of the Relevant Date
                        is 13.33 per cent; or

                  (b)   C x D

                        where:-

                        "C" is the amount of dividend excluding any associated
                        tax credit (not expressed as a percentage) calculated at
                        the date of allotment to which the holder of the
                        Category II Non-cumulative Dollar Preference Share to be
                        redeemed would become entitled in respect of the twelve
                        months following allotment by virtue of the terms of
                        issue thereof on the assumption that such amount of
                        dividend had accrued on the Category II Non-cumulative
                        Dollar Preference Share during such period and was
                        payable at the end of such period and on the further
                        assumption that there shall be no change in the
                        associated tax credit affecting the amount of dividend
                        payable in respect of such period; and

                        "D" in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the third anniversary of the Relevant Date, is 50 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the fourth anniversary of the Relevant Date, is 40 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the fifth anniversary of the Relevant Date, is 30 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the sixth anniversary of the Relevant Date, is 20 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day

<PAGE>

                                     - 36 -

                        following the seventh anniversary of the Relevant Date
                        is 10 per cent; or

                  (c)   E x F

                        where:-

                        "E" is the amount of US$25; and

                        "F" in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the third anniversary of the Relevant Date, is 33.33 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the fourth anniversary of the Relevant Date, is 26.66
                        per cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the fifth anniversary of the Relevant Date, is 20 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the sixth anniversary of the Relevant Date, is 13.33 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the seventh anniversary of the Relevant Date, is 6.66
                        per cent.

                  No Relevant Redemption Premium shall be payable when the
                  Redemption Date falls after the eighth anniversary of the
                  Relevant Date. The product of any of the above formulae in
                  respect of a Category II Non-cumulative Dollar Preference
                  Share may, in the Directors' discretion, be rounded down to
                  the nearest whole cent.

                  The Directors may, in their discretion, determine in relation
                  to any Category II Non-cumulative Dollar Preference Share,
                  prior to the Relevant Date, that none of the above formulae

<PAGE>

                                     - 37 -

                        shall apply, in which event no Relevant Redemption
                        Premium shall be payable;"", and

            (f)   notwithstanding the terms of sub-paragraph (e) above, in
                  relation to any Category II Non-cumulative Dollar Preference
                  Shares allotted on or after 14 January 2000 (other than on
                  exchange of any Exchangeable Capital Securities, Series A of
                  the Company) the provisions of sub-paragraph (A) and (B) set
                  out in sub-paragraph (e) above shall have effect subject to
                  the following modifications:

                  (i)   the reference in sub-paragraph (A) to three years and
                        one day shall be deemed to be a reference to five years
                        and one day;

                  (ii)  notwithstanding the terms of sub-paragraph (B), a
                        Relevant Redemption Premium shall only be payable when
                        the relevant Redemption Date falls after the tenth
                        anniversary of the Relevant Date and on or prior to the
                        twentieth anniversary of the Relevant Date (the
                        "redemption premium period"). The formula for
                        calculation of such Relevant Redemption Premium (subject
                        to rounding down as specified in sub-paragraph (B))
                        shall be as specified in (iii) below. The Directors may,
                        in their discretion, determine in relation to any
                        Category II Non-cumulative Dollar Preference Share,
                        prior to the Relevant Date, that no Relevant Redemption
                        Premium shall be payable;

                  (iii) the formula for calculating the Relevant Redemption
                        Premium shall be:

                                      A x B

                        where:

                        "A" is as defined in sub-paragraph (e) above;

                        "B" is, in relation to any Redemption Date falling
                        within the redemption premium period, a percentage
                        determined from the table below by reference to the
                        anniversary of the Relevant Date specified in the
                        left-hand column which is the latest to occur prior to
                        that Redemption Date:

<TABLE>
<CAPTION>
ANNIVERSARY OF THE
RELEVANT DATE                                                 PERCENTAGE
<S>                                                           <C>
tenth                                                             50%
eleventh                                                          45%
twelfth                                                           40%
thirteenth                                                        35%
fourteenth                                                        30%
fifteenth                                                         25%
sixteenth                                                         20%
seventeenth                                                       15%
eighteenth                                                        10%
nineteenth                                                         5%
</TABLE>

<PAGE>

                                     - 38 -

            (g)   in relation to any particular Category II Non-cumulative
                  Dollar Preference Shares allotted on or after the date of
                  passing of resolution 17 set out in Appendix 2 to the circular
                  letter to shareholders dated 15th March 2004, all of the
                  following provisions shall apply if (but only if) the
                  Directors so determine prior to allotment thereof:

                  (i)   the Directors may, in their sole and absolute
                        discretion, resolve prior to any dividend payment date
                        that the dividend on such Category II Non-cumulative
                        Dollar Preference Shares, or part thereof, shall not be
                        paid on that dividend payment date. If the Directors
                        resolve as aforesaid, then none or (as the case may be)
                        part only of the dividend shall be declared and/or paid.
                        The Directors shall not be bound to give their reasons
                        for exercising their discretion under this
                        sub-paragraph, and the Directors may exercise their
                        discretion in respect of a dividend notwithstanding the
                        previous setting aside of a sum to provide for payment
                        of that dividend;

                  (ii)  to the extent that any dividend or part of a dividend on
                        any Category II Non-cumulative Dollar Preference Shares
                        is, on any occasion, not paid by reason of the exercise
                        of the Directors' discretion pursuant to sub-paragraph
                        (i) above, the holders of such shares shall have no
                        claim in respect of such non-payment;

                  (iii) if any dividend or part of a dividend on any Category II
                        Non-cumulative Dollar Preference Shares has, on any
                        occasion, not been paid by reason of the exercise of the
                        Directors' discretion under sub-paragraph (i) above:

                        (1)   the provisions of sub-paragraphs (viii) and (ix)
                              of Article 4(D)(2)(b) shall not apply in respect
                              of such non-payment;

                        (2)   such non-payment shall not prevent or restrict (a)
                              the declaration and payment of dividends on any
                              other Category II Non-cumulative Dollar Preference
                              Shares, or on any preference shares capital of the
                              Company expressed to rank pari passu with the
                              Category II Non-cumulative Dollar Preference
                              Shares, (b) the setting aside of sums for the
                              payment of such dividends, (c) (subject to (4)
                              below) the redemption, purchase or other
                              acquisition of shares in the Company by the
                              Company, or (d) (subject to (4) below) the setting
                              aside of sums, or the establishment of sinking
                              funds, for any such redemption, purchase or other
                              acquisition by the Company;

<PAGE>

                                     - 39 -

                        (3)   no dividend may be declared or paid on any share
                              capital ranking after the Category II
                              Non-cumulative Dollar Preference Shares as regards
                              participation in profits (including the Ordinary
                              Shares) until such time as the dividend stated to
                              be payable on the Category II Non-cumulative
                              Dollar Preference Shares to which the non-payment
                              relates in respect of a dividend period has
                              thereafter been declared and paid in full; and

                        (4)   the Company may not redeem or purchase or
                              otherwise acquire for any consideration any share
                              capital ranking after the Category II
                              Non-cumulative Dollar Preference Shares, and may
                              not set aside any sum nor establish any sinking
                              fund for the redemption, purchase or other such
                              acquisition thereof, until such time as dividends
                              stated to be payable on the Category II
                              Non-cumulative Dollar Preference Shares to which
                              the non-payment relates in respect of successive
                              dividend periods together aggregating no less than
                              twelve months shall thereafter have been declared
                              and paid in full;

                  (iv)  if there is any conflict between the provisions of this
                        Article 4(E)(2)(g), as they apply to any Category II
                        Non-cumulative Dollar Preference Shares, and any other
                        provisions of Article 4(D) or this Article 4(E) applying
                        to such Category II Non-cumulative Dollar Preference
                        Shares, the provisions of this Article 4(E)(2)(g) shall
                        prevail. In Article 4(D)(2)(a), the words ", and subject
                        to the provisions of Article 4(E)(2)(g), if applicable"
                        shall be deemed to be inserted after "if applicable" in
                        the first sentence, and in Article 4(D)(2)(b) the words
                        "(subject to the provisions of Article 4(E)(2)(g), if
                        applicable)" shall be deemed to be inserted after "such
                        dividend shall" in sub-paragraph (i) and after
                        "dividends shall" in sub-paragraph (ii);

                  (v)   in determining the sum payable on any Category II
                        Non-cumulative Dollar Preference Shares pursuant to
                        Article 4(D)(2)(c)(i) on a winding up or liquidation,
                        the Directors' discretion under sub-paragraph (i) above
                        shall be disregarded save in so far as such discretion
                        was actually exercised prior to the making of the
                        determination;

                  (vi)  in calculating the relevant Redemption Premium if any
                        payable in respect of any Category II Non-cumulative
                        Dollar Preference Shares, the component "A" in the
                        formula for such calculation shall be determined on the
                        assumption that there shall be no exercise by the
                        Directors of their discretion under sub-paragraph (i)
                        above in respect of such Category II Non-cumulative
                        Dollar Preference Shares; and

<PAGE>

                                     - 40 -

                  (vii) for the avoidance of doubt, no series of Category II
                        Non-cumulative Dollar Preference Shares shall be treated
                        as ranking after any other New Preference Shares with
                        which it is expressed to rank pari passu as regards
                        participating in profits, by reason only of the
                        provisions set out in this Article 4(E)(2)(g) being
                        included in the terms of issue applicable to that
                        series, or any dividend on that series not being paid by
                        virtue of this Article 4(E)(2)(g).

            (3)   For the avoidance of doubt, the Category II Non-cumulative
                  Dollar Preference Shares are, for the purposes of Articles
                  4(C) and 4(D), New Preference Shares expressed to rank pari
                  passu with the Non-cumulative Sterling Preference Shares and
                  the Non-cumulative Dollar Preference Shares as regards
                  participation in surplus profits and surplus assets.

      (F)   Subject to the provisions of Article 4 and to the special rights
            attached to the Non-cumulative Sterling Preference Shares and the
            Non-cumulative Dollar Preference Shares and the Category II
            Non-cumulative Dollar Preference Shares and the Non-cumulative Euro
            Preference Shares and the Convertible Preference Shares (as defined
            in Article 4B) and the Category II Non-cumulative Convertible
            Sterling Preference Shares and to any special rights which are or
            may be attached to any other class of shares (i) the profits of the
            Company available for dividend and resolved to be distributed shall
            be distributed by way of dividend amongst the holders of the
            Ordinary Shares and (ii) on a winding up or liquidation, voluntary
            or otherwise, the residue, if any, of the surplus assets of the
            Company available for distribution amongst the members shall belong
            to the holders of the Ordinary Shares and be divided amongst them in
            proportion to the amounts paid up or credited as paid up on such
            shares held by them respectively.

4A    NON-CUMULATIVE EURO PREFERENCE SHARES

      Each Non-cumulative Euro Preference Share of E0.01 forming part of the
      share capital of the Company (a "Non-cumulative Euro Preference Share")
      shall confer the rights as to participation in the profits and assets of
      the Company, receipt of notices, attendance and votings at meetings and
      redemption specified or referred to in Schedule 1 to these presents
      ("Schedule 1", which Schedule shall be regarded as part of these
      presents).

4B    NON-CUMULATIVE CONVERTIBLE PREFERENCE SHARES

      (1)   NON-CUMULATIVE CONVERTIBLE STERLING PREFERENCE SHARES: Each
            Non-cumulative Convertible Sterling Preference Share of L0.01
            forming part of the share capital of the Company (a "Non-cumulative
            Convertible Sterling Preference Share") shall confer the rights as
            to participation in the profits and assets of the Company, receipt
            of notices, attendance and voting at meetings, redemption and
            conversion specified or referred to in Parts 1 and 4 of Schedule 2
            to these presents ("Schedule 2" which schedule shall be regarded as
            part of these presents).

      (2)   NON-CUMULATIVE CONVERTIBLE DOLLAR PREFERENCE SHARES: Each
            Non-cumulative Convertible Dollar Preference Share of US$0.01
            forming part of the share capital of the Company (a "Non-cumulative
            Convertible Dollar Preference Share") shall confer the rights as to
            participation in the profits and assets of the Company, receipt of
            notices, attendance and voting at meetings, redemption and
            conversion specified or referred to in Parts 2 and 4 of Schedule 2.

<PAGE>

                                     - 41 -

      (3)   NON-CUMULATIVE CONVERTIBLE EURO PREFERENCE SHARES: Each
            Non-cumulative Convertible Euro Preference Share of E0.01
            forming part of the share capital of the Company (a "Non-cumulative
            Convertible Euro Preference Share") shall confer the rights as to
            participation in the profits and assets of the Company, receipt of
            notices, attendance and voting at meetings, redemption and
            conversion specified or referred to in Parts 3 and 4 of Schedule 2.

      (4)   In Schedule 2, "Convertible Preference Shares" means all or any of
            the Non-cumulative Convertible Sterling Preference Shares, the
            Non-cumulative Convertible Dollar Preference Shares and the
            Non-cumulative Convertible Euro Preference Shares (each a
            "Convertible Preference Share").

4C    CATEGORY II NON-CUMULATIVE CONVERTIBLE STERLING PREFERENCE SHARES

      Each Category II Non-cumulative Convertible Preference Share of
      L0.25 forming part of the share capital of the Company (a "Category
      II Non-cumulative Convertible Sterling Preference Share") shall confer the
      rights as to participation in the profits and assets of the Company,
      receipt of notices, attendance and voting at meetings, redemption and
      conversion specified or referred to in Schedule 3 to these presents
      ("Schedule 3" which schedule shall be regarded as part of these presents).

4D.   ADDITIONAL VALUE SHARES

      Each Additional Value Share of L0.01 forming part of the share
      capital of the Company (an "Additional Value Share") shall confer the
      rights as to participation in the profits and assets of the Company,
      receipt of notices, attendance and voting at meetings and conversion
      specified or referred to in Schedule 4 to these presents ("Schedule 4")
      which schedule shall be regarded as part of these presents.

5.    SHARES WITH SPECIAL RIGHTS AND REDEEMABLE SHARES

      Without prejudice to any special rights previously conferred on the
      holders of any shares or class of shares for the time being issued (which
      special rights may be varied or abrogated only in the manner provided by
      the next following Article), any share in the Company may be issued with
      such preferred, deferred or other special rights, or subject to such
      restrictions, whether in regard to participation in the profits or assets
      of the Company, voting or otherwise, as the Company may from time to time
      by Ordinary Resolution determine (or, failing any such determination or in
      pursuance of any power conferred on the Directors by these presents or by
      Ordinary Resolution, as the Directors may determine) and subject to the
      provisions of the Statutes the Company may issue any shares which are, or
      at the option of the Company or the holder are to be liable, to be
      redeemed.

                               VARIATION OF RIGHTS

6.    METHOD OF VARYING CLASS RIGHTS

      Whenever the share capital of the Company is divided into different
      classes of shares, the special rights attached to any class may, subject
      to the provisions of the Statutes, be varied or abrogated either with the
      consent in writing of the holders of three-fourths of the issued shares of
      the class or with the sanction of an Extraordinary Resolution passed at a
      separate General Meeting of the holders of the shares of the class (but
      not otherwise) and may be so varied or abrogated either whilst the Company
      is a going concern or during or in

<PAGE>

                                     - 42 -

      contemplation of a winding up. To every such separate General Meeting all
      the provisions of these presents relating to General Meetings of the
      Company and to the proceedings thereat shall mutatis mutandis apply,
      except that the necessary quorum shall be two persons at least holding or
      representing by proxy one-third in nominal amount of the issued shares of
      the class (but so that if at any adjourned meeting a quorum as above
      defined is not present, any two holders of shares of the class present in
      person or by proxy shall be a quorum) and that any holder of shares of the
      class present in person or by proxy may demand a poll and that every such
      holder shall on a poll have one vote for every share of the class held by
      him. The foregoing provisions of this Article shall apply to the variation
      or abrogation of the special rights attached to some only of the shares of
      any class as if the shares concerned and the remaining shares of such
      class formed separate classes.

7.    WHEN SHARE RIGHTS DEEMED TO BE VARIED

      The special rights attached to any class of shares having preferential
      rights shall not unless otherwise expressly provided by the terms of issue
      thereof be deemed to be varied by the creation or issue of further shares
      ranking as regards participation in the profits or assets of the Company
      in some or all respects pari passu therewith but in no respect in priority
      thereto.

                              ALTERATION OF CAPITAL

8.    INCREASE OF CAPITAL

      The Company may from time to time by Ordinary Resolution increase its
      capital by such sum to be divided into shares of such amounts, and
      denominated in such currencies, as the resolution shall prescribe.

9.    NEW SHARES

      All new shares shall be subject to the provisions of the Statutes and of
      these presents with reference to allotment, payment of calls, lien,
      transfer, transmission, forfeiture and otherwise.

10(A). ALTERATIONS PERMITTED BY ORDINARY RESOLUTION

      The Company may by Ordinary Resolution:-

      (1)   Consolidate and divide all or any of its share capital into shares
            of larger amount than its existing shares.

      (2)   Cancel any shares which, at the date of the passing of the
            resolution, have not been taken, or agreed to be taken, by any
            person and diminish the amount of its capital by the amount of the
            shares so cancelled.

      (3)   Sub-divide its shares, or any of them, into shares of smaller amount
            than is fixed by the Memorandum of Association (subject,
            nevertheless, to the provisions of the Statutes), and so that the
            resolution whereby any share is sub-divided may determine that, as
            between the holders of the shares resulting from such sub-division,
            one or more of the shares may, as compared with the others, have any
            such preferred, deferred or other special rights, or be subject to
            any such restrictions, as the Company has power to attach to
            unissued or new shares.

<PAGE>

                                     - 43 -

(B).  FRACTIONS ARISING

      Upon any consolidation of fully paid shares into shares of larger amount
      the Directors may settle any difficulty which may arise with regard
      thereto and in particular may as between the holders of shares so
      consolidated determine which shares are consolidated into each
      consolidated share and in the case of any shares registered in the name of
      one holder (or joint holders) being consolidated with shares registered in
      the name of one holder (or joint holders) may make such arrangements for
      the allocation, acceptance or sale of the consolidated share and for the
      distribution of any moneys received in respect thereof as may be thought
      fit and for the purpose of giving effect thereto may appoint some person
      to transfer the consolidated share or any fractions thereof and to receive
      the purchase price thereof and any transfer executed in pursuance thereof
      shall be effective and after such transfer has been registered no person
      shall be entitled to question its validity.

11.   POWER TO PURCHASE OWN SHARES

      Subject to the provisions of the Statutes, and to any rights conferred on
      the holders of any class of shares and to any requirements imposed by the
      London Stock Exchange in respect of securities admitted to listing, the
      Company may purchase, or enter into a contract under which it will or may
      purchase, any of its own shares (including any redeemable shares). Neither
      the Company nor the Directors shall be required to select the shares to be
      purchased rateably or in any other particular manner as between the
      holders of shares of the same class or as between them and the holders of
      shares of any other class or in accordance with the rights as to dividends
      or capital conferred by any class of shares.

      Unless otherwise provided by the terms of issue, the rights attached to
      any New Preference Share shall not be deemed to be varied or abrogated by
      the purchase or redemption by the Company of any of its shares ranking as
      regards participation in the profits or assets of the Company pari passu
      with or postponed to such share.

12.   POWER TO REDUCE CAPITAL

      The Company may reduce its share capital or any capital redemption
      reserve, share premium account or other undistributable reserve in any
      manner and with and subject to any incident authorised, and consent
      required, by law. Unless otherwise provided by the terms of issue, the
      rights attached to any New Preference Share shall not be deemed to be
      varied or abrogated by a reduction of any share capital ranking as regards
      participation in the profits and assets of the Company pari passu with or
      postponed to such share.

                                     SHARES

13(A). SHARES AT THE DISPOSAL OF THE DIRECTORS

      Subject to the provisions of the Statutes relating to authority,
      pre-emption rights and otherwise and of any resolution of the Company in
      General Meeting passed pursuant thereto and of these presents, all
      unissued shares in the Company shall be at the disposal of the Directors
      and they may allot (with or without conferring a right of renunciation),
      grant options over or otherwise dispose of them to such persons, at such
      times and on such terms as they think proper. No share in the Company may
      be allotted (a) for cash in a currency other than that in which it is
      denominated or (b) for a consideration other than cash unless the value
      ascribed thereto is denominated in the same currency as such share.
<PAGE>

                                    - 44 -

(B).  DIRECTORS' AUTHORITY TO ALLOT SHARES AND POWER TO ALLOT SHARES FOR CASH

      (1)   The Directors shall be generally and unconditionally authorised
            pursuant to and in accordance with Section 80 of the 1985 Act to
            exercise for each Section 80 prescribed period all the powers of the
            Company to allot and to make offers or agreements to allot relevant
            securities up to an aggregate nominal amount equal to the Section 80
            amount (save that the Directors shall not be authorised hereunder to
            issue any New Preference Shares).

      (2)   During each Section 89 prescribed period the Directors shall be
            empowered to allot and to make offers or agreements to allot equity
            securities wholly for cash (pursuant to and within the terms of the
            said authority, by way of sales of treasury shares, or both):-

            (i)   in connection with a rights issue;

            (ii)  pursuant to any authority conferred upon the Directors in
                  accordance with and pursuant to Article 143; and

            (iii) otherwise than pursuant to sub-paragraphs (i) or (ii) above,
                  up to an aggregate nominal amount equal to the Section 89
                  amount;

            as if Section 89(1) of the 1985 Act did not apply to any such
            allotment.

      (3)   By such authority and power, the Directors may during such period
            make offers or agreements which would or might require the allotment
            of securities after the expiry of such period.

      (4)   For the purposes of this Article 13(B):

            (i)   "rights issue" means an offer of equity securities to holders
                  on a fixed record date of (a) Ordinary Shares in proportion to
                  their respective holdings and (b) other equity securities to
                  the extent required or permitted by the rights attached
                  thereto (but subject to such exclusions or other arrangements
                  as the Directors may deem necessary or expedient in relation
                  to fractional entitlements or legal or practical problems
                  under the laws of, or the requirements of any recognised
                  regulator body or any stock exchange in, any territory);

            (ii)  "Section 80 prescribed period" means, in the first instance, a
                  period of 5 years commencing on the day of the adoption of
                  these Articles and thereafter shall mean any other period (not
                  exceeding 5 years on any occasion) for which the authority
                  conferred by sub-paragraph (1) above is renewed or extended by
                  an Ordinary Resolution of the Company stating the Section 80
                  amount for such period;

            (iii) "Section 89 prescribed period" means, in the first instance,
                  the period from the date of the adoption of these Articles to
                  the date of the Annual General Meeting in 1999 or 15 months
                  from the day of the adoption of these Articles, whichever is
                  the earlier, and shall thereafter mean any period (not
                  exceeding 15 months on any occasion) for which the authority
                  and power conferred by sub-paragraph (2) above is renewed by a
                  Special Resolution of the Company stating the Section 89
                  amount for such period;

<PAGE>

                                     - 45 -

            (iv)  "Section 80 amount" shall for the first Section 80 prescribed
                  period be L44,956,071 and for any other Section 80 prescribed
                  period shall be that stated in the relevant Ordinary
                  Resolution or any increased amount fixed by Ordinary
                  Resolution;

            (v)   "Section 89 amount" shall for the first Section 89 prescribed
                  period be L10,751,951 and for any other Section 89 prescribed
                  period shall be that stated in the relevant Special
                  Resolution; and

            (vi)  the nominal amount of any securities shall be taken to be, in
                  the case of rights to subscribe for or to convert any
                  securities into shares of the Company, the nominal amount of
                  such shares which may be allotted pursuant to such rights.

14.   COMMISSION

      In addition to all other powers of paying commissions, the Company may
      exercise the powers of paying commissions conferred by the Statutes to the
      full extent thereby permitted. The Company may also on any issue of shares
      pay such brokerage as may be lawful. Subject to the Statutes, any such
      commission or brokerage may be satisfied by the payment of cash or by the
      allotment of fully or partly paid shares or partly in one way and partly
      in another.

15.   RENUNCIATION

      The Directors may at any time after the allotment of any share but before
      any person has been entered in the Register of Members as the holder
      recognise a renunciation thereof by the allottee in favour of some other
      person and may accord to any allottee of a share a right to effect such
      renunciation upon and subject to such terms and conditions as the
      Directors may think fit to impose

16.   INTERESTS NOT RECOGNISED

      Except as required by law, no person shall be recognised by the Company as
      holding any share upon any trust, and the Company shall not be bound by or
      compelled in any way to recognise (even when having notice thereof) any
      equitable, contingent, future or partial interest in any share, or any
      interest in any fractional part of a share, or (except only as by these
      presents or by law otherwise provided) any other right in respect of any
      share, except an absolute right to the entirety thereof in the registered
      holder or, in the case of a share warrant, in the bearer of the warrant
      for the time being.

                           EVIDENCE OF TITLE TO SHARES

17.   UNCERTIFICATED SHARES

      (A)   Pursuant and subject to the Uncertificated Securities Regulations,
            the Directors may permit title to shares of any class to be
            evidenced otherwise than by a certificate and title to shares of
            such a class to be transferred by means of a relevant system and may
            make arrangements for a class of shares (if all shares of that class
            are in all respects identical) to become a participating class.
            Title to shares of a particular class may only be evidenced
            otherwise than by a certificate where that class of shares is for
            the time being a participating class. The Directors may also,
            subject to compliance with the Uncertificated Securities Regulations
            and the rules of any relevant system,

<PAGE>

                                    - 46 -

            determine at any time that title to shares of any class may from a
            date specified by the Directors no longer be evidenced otherwise
            than by a certificate or that title to shares of such a class shall
            cease to be transferred by means of any particular relevant system.
            For the avoidance of doubt, shares which are uncertificated shares
            shall not be treated as forming a class of shares which are separate
            from certificated shares with the same rights.

      (B)   In relation to a class of shares which is, for the time being, a
            participating class and for so long as it remains a participating
            class, no provision of these Articles shall apply or have effect to
            the extent that it is inconsistent in any respect with:-

            (i)   the holding of shares of that class in uncertificated form;

            (ii)  the transfer of title to shares of that class by means of a
                  relevant system; and

            (iii) any provision of the Uncertificated Securities Regulations.

      (C)   Shares of a class which is for the time being a participating class
            may be changed from uncertificated form, and from certificated to
            uncertificated form, in accordance with and subject as provided in
            the Uncertificated Securities Regulations and the rules of any
            relevant system, and the Directors shall record on the register of
            members that the shares are held in certificated or uncertificated
            form as appropriate.

18.   CERTIFICATED SHARES

      Subject to the provisions of the Uncertificated Securities Regulations,
      the rules of any relevant system and these presents, every person (except
      a person to whom the Company is not by law required to issue a
      certificate) whose name is entered as a member in the register of members
      in respect of any shares of any one class upon the issue or transfer
      thereof shall be entitled without payment to a certificate therefor (in
      the case of issue) within one month (or such longer period as the terms of
      issue shall provide) after allotment or (in the case of a transfer of
      fully paid shares) within fourteen days after lodgement of a transfer or
      receipt of the relevant Operator-instruction by the Company or (in the
      case of a transfer of partly paid shares) within two months after
      lodgement of a transfer or receipt of the relevant Operator-instruction
      by the Company or (upon payment of such reasonable charge (if any) for
      every certificate after the first as the Directors shall from time to time
      determine) to several certificates, each for one or more of his shares of
      any class. Provided that the Company shall not be bound to register more
      than four persons as the joint holders of a share and in the case of a
      share held jointly by several persons the Company shall not be bound to
      issue more than one certificate for each class of shares so held and
      delivery of a certificate to one of such persons shall be deemed
      sufficient delivery to all. A member who has transferred some but not all
      of the shares comprised in a share certificate shall be entitled to a
      certificate for the balance without charge.

19.   AUTHENTICATION AND FORM OF CERTIFICATES

      Every certificate for shares or debentures or other securities of the
      Company shall (except to the extent that the terms and conditions for the
      time being relating thereto otherwise provide) be issued under the Seal
      (or under a Securities Seal or, in the case of shares on a branch
      register, an official seal for use in the relevant territory) and (subject
      as hereinafter provided) shall bear the autographic signatures at least of
      one Director and the Secretary. Provided that the Directors may by
      resolution determine, either generally or in any particular case or cases,

<PAGE>
                                    - 47 -

      that such signatures or either of them shall be dispensed with or shall be
      affixed by some method or system of mechanical signature or that
      certificates may be signed or authenticated by some other person or
      persons. Every such certificate shall specify the number and class of
      shares, debentures or other securities to which it relates and the amount
      paid up thereon. No certificate shall be issued representing shares,
      debentures or other securities of more than one class. No certificate need
      be issued in respect of shares, debentures or other securities held by a
      recognised clearing house or a nominee of a recognised clearing house or
      of a recognised investment exchange or any other person in respect of whom
      the Company is not required by law to complete and have ready for delivery
      a certificate as provided herein. Notwithstanding the foregoing provisions
      of this Article, the Directors may by resolution determine, either
      generally or in any particular case or cases, that certificates for
      shares, debentures or other securities shall bear the signatures or
      facsimile signatures of two authorised officers of the Company and need
      not be issued under the Seal or the Securities Seal or an official seal.

20.   CANCELLATION AND REPLACEMENT OF CERTIFICATES

      (A)   Any two or more certificates representing shares of any one class
            held by any member may at his request be cancelled and a single new
            certificate for all such shares issued in lieu subject, if the
            Directors so require, to payment of the reasonable out of pocket
            expenses of the Company in providing the same.

      (B)   If any member shall surrender for cancellation a share certificate
            representing shares held by him and request the Company to issue in
            lieu two or more share certificates representing such shares in such
            proportions as he may specify, the Directors may, if they think fit,
            comply with such request.

      (C)   If a share certificate shall be damaged, defaced, worn out, or
            alleged to have been lost, stolen or destroyed, it shall be replaced
            by a new certificate on request without fee but on such terms (if
            any) as to evidence and indemnity and to payment of any exceptional
            out-of-pocket expenses of the Company in investigating the evidence
            and preparing the indemnity as the Directors may decide and, where
            it is defaced or worn out, after delivery of the old certificate to
            the Company.

      (D)   In the case of shares held jointly by several persons any such
            request may be made by any one of the joint holders.

                                 CALLS ON SHARES

21.   POWER TO MAKE CALLS

      The Directors may from time to time make calls upon the members in respect
      of any monies unpaid on their shares (whether on account of the nominal
      value of the shares or by way of premium) and not by the terms of issue
      thereof made payable at fixed times. Each member shall (subject to being
      given at least fourteen days' notice specifying the time or times and
      place of payment) pay to the Company at the time or times and place so
      specified the amount called on his shares. A call may be revoked or
      postponed as the Directors may determine.

22.   TIME WHEN CALL MADE

      A call shall be deemed to have been made at the time when the resolution
      of the Directors authorising the call was passed and may be made payable
      by instalments.

<PAGE>

                                    - 48 -

23.   LIABILITY OF JOINT HOLDERS

      The joint holders of a share shall be jointly and severally liable to pay
      all calls in respect thereof.

24.   INTEREST PAYABLE

      If a sum called in respect of a share is not paid before or on the day
      appointed for payment thereof, the person from whom the sum is due shall
      pay interest on the sum from the day appointed for payment thereof to the
      time of actual payment at such rate (not exceeding 5 per cent per annum
      above the Base Rate, or in the absence of any Base Rate, 20 per cent per
      annum) as the Directors determine and all expenses that may have been
      incurred by the Company by reason of such non-payment, but the Directors
      shall be at liberty in any case or cases to waive payment of such interest
      and expenses wholly or in part.

25.   DEEMED CALLS

      Any sum (whether on account of the nominal value of the share or by way of
      premium) which by the terms of issue of a share becomes payable upon
      allotment or at any fixed date shall for all the purposes of these
      presents be deemed to be a call duly made and payable on the date on which
      by the terms of issue the same becomes payable. In the case of non-
      payment all the relevant provisions of these presents as to payment of
      interest and expenses, forfeiture or otherwise shall apply as if such sum
      had become payable by virtue of a call duly made and notified.

26.   DIFFERENTIATION OF CALLS

      The Directors may at any time and from time to time differentiate between
      the holders as to the amount of calls to be paid and the times of payment.

27.   PAYMENT OF CALLS IN ADVANCE

      The Directors may if they think fit receive from any member willing to
      advance the same all or any part of the monies (whether on account of the
      nominal value of the shares or by way of premium) uncalled and unpaid upon
      the shares held by him and such payment in advance of calls shall
      extinguish pro tanto the liability upon the shares in respect of which it
      is made and upon the monies so received (until and to the extent that the
      same would but for such advance become payable) the Company may pay
      interest at such rate (not exceeding the Base Rate or, in the absence of
      any Base Rate, 12 per cent per annum) as the member paying such sum and
      the Directors agree upon. The Directors may at any time repay monies paid
      in advance of calls upon giving to the member not less than one month's
      notice in writing.

                         FORFEITURE, SURRENDER AND LIEN

28.   NOTICE REQUIRING PAYMENT OF CALLS ON DEFAULT

      If a member fails to pay the whole or any part of any call or instalment
      of a call on the day appointed for payment thereof, the Directors may at
      any time thereafter during such time as any part of such call or
      instalment remains unpaid, serve a notice on him requiring payment of so
      much of the call or instalment as is unpaid together with any accrued
      interest and any costs, charges and expenses incurred by the Company by
      reason of such non-payment.

<PAGE>
                                    - 49 -

29.   CONTENT OF NOTICE

      The notice shall name a further day (not being less than seven days from
      the date of service of the notice) on or before which, and the place
      where, the payment required by the notice is to be made, and shall state
      that in the event of non-payment in accordance therewith the shares on
      which the call was made will be liable to be forfeited.

30.   FORFEITURE FOR NON-COMPLIANCE

      If the requirements of any such notice as aforesaid are not complied with,
      any share in respect of which such notice has been given may at any time
      thereafter, before payment of all calls, interest, costs, charges and
      expenses due in respect thereof has been received by the Company, be
      forfeited by a resolution of the Directors to that effect. Such forfeiture
      shall include all dividends declared in respect of the forfeited share and
      not actually paid before forfeiture. The Directors may accept a surrender
      of any share liable to be forfeited hereunder. When a share has been
      forfeited, the Company shall give notice of the forfeiture to the person
      who was before forfeiture the holder of the share or the person entitled
      by transmission to the share. No forfeiture will be invalidated by any
      omission to give such notice. An entry of the fact and date of forfeiture
      shall be made in the Register of Members.

31.   SALE OF FORFEITED SHARES

      A share so forfeited or surrendered shall become the property of the
      Company and may (subject to the provisions of the Statutes) be sold,
      re-allotted or otherwise disposed of either to the person who was before
      such forfeiture or surrender the holder thereof or entitled thereto or to
      any other person upon such terms and in such manner as the Directors shall
      think fit and at any time before a sale, re-allotment or disposition the
      forfeiture or surrender may be cancelled on such terms as the Directors
      think fit. The Directors may, if necessary, authorise some person to
      transfer a forfeited or surrendered share to any such other person as
      aforesaid.

32.   EXTINCTION OF RIGHTS

      A member whose shares have been forfeited or surrendered shall cease to be
      a member in respect of the forfeited or surrendered shares but shall
      notwithstanding the forfeiture or surrender remain liable to pay to the
      Company all moneys which at the date of forfeiture or surrender were
      presently payable by him to the Company in respect of the shares with
      interest thereon at 5 per cent per annum above the Base Rate or, in the
      absence of any Base Rate, 20 per cent per annum (or in either case such
      lower rate as the Directors may approve) from the date of forfeiture or
      surrender until payment but the Directors may waive payment of such moneys
      and/or interest either wholly or in part and the Directors may enforce
      payment without any allowance for the value of the shares at the time of
      forfeiture or surrender.

33.   COMPANY TO HAVE LIEN ON SHARES

      The Company shall have a first and paramount lien on every share (not
      being a fully paid share) for all moneys (whether presently payable or
      not) called or payable at a fixed time in respect of such share and the
      Company shall also, insofar as is permitted by the Statutes, have a first
      and paramount lien on all shares (other than fully paid shares) standing
      registered in the name of a single member for all the debts and
      liabilities of such member or his estate to the Company and that whether
      the same shall have been incurred before or after notice to the Company of
      any equitable or other interest of any person other than such member and

<PAGE>
                                    - 50 -

      whether the period for the payment or discharge of the same shall have
      actually arrived or not and notwithstanding that the same are joint debts
      or liabilities of such member or his estate and any other person, whether
      a member of the Company or not. The Company's lien (if any) on a share
      shall extend to all dividends or other moneys payable thereon or in
      respect thereof. The Directors may waive any lien which has arisen and may
      declare any share to be exempt wholly or partially from the provisions of
      this Article.

34.   ENFORCEMENT OF LIEN BY SALE

      The Company may sell in such manner as the Directors think fit any share
      on which the Company has a lien, but no sale shall be made unless some sum
      in respect of which the lien exists is presently payable nor until the
      expiration of fourteen days after a notice in writing stating and
      demanding payment of the sum presently payable and giving notice of the
      intention to sell in default shall have been given to the registered
      holder for the time being of the share or the person entitled thereto by
      reason of death or bankruptcy.

35.   APPLICATION OF PROCEEDS

      The net proceeds of such sale after payment of the costs of such sale
      shall be applied in or towards payment or satisfaction of the debts or
      liabilities in respect whereof the lien exists so far as the same are
      presently payable and any residue shall (upon surrender to the Company for
      cancellation of the certificate (if any) for the shares sold and subject
      to a like lien for debts or liabilities not presently payable as existed
      upon the shares prior to the sale) be paid to the person entitled to the
      shares at the time of the sale. For giving effect to any such sale the
      Directors may authorise some person to transfer the shares sold to, or in
      accordance with the directions of, the purchaser.

36.   GIVING EFFECT TO THE SALE

      A statutory declaration in writing that the declarant is a Director or the
      Secretary of the Company and that a share has been duly forfeited or
      surrendered or sold to satisfy a lien of the Company on a date stated in
      the declaration shall be conclusive evidence of the facts therein stated
      as against all persons claiming to be entitled to the share. Such
      declaration and the receipt of the Company for the consideration (if any)
      given for the share on the sale, re-allotment or disposal thereof
      together with the share certificate (if any) delivered to a purchaser or
      allottee thereof shall (subject to the execution of a transfer if the same
      be required) constitute a good title to the share and the person to whom
      the share is sold, re-allotted or disposed of shall be registered as the
      holder of the share and shall not be bound to see to the application of
      the purchase money (if any) nor shall his title to the share be affected
      by any irregularity or invalidity in the proceedings in reference to the
      forfeiture, surrender, sale, re-allotment or disposal of the share.

                               TRANSFER OF SHARES

37.   TRANSFERS

      Subject to such of the restrictions of these presents as may be
      applicable:-

      (i)   any member may transfer all or any of his uncertificated shares by
            means of a relevant system in such manner provided for, and subject
            as provided in the Uncertificated Securities Regulations and the
            rules of any relevant system, and accordingly no provision of these
            present shall apply in respect of an uncertificated share to the
            extent that it requires or contemplates the effecting of a transfer
            by an

<PAGE>
                                    - 51 -

            instrument in writing or the production of a certificate for the
            share to be transferred; and

      (ii)  any member may transfer all or any of his certificated shares by an
            instrument of transfer in any usual form or in any other form which
            the Directors may approve.

38.   EXECUTION OF TRANSFERS

      The instrument of transfer of a certificated share shall be executed by or
      on behalf of the transferor and (except in the case of fully paid shares)
      by or on behalf of the transferee. The transferor shall be deemed to
      remain the holder of the shares concerned until the name of the transferee
      is entered in the Register of Members in respect thereof. All instruments
      of transfer which are registered may be retained by the Company.

39.   SUSPENSION OF REGISTRATION

      Subject to the Statutes and the requirements of the London Stock Exchange,
      the registration of transfers may be suspended and the Register of Members
      closed at such times and for such period as the Directors may from time to
      time determine and either generally or in respect of any class of shares:
      Provided that such registration shall not be suspended and the Register of
      Members shall not be closed for more than thirty days in any year.

40.   RIGHT TO DECLINE TO REGISTER TRANSFER OF PARTLY PAID SHARES

      The Directors may in their absolute discretion and without assigning any
      reason therefor decline to register any transfer of shares (not being
      fully paid shares) provided that where any such share is listed on the
      London Stock Exchange, such discretion may not be exercised in such a way
      as to prevent dealings in the shares of that class from taking place on an
      open and proper basis. If the Directors refuse to register a transfer they
      shall within two months after the date on which the transfer was lodged
      with the Company or, in the case of uncertificated shares, within two
      months after the date on which the relevant Operator-instruction is
      received, send to the transferee notice of the refusal.

41.   FURTHER RIGHTS TO DECLINE TO REGISTER TRANSFER

      (A)   The Directors may only decline to register a transfer of an
            uncertificated share in the circumstances set out in the
            Uncertificated Securities Regulations, and where, in the case of a
            transfer to joint holders, the number of joint holders to whom the
            uncertificated share is to be transferred exceeds four.

      (B)   The Directors may decline to register any transfer of a certificated
            share unless:-

            (i)   the instrument of transfer is lodged at the Transfer Office or
                  at such other place as the Directors may from time to time
                  determine accompanied by the certificate for the shares to
                  which it relates and such other evidence as the Directors may
                  reasonably require to show the right of the transferor to make
                  the transfer;

            (ii)  the instrument of transfer is in respect of only one class of
                  share; and

            (iii) in the case of a transfer to joint holders, the number of
                  joint holders to whom the share is to be transferred does not
                  exceed four.

<PAGE>
                                    - 52 -

42.   NO FEE PAYABLE FOR REGISTRATION OF TRANSFERS

      No fee will be charged by the Company in respect of the registration of
      any instrument of transfer or confirmation or probate or letter of
      administration or certificate of marriage or death or power of attorney or
      other document relating to or affecting the title to any shares or
      otherwise for making any entry in the Register of Members affecting the
      title to any shares.

43.   RENUNCIATIONS RECOGNISED

      Nothing in these presents shall preclude the Directors from recognising a
      renunciation of the allotment of any share by the allottee in favour of
      some other person. In this Article "allottee" includes provisional
      allottee and any person in whose favour an allotment has been previously
      renounced.

                            DESTRUCTION OF DOCUMENTS

44.   DESTRUCTION OF DOCUMENTS

      The Company shall be entitled to destroy (a) all share certificates which
      have been cancelled at any time after the expiration of one year from the
      date of such cancellation, and (b) all notifications of change of name and
      address and all dividend mandates which have been cancelled or have ceased
      to have effect at any time after the expiration of two years from the date
      of the recording of such notification or, as the case may be, the date of
      such cancellation or cessation, and (c) all instruments of transfer of
      shares which have been registered at any time after the expiration of six
      years from the date of registration thereof, and (d) any other documents
      on the basis of which any entry in the Register of Members has been made
      at any time after the expiration of six years from the date of the first
      entry in the Register of Members in respect thereof, and it shall
      conclusively be presumed in favour of the Company that every entry in the
      Register of Members purporting to have been made on the basis of an
      instrument of transfer or other document so destroyed was duly and
      properly made and that every instrument of transfer so destroyed was a
      valid and effective instrument duly and properly registered and every
      share certificate so destroyed was a valid and effective document duly and
      properly cancelled and every other document hereinbefore mentioned so
      destroyed was a valid and effective document in accordance with the
      recorded particulars thereof in the books or records of the Company.

      Provided always that:-

      (i)   The provisions aforesaid shall apply only to the destruction of a
            document in good faith and without express notice of any claim
            (regardless of the parties thereto) to which the document might be
            relevant;

      (ii)  Nothing herein contained shall be construed as imposing upon the
            Company any liability in respect of the destruction of any such
            document earlier than as aforesaid or in any other circumstances
            which would not attach to the Company in the absence of this
            Article;

      (iii) References herein to the destruction of any document include
            references to the disposal thereof in any manner.

<PAGE>
                                    - 53 -

                             TRANSMISSION OF SHARES

45.   TRANSMISSION

      In case of the death of a registered shareholder, the survivors or
      survivor where the deceased was a joint holder, and the executors or
      administrators of the deceased where he was a sole or only surviving
      holder, shall be the only persons recognised by the Company as having any
      title to his interest in the shares, but nothing in this Article shall
      release the estate of a deceased holder (whether sole or joint) from any
      liability in respect of any share solely or jointly held by him.

46(A). REGISTRATION ON DEATH, BANKRUPTCY, ETC

      Subject to the provisions of the preceding Article any person becoming
      entitled to a share in consequence of the death or bankruptcy of a member
      or otherwise by operation of law may (subject as provided elsewhere in
      these presents) upon such evidence being produced as may from time to time
      properly be required by the Directors (and in the case of shares in
      uncertificated form, subject to the facilities and requirements of the
      relevant system) either (a) be registered as holder of the share in a
      representative capacity or (b) be registered himself as holder of the
      share or (c) transfer such share to some other person. The Directors
      shall, in any case, have the same right to decline or suspend registration
      as they would have had in the case of a transfer of the share by that
      member before his death, bankruptcy or other event giving rise to the
      transmission of his entitlement by operation of law, as the case may be.

  (B). ELECTION FOR REGISTRATION

      The intimation to the Company, by or on behalf of any person becoming
      entitled to a share in accordance with paragraph (A) of this Article, of
      the evidence therein required shall be deemed to be a request by such
      person to be registered as holder of the share in a representative
      capacity unless such person shall otherwise elect as aftermentioned,
      provided always that such registration shall not impose any personal
      liability upon such person in respect of the share. If the person so
      becoming entitled shall elect to be registered himself, he shall deliver
      or send to the Company a notice in writing in a form acceptable to the
      Directors signed by him stating that he so elects and if he shall elect to
      have another person registered he shall testify his election by, in
      respect of shares in certificated form, executing to that person a
      transfer of the share or, in respect of shares in uncertificated form,
      making such other arrangements as are consistent with the Uncertificated
      Securities Regulations and the facilities and requirements of the relevant
      system for their transfer to such person. All the limitations,
      restrictions and provisions of these presents relating to the right to
      transfer and the registration of transfers of shares shall be applicable
      to any such notice or transfer as aforesaid as if the death or bankruptcy
      of the member, or other event giving rise to the transmission of his
      entitlement by operation of law, had not occurred and the notice or
      transfer were a transfer signed by that member.

47.   RIGHTS OF PERSONS ENTITLED BY TRANSMISSION

      Save as otherwise provided by or in accordance with these presents, a
      person becoming entitled to a registered share in consequence of the death
      or bankruptcy of a member or otherwise by operation of law (upon supplying
      to the Company such evidence as the Directors may reasonably require to
      show his title to the share) shall be entitled to the same dividends and
      other advantages as those to which he would be entitled if he were the
      registered holder of the share except that he shall not be entitled in
      respect thereof (except

<PAGE>
                                     - 54 -

            with the authority of the Directors) to exercise any right conferred
            by membership in relation to meetings of the Company until he shall
            have been registered as a member in respect of the share; Provided
            that the Directors may at any time give notice requiring such person
            to elect either to be registered or to transfer the share and, if
            the notice is not complied with within such period (being not less
            than 42 days) as the Directors may fix, the Company may thereafter:

            (a)   withhold payment of all dividends and other monies payable in
                  respect of the share (but any such action shall not constitute
                  the Company a trustee in respect of any such dividends or
                  other monies) and suspend any other advantages to which such
                  person would otherwise be entitled in respect of the share
                  until the requirements of the notice have been complied with;
                  and/or

            (b)   sell the share at the best price reasonably obtainable in such
                  manner as the Directors think fit and, subject to the
                  provisions of these presents generally, the provisions of
                  Article 48(B) shall apply to such sale.

                              UNTRACED SHAREHOLDERS

48(A). POWER TO DISPOSE OF SHARES OF UNTRACED SHAREHOLDERS

      The Company shall be entitled to sell at the best price then reasonably
      obtainable the shares of a member or the shares to which a person is
      entitled by virtue of transmission on death or bankruptcy if and provided
      that:-

      (i)   during the period of twelve years ending on the date of the
            publication of the advertisement referred to in sub-paragraph (ii)
            below (or, if published on different dates, the later or latest
            thereof) at least three cash dividends (whether interim or final)
            have become payable on or in respect of the shares in question but
            all dividends or other moneys payable on or in respect of such
            shares during such period remain unclaimed; and

      (ii)  the Company shall have inserted an advertisement in one daily
            newspaper with a national circulation in the United Kingdom, one
            Scottish daily newspaper and one newspaper circulating in the area
            in which the last known address of the member or the address at
            which service of notices upon such member or other person may be
            effected in accordance with these presents is located, giving notice
            of its intention to sell the said shares; and

      (iii) during the said period of twelve years and the period of three
            months following the date of the publication of the said
            advertisement (or, if published on different dates, the later or
            latest thereof) the Company shall have received indication neither
            of the whereabouts nor of the existence of such member or person;
            and

      (iv)  if the shares in question are listed on the London Stock Exchange,
            notice shall have been given to the London Stock Exchange of the
            Company's intention to make such sale.

(B).  SALE PROCEDURE AND APPLICATION OF PROCEEDS

      To give effect to any such sale the Company may appoint some person to
      execute as transferor an instrument of transfer of the said shares and
      such instrument of transfer shall be as effective as if it had been
      executed by the registered holder of, or person entitled by

<PAGE>
                                     - 55 -

      transmission to, such shares and the title of the transferee shall not be
      affected by any irregularity or invalidity in the proceedings relating
      thereto. The Directors may authorise the conversion of shares to be sold
      which are certificated shares into uncertificated shares, and vice versa
      (so far as is consistent with the Uncertificated Securities Regulations
      and the facilities and requirements of the relevant system) for their
      transfer to, or in accordance with the directions of, the transferee. The
      net proceeds of sale shall belong to the Company which shall be obliged to
      account to the former member or other person previously entitled as
      aforesaid for an amount equal to such proceeds and shall enter the name of
      such former member or other person in the books of the Company as a
      creditor for such amount. No trust shall be created in respect of the
      debt, no interest shall be payable in respect of the same and the Company
      shall not be required to account for any money earned on the net proceeds,
      which may be employed in the business of the Company or invested in such
      investments (other than shares of the Company or its holding company if
      any) as the Directors may from time to time think fit.

                                      STOCK

49.   CONVERSION INTO STOCK

      The Company may from time to time by Ordinary Resolution convert any fully
      paid shares into stock or reconvert any stock into fully paid shares of
      any denomination. If and whenever any shares of any class in the capital
      of the Company for the time being shall have been issued and be fully paid
      and at that time the shares of that class previously issued shall stand
      converted into stock such further shares upon being fully paid shall ipso
      facto be converted into stock transferable in the same units as the
      existing stock of that class.

50.   TRANSFER OF STOCK

      The holders of stock may transfer the same or any part thereof in the same
      manner and subject to the same regulations as and subject to which the
      shares from which the stock arose might previously to conversion have been
      transferred (or as near thereto as circumstances admit) but no stock shall
      be transferable except in such units (not being greater than the nominal
      amount of the shares from which the stock arose) as the Directors may from
      time to time determine.

51.   RIGHTS OF STOCKHOLDERS

      The holders of stock shall according to the amount of the stock held by
      them have the same rights, privileges and advantages as regards dividend,
      return of capital, voting and other matters as if they held the shares
      from which the stock arose; but no such right, privilege or advantage
      (except as regards participation in the profits or assets of the Company)
      shall be conferred by an amount of stock which would not, if existing in
      shares, have conferred such right, privilege or advantage.

                            SHARE WARRANTS TO BEARER

52(A). POWER TO ISSUE SHARE WARRANTS TO BEARER

      Subject to the provisions of the 1985 Act, the Company may issue share
      warrants to bearer (each a "Warrant") and the Directors may accordingly,
      with respect to any share which is fully paid up and with respect to any
      one or more such shares as may be specified from time to time in a Warrant
      (in any case in which they shall in their discretion think fit so to do)
      issue a Warrant stating that the bearer of the Warrant is entitled to the
      shares therein

<PAGE>
                                     - 56 -

      specified, and may in any case in which a Warrant is so issued provide by
      coupons or otherwise for payment of the future dividends or other moneys
      in respect of the shares included in such Warrant.

(B).  BEARER DEEMED TO BE A MEMBER

      Subject to the provisions of these presents and of the 1985 Act the bearer
      of a Warrant shall be deemed to be a member of the Company, and shall be
      entitled to the same privileges and advantages as if his name had been
      included in the Register of Members as the holder of the shares specified
      in such Warrant.

(C).  MEETINGS

      No person shall, as the bearer of a Warrant, be entitled (a) to sign a
      requisition for calling a meeting, or to give notice of intention to
      submit a resolution to a meeting, or (b) to attend or vote by himself or
      by his proxy or exercise any privilege as a member at a meeting, unless he
      shall, in case (a) before or at the time of lodging such requisition, or
      giving such notice of intention as aforesaid, or in case (b) four days at
      least before the day fixed for the meeting, have deposited at the Office
      or a bank to be named or approved by the Company for that purpose the
      Warrant in respect of which he claims to act, attend or vote as aforesaid
      (the place at which the Warrant is so deposited being in this Article
      called "the depository"), and unless the Warrant shall remain so deposited
      until after the meeting and any adjournment thereof shall have been held.
      The names of more than one person as joint holders of a Warrant shall not
      be received.

(D).  CERTIFICATE TO ATTEND MEETINGS

      To any person so depositing a Warrant there shall be delivered a
      certificate stating his name and address, and describing the shares
      included in the Warrant so deposited, and bearing the date of issue of the
      certificate, and such certificate shall entitle him or his proxy, duly
      appointed as hereinafter provided, to attend and vote at any General
      Meeting held within three months from the date of the certificate and
      prior to delivery up thereof pursuant to paragraph (E) of this Article in
      the same way as if he were the registered holder of the shares specified
      in the certificate.

(E).  RETURN OF WARRANT AFTER MEETING

      Upon delivery up of the certificate at the depository, the bearer of the
      certificate shall be entitled to receive the Warrant in respect of which
      the certificate was given.

(F).  EXERCISE OF OTHER RIGHTS

      The holder of a Warrant shall not, save as aforesaid, be entitled to
      exercise any right as a member unless (if called upon by any Director or
      the Secretary so to do) he produce his Warrant or the certificate of its
      deposit, and state his name and address.

(G).  ISSUE OF NEW WARRANTS

      The Directors may issue new Warrants or coupons in such manner, subject to
      such conditions and in respect of such number of shares as they think fit
      from time to time and the Directors shall be empowered at any time and
      from time to time to amend any Warrant then in issue so that by virtue of
      such amendments the number of shares which such Warrant from time to time
      represents is accurately shown therein provided that no new Warrant or
      coupon shall be

<PAGE>
                                     - 57 -

      issued in place of one lost unless the Directors are satisfied beyond
      reasonable doubt that the original has been destroyed.

(H).  TRANSFER OF SHARES INCLUDED IN WARRANT

      The shares included in any Warrant shall be transferred by the delivery of
      the Warrant without any written transfer and without registration, and to
      shares so included the provisions hereinbefore contained with reference to
      the transfer of shares shall not apply.

(I).  COUPON FOR DIVIDEND

      The delivery to the Company or to a duly authorised agent of the Company
      of a coupon shall be a good discharge to the Company for the dividend
      represented thereby.

(J).  SURRENDER OF WARRANT AND REGISTRATION OF HOLDER

      Upon surrender of his Warrant to the Company for cancellation, together
      with all coupons for the future dividends on the shares comprised in the
      Warrant and an application in writing signed by him in such form and
      authenticated in such manner as the Directors shall require requesting to
      be registered as a member in respect of the shares included in the Warrant
      and stating in such application his name, address and occupation, the
      bearer of a Warrant shall be entitled to have his name entered as a member
      in respect of the shares included in the Warrant, but the Company shall in
      no case be responsible for any loss or damage incurred by any person by
      reason of the Company entering in its Register of Members, upon surrender
      of a Warrant, the name of any person not the true and lawful owner of the
      Warrant surrendered.

(K).  VARIATION OF TERMS

      The Directors may from time to time as they think fit make and vary the
      terms and conditions upon which Warrants may be issued and any matters
      incidental thereto. Subject to these presents the bearer of a Warrant
      shall be subject to the conditions for the time being in force relating to
      Warrants whether made before or after the issue of such Warrant.

                                GENERAL MEETINGS

53.   TYPES OF GENERAL MEETINGS

      An Annual General Meeting shall be held once in every year, at such time
      (within a period of not more than fifteen months after the holding of the
      last preceding Annual General Meeting) and place as may be determined by
      the Directors. All other General Meetings shall be called Extraordinary
      General Meetings.

54.   EXTRAORDINARY GENERAL MEETINGS

      The Directors may whenever they think fit, and shall on requisition in
      accordance with the Statutes, proceed to convene an Extraordinary General
      Meeting.

55.   APPLICATION TO CLASS MEETING WHERE NO VARIATION OF RIGHTS INVOLVED

      The provisions of these presents relating to General Meetings shall apply,
      with necessary modifications, to any separate meeting of the holders of
      any class of shares of the Company held otherwise than in connection with
      the variation or abrogation of the rights attached to shares of the class.
      All matters to be resolved at any such separate meeting shall, unless

<PAGE>
                                    - 58 -

      otherwise required by these presents or by statute, be resolved by
      Extraordinary Resolution, meaning for the purposes of this Article a
      resolution duly passed by a majority consisting of not less than
      three-quarters of the votes given upon the resolution at such meeting of
      which notice specifying the intention to propose the resolution as an
      Extraordinary Resolution shall have been duly given.

                           NOTICE OF GENERAL MEETINGS

56.   PERIOD OF NOTICE

      An Annual General Meeting and any General Meeting at which it is proposed
      to pass a Special Resolution or (save as provided by the Statutes) a
      resolution of which special notice has been given to the Company, shall be
      called by twenty one days' notice in writing at the least, and any other
      General Meeting by fourteen days' notice in writing at the least
      (exclusive in either case of the day on which it is served or deemed to be
      served and of the day for which it is given) given in manner hereinafter
      mentioned to the Auditors and to all members other than such as are not
      under the provisions of these presents entitled to receive such notices
      from the Company: Provided that a General Meeting notwithstanding that it
      has been called by a shorter notice than that specified above shall be
      deemed to have been duly called if it is so agreed:-

      (A)   in the case of an Annual General Meeting, by all the members
            entitled to attend and vote thereat; and

      (B)   in the case of an Extraordinary General Meeting by a majority in
            number of the members having a right to attend and vote thereat
            being a majority together holding not less than 95 per cent in
            nominal value of the shares giving that right.

      Provided also that the accidental omission to give any notice of a
      meeting, or the accidental omission to send any document relating to any
      meeting, or the non-receipt of any such notice or document by any person
      entitled thereto shall not invalidate the proceedings at any General
      Meeting.

      A notice of General Meeting may specify a time, being not more than 48
      hours before the time fixed for the meeting, by which a person must be
      entered on the Register of Members in order to have the right to attend or
      vote at the meeting. Changes made to the entries on the Register of
      Members after the time so specified shall be disregarded in determining
      the rights of any person to attend or vote at the meeting.

      For the purposes of this Article (and without prejudice to the other
      provisions of these presents), the cases in which notice in writing is to
      be taken as given to a member include any case in which the notice of
      meeting is sent, or treated as given, using electronic communications in
      accordance with Section 369(4A) and (4B) of the 1985 Act, and the
      provisions of subsection (4D) of that Section shall apply in respect of
      the publication of such notice on a web site.

57.   CONTENTS OF NOTICE

      (A)   Every notice calling a General Meeting shall specify the place and
            the day and hour of the meeting, and there shall appear with
            reasonable prominence in every such notice a statement that a member
            entitled to attend and vote is entitled to appoint a proxy to attend
            and, on a poll, vote instead of him and that a proxy need not be a
            member of the Company.

<PAGE>
                                    - 59 -

      (B)   In the case of an Annual General Meeting, the notice shall also
            specify the meeting as such.

      (C)   In cases where forms of appointment of proxy are sent out with
            notices, the accidental omission to send such forms of appointment
            of proxy to, or the non- receipt of such forms of appointment of
            proxy by, any person entitled to receive notice shall not invalidate
            the proceedings at any General Meeting.

      (D)   In the case of any General Meeting at which business other than
            routine business is to be transacted, the notice shall specify the
            general nature of such business; and if any resolution is to be
            proposed as an Extraordinary Resolution or as a Special Resolution,
            the notice shall contain a statement to that effect.

58.   ROUTINE BUSINESS

      Routine business shall mean and include only business transacted at an
      Annual General Meeting of the following classes, that is to say:-

      (A)   sanctioning or declaring dividends;

      (B)   considering and adopting the accounts, the reports of the Directors
            and Auditors and other documents required to be annexed to the
            accounts;

      (C)   re-appointing the retiring Auditors (unless they were last appointed
            otherwise than by the Company in General Meeting);

      (D)   fixing the remuneration of the Auditors or determining the manner in
            which such remuneration is to be fixed;

      (E)   appointing or re-appointing Directors to fill vacancies arising at
            the meeting on retirement by rotation or otherwise.

59.   NOTICE OF RESOLUTIONS

      The Directors shall on the requisition of members in accordance with the
      provisions of the Statutes, but subject as therein provided:-

      (A)   Give to the members entitled to receive notice of the next Annual
            General Meeting, notice of any resolution which may properly be
            moved and is intended to be moved at that meeting;

      (B)   Circulate to the members entitled to have notice of any General
            Meeting, any statement of not more than one thousand words with
            respect to the matter referred to in any proposed resolution or the
            business to be dealt with at that meeting.

60.   POSTPONEMENT OF GENERAL MEETINGS

      If the Directors, in their absolute discretion, consider that it is
      impractical or unreasonable for any reason to hold a General Meeting on
      the date or at the time or place specified in the notice calling the
      General Meeting, they may postpone the General Meeting to another date,
      time and place. When a meeting is so postponed, notice of the date, time
      and place of the postponed meeting shall be placed in at least one leading
      Scottish and one leading London

<PAGE>
                                    - 60 -

      daily newspaper. Notice of the business to be transacted at such postponed
      meeting shall not be required.

                         PROCEEDINGS AT GENERAL MEETINGS

61.   OVERFLOW ARRANGEMENTS FOR GENERAL MEETINGS

      (A)   The Directors may, notwithstanding that the notice of any General
            Meeting may specify the place of the meeting (the "principal
            place"), at which the chairman of the meeting shall preside, make
            arrangements for simultaneous attendance and participation at other
            places by members and proxies entitled to attend the General Meeting
            but unable to attend and participate at the principal place.

      (B)   Such arrangements for simultaneous attendance at the meeting may
            include arrangements regarding the level of attendance at the other
            places provided that they shall operate so that any members and
            proxies excluded from attendance at the principal place are able to
            attend at one or more of the other places. For the purposes of all
            other provisions of these presents any such meeting shall be treated
            as being held and taking place at the principal place.

      (C)   The Directors may, for the purpose of facilitating the organisation
            and administration of any General Meeting to which such arrangements
            apply, from time to time make arrangements, whether involving the
            issue of tickets (on a basis intended to afford all members and
            proxies entitled to attend the meeting an equal opportunity of being
            admitted to the principal place) or the imposition of some random
            means of selection or otherwise as they shall in their absolute
            discretion consider to be appropriate, and may from time to time
            vary any such arrangements or make new arrangements in their place
            and the entitlement of any member or proxy to attend a General
            Meeting at the principal place shall be subject to the arrangements
            as may be for the time being in force whether stated in the notice
            of meeting to apply to that meeting or notified to the members
            concerned subsequent to the provision of the notice of the meeting.

62.   QUORUM

      No business other than the appointment of a chairman of the meeting shall
      be transacted at any General Meeting unless a quorum is present at the
      time when the meeting proceeds to business. Five members present in person
      and entitled to vote at such meeting shall be a quorum for all purposes.

63.   IF QUORUM NOT PRESENT

      If within fifteen minutes from the time appointed for a General Meeting
      (or such longer time not exceeding one hour as the chairman of the meeting
      may determine to wait) a quorum is not present, the meeting, if convened
      on the requisition of members, shall be dissolved. In any other case it
      shall stand adjourned to such other day and at such other time and place
      as may have been specified for the purpose in the notice convening the
      meeting or (if not so specified) as the chairman of the meeting may
      determine; in the latter case, not less than seven days' notice of the
      adjourned meeting shall be given in like manner as in the case of the
      original meeting. If at such adjourned meeting a quorum is not present
      within fifteen minutes from the time appointed for holding the meeting,
      the members present in person or by proxy and entitled to vote at such
      meeting shall be a quorum.

<PAGE>
                                    - 61 -

64.   SECURITY ARRANGEMENTS

      The Directors may direct that persons wishing to attend any General
      Meeting should submit to such searches or other security arrangements or
      restrictions as the Directors shall consider appropriate in the
      circumstances and shall be entitled in their absolute discretion to, or to
      authorise one or more persons who shall include a Director or the
      Secretary or the chairman of the meeting to, refuse entry to, or to eject
      from, such General Meeting any person who fails to submit to such searches
      or to otherwise comply with such security arrangements or restrictions.

65.   CHAIRMAN

      The Chairman of the Directors, failing whom one of any Deputy Chairmen
      failing whom one of any Vice-Chairmen (to be chosen, if more than one are
      present and in default of agreement amongst themselves, by lot) shall
      preside as chairman at a General Meeting. If there be no such Chairman or
      Deputy Chairman or Vice-Chairman, or if at any meeting none of them be
      present within fifteen minutes after the time appointed for holding the
      meeting and willing to act, the Directors present shall choose one of
      their number (or, if no Director be present or if all the Directors
      present decline to take the chair, the members present and entitled to
      vote at such meeting shall choose one of their number) to be chairman of
      the meeting. The chairman of the meeting who presides pursuant to this
      Article may, at any time during a General Meeting of the Company, nominate
      any Director of the Company to be the chairman of the meeting for the
      remainder of or for any part of the meeting.

66.   ORDERLY CONDUCT

      The chairman shall take such action as he thinks fit to promote the
      orderly conduct of the business of the meeting as laid down in the notice
      of the meeting and the chairman's decision, taken in good faith, on
      matters of procedure or arising incidentally from the business of the
      meeting shall be final as shall be his determination as to whether any
      matter is of such a nature.

67.   ENTITLEMENT TO ATTEND AND SPEAK

      Each Director shall be entitled to attend and speak at any General Meeting
      of the Company and at any separate General Meeting of the holders of any
      class of shares in the Company. The chairman may invite any person to
      attend and speak at any General Meeting of the company whom the chairman
      considers to be equipped by knowledge or experience of the Company's
      business to assist in the deliberations of the meeting.

68.   ADJOURNMENTS

      The chairman of the meeting may with the consent of any General Meeting at
      which a quorum is present (and shall if so directed by the meeting)
      adjourn the meeting from time to time (or sine die) and from place to
      place. In addition, the chairman of the meeting may at any time without
      the consent of the meeting adjourn the meeting (whether or not it has
      commenced or a quorum is present) to another time and/or place where it
      appears to him that (a) the members wishing to attend cannot be
      conveniently accommodated in the place appointed for the meeting, (b) the
      conduct of persons present prevents or is likely to prevent the orderly
      continuation of business or (c) adjournment is otherwise necessary so that
      the business of the meeting may be properly conducted. Nothing in this
      Article shall limit any other power vested in the chairman to adjourn the
      meeting. No business shall be transacted at any adjourned meeting except
      business which might lawfully have been transacted at the meeting from
      which the adjournment took place.

<PAGE>
                                    -62-

      The chairman may adjourn the meeting notwithstanding that by reason of
      such adjournment some members may be unable to be present at the adjourned
      meeting. Any such member may nevertheless (without prejudice to the other
      provisions of these presents) execute a form of proxy for the adjourned
      meeting which, if delivered by him to the chairman or the Secretary of the
      Company, shall be valid even though it is given at less notice than would
      otherwise be required by these presents.

69.   TIME AND PLACE OF ADJOURNED MEETINGS

      When a meeting is adjourned sine die, the time and place for the adjourned
      meeting shall be fixed by the Directors. When a meeting is adjourned for
      thirty days or more or sine die not less than seven days' notice of the
      adjourned meeting shall be given in like manner as in the case of an
      original meeting. Save as aforesaid and save as expressly provided in
      Article 63, it shall not be necessary to give any notice of an adjournment
      or of the business to be transacted at an adjourned meeting.

70.   AMENDMENTS TO RESOLUTIONS

      If an amendment shall be proposed to any resolution under consideration
      but shall in good faith be ruled out of order by the chairman of the
      meeting the proceedings on the substantive resolution shall not be
      invalidated by any error in such ruling. In the case of a resolution duly
      proposed as a Special or Extraordinary Resolution no amendment thereto
      (other than a mere clerical amendment to correct a patent error) may in
      any event be considered or voted upon. In the case of a resolution duly
      proposed as an Ordinary Resolution no amendment thereto (other than an
      amendment to correct a patent error) may be considered or voted upon
      unless either at least forty-eight hours prior to the time appointed for
      holding the meeting or adjourned meeting at which such Ordinary Resolution
      is to be proposed notice in writing of the terms of the amendment and
      intention to move the same has been lodged at the Office or the chairman
      decides in his absolute discretion that it may be considered or voted
      upon.

71.   METHOD OF VOTING

      At any General Meeting a resolution put to the vote of the meeting shall
      be decided on a show of hands unless a poll is (before or on the
      declaration of the result of the show of hands or on the withdrawal of any
      other demand for a poll as hereinafter mentioned) demanded by either:-

      (A)   the chairman of the meeting; or

      (B)   not less than three members present in person or by proxy and
            entitled to vote: or

      (C)   the depository for the time being under any deposit agreement
            between the Company and such depository providing for the deposit of
            any New Preference Shares, provided such depository is present in
            person and entitled to vote; or

      (D)   a member or members present in person or by proxy and representing
            not less than one tenth of the total voting rights of all the
            members having the right to vote at the meeting; or

      (E)   a member or members present in person or by proxy and holding shares
            in the Company conferring a right to vote at the meeting being
            shares on which an aggregate sum has been paid up equal to not less
            than one tenth of the total sum paid up on all the shares conferring
            that right.

<PAGE>
                                    - 63 -

72.   DECLARATION OF RESULT AND CONDUCT OF POLL

      A demand for a poll may be withdrawn only with the approval of the
      chairman and if it is so withdrawn:-

      (a)   before the result of a show of hands is declared, the meeting shall
            continue as if the demand had not been made; or

      (b)   after the result of a show of hands is declared, the demand shall
            not be taken to have invalidated the result,

      but if a demand is withdrawn, the chairman of the meeting or other member
      or members so entitled may himself or themselves demand a poll. Unless a
      poll be duly demanded (and the demand be not withdrawn), a declaration by
      the chairman of the meeting that a resolution has been carried, or carried
      unanimously, or by a particular majority, or lost, and an entry to that
      effect in the minute book, shall be conclusive evidence of that fact
      without proof of the number or proportion of the votes recorded for or
      against such resolution. If a poll is duly demanded (and the demand be not
      withdrawn), it shall be taken in such manner (including the use of ballot
      or voting papers or tickets) as the chairman of the meeting may direct,
      and the result of a poll shall be deemed to be the resolution of the
      meeting at which the poll was demanded. The chairman of the meeting may
      (and if so directed by the meeting shall) appoint scrutineers and may
      adjourn the meeting to some place and time fixed by him for the purpose of
      declaring the result of the poll.

73.   CHAIRMAN'S CASTING VOTE

      In the case of an equality of votes, whether on a show of hands or on a
      poll, the chairman of the meeting at which the show of hands takes place
      or at which the poll is demanded shall be entitled to a casting vote in
      addition to the votes to which he may be entitled as a member or as a
      representative or proxy of a member.

74.   WHEN POLL TO BE TAKEN

      A poll demanded on the election of a chairman or on a question of
      adjournment shall be taken forthwith. A poll demanded on any other
      question shall be taken either immediately or at such subsequent time
      (being not more than thirty days after the date of the meeting at which
      the poll was demanded) and place as the chairman may direct. No notice
      need be given of a poll not taken immediately.

75.   CONTINUANCE OF MEETING

      The demand for a poll shall not prevent the continuance of a meeting for
      the transaction of any business other than the question on which the poll
      has been demanded.

                                VOTES OF MEMBERS

76.      RIGHT TO VOTE

      Subject to any special rights or restrictions as to voting attached by or
      in accordance with these presents to any class of shares and to the
      provisions of these presents, on a show of hands every member who is
      present in person shall have one vote and on a poll every

<PAGE>
                                    - 64 -

      member who is present in person or by proxy shall have one vote for each
      25p in nominal amount of the shares held by him.

77.   VOTES OF JOINT HOLDERS

      In the case of joint holders of a share the vote of the senior who tenders
      a vote, whether in person or by proxy, shall be accepted to the exclusion
      of the votes of the other joint holders and for this purpose seniority
      shall be determined by the order in which the names stand in the Register
      of Members in respect of the joint holding.

78.   MEMBER UNDER INCAPACITY

      A member who is a patient for any purpose of any statute relating to
      mental health or in respect of whom an order has been made by any court
      having jurisdiction for the protection or management of the affairs of
      persons incapable of managing their own affairs, may vote, whether on a
      show of hands or on a poll, by his committee, receiver, curator bonis or
      other person in the nature of a committee, receiver or curator bonis
      appointed by such court, and any such committee, receiver, curator bonis
      or other person may, on a poll, vote by proxy, provided that such evidence
      as the Directors may require of the authority of the person claiming to
      vote shall have been deposited at the Transfer Office, or at such other
      place (if any) as is specified for the delivery of instruments of proxy in
      accordance with these presents, not less than forty eight hours before the
      time appointed for holding the meeting or adjourned meeting or (in the
      case of a poll taken otherwise than at, or on the same day as, the meeting
      or adjourned meeting) for the taking of the poll at which it is desired to
      vote.

79.   CALLS IN ARREARS

      No member shall, unless the Directors otherwise determine, be entitled in
      respect of shares held by him to vote at a General Meeting either
      personally or by proxy or to exercise any other right conferred by
      membership in relation to meetings of the Company if any call or other sum
      presently payable by him to the Company in respect of shares in the
      Company remains unpaid.

80.   OBJECTION TO VOTING

      If (i) any objection shall be raised to the qualification of any person to
      vote or to the admissibility of any vote or (ii) any votes have been
      counted which ought not to have been counted or which might have been
      rejected or (iii) any votes are not counted which ought to have been
      counted, the objection or error shall not vitiate the decision of the
      meeting or adjourned meeting on any resolution unless the same is raised
      or pointed out at the meeting or, as the case may be, the adjourned
      meeting at which the vote objected to is given or tendered or at which the
      error occurs. Any objection or error raised or pointed out in due time
      shall be referred to the chairman of the meeting and shall only vitiate
      the decision of the meeting on any resolution if the chairman decides that
      the same may have affected the decision of the meeting. The decision of
      the chairman on such matters shall be final and conclusive.

81.   VOTES ON A POLL

      On a poll votes may be given either personally or by proxy and a person
      entitled to more than one vote need not use all his votes or cast all the
      votes he uses in the same way.

<PAGE>
                                    - 65 -

82.   PROXY NEED NOT BE A MEMBER

      A proxy need not be a member of the Company.

83.   FORM AND EXECUTION OF PROXIES

      An appointment of a proxy shall be in any usual or common form or in any
      other form which the Directors may prescribe or accept and, in the case of
      an instrument in writing:-

      (a)   in the case of an individual shall be signed by the appointor or by
            his attorney; and

      (b)   in the case of a corporation shall be either given under its common
            seal or executed in any manner prescribed by the Statutes to have
            the same effect as if given under the common seal of the corporation
            or signed on its behalf by an attorney or duly authorised officer of
            the corporation.

      The Directors may, but shall not be bound to, require evidence of the
      authority of any such attorney or officer. The signature on such
      instrument need not be witnessed.

      An appointment of a proxy may be contained in an electronic communication
      in accordance with these presents, authenticated or executed in such a
      manner as is specified by the Directors.

84.   DELIVERY OF FORMS OF PROXY

      (A)   An appointment of a proxy (together with any evidence of authority
            required by the directors pursuant to the immediately preceding
            Article) must:-

            (a)   in the case of an instrument in writing, be delivered to such
                  place or one of such places (if any) as may be specified for
                  that purpose in, or by way of note to, or in any documents
                  accompanying, the notice convening the meeting or any notice
                  of any adjournment (or, if no place is so specified, to the
                  Transfer Office); and

            (b)   in the case of an appointment contained in an electronic
                  communication, be received at such address as may have been
                  specified for that purpose in (i) the notice convening the
                  meeting or notice of any adjournment, (ii) any instrument of
                  proxy sent out by the Company in relation to the meeting or
                  adjourned meeting, or (iii) any invitation contained in an
                  electronic communication to appoint a proxy issued by the
                  Company in relation to the meeting or adjourned meeting,

            in each case not later than forty-eight hours before the time
            appointed for the holding of the meeting or adjourned meeting or (in
            the case of a poll taken otherwise than at, or on the same day as,
            the meeting or adjourned meeting) for the taking of the poll at
            which it is to be used, and, subject to paragraph (B) of this
            Article, in default shall not be treated as valid; provided that an
            appointment of a proxy relating to more than one meeting (including
            any adjournment thereof) having once been so delivered or received
            for the purposes of any meeting shall not require again to be
            delivered or received in relation to any subsequent meetings to
            which it relates. No appointment of a proxy shall be valid after the
            expiration of twelve months from the date stated in it as the date
            of its execution or, in the case of an appointment contained in an
            electronic communication, the date it was sent.

<PAGE>
                                    - 66 -

      (B)   A Director, the Secretary or some person authorised for the purpose
            by the Secretary may, in the case of an instrument appointing a
            proxy in writing:

            (a)   accept a photocopy, or a copy delivered by facsimile
                  transmission, of the instrument appointing the proxy (and of
                  the power of attorney (if any) under which it is signed, or a
                  copy of such authority certified notarially or in some other
                  way approved by the Directors); and/or

            (b)   accept an instrument appointing a proxy which has not been
                  properly executed or is not supported by the relevant
                  documents as required by paragraph (A) of this Article

            as a valid instrument of proxy where such person determines, in good
            faith, that the documents deposited indicate in sufficient detail
            the member's intention to appoint a proxy.

85.   DIFFERING PROXIES

      When two or more valid but differing appointments of proxy are delivered
      in respect of the same share for use at the same meeting, the one which is
      last delivered or received (regardless of its date or of the date of its
      execution) shall be treated as replacing and revoking the others as
      regards that share and if the Company is unable to determine which was
      last delivered or received none of them shall be treated as valid in
      respect of that share.

86.   ISSUE OF FORMS OF PROXY

      Subject to the provisions of the Statutes, the Directors may, if they
      think fit, at the expense of the Company, issue forms of proxy for use by
      the members with or without prepaid postage and with or without inserting
      therein the names of any of the Directors or any other person as proxies.

87.   RIGHTS CONFERRED BY FORM OF PROXY

      An appointment of a proxy shall be deemed to include the right to demand
      or join in demanding a poll but shall not confer any further right to
      speak at the meeting, except with the permission of the chairman of the
      meeting, and shall be deemed to confer authority to vote on any resolution
      or amendment of a resolution put to the meeting for which it is given
      (including, for the avoidance of doubt, any resolution which properly
      comes before the meeting where notice of the same was not included in the
      notice of the meeting nor specific reference thereto made in the
      appointment of a proxy) as the proxy thinks fit. An appointment of a proxy
      shall, unless the contrary is stated thereon, be valid as well for any
      adjournment of the meeting as for the meeting to which it relates.

88.   INTERVENING EVENTS

      A vote cast by proxy shall not be invalidated by the previous death or
      insanity of the principal or by the revocation of the appointment of proxy
      or of the authority under which the appointment was executed provided that
      no intimation of such death, insanity or revocation shall have been
      received by the Company at the Transfer Office or such other place (if
      any) as is specified for the delivery of instruments of proxy or, in the
      case of an appointment of proxy contained in an electronic communication,
      at the address at which such appointment was duly received, in each case
      in accordance with these presents prior to one hour before the

<PAGE>
                                    - 67 -

      commencement of the meeting or adjourned meeting or (in the case of a poll
      taken otherwise than at, or on the same day as the meeting or adjourned
      meeting) the time appointed for the taking of the poll at which the vote
      is cast.

                  RESTRICTIONS ON VOTING AND OTHER SHARE RIGHTS

89(A). DISENFRANCHISEMENT

      Without prejudice to any other rights or remedies of the Company where, in
      respect of any shares in the Company ("the default shares", which
      expression shall include any further shares which are allotted or issued
      in respect of such shares), any holder of such shares or other person
      appearing to be interested in such shares fails to comply with any notice
      (in this Article called a "statutory notice") given to that holder or
      other person by the Company pursuant to Part VI of the 1985 Act or, in
      purported compliance with such a statutory notice, makes a statement which
      is false in a material particular, then not earlier than fourteen days
      after the service of such statutory notice, the Directors may serve upon
      such holder a notice (in this Article called a "disenfranchisement
      notice") stating or to the effect that the default shares and, if the
      Directors so determine, any other shares held by the holder shall from the
      service of the disenfranchisement notice confer on him, and on any
      transferee to which any of such shares are transferred other than pursuant
      to an approved transfer (as defined in paragraph (D) of this Article) or
      pursuant to paragraph (B)(i) of this Article, no right to attend or vote,
      in person or by proxy, either at any General Meeting of the Company or at
      any separate General Meeting of the holders of the shares of the relevant
      class or to exercise any other right conferred by membership in relation
      to any such meeting.

(B).  OTHER RESTRICTIONS

      Where the default shares are Ordinary Shares representing at least 0.25
      per cent in nominal value of the issued ordinary share capital as at the
      date of service of the disenfranchisement notice, the disenfranchisement
      notice may also at the discretion of the Directors (subject in the case of
      (i) below, to the requirements of the Uncertificated Securities
      Regulations) direct that:-

      (i)   no transfer of any of the shares held by such holder shall be
            registered unless (a) such holder is not himself in default as
            regards supplying the information requested and the transfer is part
            only of such holder's holding and, when presented for registration,
            is accompanied by a certificate by such holder in a form
            satisfactory to the Directors to the effect that, after due and
            careful enquiry, such holder is satisfied that no person in default
            as regards supplying such information is interested in any of the
            shares the subject of the transfer or (b) such transfer is an
            approved transfer; and/or

      (ii)  any dividend or other moneys which would otherwise be payable on the
            default shares shall be retained by the Company in whole or in part
            without any liability to pay interest thereon when such moneys are
            finally paid to such holder and the holder shall not be entitled to
            elect pursuant to Article 143 to receive shares instead of that
            dividend.

(C).  CESSATION OF DISENFRANCHISEMENT

      Any disenfranchisement notice shall have effect in relation to default
      shares in accordance with its terms but shall cease to have effect:-

<PAGE>
                                    - 68 -

      (i)   on the expiry of seven days after the Company has received in
            writing all information required by it in respect of those default
            shares pursuant to every statutory notice served on the holder of
            such shares and each other person appearing to be interested in such
            shares; or

      (ii)  when the Company receives notice that an approved transfer to a
            third party has occurred; or

      (iii) if and to the extent that the Directors so determine.

(D).  PERSON INTERESTED IN SHARES; APPROVED TRANSFERS

      For the purposes of this Article 85:-

      (a)   a person shall be treated as appearing to be interested in any
            shares if the holder of such shares has given to the Company a
            notification under Section 212 of the 1985 Act and either (a) the
            holder has named such person as being so interested, or (b) (after
            taking into account the said notification and any other relevant
            Section 212 notification) the Company knows or has reasonable cause
            to believe that the person in question is or may be interested in
            the shares; and

      (b)   A transfer of Ordinary Shares is an approved transfer if, but only
            if:-

            (i)   it is a transfer to an offeror by way of or in pursuance of
                  acceptance of a takeover offer (as defined for the purposes of
                  Part XIIIA of the 1985 Act) for the Company; or

            (ii)  the Directors are satisfied that the transfer is made pursuant
                  to a bona fide sale of the whole of the beneficial ownership
                  of the shares to a person unconnected with the holder or with
                  any other person appearing to be interested in such shares
                  (including any such sale made through a recognised investment
                  exchange or any stock exchange outside the United Kingdom on
                  which the Company's ordinary shares (or rights in respect of
                  those shares) are normally traded). For the purposes of this
                  sub-paragraph (ii) any associate (as defined in Section 435 of
                  the Insolvency Act 1986) shall be included amongst the persons
                  who are connected with the holder or any person appearing to
                  be interested in such shares.

                     CORPORATIONS ACTING BY REPRESENTATIVES

90.   AUTHORITY OF REPRESENTATIVES

      Any corporation which is a member of the Company may by resolution of its
      directors or other governing body authorise such person as it thinks fit
      to act as its representative at any meeting of the Company or of any class
      of members of the Company. The person so authorised shall be entitled to
      exercise the same powers on behalf of such corporation as the corporation
      could exercise if it were an individual member of the Company and such
      corporation shall for the purposes of these presents be deemed to be
      present in person at any such meeting if a person so authorised is present
      thereat.

<PAGE>
                                    - 69 -

                                    DIRECTORS

91.   LIMIT ON NUMBER OF DIRECTORS

      Subject as hereinafter provided the Directors shall not be more than
      twenty-five in number. The Company may by Ordinary Resolution from time to
      time vary the maximum number of Directors.

92.   DIRECTORS NEED NOT BE MEMBERS

      A Director shall not be required to hold any shares of the Company by way
      of qualification. A Director who is not a member of the Company shall
      nevertheless be entitled to receive notice of and attend and speak at
      General Meetings and all separate meetings of the holders of any class of
      shares of the Company.

93.   DIRECTORS' FEES

      Each of the Directors may be paid a fee at such rate as may from time to
      time be determined by the Directors provided that, (a) the aggregate of
      all fees so paid to Directors shall not exceed L250,000 per annum or
      such higher amount as may from time to time be decided by ordinary
      resolution of the Company, (b) the Directors shall have no authority or
      power under this Article to determine the fees payable in respect of any
      period commencing prior to 15 January 1999, and (c) unless and until the
      Directors exercise their authority and power under this Article to
      determine the fees payable to a Director, such Director shall be entitled
      to ordinary remuneration at the rate last determined pursuant to Article
      89 of the Articles of Association of the Company in force immediately
      prior to adoption of these presents. Such fees shall accrue from day to
      day and in the case of any Director shall, unless and to the extent that
      the Directors otherwise determine, be independent of any remuneration to
      which such Director may be entitled under any other provision of these
      articles or in respect of any other office or appointment under the
      Company or any other company in which the Company may be interested.

94.   EXPENSES

      The Directors may repay to any Director all such reasonable expenses as he
      may incur in attending and returning from meetings of the Directors or of
      any committee or General Meetings or otherwise in or about the business of
      the Company or the discharge of his duties as a Director, including
      (without limitation) any professional fees incurred by him (with the
      approval of the Directors or in accordance with any procedures stipulated
      by the Directors) in taking independent advice in connection with the
      discharge of such duties.

95.   EXTRA REMUNERATION

      Any Director who is appointed to any executive office (including for this
      purpose the office of Chairman or Deputy Chairman or Vice-Chairman whether
      or not such office is held in an executive capacity) or who serves on any
      committee or who otherwise performs services which in the opinion of the
      Directors are outside the scope of the ordinary duties of a Director, may
      be paid such extra remuneration by way of salary, commission or otherwise
      as the Directors may determine.

<PAGE>
                                    - 70 -

96(A). RETIREMENT AND OTHER BENEFITS

      Without prejudice to the general power of the Directors under these
      presents to exercise on behalf of the Company (by establishment or
      maintenance of schemes or otherwise) all the powers of the Company to give
      or procure the giving of pensions, annuities or other allowances or
      benefits to or for the benefit of any person, and without restricting the
      generality of their other powers, the Directors shall have power to pay
      and agree to pay pensions or other retirement, superannuation, death or
      disability benefits or other allowances and benefits to any Director or
      ex-Director of the Company or of any company which is a subsidiary
      undertaking of the Company or is allied to or associated with the Company
      or any such subsidiary undertaking or of any predecessor in business of
      the Company or any other company as aforesaid and to the husbands, wives,
      widowers, widows, children, families, dependants and personal
      representatives of any such Director or ex-Director, and for the purpose
      of providing any such pensions or other benefits to establish or
      contribute to any trust, scheme, association, arrangement or fund or to
      pay premiums, and shall have power to establish trusts, schemes,
      associations, arrangements or funds considered to be for the benefit of
      any such persons aforesaid. A Director or ex-Director shall not be
      accountable to the Company or the members for any such pension, allowance
      or other benefit and the receipt of the same shall not disqualify any
      person from being or becoming a Director of the Company.

(B).  INSURANCE

      Without prejudice to the provisions of Article 169, the Directors shall
      have the power to purchase and maintain insurance for or for the benefit
      of any persons who are or were at any time directors, officers or
      employees of the Company, or of any other company which is its holding
      company or in which the Company or such holding company or any of the
      predecessors of the Company or of such holding company has any interest,
      whether direct or indirect, or which is in any way allied to or associated
      with the Company, or of any subsidiary undertaking of or any other body,
      whether or not incorporated ("body"), owned by or in which an interest is
      owned by the Company or any such other company, or who are or were at any
      time trustees of any pension fund or employees' share scheme in which
      employees of the Company or any such other company or subsidiary
      undertaking or body are interested, including (without prejudice to the
      generality of the foregoing) insurance against any liability incurred by
      such persons in respect of any act or omission in the actual or purported
      execution and/or discharge of their duties and/or the exercise or
      purported exercise of their powers and/or otherwise in relation to or in
      connection with their duties, powers or offices in relation to the Company
      or any such other company, subsidiary undertaking, body, pension fund or
      employees' share scheme.

97(A). DIRECTORS' INTERESTS IN CONTRACTS WITH THE COMPANY

      Subject to the provisions of the Statutes and Article 113, a Director or
      alternate Director may be a customer of the Company or of any of its
      subsidiary undertakings or be party to or in any way interested in any
      contract or arrangement or transaction to which the Company is a party or
      in which the Company is in any way interested and he may hold and be
      remunerated (in addition to any other remuneration provided for by or
      pursuant to any other Article) in respect of any office or place of profit
      (other than the office of Auditor of the Company or any subsidiary
      thereof) under the Company or any other company in which the Company is in
      any way interested and he (or any firm of which he is a member) may act in
      a professional capacity for the Company or any such other company and be
      remunerated therefor and in any such case as aforesaid (unless otherwise
      agreed) the Director may retain for his own absolute use and benefit all
      profits and advantages accruing to him thereunder or in consequence
      thereof.

<PAGE>
                                    - 71 -

(B).  APPOINTMENTS WITH OTHER COMPANIES

      A Director of the Company may be or become a director or other officer of,
      or otherwise interested in, any undertaking promoted by the Company or in
      which the Company may be interested, and (unless otherwise agreed) shall
      not be accountable to the Company or the members for any remuneration,
      profit or other benefit received by him as a director or officer of, or
      from his interest in, such other undertaking. The Directors may also cause
      the voting power conferred by the shares in any other undertaking held or
      owned by the Company to be exercised in such manner in all respects as
      they think fit, including the exercise thereof in favour of any resolution
      appointing themselves or any of them to be directors, officers or servants
      of such other undertaking, or voting or providing for the payment of
      remuneration to the directors, officers or servants of such other
      undertaking.

98(A). EXECUTIVE OFFICE

      The Directors may from time to time appoint one or more of their body to
      be holder of any executive office (including, where considered
      appropriate, the office of Chairman, Deputy Chairman or Vice-Chairman,
      Managing, Joint Managing, Deputy or Assistant, Managing Director or Chief,
      Deputy Chief or Assistant Chief Executive) on such terms and for such
      period as they may (subject to the provisions of the Statutes) determine
      and without prejudice to the terms of any contract entered into in any
      particular case, may at any time revoke any such appointment.

(B).  WHEN TERMINATION OF APPOINTMENT AUTOMATIC

      The appointment of any Director to any of the executive offices
      specifically mentioned in paragraph (A) above shall automatically
      determine if he ceases to be a Director but without prejudice to any claim
      for damages for breach of any contract of service between him and the
      Company.

(C).  WHEN TERMINATION OF APPOINTMENT NOT AUTOMATIC

      The appointment of any Director to any other executive office shall not
      automatically determine if he ceases from any cause to be a Director,
      unless the contract or resolution under which he holds office shall
      expressly state otherwise in which event the termination of his office if
      he ceases to be a Director shall be without prejudice to any claim for
      damages for breach of any contract of service between him and the Company.

99.   DELEGATION OF POWERS

      The Directors may entrust to and confer upon any Director any of the
      powers exercisable by them as Directors upon such terms and conditions and
      with such restrictions as they think fit, and either collaterally with or
      to the exclusion of their own powers, and may from time to time revoke,
      withdraw, alter or vary all or any of such powers.

                     APPOINTMENT AND RETIREMENT OF DIRECTORS

100.  AGE LIMIT

      Any provisions of the Statutes which, subject to the provisions of these
      presents, would have the effect of rendering any person ineligible for
      appointment as a Director or liable to vacate office as Director on
      account of his having reached any specified age or of requiring special

<PAGE>
                                    - 72 -

      notice or any other special formality in connection with the appointment
      of any Director over a specified age shall apply to the Company.

101.  VACATION OF OFFICE OF DIRECTOR

      The office of a Director shall be vacated in any of the following events,
      namely:-

      (A)   if pursuant to any provisions of the Statutes he is removed or
            prohibited from being a Director;

      (B)   if he shall resign by writing under his hand left at the Office or
            if he shall tender his resignation and the Directors shall resolve
            to accept the same;

      (C)   if he shall have a receiving order made against him, become
            bankrupt, apparently insolvent, execute a trust deed for behalf of
            his creditors or shall compound with his creditors generally;

      (D)   if he shall become of unsound mind or otherwise incapax;

      (E)   if he shall be absent from meetings of the Directors for three
            months without leave and his alternate Director (if any) shall not
            during such period have attended in his stead and the Directors
            shall resolve that his office be vacated; or

      (F)   if he shall be removed from office by notice in writing served upon
            him signed by all his co-Directors, but so that in the case of a
            Director holding an executive office which automatically determines
            on his ceasing to be a Director such removal shall be deemed an act
            of the Company and shall have effect without prejudice to any claim
            for damages in respect of the consequent termination of his
            executive office.

102.  RETIREMENT OF DIRECTORS BY ROTATION

      At the Annual General Meeting in each year any Director bound to retire
      under Article 108 and one-third of the other Directors for the time being
      (or, if their number is not three or a multiple of three, the number
      nearest to one-third) shall retire from office, but: --

      (a)   if any Director has at the start of the Annual General Meeting in
            any year been in office for three years or more since his last
            appointment or re-appointment (or would be if the Annual General
            Meeting in that year was on a date numerically corresponding to the
            date of his last appointment or re-appointment), he shall retire;
            and

      (b)   if there is only one Director who is subject to retirement by
            rotation, he shall retire.

103.  SELECTION OF DIRECTORS TO RETIRE

      The Directors to retire by rotation shall include (so far as necessary to
      obtain the number required) any Director who wishes to retire and not to
      offer himself for re-election. Any further Directors so to retire shall be
      those of the other Directors subject to retirement by rotation who have
      been longest in office since their last re-election or appointment and so
      that as between persons who become or were last re-elected Directors on
      the same day those to retire shall (unless they otherwise agree among
      themselves) be determined by lot. The Directors to retire on each occasion
      (both as to number and identity) shall be determined by the composition of
      the Board of Directors of the Company at the date of the notice convening

<PAGE>
                                    - 73 -

      the Annual General Meeting and no Director shall be required to retire or
      be relieved from retiring by reason of any change in the number or
      identity of the Directors after the date of such notice but before the
      close of the meeting. Subject in the case of a Director who is over the
      age of seventy to a resolution of which special notice has been given
      being passed as required by Section 293(5) of the 1985 Act, a retiring
      Director shall be eligible for re-election.

104.  WHEN DIRECTORS DEEMED TO BE REAPPOINTED

      The Company at the meeting at which a Director retires under any provision
      of these presents may (subject to Article 106) by Ordinary Resolution fill
      up the office being vacated by electing thereto the retiring Director or
      some other person eligible for appointment. In default the retiring
      Director shall be deemed to have been re-elected except in any of the
      following cases:-

      (A)   where at such meeting it is expressly resolved not to fill up such
            office or a resolution for the re-election of such Director is put
            to the meeting and lost;

      (B)   where such Director has given notice in writing to the Company that
            he is unwilling to be re-elected;

      (C)   where the default is due to the moving of a resolution in
            contravention of the next following Article;

      (D)   where such Director has attained any retiring age applicable to him
            as Director;

      (E)   where, if such Director was re-elected, he would be required to
            vacate the office of Director pursuant to Article 101.

      The retirement shall not have effect until the conclusion of the meeting
      except where a resolution is passed to elect some other person in the
      place of the retiring Director or a resolution for his re-election is put
      to the meeting and lost and accordingly a retiring Director who is
      re-elected or deemed to have been re-elected will continue in office
      without break, save that notwithstanding the provisions of Section 293(6)
      of the 1985 Act, a person re-appointed a Director on retiring on account
      of age, or a person appointed at an Annual General Meeting in place of a
      Director so retiring, shall be deemed for the purpose of the rotation of
      Directors to have been elected at the meeting at which he was so
      re-appointed or appointed and not before.

105.  RESOLUTION

      A resolution for the appointment of two or more persons as Directors by a
      single resolution shall not be moved at any General Meeting unless a
      resolution that it shall be so moved has first been agreed to by the
      meeting without any vote being given against it; and any resolution moved
      in contravention of this provision shall be void.

106.  NOTICE OF INTENTION TO APPOINT A DIRECTOR

      No person other than a Director retiring at the meeting shall, unless
      recommended by the Directors for election, be eligible for appointment as
      a Director at any General Meeting unless not less than seven nor more than
      forty two days (inclusive of the date on which the notice is given) before
      the day appointed for the meeting there shall have been left at the
      Office, addressed to the Secretary, notice in writing signed by some
      member (other than the

<PAGE>
                                    - 74 -

      person to be proposed) duly qualified to attend and vote at the meeting
      for which such notice is given of his intention to propose such person for
      appointment stating the particulars which would, if he were so appointed,
      be required to be included in the Company's Register of Directors together
      with notice in writing signed by the person to be proposed of his
      willingness to be elected.

107.  REMOVAL AND REPLACEMENT OF DIRECTORS

      The Company may in accordance with and subject to the provisions of the
      Statutes by Ordinary Resolution of which special notice has been given
      remove any Director from office notwithstanding any provision of these
      presents or of any agreement between the Company and such Director, but
      without prejudice to any claim he may have for damages for breach of any
      such agreement, and by Ordinary Resolution appoint another person in place
      of a Director so removed from office and any person so appointed shall be
      treated for the purpose of determining the time at which he or any other
      Director is to retire by rotation as if he had become a Director on the
      day on which the Director in whose place he is appointed was last elected
      as a Director. In default of such appointment the vacancy arising upon the
      removal of a Director from office may be filled by the Directors as a
      casual vacancy.

108.  APPOINTMENT BY ORDINARY RESOLUTION OR BY DIRECTORS

      The Company may by Ordinary Resolution appoint any person to be a Director
      either to fill a casual vacancy or as an additional Director. Without
      prejudice and in addition thereto, the Directors shall have the power at
      any time so to do, but so that the total number of Directors shall not at
      any time exceed the maximum number (if any) fixed by or in accordance with
      these presents. Any person so appointed by the Directors shall hold office
      only until the next Annual General Meeting and shall then be eligible for
      re-election, but shall not be taken into account in determining the number
      of Directors who are to retire by rotation at such meeting.

                               ALTERNATE DIRECTORS

109(A).POWER TO APPOINT ALTERNATE DIRECTORS

      Any Director (other than an alternate Director) may at any time by writing
      under his hand and deposited at the Office, or received by the Secretary
      or delivered at a meeting of the Directors, appoint any person (including
      another Director) to be his alternate Director and may in like manner at
      any time terminate such appointment. If such alternate Director is not
      another Director, such appointment, unless previously approved by the
      Directors, shall have effect only upon and subject to being so approved.

(B).  TERMINATION

      The appointment of an alternate Director shall automatically determine on
      the happening of any event which if he were a Director would cause him to
      vacate such office or if his appointor ceases to be a Director or if the
      approval of the Directors to his appointment is withdrawn. An alternate
      Director may by writing under his hand left at the Office resign such
      appointment.

(C).  ALTERNATE TO RECEIVE NOTICES

      An alternate Director shall (except when absent from the United Kingdom)
      be entitled, if his appointor so requests, to receive notices of meetings
      of the Directors to the same extent as, but in lieu of, the Director
      appointing him and shall be entitled to attend and vote as a

<PAGE>
                                    - 75 -

      Director and be counted for the purposes of a quorum at any such meeting
      at which the Director appointing him is not personally present and
      generally at such meeting to perform all functions, powers and duties of
      his appointor as a Director and for the purposes of the proceedings at
      such meeting the provisions of these presents shall apply as if he were a
      Director. If he shall himself be a Director or shall attend any such
      meeting as an alternate for more than one Director his voting rights shall
      be cumulative. If his appointor is for the time being absent from the
      United Kingdom or temporarily unable to act through ill-health or
      disability his signature to any resolution in writing of the Directors
      shall be as effective as the signature of his appointor. To such extent as
      the Directors may from time to time determine in relation to any
      committees formed under Article 118 the foregoing sentences shall also
      apply mutatis mutandis to any meeting of any such committee of which his
      appointor is a member. An alternate Director shall not (save as aforesaid)
      have power to act as a Director nor shall he be deemed to be a Director
      for the purposes of these presents.

(D).  ALTERNATE MAY BE PAID EXPENSES BUT NOT REMUNERATION

      An alternate Director may be repaid expenses, and shall be entitled to be
      indemnified, by the Company to the same extent mutatis mutandis as if he
      were a Director but he shall not be entitled to receive from the Company
      any remuneration except only such proportion (if any) of the remuneration
      otherwise payable to his appointor as such appointor may by notice in
      writing to the Company from time to time direct.

                            PROCEEDINGS OF DIRECTORS

110(A).MEETINGS OF DIRECTORS

      Subject to the provisions of these presents, the Directors may meet
      together for the despatch of business, adjourn and otherwise regulate
      their meetings as they think fit. Questions arising at any meeting shall
      be determined by a majority of votes. In case of an equality of votes the
      chairman of the meeting shall have a second or casting vote. A Director
      may, and the Secretary on the requisition of a Director shall, at any time
      summon a meeting of the Directors. Notice of a meeting of Directors shall
      be deemed to be properly given to a Director if it is given to him
      personally or by word of mouth or sent in writing or by electronic
      communication to him at his last known address or any other address given
      by him to the Company for this purpose. A Director absent or intending to
      be absent from the United Kingdom may request that notices of meetings of
      Directors shall during his absence be sent in writing or by electronic
      communication to him at an address given by him to the Company for this
      purpose, but such notices need not be given any earlier than notices given
      to Directors not so absent and if no such request is made it shall not be
      necessary to give notice of a meeting of Directors to any Director who is
      for the time being absent from the United Kingdom. A Director may waive
      notice of any meeting either prospectively or retrospectively.

(B).  PARTICIPATION IN MEETINGS BY TELEPHONE

      Any one or more (including, without limitation, all) of the Directors, or
      any committee of the Directors, may participate in a meeting of the
      Directors or of such committee:-

      (a)   by means of a conference telephone or similar communications
            equipment allowing all persons participating in the meeting to hear
            each other at the same time; or

      (b)   by a succession of telephone calls to Directors from the chairman of
            the meeting following disclosure to them of all material points.

<PAGE>
                                    - 76 -

      Participating by such means shall constitute presence in person at a
      meeting. Such meeting shall be deemed to have occurred, in the case of
      (a), at the place where most of the Directors participating are present
      or, if there is no such place, where the chairman of the meeting is
      present and, in the case of (b), where the chairman of the meeting is
      present.

111.  AUTHORITY TO VOTE

      A Director who is unable to attend any meeting of the Directors and has
      not appointed an alternate Director may authorise any other Director to
      vote for him at that meeting, and in that event the Director so authorised
      shall have a vote for each Director by whom he is so authorised in
      addition to his own vote. Any such authority must be in writing or by
      cable. telegram, telex or facsimile which must be produced at the meeting
      at which the same is to be used and be left with the Secretary for
      retention.

112.  QUORUM

      The quorum necessary for the transaction of the business of the Directors
      may be fixed by the Directors and unless so fixed at any other number
      shall be three. A meeting of the Directors at which a quorum is present
      shall be competent to exercise all powers and discretions for the time
      being exercisable by the Directors.

113.  DIRECTORS' INTERESTS

      A Director who is in any way, whether directly or indirectly, interested
      in a contract or proposed contract (or any transaction or arrangement
      whether or not constituting a contract) with the Company shall declare the
      nature of his interest in accordance with the provisions of the Statutes.

114(A).RESTRICTIONS ON VOTING

      Save as herein provided, a Director shall not vote at any meeting of the
      Directors in respect of any contract or arrangement or any other proposal
      whatsoever in which he has an interest which (together with any interest
      of any person connected with him within the meaning of Section 346 of the
      1985 Act) is, to his knowledge, a material interest (otherwise than by
      virtue of his interests in shares or debentures or other securities of, or
      otherwise in or through, the Company). A Director shall not be counted in
      the quorum at a meeting in relation to any resolution on which he is
      debarred from voting.

(B).  WHERE INTEREST DOES NOT PREVENT VOTING

      Subject to the provisions of the Statutes a Director shall (in the absence
      of some other material interest than is indicated below) be entitled to
      vote (and be counted in the quorum) in respect of any resolution
      concerning any of the following matters, namely:-

      (i)   the giving of any security or indemnity to him pursuant to Article
            168 or in respect of money lent or obligations incurred by him at
            the request of or for the benefit of the Company or any of its
            subsidiary undertakings;

      (ii)  the giving of any security or indemnity to a third party in respect
            of a debt or obligation of the Company or any of its subsidiary
            undertakings for which he himself has assumed responsibility in
            whole or in part under a guarantee or indemnity or by the giving of
            security;

<PAGE>
                                    - 77 -

      (iii) any proposal concerning an offer of shares or debentures or other
            securities of or by the Company or any of its subsidiary
            undertakings for subscription or purchase in which offer he is or
            may be entitled to participate as a holder of securities or in the
            underwriting or sub-underwriting of which he is to participate;

      (iv)  any proposal concerning any other company (not being a company in
            which he owns one per cent or more) in which he is interested,
            directly or indirectly and whether as an officer, or shareholder,
            creditor or otherwise howsoever;

      (v)   any proposal concerning the adoption, modification or operation of a
            pension fund or retirement death or disability benefits scheme or
            employees' share scheme which relates both to Directors and
            employees of the Company or of any of its subsidiary undertakings
            and does not provide in respect of any Director as such any
            privilege or advantage not accorded to the employees to which the
            fund or scheme relates;

      (vi)  any contract or arrangement for the benefit of employees of the
            Company or of any of its subsidiary undertakings under which he
            benefits or stands to benefit in a similar manner to the employees
            and which does not accord to any Director as such any privilege or
            advantage not accorded to the employees to whom the contract or
            arrangement relates; and;

      (vii) any proposal concerning insurance which the Company proposes to
            purchase and/or maintain for the benefit of any Directors of the
            Company or for persons who include Directors of the Company,
            provided that for the purposes of this sub-paragraph (vii),
            insurance shall mean only insurance against liability incurred by a
            Director in respect of any act or omission by him referred to in
            Article 96(B), or any other insurance which the Company is empowered
            to purchase and/or maintain for, or for the benefit of, any groups
            of persons consisting of or including Directors of the Company.

      For the purposes of sub-paragraph (iv) above, a company shall be deemed to
      be one in which a Director owns one per cent or more if and so long as
      (but only if and so long as) he, taken together with any person connected
      with him within the meaning of Section 346 of the 1985 Act, is to his
      knowledge (either directly or indirectly) the holder of or beneficially
      interested in one per cent or more of any class of the equity share
      capital of that company or of the voting rights available to members of
      that company. For the purpose of this paragraph there shall be disregarded
      any shares held by the Director or any such person as simple trustee under
      the laws of Scotland or bare or custodian trustee under the laws of
      England and Wales and in which he has no beneficial interest, any shares
      comprised in a trust in which his, or any such person's, interest is in
      reversion or remainder or fee if and so long as some other person is
      entitled to receive the income of the trust, and any shares comprised in
      an authorised unit trust scheme in which he, or any such person, is
      interested only as a unit holder. Where a company in which a Director owns
      one per cent or more is materially interested in a contract or arrangement
      or other proposal, he also shall be deemed to be materially interested in
      that contract, arrangement or other proposal.

(C).  CONSIDERATION OF MATTERS INVOLVING TWO OR MORE DIRECTORS

      Where proposals are under consideration concerning the appointment
      (including fixing or varying the terms of appointment) of two or more
      Directors to offices or employments with the Company or any company in
      which the Company is interested, such proposals may be divided and
      considered in relation to each Director separately and in such case each
      of the Directors concerned (if not debarred from voting under paragraph
      (B)(iv) of this Article)

<PAGE>
                                    - 78 -

      shall be entitled to vote (and be counted in the quorum) in respect of
      each resolution except that concerning his own appointment.

(D).  MATERIALITY OF DIRECTORS' INTERESTS

      If any question shall arise at any meeting as to the materiality of a
      Director's interest or as to the entitlement of any Director to vote and
      such question is not resolved by his voluntarily agreeing to abstain from
      voting, such question shall be referred to the chairman of the meeting (or
      in the case of a question as to the materiality of an interest or
      entitlement to vote of the chairman, one of the Deputy Chairmen or in his
      absence one of the Vice-Chairmen) and his ruling in relation to any other
      Director shall be final and conclusive except in a case where the nature
      or extent of the interests of such Director has not been fairly disclosed.

(E).  ALTERNATE DIRECTORS

      In relation to an alternate Director, the interest of his appointor shall,
      for the purposes of this Article, be treated as the interest of the
      alternate Director in addition to an interest which the alternate Director
      otherwise has. This Article applies to an alternate Director as if he were
      a Director.

(F).  RELAXATION OF PROVISIONS

      Subject to the Statutes, the Company may by Special Resolution suspend or
      relax the provisions of this Article to any extent or ratify any
      transaction not duly authorised by reason of a contravention of this
      Article.

115.  PROCEEDINGS IN CASE OF VACANCIES

      The continuing Directors may act notwithstanding any vacancies in their
      number, but if and so long as the number of Directors is reduced below the
      number fixed by or in accordance with these presents as the necessary
      quorum of Directors the continuing Directors or Director may act for the
      purpose of filling up such vacancies or of summoning General Meetings of
      the Company, but not for any other purpose. If there be no Directors or
      Director able or willing to act, then any two members may summon a General
      Meeting for the purpose of appointing Directors.

116.  CHAIRMAN

      The Directors may elect a Chairman and one or more Deputy Chairmen and one
      or more Vice-Chairmen and determine the period for which each is to hold
      office. The Chairman or, in his absence, one of any Deputy Chairmen or, in
      his absence, one of any Vice-Chairmen shall preside at meetings of the
      Directors, but if no Chairman or Deputy Chairman or Vice- Chairman shall
      have been appointed, or if at any meeting none of them be present within
      five minutes after the time appointed for holding the same, the Directors
      present may choose one of their number to be chairman of the meeting. If
      at any time there is more than one Deputy Chairman or Vice-Chairman the
      right (in the absence of the Chairman or of the Chairman and the Deputy
      Chairmen respectively) to preside at a meeting of Directors shall be
      determined as between the Deputy Chairmen (in the absence of the Chairman)
      or Vice-Chairmen (in the absence of the Chairman and the Deputy Chairmen)
      present (if more than one) by seniority in length of appointment or
      otherwise as resolved by the Directors.

<PAGE>
                                    - 79 -

117.  RESOLUTIONS IN WRITING

      A resolution in writing signed by all the Directors for the time being in
      the United Kingdom and all the alternate Directors (if any) for the time
      being in the United Kingdom whose appointors are for the time being absent
      from the United Kingdom (provided that their number is sufficient to
      constitute a quorum) or by all the members of a committee formed under the
      next following Article for the time being shall be as valid and effective
      as a resolution passed at a meeting of the Directors or, as the case may
      be, of such committee duly convened and held and may consist of several
      documents in the like form, each signed by one or more of the Directors or
      alternate Directors or members of the committee concerned.

118.  COMMITTEES OF DIRECTORS

      The Directors may delegate any of their powers, authorities or discretions
      (including, for the avoidance of doubt, any powers, authorities or
      discretions relating to the remuneration of Directors, the varying of
      Directors' terms and conditions of employment or the conferring of any
      benefit on Directors) to committees consisting of one or more members of
      their body and (if thought fit) one or more other persons co-opted as
      hereinafter provided. Insofar as any such power, authority or discretion
      is delegated to a committee, any reference in these presents to the
      exercise by the Directors of the power, authority or discretion so
      delegated shall be read and construed as if it were a reference to the
      exercise by such committee. Any committee so formed shall in the exercise
      of the powers, authority or discretions so delegated conform to any
      regulations which may from time to time be imposed by the Directors. Any
      such regulations may provide for or authorise the co-option to the
      committee of persons other than Directors and for such co-opted members to
      have voting rights as members of the committee but so that (i) the number
      of co-opted members shall be less than one half of the total number of
      members of the committee and (ii) no resolution of the committee shall be
      effective unless a majority of the members of the committee present at the
      meeting when the resolution is passed are Directors. The Directors may
      authorise any such committee to sub-delegate all or any of the powers,
      authorities and discretions delegated to it, and the Directors may at any
      time dissolve any such committee or revoke, vary or suspend any delegation
      made to any such committee.

119.  PROCEEDINGS OF COMMITTEE

      The meetings and proceedings of any such committee consisting of two or
      more members (including the exercise of all powers, authorities and
      discretions vested in such committee) shall be governed by the provisions
      of these presents regulating the meetings and proceedings of the
      Directors, so far as the same are applicable and are not superseded by any
      regulations made by the Directors under the last preceding Article.

120.  VALIDITY OF PROCEEDINGS

      All acts done by any meeting of Directors, or of any such committee, or by
      any person acting as a Director, shall as regards all persons dealing in
      good faith with the Company, notwithstanding that there was some defect in
      the appointment or continuance in office of any such Directors (or their
      alternates), or member of the committee, or person acting as aforesaid, or
      that they or any of them were disqualified or had vacated office, or were
      not entitled to vote, be as valid as if every such person had been duly
      appointed and was qualified and had continued to be a Director (or
      alternate Director) or member of the committee and had been entitled to
      vote.

<PAGE>
                                    - 80 -

                                BORROWING POWERS

121.  POWER TO BORROW AND GRANT SECURITY

      The Directors may exercise all the powers of the Company to borrow money,
      and to mortgage or charge its undertaking, property and uncalled capital,
      and to issue debentures and other securities, whether outright or as
      collateral security for any debt, guarantee, liability or obligation of
      the Company or of any third party.

                          GENERAL POWERS OF DIRECTORS

122.  BUSINESS TO BE MANAGED BY THE DIRECTORS

      The business and affairs of the Company shall be managed by the Directors,
      who may exercise all such powers of the Company as are not by the Statutes
      or by these presents required to be exercised by the Company in General
      Meeting, subject nevertheless to any regulations of these presents, to the
      provisions of the Statutes and to such regulations, being not inconsistent
      with the aforesaid regulations or provisions, as may be prescribed by
      Special Resolution of the Company, but no regulation so made by the
      Company shall invalidate any prior act of the Directors which would have
      been valid if such regulation had not been made. The general powers given
      by this Article shall not be limited or restricted by any special
      authority or power given to the Directors by any other Article.

123.  LOCAL BOARDS, ETC

      The Directors may make such arrangements as they think fit for the
      management and transaction of the Company's affairs in any specified
      locality whether in the United Kingdom or elsewhere and without prejudice
      to the generality of the foregoing may at any time and from time to time
      (a) establish Regional, Divisional or Local Boards, Committees or Agencies
      in the United Kingdom or elsewhere, (b) appoint any one or more of the
      Directors or any other person or persons to be members thereof for such
      period and at such remuneration as the Directors may deem fit, (c) revoke
      from time to time any such appointment, (d) fix the quorum of the said
      Regional, Divisional or Local Boards and Committees, (e) delegate to such
      Regional, Divisional or Local Boards, Committees and Agencies from time to
      time all or such powers, authorities and discretions vested in the
      Directors (other than the power to make calls) as the Directors may deem
      expedient, with power to sub-delegate, and (f) annul or vary any such
      delegation, but no person dealing in good faith and without notice of any
      such annulment or variation shall be affected thereby.

124.  POWERS OF ATTORNEY

      The Directors may from time to time and at any time by power of attorney
      or factory and commission or otherwise appoint any company, firm or person
      or any fluctuating body of persons, whether nominated directly or
      indirectly by the Directors, to be the Attorney or Attorneys or
      Commissioner or Commissioners of the Company for such purposes and with
      such powers, authorities and discretions (not exceeding those vested in or
      exercisable by the Directors under these presents) and for such period and
      subject to such conditions as they may think fit, and any such power of
      attorney or factory and commission may contain such provisions for the
      protection and convenience of persons dealing with any such Attorney or
      Commissioner as the Directors may think fit, and may also authorise any
      such Attorney or Commissioner to sub-delegate all or any of the powers,
      authorities and discretions vested in him. The Directors may delegate all
      or any of their powers under this Article.

<PAGE>
                                    - 81 -

125.  OFFICIAL SEAL FOR USE ABROAD

      The Company may exercise the powers conferred by the Statutes with regard
      to having an official seal for use abroad and such powers shall be vested
      in the Directors.

126.  OVERSEAS REGISTERS

      Subject to and to the extent permitted by the Statutes, the Company, or
      the Directors on behalf of the Company, may cause to be kept in any
      territory outside the United Kingdom a branch register of members resident
      in such territory, and the Directors may make and vary such regulations as
      they may think fit respecting the keeping of any such register.

127.  EXECUTION BY THE COMPANY

      All cheques, promissory notes, drafts, bills of exchange, and other
      negotiable or transferable instruments, and all receipts for moneys paid
      to the Company, shall be signed, drawn, accepted, endorsed, or otherwise
      executed, as the case may be, in such manner as the Directors or any duly
      authorised committee shall from time to time determine.

                    DEPARTMENTAL, REGIONAL OR LOCAL DIRECTORS
                              AND OTHER APPOINTEES

128(A).USE OF DESIGNATION "DIRECTOR"

      The Directors may from time to time appoint any person to be a
      Departmental, Regional or Local Director or (without prejudice to the
      powers conferred by Article 123) to any other appointment including the
      word "Director" in its title (any person so appointed pursuant to this
      Article being in this Article called "an Appointee").

(B).  POWERS AND DUTIES OF APPOINTEE

      The Directors may from time to time define, limit or restrict the powers
      and duties of an Appointee and determine his remuneration and may at any
      time remove any such person from such office but without prejudice to any
      claim for damages for breach of any contract of service between him and
      the Company. Any person so appointed as an Appointee shall not, by reason
      only of such appointment, be a Director of the Company for any of the
      purposes of these presents or of the Statutes, nor shall he have, by
      reason only of such appointment, any of the powers or duties of a Director
      save in so far as specific powers or duties may be vested in him by the
      Directors as aforesaid. The Directors may at any time determine the use of
      any designation or title including the word "Director".

(C).  ATTENDANCE AT BOARD MEETINGS

      An Appointee shall not be entitled, by reason only of such appointment, to
      receive notice of or to attend at any meeting of the Directors unless he
      is specifically invited by the Directors to do so, and as an Appointee he
      shall not be entitled to vote thereat.

(D).  APPOINTMENT OF OTHER OFFICERS

      The Directors may from time to time appoint Chief General Managers, Deputy
      Chief General Managers, Assistant Chief General Managers, Senior General
      Managers, General Managers, Deputy General Managers, Assistant General
      Managers and any other officers on such terms and for such period as the
      Directors may think fit. The Directors may from time to time

<PAGE>
                                    - 82 -

      define, limit or restrict the powers and duties of any person appointed to
      any such office and determine his remuneration and may at any time remove
      any such person from such office but without prejudice to any claim for
      damages for breach of any contract of service between him and the Company.

                                    SECRETARY

129.  SECRETARY

      The Secretary shall be appointed by the Directors on such terms and for
      such period as they may think fit. Any Secretary so appointed may at any
      time be removed from office by the Directors, but without prejudice to any
      claim for damages for breach of any contract of service between him and
      the Company. If thought fit two or more persons may be appointed as Joint
      Secretaries. The Directors may also appoint from time to time on such
      terms as they may think fit one or more Deputy Secretaries and Assistant
      Secretaries. Anything by the Statutes or by these presents required or
      authorised to be done by or to the Secretary may, if the office is vacant
      or there is for any other reason no Secretary capable of acting, be done
      by or to any Deputy or Assistant Secretary, or if there is no Deputy or
      Assistant Secretary capable of acting, by or to any officer of the Company
      authorised generally or specially in that behalf by the Directors.

                                      SEALS

130(A).CUSTODY OF SEAL

      The Directors shall provide for the safe custody of the Seal and any
      Securities Seal and neither shall be used without the authority of the
      Directors or a committee authorised by the Directors in that behalf.

(B).  FORMALITIES FOR AFFIXING THE SEAL

      Every deed, contract, document, instrument or other writing to which the
      Seal shall be affixed shall (except as permitted by Article 19) be signed
      by a Director or by some other person appointed by the Directors for the
      purpose and countersigned by the Secretary or by a second Director or by
      some other person appointed by the Directors for the purpose. Such
      signature and counter-signature shall not require to be witnessed.

(C).  USE OF SECURITIES SEAL

      The Securities Seal shall be used only for sealing securities issued by
      the Company and documents creating or evidencing securities so issued. Any
      such securities or documents sealed with the Securities Seal shall not
      require to be signed.

                             EXECUTION OF DOCUMENTS

131.  EXECUTION OF DOCUMENTS

      Subject to the provisions of the Statutes, all deeds, contracts,
      documents, instruments or other writings not executed under Seal may be
      signed by a Director or by the Secretary or by some other person appointed
      by the Directors or by a duly authorised committee for that purpose and
      that whether or not relating to heritable or real property. Provided that
      this Article and the provisions of Article 130(B) are without prejudice to
      any other manner of execution of documents permitted or prescribed by the
      Statutes.

<PAGE>
                                    - 83 -

                                AUTHENTICATION OF DOCUMENTS

132.  AUTHENTICATION OF DOCUMENTS

      Any Director or the Secretary or any person appointed by the Directors or
      by a duly authorised committee for the purpose shall have power to
      authenticate any documents affecting the constitution of the Company and
      any resolutions passed by the Company or the Directors or any committee,
      and any books, records, documents and accounts relating to the business of
      the Company, and to certify copies thereof or extracts therefrom as true
      copies or extracts; and where any books, records, documents or accounts
      are elsewhere than at the Office the officer, servant or agent of the
      Company having the custody thereof shall be deemed to be a person
      appointed by the Directors as aforesaid. A document purporting to be a
      copy of a resolution, or an extract from the minutes of a meeting, of the
      Company or of the Directors or any committee which is certified as
      aforesaid shall be conclusive evidence in favour of all persons dealing
      with the Company upon the faith thereof that such resolution has been duly
      passed or, as the case may be, that such minutes or extract is a true and
      accurate record of proceedings at a duly constituted meeting.

                                   DIVIDENDS

133.  DECLARATION OF DIVIDENDS

      The Company may by Ordinary Resolution declare dividends but no dividend
      shall be payable except out of the profits of the Company available for
      distribution under the provisions of the Statutes, or in excess of the
      amount recommended by the Directors, or in contravention of the special
      rights attaching to any share. Unless and to the extent that the rights
      attached to any shares or the terms of issue thereof otherwise provide,
      all dividends shall be declared and paid according to the amounts paid on
      the shares in respect of which the dividend is paid, and shall (as regards
      any shares not fully paid throughout the period in respect of which the
      dividend is paid) be apportioned and paid pro rata according to the
      amounts paid on the shares during any portion or portions of the period in
      respect of which the dividend is paid. The amounts of any such pro rata
      apportionments shall be determined by the Directors as they think fit in
      all respects including as to any Applicable Exchange Rate applied by them
      for the purposes of converting any amount denominated in one currency into
      another currency for such determination. Provided that the Directors act
      bona fide they shall not incur any responsibility to the holders of any
      share in respect of the determination of such pro rata apportionment. For
      the purposes of this Article no amount paid on a share in advance of calls
      shall be treated as paid on the share.

134(A).INTERIM DIVIDENDS

      If and so far as in the opinion of the Directors the profits of the
      Company justify such payment, the Directors may (subject to the special
      rights attaching to any share and provided that the Directors may in any
      event pay an interim dividend on the Ordinary Shares at a rate not
      exceeding L 0.01 per Ordinary Share) subject to the Statutes declare and
      pay the fixed dividends or dividends not exceeding a specified amount on
      any class of shares carrying a fixed dividend or dividends not exceeding a
      specified amount expressed to be payable on fixed dates on the half-yearly
      or other dates prescribed for the payment thereof and may also from time
      to time subject to the Statutes declare and pay interim dividends on
      shares of any class of such amount and on such dates and in respect of
      such periods as they think fit. For the purpose of ascertaining the
      distributable profits or reserves of the Company available for
      distribution at any time and the extent to which the same may cover fixed
      dividends or

<PAGE>
                                    - 84 -

      dividends not exceeding a specified amount expressed to be payable at such
      time, the Directors may convert any such profits or reserves denominated
      in, and any fixed dividend or dividends not exceeding a specified amount
      expressed to be payable in, a Foreign Currency into Sterling at the
      Applicable Exchange Rate.

(B).  DIRECTORS' RESPONSIBILITY

      Provided that the Directors act bona fide, they shall not incur any
      responsibility to the holders of any share conferring a preference which
      may at any time be issued for any damage they may suffer by reason of the
      payment of an interim dividend on any shares ranking after such preference
      shares. A resolution of the Directors declaring the interim dividend shall
      (once announced) be irrevocable and have the same effect in all respects
      as if such dividend had been declared upon the recommendation of the
      Directors by an Ordinary Resolution of the Company.

135.  PROFITS AND LOSSES FROM PAST DATE

      Subject to the provisions of the Statutes, where any asset, business or
      property is bought by, transferred to or vested in the Company as from a
      past date (whether such date be before or after the incorporation of the
      Company) the profits and losses thereof as from such date may at the
      discretion of the Directors in whole or in part be carried to revenue
      account and treated for all purposes as profits or losses of the Company.
      Subject as aforesaid, if any shares or securities are purchased cum
      dividend or interest, such dividend or interest may at the discretion of
      the Directors be treated as revenue, and it shall not be obligatory to
      capitalise the same or any part thereof.

136.  INTEREST NOT PAYABLE

      No dividend or other moneys payable on or in respect of a share shall bear
      interest as against the Company. The provisions of this Article shall not
      affect the provisions of Article 48.

137.  PERMITTED DEDUCTIONS

      The Directors may deduct from any dividend or other moneys payable to any
      member on or in respect of a share all sums of money (if any) presently
      payable by him to the Company on account of calls or otherwise.

138.  RETENTION OF DIVIDENDS

      The Directors may retain any dividend or other moneys payable on or in
      respect of a share on which the Company has a lien, and may apply the same
      in or towards satisfaction of the debts, liabilities or engagements in
      respects of which the lien exists.

139.  WAIVER OF DIVIDENDS

      The waiver in whole or in part of any dividend on any share by any
      document (whether or not under seal) shall be effective only if such
      document is signed by the shareholder (or the person entitled to the share
      in consequence of the death or bankruptcy of the holder or otherwise by
      operation of law) and delivered to the Company and if or to the extent
      that the same is accepted as such or acted upon by the Company.

<PAGE>
                                    - 85 -

140.  UNCLAIMED DIVIDENDS

      All dividends or other moneys payable on or in respect of a share
      unclaimed after having been declared may be invested or otherwise made use
      of by the Directors for the benefit of the Company until, subject as
      provided by these presents, claimed. The payment by the Directors of any
      unclaimed dividend or other moneys payable on or in respect of a share
      into a separate account shall not constitute the Company a trustee in
      respect thereof. The provisions of this Article shall not affect the
      provisions of Article 48.

141.  FORFEITURE OF UNCLAIMED DIVIDENDS

      Any dividend unclaimed after a period of twelve years from the date of
      declaration of such dividend shall be forfeited and shall revert to the
      Company.

142.  DIVIDENDS IN SPECIE

      The Company may upon the recommendation of the Directors by Ordinary
      Resolution direct payment of a dividend in whole or in part by the
      distribution of specific assets (and in particular of paid-up shares or
      debentures of any other company) and the Directors shall give effect to
      such resolution, and where any difficulty arises in regard to such
      distribution, the Directors may (a) settle the same as they think
      expedient and in particular may issue fractional certificates or may
      authorise any person to sell and transfer any fractions or disregard
      fractions altogether, (b) fix the value for distribution of such specific
      assets or any part thereof, (c) determine that cash payments shall be made
      to any members upon the footing of the value so fixed in order to adjust
      the rights of those entitled to participate in the dividend, and (d) vest
      any such specific assets in trustees as may seem expedient to the
      Directors.

143.  SCRIP DIVIDEND

      The Directors may, subject to the rights attached to any class of share
      and in addition to the provisions of Article 4(C)(2)(b)(vi), with the
      prior sanction of an Ordinary Resolution of the Company, offer the holders
      of Ordinary Shares the right to elect to receive Ordinary Shares, credited
      as fully paid, instead of cash in respect of all or part of such dividend
      or dividends as are specified by such resolution. Such offer may be made
      by the Directors upon such terms and conditions as they think fit,
      provided that the following provisions shall apply in any event:-

      (A)   the said Ordinary Resolution may specify all or part of a particular
            dividend (whether or not already declared) or may specify all or any
            dividends (or any part of such dividends) declared or to be declared
            or paid within a specified period, but such period may not end later
            than the beginning of the fifth Annual General Meeting following the
            date of the meeting at which such resolution is passed;

      (B)   the entitlement of each holder of Ordinary Shares to new Ordinary
            Shares shall be such that the relevant value of the entitlement
            shall be as nearly as possible equal to (but not greater than) the
            cash amount (disregarding any tax credit) of the dividend that such
            holder elects to forego provided always that, in calculating the
            entitlement, the Directors may at their discretion adjust the figure
            obtained by dividing the relevant value by the amount payable on the
            Ordinary Shares up or down so as to procure that the entitlement of
            each shareholder to new Ordinary Shares may be represented by a
            simple numerical ratio. For this purpose "relevant value" shall be
            calculated by reference to the average of the middle market
            quotations for the

<PAGE>
                                    - 86 -

            Company's Ordinary Shares on the London Stock Exchange, as derived
            from the Daily Official List, on the day on which the Ordinary
            Shares are first quoted "ex" the relevant dividend and the four
            subsequent dealing days, or in such other manner as may be
            determined by the Directors on such basis as they consider fair and
            reasonable. A certificate or report by the Auditors as to the amount
            of the average quotation in respect of any dividend shall be
            conclusive evidence of that amount;

      (C)   the basis of allotment shall be such that no member may receive a
            fraction of a share. The Directors may make such provisions as they
            think fit for any fractional entitlements, including provisions
            whereby, in whole or in part, fractional entitlements are
            disregarded or the benefit thereof accrues to the Company and/or
            under which fractional entitlements are accrued and/or retained and
            in each case accumulated on behalf of any shareholder and such
            accruals or retentions are applied to the allotment by way of bonus
            to or cash subscription on behalf of such shareholder of fully paid
            Ordinary Shares;

      (D)   the Directors, after determining the basis of allotment, shall
            notify the holders of Ordinary Shares of the right of election
            offered to them, and shall send with, or following, such
            notification, forms of election and specify the procedure to be
            followed and the place at which, and the latest date and time by
            which, duly completed forms of election must be lodged in order to
            be effective. Electronic communications may, if the Directors so
            determine, be used in accordance with these presents (instead of
            documents in writing) for the notification of the right of election
            and the sending of completed forms of election;

      (E)   the dividend (or that part of the dividend in respect of which a
            right of election has been offered) shall not be payable on Ordinary
            Shares in respect whereof the said election has been duly made ("the
            elected Ordinary Shares") and instead thereof additional Ordinary
            Shares shall be allotted to the holders of the elected Ordinary
            Shares on the basis of allotment determined as aforesaid. For such
            purpose the Directors shall capitalise out of such of the sums
            standing to the credit of any of the Company's reserves (including
            Share Premium Account and Capital Redemption Reserve) or any of the
            profits which could otherwise have been applied in paying dividends
            in cash as the Directors may determine, a sum equal to the aggregate
            nominal amount of the additional Ordinary Shares to be allotted on
            such basis and apply the same in paying up in full the appropriate
            number of unissued Ordinary Shares for allotment and distribution to
            and amongst the holders of the elected Ordinary Shares on such
            basis. A resolution of the Directors capitalising any part of the
            reserves or profits hereinbefore mentioned shall have the same
            effect as if such capitalisation had been declared by Ordinary
            Resolution of the Company in accordance with Article 148;

      (F)   the additional Ordinary Shares so allotted shall rank pari passu in
            all respects with the fully paid Ordinary Shares then in issue save
            only as regards participation in the relevant dividend;

      (G)   any resolution of the Company or the Directors, passed on or after
            the date of adoption of these presents, declaring a dividend in
            respect of which (or in respect of any part of which) a right of
            election is offered under this Article (whether before or after the
            passing of the resolution) shall be deemed to include (if not
            expressly included) a provision that the dividend declared (or the
            part thereof in respect of which the right of election is offered)
            shall not be payable in respect of Ordinary Shares as regards which
            a valid acceptance of the offer under this Article shall have

<PAGE>
                                    - 87 -

            been received by the Company not later than the final time for
            receipt of forms of election;

      (H)   Unless the Directors otherwise determine, or unless the
            Uncertificated Securities Regulations and/or the rules of the
            relevant system concerned otherwise require, the new Ordinary Share
            or shares which a member has elected to receive instead of cash in
            respect of the whole (or some part) of the specified dividend
            declared in respect of his elected Ordinary Shares shall be in
            uncertificated form (in respect of the member's elected Ordinary
            Shares which were in uncertificated form on the date of the member's
            election) and in certificated form (in respect of the member's
            elected Ordinary Shares which were in certificated form on the date
            of the member's election); and

      (I)   the Directors may also from time to time establish, continue or vary
            a procedure for election mandates, which, for the avoidance of
            doubt, may include an election by means of a relevant system and
            mandates given before the adoption of these presents, under which a
            holder of Ordinary Shares may elect to receive Ordinary Shares
            credited as fully paid instead of cash in respect of all future
            rights offered to that holder under this Article until the election
            mandate is revoked or deemed to be revoked in accordance with the
            procedure;

      (J)   the Directors may undertake and do such acts and things as they may
            consider necessary or expedient for the purpose of giving effect to
            the provisions of this Article;

      (K)   notwithstanding the foregoing, the Directors may at any time prior
            to payment of the relevant dividend determine, if it appears to them
            desirable to do so because of a change in circumstances, that the
            dividend shall be payable wholly in cash after all and if they so
            determine then all elections made shall be disregarded. The dividend
            shall be payable wholly in cash if the ordinary share capital of the
            Company ceases to be listed on the Official List of the London Stock
            Exchange at any time prior to the due date of issue of the
            additional shares or if the listing is suspended and not reinstated
            by the date immediately preceding the due date of such issue;

      (L)   the Directors may on any occasion determine that rights of election
            hereunder shall be subject to such exclusions, restrictions or other
            arrangements as the Directors may deem necessary or expedient in
            relation to legal or practical problems under the laws of, or the
            requirements of any recognised regulating body or any stock exchange
            in, any territory; and

      (M)   this Article shall have effect without prejudice to the other
            provisions of these presents and such provisions shall also have
            effect without prejudice to the provisions of this Article.

144(A).PROCEDURE FOR PAYMENT

      Any dividend or other monies payable in cash on or in respect of a share
      may be paid by cheque, warrant or other financial instrument sent through
      the post to the registered address of the member or person entitled
      thereto (or, if two or more persons are registered as joint holders of the
      share or are entitled thereto in consequence of the death or bankruptcy of
      the holder or otherwise by operation of law, to any one of such persons),
      or to such person and such address as such member or person or persons may
      by writing direct Every such cheque shall be crossed and bear across its
      face the words "account payee" or "a/c payee" either with

<PAGE>
                                    - 88 -

      or without the word "only", and every such cheque or warrant or other
      financial instrument shall be made payable to the order of the person to
      whom it is sent or to such person as the holder or joint holders or person
      or persons entitled to the share in consequence of the death or bankruptcy
      of the holder or otherwise by operation of law may direct. Payment of the
      cheque or warrant or other financial instrument by the banker upon whom it
      is drawn or, in respect of uncertificated shares, the making of payment in
      accordance with the facilities and requirements of the relevant system,
      shall be a good discharge to the Company. Every such cheque or warrant or
      other financial instrument shall be sent at the risk of the person
      entitled to the money represented thereby. In addition, any such dividend
      or other monies may be paid by any usual or common banking or funds
      transfer method (including, without limitation, direct debit, bank
      transfer and electronic funds transfer) and to or through such person as
      the holder or joint holders may in writing direct, and the Company shall
      have no responsibility for any sums lost or delayed in the course of any
      such transfer or where it has acted on any such directions.

(B).  UNCERTIFICATED SHARES

      In respect of uncertificated shares every such payment of dividend or
      other monies made by any method referred to in this Article 144 may be
      made in any such manner as may be consistent with the facilities and
      requirements of the relevant system. Without prejudice to the generality
      of the foregoing, in respect of uncertificated shares, such payment may
      include the sending by the Company or by any person on its behalf of an
      instruction to the Operator of the relevant system to credit the cash
      memorandum account of the holder or joint holders, or of such person as
      the holder or joint holders may in writing direct.

(C).  UNCASHED DIVIDENDS

      The Company may cease to send any cheque, warrant or other financial
      instrument through the post or employ any other means of payment,
      including payment by means of a relevant system, for any dividend payable
      on any shares in the Company which is normally paid in that manner on
      those shares if in respect of at least two consecutive dividends payable
      on those shares the cheques, warrants or other financial instruments have
      been returned undelivered or remain uncashed or that means of payment has
      failed. In addition, the Company may cease to send any cheque, warrant or
      other financial instrument through the post or may cease to employ any
      other means of payment if, in respect of one dividend payable on those
      shares, the cheque, warrant or other financial instrument has been
      returned undelivered or remains uncashed or that means of payment has
      failed and reasonable enquiries have failed to establish any new address
      or account of the registered holder. Subject to the provisions of these
      presents, the Company may recommence sending cheques, warrants or other
      financial instruments or employing such other means in respect of
      dividends payable on those shares if the holder or person entitled to
      transmission requests such recommencement in writing. All monies
      represented by cheques, warrants or other financial instruments or means
      of payment not sent or employed under this paragraph (C) shall be deemed
      to be unclaimed dividends or monies and the provisions of Articles 48 and
      140 shall apply thereto.

(D).  CURRENCY OF PAYMENT

      Subject to the provisions of these presents and to the rights attaching to
      or the terms of issue of any shares, any dividends or other monies on or
      in respect of a share may be paid in such currency on the basis of the
      Applicable Exchange Rate as the Directors may think fit or otherwise
      determine.

<PAGE>
                                    - 89 -

145.  RECEIPTS WHERE JOINT HOLDERS

      If two or more persons are registered as joint holders of any share, or
      are entitled jointly to a share in consequence of the death or bankruptcy
      of the holder, any one of them may give effectual receipts for any
      dividend or other monies payable or property distributable on or in
      respect of the share.

                                   RECORD DATE

146.  RECORD DATE

      Notwithstanding any other provision of these presents but without
      prejudice to the rights attached to any shares and subject to the
      Statutes, the Company or the Directors may by resolution specify any date
      (the "record date") as the date at the close of business (or such other
      time as the Directors may determine) on which persons registered as the
      holders of shares or other securities shall be entitled to receipt of any
      dividend, distribution, interest, allotment, issue, notice, information,
      document or circular and such record date may be on or at any time before
      the date on which the same is paid or made or (in the case of any
      dividend, distribution, interest, allotment or issue) at any time after
      the same is recommended, resolved, declared or announced but without
      prejudice to the rights inter se in respect of the same of transferors and
      transferees of any such shares or other securities.

                                    RESERVES

147(A).RESERVES

      The Directors may from time to time subject to the rights attaching to any
      share set aside out of the profits of the Company and carry to reserve
      such sums in such currencies as they think proper which, at the discretion
      of the Directors, shall be applicable for any purpose to which the profits
      of the Company may properly be applied and pending such application may
      either be employed in the business of the Company or be invested. The
      Directors may divide the reserve into such special funds denominated in
      such currencies as they think fit, and may consolidate into one fund
      denominated in such currencies as they think fit any special funds or any
      parts of any special funds into which the reserve may have been divided.
      The Directors may also without placing the same to reserve carry forward
      any profits. In carrying sums to reserve and in applying the same the
      Directors shall comply with the provisions of the Statutes and these
      presents.

(B).  LIMITATION ON CARRYING SUMS TO RESERVE

      Notwithstanding the provisions of paragraph (A) of this Article:-

      (i)   unless the Directors shall determine in relation to any New
            Preference Shares prior to the allotment thereof that this paragraph
            (B)(i) shall not apply thereto the Directors shall not set aside out
            of profits and carry to any reserve fund referred to in paragraph
            (A), or carry forward in the manner described in paragraph (A), any
            sum then required for the payment of dividend payable on any New
            Preference Shares which may be properly applied for that purpose;
            and

      (ii)  if at any time there shall be insufficient profits standing to the
            credit of the profit and loss account (or any other of the Company's
            accounts or reserves) and available for distribution for the payment
            of any such dividend referred to in paragraph (B) (i) above, the
            Directors shall (subject to the Statutes) withdraw from any such
            reserve

<PAGE>
                                    - 90 -

            fund referred to in paragraph (A) such sum (calculated at the
            Applicable Exchange Rate) as may be required for payment of any such
            dividend (and so that the Directors shall not require the consent of
            the Company in General Meeting to such withdrawal). Subject to the
            Statutes, any sum so withdrawn (and any profits previously carried
            forward pursuant to paragraph (A) subsequently required for the
            payment of any such dividend) may be applied in or towards payment
            of such dividend.

(C).  DIFFERENT CURRENCIES

      Any consolidation of or any credit to, debit from or other transfer
      between reserves denominated in different currencies shall be effected at
      the Applicable Exchange Rate.

                     CAPITALISATION OF PROFITS AND RESERVES

148.  POWER TO CAPITALISE PROFITS

148(A)Subject to the Statutes and to the rights attaching to any share, the
      Company may upon the recommendation of the Directors by Ordinary
      Resolution and subject as hereinafter provided, resolve to capitalise any
      part of the undivided profits of the Company (whether or not the same are
      available for distribution) or any part of any sum standing to the credit
      of any of the Company's reserves (including Share Premium Account and
      Capital Redemption Reserve), provided that such sum be not required for
      paying the dividends on any shares carrying a fixed cumulative
      preferential dividend, and authorise the Directors to appropriate the
      profits or sum resolved to be capitalised either in accordance with the
      rights attaching to any share or to the Ordinary Shareholders in the
      proportions in which such profits or sum would have been divisible amongst
      them had the same been applied or been applicable in paying a dividend on
      the Ordinary Shares and to apply such profits or sum on their behalf
      either in or towards paying up the amounts (if any) for the time being
      unpaid on any shares held by them respectively, or in paying up in full
      unissued shares or debentures or other securities or obligations of the
      Company of a nominal amount equal to such profits or sum, such shares or
      debentures or other securities or obligations to be allotted and
      distributed credited as fully paid up to and amongst them in the
      proportion aforesaid, or partly in one way and partly in the other:

      Provided that any Share Premium Account and Capital Redemption Reserve and
      any profits which are not available for distribution may only be applied
      hereunder in the paying up of unissued shares to be allotted as fully
      paid.

148(B)In addition and without limiting the generality of paragraph (A) of this
      Article, the Directors may at any time without any resolution of the
      shareholders capitalise any profit or reserve which may be capitalised
      pursuant to paragraph (A) of this Article and which is required to be
      capitalised to enable the Company to allot and issue fully paid shares to
      the holders of convertible securities pursuant to the rights of conversion
      conferred upon such holders and in any such case the Directors shall apply
      any sum so capitalised in paying up and issuing to such holders such
      number of shares of such nominal amounts and conferring such rights and
      being subject to such restrictions as shall be required to enable the
      Company to comply with its obligations.

149(A).PROCEDURE FOR CAPITALISATION

      Whenever such a resolution as aforesaid shall have been passed the
      Directors shall make all appropriations and applications of the profits or
      sum resolved to be capitalised thereby and

<PAGE>
                                    - 91 -

      all allotments and issues of fully paid shares or debentures or other
      securities (if any) and generally shall do all acts and things required to
      give effect thereto, with full power to the Directors to make such
      provisions as they think fit for the case of shares or debentures or other
      securities becoming distributable in fractions (including provisions
      whereby any fractional entitlements which would arise on the basis
      aforesaid are disregarded or the benefit thereof accrues to the Company
      rather than to the members concerned) and also to authorise any person to
      enter on behalf of all the members interested into an agreement with the
      Company providing for any such capitalisation and for matters incidental
      thereto and any agreement made under such authority shall be effective and
      binding on all concerned.

(B).  POWER TO CAPITALISE ON ADJUSTMENT OF SUBSCRIPTION PRICE IN AN EMPLOYEES'
      SHARE SCHEME

      Notwithstanding any other provisions contained in these presents, if an
      adjustment is made to the subscription price payable by an option holder
      under any employees' share scheme which results in the adjusted price per
      share payable on the exercise of an option in respect of an Ordinary Share
      being less than the nominal value of such Ordinary Share (the "adjusted
      price"), the Directors may capitalise all or part of the Company's
      reserves available for distribution (excluding any Share Premium Account,
      Capital Redemption Reserve or other undistributable reserve), upon the
      issue of any Ordinary Share in respect of and following the exercise of
      the relevant option (the "new share"). The amount to be so capitalised
      shall be equal to the difference between the adjusted price and the
      nominal value of the new share. The Directors shall apply such amount in
      paying up in full the balance payable on the new share. The Directors may
      take such steps as they consider necessary to ensure that the Company has
      sufficient reserves available for such application. No further authority
      of the Company in General Meeting is required.

                                MINUTES AND BOOKS

150.  KEEPING OF MINUTES AND BOOKS

      The Directors shall cause Minutes to be made in books to be provided for
      the purpose:-

      (A)   Of the names of the Directors or their alternates and any other
            persons present at each meeting of Directors and of any committee
            formed under Article 118.

      (B)   Of all resolutions and proceedings at all meetings of the Company
            and of any class of members of the Company and of the Directors and
            of committees formed under Article 118.

      Any such Minute shall be conclusive evidence of any such proceedings if it
      purports to be signed by the chairman of the meeting at which the
      proceedings were had, or by the chairman of the next succeeding meeting.

151.  SAFEGUARDING OF MINUTES AND BOOKS

      Any register, index, minute book, book of account or other book required
      by these presents or the Statutes to be kept by or on behalf of the
      Company may be kept either by making entries in bound books or by
      recording them in any other manner. In any case in which bound books are
      not used, the Directors shall take adequate precautions for guarding
      against falsification and for facilitating its discovery.

<PAGE>
                                    - 92 -

                                    ACCOUNTS

152.  RIGHT TO INSPECT ACCOUNTS

      Accounting records sufficient to show and explain the Company's
      transactions and otherwise complying with the Statutes shall be kept at
      the Office, or, subject to the Statutes, at such other place or places as
      the Directors think fit, and shall always be open to the inspection of the
      Directors. No member (other than a Director) shall have any right of
      inspecting any account or book or document of the Company except as
      conferred by statute or ordered by a court of competent jurisdiction or
      authorised by the Directors.

153.  PREPARATION AND LAYING OF ACCOUNTS

      The Directors shall from time to time in accordance with the provisions of
      the Statutes cause to be prepared and to be laid before a General Meeting
      of the Company such profit and loss accounts, balance sheets, group
      accounts (if any) and reports as may be necessary.

154.  ACCOUNTS TO BE SENT TO MEMBERS

      A copy of every balance sheet and profit and loss account which is to be
      laid before a General Meeting of the Company (including every document
      required by law to be attached or annexed thereto) and of the Directors'
      and Auditors' reports or (where permitted by the Statutes and/or any
      applicable regulations and if the Directors so resolve from time to time)
      a copy of a summary financial statement instead of such balance sheet,
      profit and loss account and reports shall, not less than twenty one days
      before the date of the meeting, be sent to every member of, and every
      holder of debentures of, the Company and to every other person who is
      entitled to receive notices of meetings from the Company under the
      provisions of the Statutes or of these presents; Provided that this
      Article shall not require a copy of these documents to be sent to more
      than one of joint holders or to any person who is not entitled to receive
      notices of meetings and of whose address the Company is not aware, but any
      member or holder of debentures to whom a copy of these documents has not
      been sent shall be entitled to receive a copy free of charge on
      application at the Office. Whenever listing or quotation on any stock
      exchange for all or any of the shares or debentures or other securities of
      the Company shall for the time being be in force, there shall be forwarded
      to the appropriate officer of such stock exchange such number of copies of
      such documents and/or statements as may for the time being be required
      under its regulations or practice.

      Reference in this Article (other than in the immediately preceding
      sentence) to copies of the above-mentioned documents and/or statements
      being sent to any person include (without prejudice to any other provision
      of these presents) references to copies of such documents and/or
      statements being sent, or treated as sent, to such person using electronic
      communications in accordance with Section 238(4A) and (4B) or Section
      251(2A) and (2B) of the 1985 Act, and the provisions of Section 238(4D)
      and 251(2D) of the 1985 Act shall apply in respect of the publication of
      such documents and/or statements on a web site.

                                    AUDITORS

155.  VALIDITY OF ACTS OF AUDITORS

      Subject to the provisions of the Statutes, all acts done by any person
      acting as an Auditor shall, as regards all persons dealing in good faith
      with the Company, be valid, notwithstanding that there was some defect in
      his appointment or that he was at the time of his appointment not
      qualified for appointment or subsequently became disqualified.

<PAGE>
                                    - 93 -

156.  RIGHTS OF AUDITORS

      The Auditor shall be entitled to attend any General Meeting and to receive
      all notices of and other communications relating to any General Meeting
      which any member is entitled to receive, and to be heard at any General
      Meeting on any part of the business of the meeting which concerns him as
      Auditor. Notwithstanding the references to notice in writing in Article
      56, electronic communications may be used by the Company pursuant to
      Section 390(1A) of the 1985 Act (and the provisions of the 1985 Act
      therein referred to) to give notice of General Meetings to the Auditors.

                                     NOTICES

157.  NOTICES TO BE IN WRITING

      Any notice to be given to or by any person pursuant to these presents
      shall, unless otherwise provided in these presents, be in writing or be
      given using electronic communications to an address for the time being
      notified for that purpose to the person giving the notice.

158(A).SERVICE OF NOTICES

      Any notice or document (including a share certificate) may be served on or
      delivered to any member by the Company either personally or by sending it
      through the post in a prepaid cover addressed to such member at his
      registered address, or (if he has no registered address within the United
      Kingdom) to the address, if any, within the United Kingdom supplied by him
      to the Company as his address for the service of notices, or by delivering
      it to such address addressed as aforesaid or, in respect of any
      shareholder, in accordance with any of the rights attaching to his shares
      for the time being, or by means of a relevant system, or by sending it
      using electronic communications to an address for the time being notified
      to the Company by the member, or in accordance with any other arrangements
      approved by the member concerned (which may consist of the Company placing
      such notice or document on a web site and sending the member concerned
      notification of the notice or document on the web site in lieu of sending
      the notice or document). In the case of a member registered on a branch
      register any such notice or document may be posted either in the United
      Kingdom or in the territory in which such branch register is maintained.

(B).  WHEN NOTICE DEEMED SERVED

      Where a notice or other document is served or sent by post, service or
      delivery shall be deemed to be effected at the expiration of twenty-four
      hours (or where second-class mail is employed, forty-eight hours) after
      the time when the cover containing the same is posted and in proving such
      service or delivery it shall be sufficient to prove that such cover was
      properly addressed, stamped and posted. Any notice or documents not sent
      by post but left by the Company at a registered address shall be deemed to
      have been served or delivered on the day it was so left. Any notice served
      or delivered by the Company by means of a relevant system shall be deemed
      to have been served or delivered when the Company or any sponsoring system
      participant acting on its behalf sends the issuer-instruction relating to
      the notice. Any notice or document sent by using electronic communication
      shall be deemed to be served or delivered at the expiration of forty-eight
      hours after the time it was sent, and in proving such service or delivery,
      proof that a notice or document contained in an electronic communication
      was sent in accordance with guidance issued by the Institute of Chartered
      Secretaries and Administrators shall be conclusive evidence that the
      notice or document was served or delivered. Any notice or document served
      or delivered by the Company by any other means

<PAGE>
                                    - 94 -

      authorised by the member concerned shall be deemed to have been served
      when the Company has carried out the action it has been authorised to take
      for that purpose.

(C).  RECORD DATE FOR SERVICE

      Any notice or document may be served or delivered by the Company by
      reference to the Register of Members as it stands at any time not more
      than 15 days before the date of service or delivery. No change in the
      register after that time shall invalidate that service or delivery. Where
      any notice or document is served on or delivered to any person in respect
      of a share in accordance with these presents, no person deriving any title
      or interest in that share shall be entitled to any further service or
      delivery of that notice or document.

159.  NOTICE TO JOINT HOLDERS

      In respect of joint holdings all notices shall be given to that one of the
      joint holders whose name stands first in the Register of Members and
      notice so given shall be sufficient notice to all the joint holders in
      their capacity as such. For such purposes a joint holder having no
      registered address in the United Kingdom and not having supplied an
      address within the United Kingdom for the service of notices shall be
      disregarded.

160.  NOTICE TO PERSONS ENTITLED BY TRANSMISSION

      A person entitled to a share in consequence of the death or bankruptcy of
      a member or otherwise by operation of law upon such evidence being
      produced as may from time to time properly be required by the Directors
      and upon supplying an address within the United Kingdom for the service of
      notices, shall be entitled to have served upon or delivered to him at such
      address any notice or document to which the member would have been
      entitled, and such service or delivery shall for all purposes be deemed a
      sufficient service or delivery of such notice or document on all persons
      interested (whether jointly with or as claiming through or under him) in
      the share. Save as aforesaid any notice or document delivered or sent by
      post to or left at the registered address of any member in pursuance of
      these presents shall, notwithstanding that such member be then dead or
      bankrupt or in liquidation, and whether or not the Company have notice of
      his death or bankruptcy or liquidation be deemed to have been duly served
      or delivered in respect of any share registered in the name of such member
      as sole or joint holder.

161.  UNTRACED MEMBERS

      A member who (having no registered address within the United Kingdom) has
      not supplied to the Company an address within the United Kingdom for the
      service of notices shall not be entitled to receive notices from the
      Company. If on three consecutive occasions notices have been sent through
      the post to any member at his registered address or his address for the
      service of notices but have been returned undelivered, or if, after any
      one such occasion, the Directors or any committee authorised by the
      Directors in that behalf are of the opinion, after the making of all
      reasonable enquiries, that any further notices to such member would, if
      sent as aforesaid, likewise be returned undelivered, such member shall not
      thereafter be entitled to receive notices from the Company until he shall
      have communicated with the Company and supplied in writing to the Transfer
      Office a new registered address or address within the United Kingdom for
      the service of notices.

162.  SIGNATURE

<PAGE>
                                    - 95 -

      The signature of any notice required to be given by the Company, and given
      in writing, may be typed or printed or otherwise written.

163.  ADVERTISEMENT OF NOTICES

      Any notice required to be given by the Company to the members or any of
      them, and not expressly provided for by or pursuant to these presents,
      shall be sufficiently given if given by advertisement inserted once in at
      least one leading Scottish newspaper and one newspaper with a national
      circulation in the United Kingdom.

164.  NOTICE DURING DISRUPTION OF POSTAL SERVICES

      If at any time by reason of the suspension or curtailment of postal
      services within the United Kingdom the Company is unable effectively to
      convene a General Meeting by notices sent through the post, a General
      Meeting may be convened by a notice advertised in at least one newspaper
      with a national circulation in the United Kingdom and one leading Scottish
      newspaper published on the same date and such notice shall be deemed to
      have been duly served on all members entitled thereto at noon on the day
      when the advertisement appears. In any such case the Company shall send
      confirmatory copies of the notice by post if at least six clear days prior
      to the meeting the posting of notices to addresses throughout the United
      Kingdom again becomes practicable.

165.  NOTICE TO WARRANT HOLDERS

      The holders of share warrants shall not, unless otherwise expressed
      therein, be entitled in respect thereof to receive notices from the
      Company.

166.  STATUTORY REQUIREMENTS

      Nothing in any of the preceding nine Articles shall affect any requirement
      of the Statutes that any particular offer, notice or other document be
      served in any particular manner.

      Nothing in any of the preceding nine Articles shall prevent or restrict
      the Company using any method of sending, or giving access to, any
      particular offer, notice or other document which the Statutes or any other
      provision of these presents permits or enables the Company to use.

                                   WINDING UP

167.  LIQUIDATOR MAY DISTRIBUTE IN SPECIE

      If the Company shall be wound up (whether the liquidation is voluntary,
      under supervision, or by the Court) the Liquidator may, with the authority
      of an Extraordinary Resolution, divide among the members in specie or kind
      the whole or any part of the assets of the Company and whether or not the
      assets shall consist of property of one kind or shall consist of
      properties of different kinds, and may for such purpose set such value as
      he deems fair upon any one or more class or classes of property and may
      determine how such division shall be carried out as between the members or
      different classes of members. The Liquidator may, with the like authority,
      vest any part of the assets in trustees upon such trusts for the benefit
      of members as the Liquidator with the like authority shall think fit, and
      the liquidation of the Company may be closed and the Company dissolved,
      but so that no contributory shall be compelled to accept any shares or
      other property in respect of which there is a liability.

<PAGE>
                                    - 96 -

                             PROVISION FOR EMPLOYEES

168.  PROVISION FOR EMPLOYEES

      The Directors may by resolution exercise any power conferred by the
      Statutes to make provision for the benefit of persons employed or formerly
      employed by the Company or any of its subsidiaries in connection with the
      cessation or the transfer to any person of the whole or part of the
      undertaking of the Company or that subsidiary.

                                    INDEMNITY

169.  INDEMNITY

      Subject to the provisions of and so far as may be consistent with the
      Statutes, every Director, Secretary or other officer of the Company, and,
      if the Directors so determine, an Auditor, shall be entitled to be
      indemnified out of the assets of the Company against all costs, charges,
      losses, expenses and liabilities incurred by him in the actual or
      purported execution and/or discharge of his duties and/or the exercise or
      purported exercise of his powers and/or otherwise in relation to or in
      connection with his duties, powers or office including (without prejudice
      to the generality of the foregoing) any liability incurred by him in
      defending any proceedings, civil or criminal, which relate to anything
      done or omitted or alleged to have been done or omitted by him as an
      officer or employee or Auditor of the Company and in which decree or
      judgment is given in his favour (or the proceedings are otherwise disposed
      of without any finding or admission of any material breach of duty on his
      part) or in which he is acquitted or in connection with any application
      for relief from liability in respect of any such act or omission in which
      relief is granted to him by the Court.

<PAGE>
                                    - 97 -

                                   SCHEDULE 1

                      NON-CUMULATIVE EURO PREFERENCE SHARES

1.    The Non-cumulative Euro Preference Shares are New Preference Shares. They
      shall rank after the Cumulative Preference Shares to the extent specified
      in Article 4 and this Schedule 1, and shall rank pari passu inter se and
      (save as aforesaid) with the Cumulative Preference Shares and with all
      other New Preference Shares. They shall confer the rights and be subject
      to the restrictions set out in this Schedule 1 and shall also confer such
      further rights as may be attached by the Directors to such shares in
      accordance with this Schedule 1 prior to allotment. Whenever the Directors
      have power under this Schedule 1 to determine any of the rights attached
      to any of the Non-cumulative Euro Preference Shares, the rights so
      determined need not be the same as those attached to the Non-cumulative
      Euro Preference Shares then allotted or in issue. The Non-cumulative Euro
      Preference Shares may be issued in one or more separate series, and each
      series shall be identified in such manner as the Directors may determine
      without any such determination or identification requiring any alteration
      to these presents.

2.    Each Non-cumulative Euro Preference Share shall confer the following
      rights as to participation in the profits and assets of the Company,
      receipt of notices, attendance and voting at meetings and redemption: --

2.1   Income

      The right (subject to the provisions of paragraph 2.2, if applicable) to a
      non-cumulative preferential dividend not exceeding a specified amount
      payable in Euro at such rate on such dates (each a "dividend payment
      date") in respect of such periods (each a "dividend period") and on such
      other terms and conditions as may be determined by the Directors prior to
      allotment thereof. References in these presents to a "dividend" on the
      Non-cumulative Euro Preference Shares include a reference to each dividend
      in respect of each dividend period applicable thereto and references in
      this Schedule 1 to dividend payment dates and dividend periods are to
      dividend payment dates and dividend periods in respect of the
      Non-cumulative Euro Preference Shares only. Such dividends shall be paid
      in priority to the payment of any dividends on the Ordinary Shares. The
      Non-cumulative Euro Preference Shares shall rank for dividend after the
      Cumulative Preference Shares, pari passu with the Non-cumulative Sterling
      Preference Shares, the Non-cumulative Dollar Preference Shares, the
      Category II Non-cumulative Dollar Preference Shares and all other New
      Preference Shares expressed to rank pari passu therewith as regards
      participation in profits and otherwise in priority to any other share
      capital in the Company.

2.2   Further provisions as to income

      All or any of the following provisions shall apply in relation to any
      particular Non-cumulative Euro Preference Shares if so determined by the
      Directors prior to allotment thereof: --

      (i)   if, in the opinion of the Directors, the distributable profits of
            the Company are sufficient to cover the payment in full of dividends
            on the Non-cumulative Euro Preference Shares on any dividend payment
            date and also the payment in full of all other dividends stated to
            be payable on such date on any other New Preference Share expressed
            to rank pari passu therewith as regards participation in profits,
            after payment in full, or the setting aside of a sum to cover the
            payment in full, of all

<PAGE>
                                    - 98 -

            dividends stated to be payable on such date on any Cumulative
            Preference Share, then each such dividend shall be declared and paid
            in full;

      (ii)  if, in the opinion of the Directors, the distributable profits of
            the Company are insufficient to cover the payment in full of
            dividends on the Non-cumulative Euro Preference Shares on any
            dividend payment date and also the payment in full of all other
            dividends stated to be payable on such date on any other New
            Preference Share expressed to rank pari passu therewith as regards
            participation in profits, after payment in full, or the setting
            aside of a sum to cover the payment in full, of all dividends stated
            to be payable on or before such date on any Cumulative Preference
            Share, then dividends shall be declared by the Directors pro rata
            for the Non-cumulative Euro Preference Shares and such other New
            Preference Shares to the extent of the available distributable
            profits (if any) to the intent that the amount of dividend declared
            per share on each such Non-cumulative Euro Preference Share and
            other New Preference Share will bear to each other the same ratio as
            the dividends accrued per share on each such Non-cumulative Euro
            Preference Share and other New Preference Share bear to each other.
            If it shall subsequently appear that any such dividend which has
            been paid should not, in accordance with the provisions of this
            sub-paragraph, have been so paid, then provided the Directors shall
            have acted in good faith, they shall not incur any liability for any
            loss which any shareholder may suffer in consequence of such payment
            having been made;

      (iii) if in the opinion of the Directors, the payment of any dividend on
            any Non-cumulative Euro Preference Shares would breach or cause a
            breach of the capital adequacy requirements of the Financial
            Services Authority (or any person or body to whom the banking
            supervision functions of the Financial Services Authority are
            transferred) applicable to the Company and/or any of its
            subsidiaries, then none of such dividend shall be declared or paid;

      (iv)  subject to sub-paragraph (v) below, the Non-cumulative Euro
            Preference Shares shall carry no further right to participate in the
            profits of the Company and if and to the extent that any dividend or
            part thereof is on any occasion not paid for the reasons described
            in sub-paragraph (ii) or (iii) above, the holders of such shares
            shall have no claim in respect of such non-payment;

      (v)   if any dividend or part thereof on any Non-cumulative Euro
            Preference Share is not payable for the reasons specified in
            sub-paragraphs (ii) or (iii) above and if they so resolve, the
            Directors may, subject to the Statutes, pay a special non-cumulative
            preferential dividend on the Non-cumulative Euro Preference Shares
            at a rate not exceeding E0.01 per share (but so that reference
            elsewhere in this Schedule 1 and in these presents to any dividend
            payable on any Non-cumulative Euro Preference Shares shall not be
            treated as including a reference to any such special dividend);

      (vi)  if any date on which dividends are payable on Non-cumulative Euro
            Preference Shares is not a day on which TARGET is operating and on
            which banks in London are open for business, and on which foreign
            exchange dealings may be conducted in Euro ("a Euro Business Day"),
            then payment of the dividend payable on such date will be made on
            the succeeding Euro Business Day and without any interest or other
            payment in respect of such delay unless such day shall fall within
            the next calendar month whereupon such payment will be made on the
            preceding Euro Business Day; for these purposes "TARGET" means the
            Trans-European Real-Time Gross Settlement Express Transfer (TARGET)
            system;

<PAGE>
                                    - 99 -

      (vii) dividends payable on Non-cumulative Euro Preference Shares shall
            accrue from and to the dates determined by the Directors prior to
            allotment thereof, and the amount of dividend payable in respect of
            any period shorter than a full dividend period will be calculated on
            the basis of twelve 30 day months, a 360 day year and the actual
            number of days elapsed in such period;

      (viii)if any dividend stated to be payable on the Non-cumulative Euro
            Preference Shares on the most recent dividend payment date has not
            been declared and paid in full, or if a sum has not been set aside
            to provide for such payment in full, no dividends may be declared on
            any other share capital of the Company (other than the Cumulative
            Preference Shares), and no sum may be set aside for the payment
            thereof, unless, on the date of declaration relative to any such
            payment, an amount equal to the dividend stated to be payable on the
            Non-cumulative Euro Preference Shares in respect of the then current
            dividend period is set aside for the payment in full of such
            dividend on the dividend payment date relating to the then current
            dividend period; and

      (ix)  if any dividend stated to be payable on the Non-cumulative Euro
            Preference Shares on any dividend payment date has not been declared
            and paid in full, or if a sum has not been set aside to provide for
            such payment in full, the Company may not redeem or purchase or
            otherwise acquire for any consideration any other share capital of
            the Company, and may not set aside any sum nor establish any sinking
            fund for the redemption or purchase or other such acquisition
            thereof, until such time as dividends stated to be payable on the
            Non-cumulative Euro Preference Shares in respect of successive
            dividend periods together aggregating no less than twelve months
            shall thereafter have been declared and paid in full.

2.2A  Abrogation of entitlement to dividend

      In relation to any particular Non-Cumulative Euro Preference Shares
      allotted on or after the date of passing of resolution 17 set out in
      Appendix 2 to the circular letter to shareholders dated 15th March 2004,
      all of the following provisions shall apply if (but only if) the Directors
      so determine prior to allotment thereof:

      (i)   the Directors may, in their sole and absolute discretion, resolve
            prior to any dividend payment date that the dividend on such
            Non-cumulative Euro Preference Shares, or part thereof, shall not be
            paid on that dividend payment date. If the Directors resolve as
            aforesaid, then none or (as the case may be) part only of the
            dividend shall not be declared and/or paid. The Directors shall be
            bound to give their reasons for exercising their discretion under
            this sub-paragraph, and the Directors may exercise their discretion
            in respect of a dividend notwithstanding the previous setting aside
            of a sum to provide for payment of that dividend;

      (ii)  to the extent that any dividend or part of a dividend on any
            Non-cumulative Euro Preference Shares is, on any occasion, not paid
            by reason of the exercise of the Directors' discretion pursuant to
            sub-paragraph (i) above, the holders of such shares shall have no
            claim in respect of such non-payment;

      (iii) if any dividend or part of a dividend on any Non-cumulative Euro
            Preference Shares has, on any occasion, not been paid by reason of
            the exercise of the Directors' discretion under sub-paragraph (i)
            above:

            (1)   the provisions of sub-paragraphs (viii) and (ix) of paragraph
                  2.2 shall not apply in respect of such non-payment;

<PAGE>
                                    - 100 -

            (2)   such non-payment shall not prevent or restrict (a) the
                  declaration and payment of dividends on any other
                  Non-cumulative Euro Preference Shares, or on any preference
                  shares capital of the Company expressed to rank pari passu
                  with the Non-cumulative Euro Preference Shares, (b) the
                  setting aside of sums for the payment of such dividends, (c)
                  (subject to (4) below) the redemption, purchase or other
                  acquisition of shares in the Company by the Company, or (d)
                  (subject to (4) below) the setting aside of sums, or the
                  establishment of sinking funds, for any such redemption,
                  purchase or other acquisition by the Company;

            (3)   no dividend may be declared or paid on any share capital
                  ranking after the Non-cumulative Euro Preference Shares as
                  regards participation in profits (including the Ordinary
                  Shares) until such time as the dividend stated to be payable
                  on the Non-cumulative Euro Preference Shares to which the non-
                  payment relates in respect of a dividend period has thereafter
                  been declared and paid in full; and

            (4)   the Company may not redeem or purchase or otherwise acquire
                  for any consideration any share capital ranking after the
                  Non-cumulative Euro Preference Shares, and may not set aside
                  any sum nor establish any sinking fund for the redemption,
                  purchase or other such acquisition thereof, until such time as
                  dividends stated to be payable on the Non-cumulative Euro
                  Preference Shares to which the non-payment relates in respect
                  of successive dividend periods together aggregating no less
                  than twelve months shall thereafter have been declared and
                  paid in full;

      (iv)  if there is any conflict between the provisions of this paragraph
            2.2A, as they apply to any Non-cumulative Euro Preference Shares,
            and any other provisions of this Schedule applying to such
            Non-cumulative Euro Preference Shares, the provisions of this
            paragraph 2.2A shall prevail. In paragraph 2.1, the words", and
            subject to the provisions of paragraph 2.2A, if applicable" shall be
            deemed to be inserted after "if applicable" in the first sentence,
            and in paragraph 2.2 the words "(subject to the provisions of
            paragraph 2.2A, if applicable)" shall be deemed to be inserted after
            "such dividend shall" in sub-paragraph (i) and after "dividends
            shall" in sub-paragraph (ii);

      (v)   in determining the sum payable on any Non-cumulative Euro Preference
            Shares pursuant to paragraph 2.3(i) below on a winding up or
            liquidation, the Directors' discretion under sub-paragraph (i) above
            shall be disregarded save in so far as such discretion was actually
            exercised prior to the making of the determination;

      (vi)  in calculating any Relevant Redemption Premium payable in respect of
            any Non-cumulative Euro Preference Shares pursuant to paragraph
            2.6(ii)(B) below, the components "A" and "C" in the formulae for
            such calculation shall be determined on the assumption that there
            shall be no exercise by the Directors of their discretion under
            sub-paragraph (i) above and in respect of such Non-cumulative Euro
            Preference Shares; and

      (vii) for the avoidance of doubt, no series of Non-cumulative Euro
            Preference Shares shall be treated as ranking after any other New
            Preference Shares with which it is expressed to rank pari passu as
            regards participating in profits, by reason only of the provisions
            set out in this paragraph 2.2A being included in the terms of issue

<PAGE>
                                    - 101 -

            applicable to that series, or any dividend on that series not being
            paid by virtue of this paragraph 2.2A.

2.3   Capital

      The right on a winding up or liquidation, voluntary or otherwise other
      than (unless otherwise provided by the terms of issue of such share) a
      redemption or purchase by the Company of any shares of any class to
      receive in Euro out of the surplus assets of the Company available for
      distribution amongst the members: --

      (i)   after payment of the arrears (if any) of the fixed cumulative
            preferential dividends stated to be payable on the Cumulative
            Preference Shares to the holders thereof in accordance with Article
            4(B) FIRSTLY and pari passu with the holders of any other New
            Preference Shares expressed to rank pari passu therewith as regards
            participation in profits and in priority to the holders of the
            Ordinary Shares of the Company a sum equal to: --

            (A)   the amount of any dividend which is due for payment after the
                  date of commencement of the winding up or liquidation but
                  which is payable in respect of a period ending on or before
                  such date; and

            (B)   any further amount of dividend payable in respect of the
                  period from the preceding dividend payment date to the date of
                  payment in accordance with this sub-paragraph (i);

            but only to the extent that any such amount or further amount was,
            or would have been payable as a dividend in accordance with or
            pursuant to this Schedule 1 (other than pursuant to this provision);
            and

      (ii)  subject thereto, pari passu with the holders of the Cumulative
            Preference Shares and any other New Preference Shares expressed to
            rank pari passu therewith as regards participation in surplus assets
            in priority to the holders of the Ordinary Shares of the Company, a
            sum equal to the amount paid up or credited as paid up on the Non-
            cumulative Euro Preference Shares (including any premium paid to the
            Company in respect thereof on issue).

      If upon any such winding-up or liquidation, the amounts available for
      payment are insufficient to cover the amounts payable in full on the
      Cumulative Preference Shares, the Non-cumulative Euro Preference Shares
      and on any other New Preference Shares expressed to rank pari passu
      therewith as regards participation in surplus assets, then the holders of
      the Cumulative Preference Shares, the Non-cumulative Euro Preference
      Shares and such other New Preference Shares will share rateably in the
      distribution of surplus assets (if any) in proportion to the full
      respective preferential amounts to which they are entitled. No Non-
      cumulative Euro Preference Share shall confer any right to participate in
      the surplus assets of the Company other than that set out in this
      paragraph 2.3.

2.4   Receipt of Notices

      The right to have sent to the holder of each Non-cumulative Euro
      Preference Share (at the same time as the same are sent to the holders of
      Ordinary Shares) a copy of the Company's Annual Report and Accounts and
      Interim Financial Statement together with notice of any General Meeting of
      the Company at which such holder is entitled to attend and vote.

<PAGE>
                                    - 102 -

2.5   Attendance and Voting at Meetings

      The right to attend at a General Meeting of the Company and to speak to or
      vote upon any Resolution proposed thereat in the following
      circumstances:--

      (i)   in respect of a Resolution which is to be proposed at the Meeting
            either varying or abrogating any of the rights attached to the
            Non-cumulative Euro Preference Shares or proposing the winding up of
            the Company (and then in each such case only to speak to and vote
            upon any such Resolution);

      (ii)  in circumstances where the dividend stated to be payable on the
            Non-cumulative Euro Preference Shares in respect of such number of
            dividend periods as the Directors shall determine prior to allotment
            thereof has not been declared and paid in full, and until such date
            as the Directors shall likewise determine; and

      (iii) in such other circumstances as the Directors may determine prior to
            allotment of the Non-cumulative Euro Preference Shares,

      but not otherwise, together with the right, in such circumstances and on
      such terms, if any, as the Directors may determine prior to allotment of
      the Non-cumulative Euro Preference Shares, to seek to requisition a
      General Meeting of the Company. Whenever holders of Non-cumulative Euro
      Preference Shares are so entitled to vote on a Resolution, on a show of
      hands every such holder who is present in person shall have one vote and,
      on a poll, every such holder who is present in person or by proxy shall
      have such number of votes for each Non-cumulative Euro Preference Share
      held as may be determined by the Directors prior to allotment of such
      Non-cumulative Euro Preference Shares.

2.6   Redemption

      (i)   Unless the Directors shall, prior to the allotment of any series of
            Non-cumulative Euro Preference Shares, determine that such series
            shall be non-redeemable, each series of Non-cumulative Euro
            Preference Shares shall, subject to the provisions of the Statutes,
            be redeemable at the option of the Company in accordance with the
            following provisions.

      (ii)  In the case of any series of Non-cumulative Euro Preference Shares
            which are to be so redeemable: --

            (A)   the Company may, subject thereto, redeem on any Redemption
                  Date (as hereinafter defined) all or some only of the
                  Non-cumulative Euro Preference Shares by giving to the holders
                  of the Non-cumulative Euro Preference Shares to be redeemed
                  not less than 30 days' nor more than 60 days' prior notice in
                  writing (a "Notice of Redemption") of the relevant Redemption
                  Date. "Redemption Date" means, in relation to a Non-cumulative
                  Euro Preference Share, any date which falls no earlier than
                  five years and one day (or such longer period (if any) as may
                  be fixed by the Directors prior to allotment of such Share)
                  after the date of allotment of the Non-cumulative Euro
                  Preference Share to be redeemed;

            (B)   there shall be paid on each Non-cumulative Euro Preference
                  Share so redeemed, in Euro, the aggregate of the nominal
                  amount thereof together with any premium paid on issue
                  together with, where applicable, the Relevant Redemption
                  Premium (defined below) and together with arrears (if

<PAGE>
                                    - 103 -

                  any) of dividends thereon (whether earned or declared or not)
                  in respect of the period from the dividend payment date last
                  preceding the Redemption Date to the Redemption Date.
                  "Relevant Redemption Premium" means an amount calculated in
                  accordance with such one (if any) of the following three
                  formulae as applied in relation to a Redemption Date notified
                  under sub-paragraph (A) above which falls within the period of
                  twelve months commencing on the date following the fifth,
                  sixth, seventh, eighth or ninth anniversary of the relevant
                  date of allotment ("the Relevant Date"), as the case may be,
                  as may be determined by the Directors prior to the Relevant
                  Date. The formula for calculation of the Relevant Redemption
                  Premium shall be: --

                  (a)   A x B

                        where:

                        "A" is the amount of dividend excluding any associated
                        tax credit (not expressed as a percentage) calculated at
                        the date of allotment to which the holder of the
                        Non-cumulative Euro Preference Share to be redeemed
                        would become entitled in respect of the twelve months
                        following allotment by virtue of the terms of issue
                        thereof on the assumption that such amount of dividend
                        had accrued on the Non-cumulative Euro Preference Share
                        during such period and was payable at the end of such
                        period and on the further assumption that there shall be
                        no change in the associated tax credit affecting the
                        amount of dividend payable in respect of such period;
                        and

                        "B" in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the fifth anniversary of the Relevant Date, is 66.66 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the sixth anniversary of the Relevant Date, is 53.33 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the seventh anniversary of the Relevant Date, is 40 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the eighth anniversary of the Relevant Date, is 26.66
                        per cent.,

                        or
<PAGE>

                                     - 104 -

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the ninth anniversary of the Relevant Date is 13.33 per
                        cent.; or

                  (b)   C x D

                        where:--

                        "C" is the amount of dividend excluding any associated
                        tax credit (not expressed as a percentage) calculated at
                        the date of allotment to which the holder of the
                        Non-cumulative Euro Preference Share to be redeemed
                        would become entitled in respect of the twelve months
                        following allotment by virtue of the terms of issue
                        thereof on the assumption that such amount of dividend
                        had accrued on the Non-cumulative Euro Preference Share
                        during such period and was payable at the end of such
                        period and on the further assumption that there shall be
                        no change in the associated tax credit affecting the
                        amount of dividend payable in respect of such period;
                        and

                        "D" in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the fifth anniversary of the Relevant Date, is 50 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the sixth anniversary of the Relevant Date, is 40 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the seventh anniversary of the Relevant Date, is 30 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the eighth anniversary of the Relevant Date, is 20 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the ninth anniversary of the Relevant Date is 10 per
                        cent.; or

                  (c)   E x F

                        where:--

                        "E" is the amount of E25; and
<PAGE>
                                    - 105 -

                        "F" in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the fifth anniversary of the Relevant Date, is 33.33 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the sixth anniversary of the Relevant Date, is 26.66 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the seventh anniversary of the Relevant Date, is 20 per
                        cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the eighth anniversary of the Relevant Date, is 13.33
                        per cent.,

                        or

                        in relation to a Redemption Date falling within the
                        period of twelve months commencing on the day following
                        the ninth anniversary of the Relevant Date, is 6.66 per
                        cent.

                  No Relevant Redemption Premium shall be payable when the
                  Redemption Date falls after the tenth anniversary of the
                  Relevant Date. The product of any of the above formulae in
                  respect of a Non-cumulative Euro Preference Share may, in the
                  Directors' discretion, be rounded down to the nearest whole
                  Euro.

                  The Directors may, in their discretion, determine in relation
                  to any Non-cumulative Euro Preference Share, prior to the
                  Relevant Date, that none of the above formulae shall apply, in
                  which event no Relevant Redemption Premium shall be payable;

            (C)   in the case of a redemption of some only of the Non-cumulative
                  Euro Preference Shares in any series, the Company shall for
                  the purpose of determining the particular Non-cumulative Euro
                  Preference Shares to be redeemed cause a drawing to be made at
                  the Office or such other place as the Directors may approve in
                  the presence of the Auditors for the time being of the
                  Company;

            (D)   any Notice of Redemption given under sub-paragraph (A) above
                  shall specify the applicable Redemption Date, the particular
                  Non-cumulative Euro Preference Shares to be redeemed and the
                  redemption price (specifying the amount of the accrued and
                  unpaid dividend per share to be included therein and stating
                  that dividends on the Non-cumulative Euro Preference Shares to
                  be redeemed will cease to accrue on redemption), and shall
                  state the place or places at which documents of title in
                  respect of such Non-cumulative Euro

<PAGE>
                                    - 106 -

                  Preference Shares are to be presented and surrendered for
                  redemption and payment of the redemption monies is to be
                  effected. Upon such Redemption Date, the Company shall redeem
                  the particular Non-cumulative Euro Preference Shares to be
                  redeemed on that date subject to the provisions of this
                  paragraph and of the Statutes. No defect in the Notice of
                  Redemption or in the giving thereof shall affect the validity
                  of the redemption proceedings;

            (E)   subject to sub-paragraph (I) below, the provisions of this and
                  the following sub-paragraph shall have effect in relation to
                  Non-cumulative Euro Preference Shares for the time being
                  issued and registered in the Register of Members ("Registered
                  Shares") and represented by certificates ("Certificates") and
                  in relation to Non-cumulative Euro Preference Shares which, in
                  accordance with Article 52 of these presents, are for the time
                  being issued and represented by a Warrant (as defined in the
                  said Article 52) ("Bearer Shares"). Payments in respect of the
                  amount due on redemption of a Registered Share shall be made
                  by Euro cheque drawn on a bank in London or upon the request
                  of the holder or joint holders not later than the date
                  specified for the purpose in the Notice of Redemption by
                  transfer to a Euro account maintained by the payee with a bank
                  in London. Such payment will be against presentation and
                  surrender of the relative Certificate at the place or one of
                  the places specified in the Notice of Redemption and if any
                  Certificate so surrendered includes any Non-cumulative Euro
                  Preference Shares not to be redeemed on the relevant
                  Redemption Date the Company shall within fourteen days
                  thereafter issue to the holder, free of charge, a fresh
                  Certificate in respect of such Non-cumulative Euro Preference
                  Shares. Payment in respect of the amount due on redemption of
                  a Bearer Share shall be made by Euro cheque drawn on a bank in
                  London or upon the request of the holder not later than the
                  date specified for the purpose in the Notice of Redemption by
                  transfer to a Euro account maintained by the payee with a bank
                  in London. Such payments will be made against presentation and
                  surrender of the Warrant and all unmatured dividend coupons
                  and talons (if any) at the place or the places specified in
                  the Notice of Redemption. Upon the relevant Redemption Date
                  all unmatured dividend coupons and any talon for additional
                  dividend coupons appertaining thereto (whether or not
                  returned) shall become void and no payment will be made in
                  respect thereof. If the Warrant so surrendered represents any
                  Non-cumulative Euro Preference Shares not to be redeemed on
                  the relevant Redemption Date the Company shall issue, free of
                  charge, a fresh Warrant representing such Bearer Shares which
                  are not to be redeemed on such Redemption Date.

                  All payments in respect of redemption monies will in all
                  respects be subject to any applicable fiscal or other laws;

            (F)   as from the relevant Redemption Date the dividend on the
                  Non-cumulative Euro Preference Shares due for redemption shall
                  cease to accrue except on any such Non-cumulative Euro
                  Preference Share in respect of which, upon the due surrender
                  of the Certificate or, as the case may be, the Warrant and all
                  unmatured dividend coupons and talons (if any) in respect
                  thereof, in accordance with sub-paragraph (E) above, payment
                  of the redemption monies due on such Redemption Date shall be
                  improperly withheld or refused, in which case such dividend,
                  at the rate then applicable, shall be deemed to have continued
                  and shall accordingly continue to accrue from the relevant
                  Redemption Date to the date of payment of such redemption
                  monies. Such

<PAGE>

                                     - 107 -

                  Non-cumulative Euro Preference Share shall not be treated as
                  having been redeemed until the redemption monies in question
                  together with the accrued dividend thereon shall have been
                  paid;

            (G)   if the due date for the payment of the redemption monies on
                  any Non-cumulative Euro Preference Shares is not a Euro
                  Business Day then payment of such monies will be made on the
                  next succeeding day which is a Euro Business Day and without
                  any interest or other payment in respect of such delay unless
                  such day shall fall within the next calendar month whereupon
                  such payment will be made on the preceding Euro Business Day;

            (H)   the receipt of the holder for the time being of any Registered
                  Share (or in the case of joint holders the receipt of any one
                  of them) and the receipt of the person delivering any Warrant
                  to the place or one of the places specified pursuant to
                  sub-paragraph (D) above in respect of the monies payable on
                  redemption on such Registered Share or, as the case may be,
                  such Bearer Share, shall constitute an absolute discharge to
                  the Company; and

            (I)   subject as aftermentioned, the provisions of sub-paragraphs
                  (E) and (F) above shall have effect in relation to Registered
                  Shares which are in uncertificated form within the meaning of
                  the Uncertificated Securities Regulations 1995 (as in force on
                  the date of adoption of this Schedule 1) in the same manner as
                  they have effect in relation to Registered Shares represented
                  by Certificates, save that (i) any provision of the said
                  paragraphs requiring presentation and surrender of a
                  Certificate shall be satisfied in the manner prescribed or
                  permitted by the said Regulations (or by any enactment or
                  subordinate legislation which amends or supersedes those
                  Regulations) or (subject to those Regulations or such
                  enactment or subordinate legislation) in such manner as may
                  from time to time be prescribed by the Directors), and (ii)
                  the Company shall not be under any obligation to issue a fresh
                  Certificate under sub-paragraph (E).

2.7   Purchase

      Subject to the provisions of the Statutes and any other applicable laws,
      the Company may at any time and from time to time purchase any
      Non-cumulative Euro Preference Shares upon such terms as the Directors
      shall determine provided that, in the case of Non-cumulative Euro
      Preference Shares which are listed on the London Stock Exchange, the
      purchase price, exclusive of expenses and accrued dividends, shall not
      exceed (i) in the case of a purchase in the open market, or by tender
      (which shall be available alike to all holders of the Non-cumulative Euro
      Preference Shares), the average of the closing middle market quotations of
      such Non-cumulative Euro Preference Shares on the London Stock Exchange
      (as derived from The London Stock Exchange Daily Official List) for the
      last ten dealing days preceding the date of purchase or (if higher), in
      the case of a purchase in the open market only, the market price on the
      date of purchase provided that such market price is not more than 105 per
      cent. of such average and (ii) in the case of a purchase by private
      treaty, 120 per cent. of the closing middle market quotation of such
      Non-cumulative Euro Preference Shares on the London Stock Exchange (as
      derived from The London Stock Exchange Daily Official List) for the last
      dealing day preceding the date of purchase: but so that this proviso shall
      not to any purchase of Non-cumulative Euro Preference Shares made in the
      ordinary course of a business of dealing in securities.
<PAGE>

                                    - 108 -

3.    (a)   Save with the written consent of the holders of three-quarters in
            nominal value of, or with the sanction of an Extraordinary
            Resolution passed at a separate General Meeting of the holders of,
            the Non-cumulative Euro Preference Shares, the Directors shall not
            authorise or create, or increase the amount of, any shares of any
            class or any security convertible into shares of any class ranking
            as regards rights to participate in the profits or assets of the
            Company (other than on a redemption or purchase by the Company of
            any such shares) in priority to the Non-cumulative Euro Preference
            Shares.

      (b)   The special rights attached to any series of Non-cumulative Euro
            Preference Shares allotted or in issue shall not (unless otherwise
            provided by their terms of issue) be deemed to be varied by the
            creation or issue of any New Shares ranking as regards participation
            in the profits or assets of the Company in some or all respects pari
            passu with or after such Non-cumulative Euro Preference Shares. Any
            new shares ranking in some or all respects pari passu with such
            Non-cumulative Euro Preference Shares may without their creation or
            issue being deemed to vary the special rights attached to any
            Non-cumulative Euro Preference Share then in issue either carry
            rights identical in all respects with such Non-cumulative Euro
            Preference Shares or any of them or carry rights differing therefrom
            in any respect, including, but without prejudice to the generality
            of the foregoing, in that:--

            (i)   the rate or means of calculating the dividend may differ and
                  the dividend may be cumulative or non-cumulative;

            (ii)  the New Shares or any series thereof may rank for dividend as
                  from such date as may be provided by the terms of issue
                  thereof and the dates for payment of dividend may differ;

            (iii) the New Shares may be denominated in Sterling or in any
                  Foreign Currency;

            (iv)  a premium may be payable on return of capital or there may be
                  no such premium;

            (v)   the New Shares may be redeemable at the option of the holder
                  or of the Company, or may be non-redeemable and if redeemable
                  at the option of the Company, they may be redeemable at
                  different dates and on different terms from those applying to
                  the Non-cumulative Euro Preference Shares; and

            (vi)  the New Shares may be convertible into Ordinary Shares or any
                  other class of shares ranking as regards participation in the
                  profits and assets of the Company pari passu with or after
                  such Non-cumulative Euro Preference Shares in each case on
                  such terms and conditions as may be prescribed by the terms of
                  issue thereof.

<PAGE>
                                     - 109 -

                                   SCHEDULE 2

                                     PART 1

              NON-CUMULATIVE CONVERTIBLE STERLING PREFERENCE SHARES

      1.    The Non-cumulative Convertible Sterling Preference Shares are New
            Preference Shares. They shall rank after the Cumulative Preference
            Shares to the extent specified in Article 4 and this Schedule 2, and
            shall rank pari passu inter se and (save as aforesaid) with the
            Cumulative Preference Shares and with all other New Preference
            Shares. They shall confer the rights and be subject to the
            restrictions set out or referred to in this Part 1 of Schedule 2 and
            shall also confer such further rights (not being inconsistent with
            the rights set out or referred to in this Part 1) as may be attached
            by the Directors to such shares in accordance with this Part 1 prior
            to allotment. Whenever the Directors have power under this Part to
            determine any of the rights attached to any of the Non-cumulative
            Convertible Sterling Preference Shares, the rights so determined
            need not be the same as those attached to the Non-cumulative
            Convertible Sterling Preference Shares then allotted or in issue.
            The Non-cumulative Convertible Sterling Preference Shares may be
            issued in one or more separate series, and each series shall be
            identified in such manner as the Directors may determine without any
            such determination or identification requiring any alteration to
            these presents.

      2.    Each Non-cumulative Convertible Sterling Preference Share shall
            confer the following rights as to participation in the profits and
            assets of the Company, receipt of notices, attendance and voting at
            meetings, redemption and conversion:

      2.1   Income

            The right (subject to the provisions of paragraph 2.2, if
            applicable) to a non-cumulative preferential dividend not exceeding
            a specified amount payable in Sterling at such rate (which, in the
            case of any series allotted after 11th April 2001, may be fixed or
            variable and may be subject to recalculation at fixed intervals) on
            such dates (each a "dividend payment date") in respect of such
            periods (each a "dividend period") and on such other terms and
            conditions as may be determined by the Directors prior to allotment
            thereof. References in these presents to a "dividend" on the
            Non-cumulative Convertible Sterling Preference Shares include a
            reference to each dividend in respect of each dividend period
            applicable thereto and references in this Part of the Schedule to
            dividend payment dates and dividend periods are to dividend payment
            dates and dividend periods in respect of the Non-cumulative
            Convertible Sterling Preference Shares only. Such dividends shall be
            paid in priority to the payment of any dividends on the Ordinary
            Shares. The Non-cumulative Convertible Sterling Preference Shares
            shall rank for dividend after the Cumulative Preference Shares, pari
            passu with the Non-cumulative Sterling Preference Shares, the
            Non-cumulative Dollar Preference Shares, the Category II
            Non-cumulative Dollar Preference Shares, all other Convertible
            Preference Shares and all other New Preference Shares expressed to
            rank pari passu therewith as regards participation in profits and
            otherwise in priority to any other share capital in the Company.

      2.2   Further provisions as to income

            All or any of the following provisions shall apply in relation to
            any particular Non-cumulative Convertible Sterling Preference
            Shares if so determined by the Directors prior to allotment
            thereof:-

<PAGE>

                                     - 110 -

      (i)   if, in the opinion of the Directors, the distributable profits of
            the Company are sufficient to cover the payment in full of dividends
            on the Non-cumulative Convertible Sterling Preference Shares on any
            dividend payment date and also the payment in full of all other
            dividends stated to be payable on such date on any other New
            Preference Share expressed to rank pari passu therewith as regards
            participation in profits, after payment in full, or the setting
            aside of a sum to cover the payment in full, of all dividends stated
            to be payable on such date on any Cumulative Preference Share, then
            each such dividend shall be declared and paid in full;

      (ii)  if, in the opinion of the Directors, the distributable profits of
            the Company are insufficient to cover the payment in full of
            dividends on the Non-cumulative Convertible Sterling Preference
            Shares on any dividend payment date and also the payment in full of
            all other dividends stated to be payable on such date on any other
            New Preference Share expressed to rank pari passu therewith as
            regards participation in profits, after payment in full, or the
            setting aside of a sum to cover the payment in full, of all
            dividends stated to be payable on or before such date on any
            Cumulative Preference Share, then dividends shall be declared by the
            Directors pro rata for the Non-cumulative Convertible Sterling
            Preference Shares and such other New Preference Shares to the extent
            of the available distributable profits (if any) to the intent that
            the amount of dividend declared per share on each such
            Non-cumulative Convertible Sterling Preference Share and other New
            Preference Share will bear to each other the same ratio as the
            dividends accrued per share on each such Non-cumulative Convertible
            Sterling Preference Share and other New Preference Share bear to
            each other. If it shall subsequently appear that any such dividend
            which has been paid should not, in accordance with the provisions of
            this sub-paragraph, have been so paid, then provided the Directors
            shall have acted in good faith, they shall not incur any liability
            for any loss which any shareholder may suffer in consequence of such
            payment having been made;

      (iii) if, in the opinion of the Directors, the payment of any dividend on
            any Non-cumulative Convertible Sterling Preference Shares would
            breach or cause a breach of the capital adequacy requirements of the
            Financial Services Authority (or any person or body to whom the
            banking supervision functions of the Financial Services Authority
            are transferred) applicable to the Company and/or any of its
            subsidiaries, then none of such dividend shall be declared or paid;

      (iv)  subject to sub-paragraph (v) below, the Non-cumulative Convertible
            Sterling Preference Shares shall carry no further right to
            participate in the profits of the Company and if and to the extent
            that any dividend or part thereof is on any occasion not paid for
            the reasons described in sub-paragraph (ii) or (iii) above, the
            holders of such shares shall have no claim in respect of such
            non-payment;

      (v)   if any dividend or part thereof on any Non-cumulative Convertible
            Sterling Preference Share is not payable for the reasons specified
            in sub-paragraphs (ii) or (iii) above and if they so resolve, the
            Directors may, subject to the Statutes, pay a special non-cumulative
            preferential dividend on the Non-cumulative Convertible Sterling
            Preference Shares at a rate not exceeding L0.01 per share (but
            so that reference elsewhere in this Schedule 2 and in these presents
            to any dividend payable on any Non-cumulative Convertible Sterling
            Preference Shares shall not be treated as including a reference to
            any such special dividend);

      (vi)  if any date on which dividends are payable on Non-cumulative
            Convertible Sterling Preference Shares is not a day on which banks
            in London are open for business, and

<PAGE>

                                     - 111 -

            on which foreign exchange dealings may be conducted in London ("a
            Sterling Business Day"), then payment of the dividend payable on
            such date will be made on the succeeding Sterling Business Day and
            without any interest or other payment in respect of such delay
            unless such day shall fall within the next calendar month whereupon
            such payment will be made on the preceding Sterling Business Day;

      (vii) dividends payable on Non-cumulative Convertible Sterling Preference
            Shares shall accrue from and to the dates determined by the
            Directors prior to allotment thereof, and the amount of dividend
            payable in respect of any period shorter than a full dividend period
            will be calculated on the basis of twelve 30 day months, a 360 day
            year and the actual number of days elapsed in such period;

     (viii) if any dividend stated to be payable on the Non-cumulative
            Convertible Sterling Preference Shares on the most recent dividend
            payment date has not been declared and paid in full, or if a sum has
            not been set aside to provide for such payment in full, no dividends
            may be declared on any other share capital of the Company (other
            than the Cumulative Preference Shares), and no sum may be set aside
            for the payment thereof, unless, on the date of declaration relative
            to any such payment, an amount equal to the dividend stated to be
            payable on the Non-cumulative Convertible Sterling Preference Shares
            in respect of the then current dividend period is set aside for the
            payment in full of such dividend on the dividend payment date
            relating to the then current dividend period; and

      (ix)  if any dividend stated to be payable on the Non-cumulative
            Convertible Sterling Preference Shares on any dividend payment date
            has not been declared and paid in full, or if a sum has not been set
            aside to provide for such payment in full, the Company may not
            redeem or purchase or otherwise acquire for any consideration any
            other share capital of the Company, and may not set aside any sum
            nor establish any sinking fund for the redemption or purchase or
            other such acquisition thereof, until such time as dividends stated
            to be payable on the Non-cumulative Convertible Sterling Preference
            Shares in respect of successive dividend periods together
            aggregating no less than twelve months shall thereafter have been
            declared and paid in full.

2.3   Capital

      The right on a winding up or liquidation, voluntary or otherwise other
      than (unless otherwise provided by the terms of issue of such share) a
      redemption or purchase by the Company of any shares of any class to
      receive in Sterling out of the surplus assets of the Company available for
      distribution amongst the members:-

      (i)   after payment of the arrears (if any) of the fixed cumulative
            preferential dividends stated to be payable on the Cumulative
            Preference Shares to the holders thereof in accordance with Article
            4(B) FIRSTLY and pari passu with the holders of any other New
            Preference Shares expressed to rank pari passu therewith as regards
            participation in profits and in priority to the holders of the
            Ordinary Shares of the Company a sum equal to:-

            (A)   the amount of any dividend which is due for payment after the
                  date of commencement of the winding up or liquidation but
                  which is payable in respect of a period ending on or before
                  such date; and

<PAGE>

                                     - 112 -

            (B)   any further amount of dividend payable in respect of the
                  period from the preceding dividend payment date to the date of
                  payment in accordance with this sub-paragraph (i);

            but only to the extent that any such amount or further amount was,
            or would have been payable as a dividend in accordance with or
            pursuant to this Part of Schedule 2 (other than pursuant to this
            provision); and

      (ii)  subject thereto, pari passu with the holders of the Cumulative
            Preference Shares and any other New Preference Shares expressed to
            rank pari passu therewith as regards participation in surplus assets
            in priority to the holders of the Ordinary Shares of the Company, a
            sum equal to the amount paid up or credited as paid up on the Non-
            cumulative Convertible Sterling Preference Shares (including any
            premium paid to the Company in respect thereof on issue).

      If upon any such winding-up or liquidation, the amounts available for
      payment are insufficient to cover the amounts payable in full on the
      Cumulative Preference Shares, the Non-cumulative Convertible Sterling
      Preference Shares and on any other New Preference Shares expressed to rank
      pari passu therewith as regards participation in surplus assets, then the
      holders of the Cumulative Preference Shares, the Non-cumulative
      Convertible Sterling Preference Shares and such other New Preference
      Shares will share rateably in the distribution of surplus assets (if any)
      in proportion to the full respective preferential amounts to which they
      are entitled. No Non-cumulative Convertible Sterling Preference Share
      shall confer any right to participate in the surplus assets of the Company
      other than that set out in this paragraph 2.3.

2.4   Receipt of Notices

      The right to have sent to the holder of each Non-cumulative Convertible
      Sterling Preference Share (at the same time as the same are sent to the
      holders of Ordinary Shares) a copy of the Company's Annual Report and
      Accounts and Interim Financial Statement together with notice of any
      General Meeting of the Company at which such holder is entitled to attend
      and vote.

2.5   Attendance and Voting at Meetings

      The right to attend at a General Meeting of the Company and to speak to or
      vote upon any Resolution proposed thereat in the following circumstances:-

      (i)   in respect of a Resolution which is to be proposed at the Meeting
            either varying or abrogating any of the rights attached to the
            Non-cumulative Convertible Sterling Preference Shares or proposing
            the winding up of the Company (and then in each such case only to
            speak to and vote upon any such Resolution);

      (ii)  in circumstances where the dividend stated to be payable on the
            Non-cumulative Convertible Sterling Preference Shares in respect of
            such number of dividend periods as the Directors shall determine
            prior to allotment thereof has not been declared and paid in full,
            and until such date as the Directors shall likewise determine; and

      (iii) in such other circumstances as the Directors may determine prior to
            allotment of the Non-cumulative Convertible Sterling Preference
            Shares, but not otherwise, together with the right, in such
            circumstances and on such terms, if any, as the Directors may
            determine prior to allotment of the Non-cumulative Convertible
            Sterling Preference

<PAGE>

                                     - 113 -

            Shares, to seek to requisition a General Meeting of the Company.
            Whenever holders of Non-cumulative Convertible Sterling Preference
            Shares are so entitled to vote on a Resolution, on a show of hands
            every such holder who is present in person shall have one vote and,
            on a poll, every such holder who is present in person or by proxy
            shall have such number of votes for each Non-cumulative Convertible
            Sterling Preference Share held as may be determined by the Directors
            prior to allotment of such Non-cumulative Convertible Sterling
            Preference Shares.

2.6   Redemption

      Each series of Non-cumulative Convertible Sterling Preference Shares
      shall, subject to the provisions of the Statutes, be redeemable at the
      option of the Company in accordance with the following provisions:-

      (A)   the Company may, subject thereto, redeem on any Redemption Date (as
            hereinafter defined) all or some only of the Non-cumulative
            Convertible Sterling Preference Shares by giving to the holders of
            the Non-cumulative Convertible Sterling Preference Shares to be
            redeemed not less than 120 days' nor more than 150 days' prior
            notice in writing (a "Notice of Redemption") of the relevant
            Redemption Date. "Redemption Date" means, in relation to a
            Non-cumulative Convertible Sterling Preference Share, any date which
            falls no earlier than ten years and one day after the date of
            allotment of the Non-cumulative Convertible Sterling Preference
            Share to be redeemed; provided that the Directors may determine,
            prior to allotment of any series of Non-cumulative Convertible
            Sterling Preference Shares, that this sub-paragraph (A) shall have
            effect in relation to that series as if the reference to ten years
            was a reference to such longer period (not exceeding thirty years)
            as they determine prior to allotment. The Company shall not be
            entitled (save with the consent of the relevant holder) to give a
            Notice of Redemption under this sub-paragraph (A) in respect of any
            share for which a Conversion Notice (as defined in paragraph 5 of
            Part 4 of this Schedule 2) has been given in accordance with that
            Part and not withdrawn;

      (AA)  notwithstanding the foregoing, in relation to any series of
            Non-cumulative Convertible Sterling Preference Shares allotted after
            11th April 2001, sub-paragraph (A) above shall have effect as if the
            references to ten years, in both places where they occur, were
            references to five years;

      (B)   there shall be paid on each Non-cumulative Convertible Sterling
            Preference Share so redeemed, in Sterling, the aggregate of the
            nominal amount thereof together with any premium paid on issue and
            together with arrears (if any) of dividends thereon (whether earned
            or declared or not) in respect of the period from the dividend
            payment date last preceding the Redemption Date to the Redemption
            Date;

      (C)   in the case of a redemption of some only of the Non-cumulative
            Convertible Sterling Preference Shares in any series, the Company
            shall for the purpose of determining the particular Non-cumulative
            Convertible Sterling Preference Shares to be redeemed cause a
            drawing to be made at the Office or such other place as the
            Directors may approve in the presence of the Auditors for the time
            being of the Company, provided that there shall be excluded from
            such drawing any Non-cumulative Convertible Sterling Preference
            Shares to be converted pursuant to Part 4 of this Schedule 2;

      (D)   any Notice of Redemption given under sub-paragraph (A) above shall
            specify the applicable Redemption Date, the particular
            Non-cumulative Convertible Sterling Preference Shares to be redeemed
            and the redemption price (specifying the amount

<PAGE>

                                           - 114 -

            of the accrued and unpaid dividend per share to be included therein
            and stating that dividends on the Non-cumulative Convertible
            Sterling Preference Shares to be redeemed will cease to accrue on
            redemption), and shall state the place or places at which documents
            of title in respect of such Non-cumulative Convertible Sterling
            Preference Shares are to be presented and surrendered for redemption
            and payment of the redemption monies is to be effected. Upon such
            Redemption Date, the Company shall redeem the particular
            Non-cumulative Convertible Sterling Preference Shares to be redeemed
            on that date subject to the provisions of this paragraph and of the
            Statutes. No defect in the Notice of Redemption or in the giving
            thereof shall affect the validity of the redemption proceedings;

      (E)   subject to sub-paragraph (I) below, the provisions of this and the
            following sub-paragraph shall have effect in relation to
            Non-cumulative Convertible Sterling Preference Shares for the time
            being issued and registered in the Register of Members ("Registered
            Shares") and represented by certificates ("Certificates") and in
            relation to Non-cumulative Convertible Sterling Preference Shares
            which, in accordance with Article 52 of these presents, are for the
            time being issued and represented by a Warrant (as defined in the
            said Article 52) ("Bearer Shares"). Payments in respect of the
            amount due on redemption of a Registered Share shall be made by
            Sterling cheque drawn on a bank in London or upon the request of the
            holder or joint holders not later than the date specified for the
            purpose in the Notice of Redemption by transfer to a Sterling
            account maintained by the payee with a bank in London. Such payment
            will be against presentation and surrender of the relative
            Certificate at the place or one of the places specified in the
            Notice of Redemption and if any Certificate so surrendered includes
            any Non-cumulative Convertible Sterling Preference Shares not to be
            redeemed on the relevant Redemption Date (other than Non-cumulative
            Convertible Sterling Preference Shares to be converted pursuant to
            Part 4 of this Schedule 2) the Company shall within fourteen days
            thereafter issue to the holder, free of charge, a fresh Certificate
            in respect of such Non-cumulative Convertible Sterling Preference
            Shares. Payment in respect of the amount due on redemption of a
            Bearer Share shall be made by Sterling cheque drawn on a bank in
            London or upon the request of the holder not later than the date
            specified for the purpose in the Notice of Redemption by transfer to
            a Sterling account maintained by the payee with a bank in London.
            Such payments will be made against presentation and surrender of the
            Warrant and all unmatured dividend coupons and talons (if any) at
            the place or the places specified in the Notice of Redemption. Upon
            the relevant Redemption Date all unmatured dividend coupons and any
            talon for additional dividend coupons appertaining thereto (whether
            or not returned) shall become void and no payment will be made in
            respect thereof. If the Warrant so surrendered represents any
            Non-cumulative Convertible Sterling Preference Shares not to be
            redeemed on the relevant Redemption Date (other than Non-cumulative
            Convertible Sterling Preference Shares to be converted pursuant to
            Part 4 of this Schedule 2) the Company shall issue, free of charge,
            a fresh Warrant representing such Bearer Shares which are not to be
            redeemed on such Redemption Date.

            All payments in respect of redemption monies will in all respects be
            subject to any applicable fiscal or other laws;

      (F)   as from the relevant Redemption Date the dividend on the
            Non-cumulative Convertible Sterling Preference Shares due for
            redemption shall cease to accrue except on any such Non-cumulative
            Convertible Sterling Preference Share in respect of which, upon the
            due surrender of the Certificate or, as the case may be, the

<PAGE>

                                     - 115 -

            Warrant and all unmatured dividend coupons and talons (if any) in
            respect thereof, in accordance with sub-paragraph (E) above, payment
            of the redemption monies due on such Redemption Date shall be
            improperly withheld or refused, in which case such dividend, at the
            rate then applicable, shall be deemed to have continued and shall
            accordingly continue to accrue from the relevant Redemption Date to
            the date of payment of such redemption monies. Such Non-cumulative
            Convertible Sterling Preference Share shall not be treated as having
            been redeemed until the redemption monies in question together with
            the accrued dividend thereon shall have been paid;

      (G)   if the due date for the payment of the redemption monies on any
            Non-cumulative Convertible Sterling Preference Shares is not a
            Sterling Business Day then payment of such monies will be made on
            the next succeeding day which is a Sterling Business Day and without
            any interest or other payment in respect of such delay unless such
            day shall fall within the next calendar month whereupon such payment
            will be made on the preceding Sterling Business Day;

      (H)   the receipt of the holder for the time being of any Registered Share
            (or in the case of joint holders the receipt of any one of them) and
            the receipt of the person delivering any Warrant to the place or one
            of the places specified pursuant to sub-paragraph (D) above in
            respect of the monies payable on redemption on such Registered Share
            or, as the case may be, such Bearer Share, shall constitute an
            absolute discharge to the Company; and

      (I)   subject as aftermentioned, the provisions of sub-paragraphs (E) and
            (F) above shall have effect in relation to Registered Shares which
            are in uncertificated form within the meaning of the Uncertificated
            Securities Regulations 1995 (as in force on the date of adoption of
            this Schedule 2) in the same manner as they have effect in relation
            to Registered Shares represented by Certificates, save that (i) any
            provision of the said paragraphs requiring presentation and
            surrender of a Certificate shall be satisfied in the manner
            prescribed or permitted by the said Regulations (or by any enactment
            or subordinate legislation which amends or supersedes those
            Regulations) or (subject to those Regulations or such enactment or
            subordinate legislation) in such manner as may from time to time be
            prescribed by the Directors), and (ii) the Company shall not be
            under any obligation to issue a fresh Certificate under sub-
            paragraph (E).

2.7   Purchase

      Subject to the provisions of the Statutes and any other applicable laws,
      the Company may at any time and from time to time purchase any
      Non-cumulative Convertible Sterling Preference Shares upon such terms as
      the Directors shall determine provided that, in the case of Non-
      cumulative Convertible Sterling Preference Shares which are listed on the
      London Stock Exchange, the purchase price, exclusive of expenses and
      accrued dividends, shall not exceed (i) in the case of a purchase in the
      open market, or by tender (which shall be available alike to all holders
      of the Non-cumulative Convertible Sterling Preference Shares), the average
      of the closing middle market quotations of such Non-cumulative Convertible
      Sterling Preference Shares on the London Stock Exchange (as derived from
      The London Stock Exchange Daily Official List) for the last ten dealing
      days preceding the date of purchase or (if higher), in the case of a
      purchase in the open market only, the market price on the date of purchase
      provided that such market price is not more than 105 per cent of such
      average and (ii) in the case of a purchase by private treaty, 120 per cent
      of the closing middle market quotation of such Non-cumulative Convertible
      Sterling Preference Shares on the London Stock Exchange (as derived from
      The London Stock Exchange Daily Official List) for the last dealing day

<PAGE>

                                     - 116 -

      preceding the date of purchase: but so that this proviso shall not apply
      to any purchase of Non-cumulative Convertible Sterling Preference Shares
      made in the ordinary course of a business of dealing in securities.

2.8   Conversion

      The Non-cumulative Convertible Sterling Preference Shares shall be
      convertible into Ordinary Shares in the manner set out in (and subject to
      the provisions of) Part 4 of this Schedule 2. The provisions of paragraph
      2.6 of this Part 1 regarding redemption are without prejudice to any
      provisions in the said Part 4 providing for the effecting of conversion by
      means of redemption.

3.    (a)   Save with the written consent of the holders of three-quarters in
            nominal value of, or with the sanction of an Extraordinary
            Resolution passed at a separate General Meeting of the holders of,
            the Non-cumulative Convertible Sterling Preference Shares, the
            Directors shall not authorise or create, or increase the amount of,
            any shares of any class or any security convertible into shares of
            any class ranking as regards rights to participate in the profits or
            assets of the Company (other than on a redemption or purchase by the
            Company of any such shares) in priority to the Non-cumulative
            Convertible Sterling Preference Shares.

      (b)   The special rights attached to any series of Non-cumulative
            Convertible Sterling Preference Shares allotted or in issue shall
            not (unless otherwise provided by their terms of issue) be deemed to
            be varied by the creation or issue of any New Shares ranking as
            regards participation in the profits or assets of the Company in
            some or all respects pari passu with or after such Non-cumulative
            Convertible Sterling Preference Shares. Any new shares ranking in
            some or all respects pari passu with such Non-cumulative Convertible
            Sterling Preference Shares may without their creation or issue being
            deemed to vary the special rights attached to any Non-cumulative
            Convertible Sterling Preference Share then in issue either carry
            rights identical in all respects with such Non-cumulative
            Convertible Sterling Preference Shares or any of them or carry
            rights differing therefrom in any respect, including, but without
            prejudice to the generality of the foregoing, in that:-

            (i)   the rate or means of calculating the dividend may differ and
                  the dividend may be cumulative or non-cumulative;

            (ii)  the New Shares or any series thereof may rank for dividend as
                  from such date as may be provided by the terms of issue
                  thereof and the dates for payment of dividend may differ;

            (iii) the New Shares may be denominated in Sterling or in any
                  Foreign Currency;

            (iv)  a premium may be payable on return of capital or there may be
                  no such premium;

            (v)   the New Shares may be redeemable at the option of the holder
                  or of the Company, or may be non-redeemable and if redeemable
                  at the option of the Company, they may be redeemable at
                  different dates and on different terms from those applying to
                  the Non-cumulative Convertible Sterling Preference Shares; and

<PAGE>

                                  - 117 -

            (vi)  the New Shares may be convertible into Ordinary Shares or any
                  other class of shares ranking as regards participation in the
                  profits and assets of the Company pari passu with or after
                  such Non-cumulative Convertible Sterling Preference Shares in
                  each case on such terms and conditions as may be prescribed by
                  the terms of issue thereof.

<PAGE>

                                     - 118 -

                                     PART 2

               NON-CUMULATIVE CONVERTIBLE DOLLAR PREFERENCE SHARES

      1.    The Non-cumulative Convertible Dollar Preference Shares are New
            Preference Shares. They shall rank after the Cumulative Preference
            Shares to the extent specified in Article 4 and this Schedule 2, and
            shall rank pari passu inter se and (save as aforesaid) with the
            Cumulative Preference Shares and with all other New Preference
            Shares. They shall confer the rights and be subject to the
            restrictions set out or referred to in this Part 2 of Schedule 2 and
            shall also confer such further rights (not being inconsistent with
            the rights set out or referred to in this Part 2) as may be attached
            by the Directors to such shares in accordance with this Part 2 prior
            to allotment. Whenever the Directors have power under this Part to
            determine any of the rights attached to any of the Non-cumulative
            Convertible Dollar Preference Shares, the rights so determined need
            not be the same as those attached to the Non-cumulative Convertible
            Dollar Preference Shares then allotted or in issue. The
            Non-cumulative Convertible Dollar Preference Shares may be issued in
            one or more separate series, and each series shall be identified in
            such manner as the Directors may determine without any such
            determination or identification requiring any alteration to these
            presents.

      2.    Each Non-cumulative Convertible Dollar Preference Share shall confer
            the following rights as to participation in the profits and assets
            of the Company, receipt of notices, attendance and voting at
            meetings, redemption and conversion:

      2.1   Income

            The right (subject to the provisions of paragraph 2.2, if
            applicable) to a non-cumulative preferential dividend not exceeding
            a specified amount payable in Dollars at such rate (which, in the
            case of any series allotted after 11th April 2001, may be fixed or
            variable and may be subject to recalculation at fixed intervals) on
            such dates (each a "dividend payment date") in respect of such
            periods (each a "dividend period") and on such other terms and
            conditions as may be determined by the Directors prior to allotment
            thereof. References in these presents to a "dividend" on the
            Non-cumulative Convertible Dollar Preference Shares include a
            reference to each dividend in respect of each dividend period
            applicable thereto and references in this Part of the Schedule to
            dividend payment dates and dividend periods are to dividend payment
            dates and dividend periods in respect of the Non-cumulative
            Convertible Dollar Preference Shares only. Such dividends shall be
            paid in priority to the payment of any dividends on the Ordinary
            Shares. The Non-cumulative Convertible Dollar Preference Shares
            shall rank for dividend after the Cumulative Preference Shares, pari
            passu with the Non-cumulative Sterling Preference Shares, the
            Non-cumulative Dollar Preference Shares, the Category II
            Non-cumulative Dollar Preference Shares, all other Convertible
            Preference Shares and all other New Preference Shares expressed to
            rank pari passu therewith as regards participation in profits and
            otherwise in priority to any other share capital in the Company.

      2.2   Further provisions as to income

            All or any of the following provisions shall apply in relation to
            any particular Non-cumulative Convertible Dollar Preference Shares
            if so determined by the Directors prior to allotment thereof:-

            (i)   if, in the opinion of the Directors, the distributable profits
                  of the Company are sufficient to cover the payment in full of
                  dividends on the Non-cumulative Convertible Dollar Preference
                  Shares on any dividend payment date and also the payment in
                  full of all other dividends stated to be payable on such date
                  on any other

<PAGE>

                                     - 119 -

            New Preference Share expressed to rank pari passu therewith as
            regards participation in profits, after payment in full, or the
            setting aside of a sum to cover the payment in full, of all
            dividends stated to be payable on such date on any Cumulative
            Preference Share, then each such dividend shall be declared and paid
            in full;

      (ii)  if, in the opinion of the Directors, the distributable profits of
            the Company are insufficient to cover the payment in full of
            dividends on the Non-cumulative Convertible Dollar Preference Shares
            on any dividend payment date and also the payment in full of all
            other dividends stated to be payable on such date on any other New
            Preference Share expressed to rank pari passu therewith as regards
            participation in profits, after payment in full, or the setting
            aside of a sum to cover the payment in full, of all dividends stated
            to be payable on or before such date on any Cumulative Preference
            Share, then dividends shall be declared by the Directors pro rata
            for the Non-cumulative Convertible Dollar Preference Shares and such
            other New Preference Shares to the extent of the available
            distributable profits (if any) to the intent that the amount of
            dividend declared per share on each such Non-cumulative Convertible
            Dollar Preference Share and other New Preference Share will bear to
            each other the same ratio as the dividends accrued per share on each
            such Non-cumulative Convertible Dollar Preference Share and other
            New Preference Share bear to each other. If it shall subsequently
            appear that any such dividend which has been paid should not, in
            accordance with the provisions of this sub-paragraph, have been so
            paid, then provided the Directors shall have acted in good faith,
            they shall not incur any liability for any loss which any
            shareholder may suffer in consequence of such payment having been
            made;

      (iii) if, in the opinion of the Directors, the payment of any dividend on
            any Non-cumulative Convertible Dollar Preference Shares would
            breach or cause a breach of the capital adequacy requirements of the
            Financial Services Authority (or any person or body to whom the
            banking supervision functions of the Financial Services Authority
            are transferred) applicable to the Company and/or any of its
            subsidiaries, then none of such dividend shall be declared or paid;

      (iv)  subject to sub-paragraph (v) below, the Non-cumulative Convertible
            Dollar Preference Shares shall carry no further right to participate
            in the profits of the Company and if and to the extent that any
            dividend or part thereof is on any occasion not paid for the reasons
            described in sub-paragraph (ii) or (iii) above, the holders of such
            shares shall have no claim in respect of such non-payment; (v) if
            any dividend or part thereof on any Non-cumulative Convertible
            Dollar Preference Share is not payable for the reasons specified in
            sub-paragraphs (ii) or (iii) above and if they so resolve, the
            Directors may, subject to the Statutes, pay a special non-cumulative
            preferential dividend on the Non-cumulative Convertible Dollar
            Preference Shares at a rate not exceeding 1 (one) US cent per share
            (but so that reference elsewhere in this Schedule 2 and in these
            presents to any dividend payable on any Non-cumulative Convertible
            Dollar Preference Shares shall not be treated as including a
            reference to any such special dividend);

      (vi)  if any date on which dividends are payable on Non-cumulative
            Convertible Dollar Preference Shares is not a day on which banks in
            London and the City of New York are open for business, and on which
            foreign exchange dealings may be conducted in such cities (a "Dollar
            Business Day"), then payment of the dividend payable on such date
            will be made on the succeeding Dollar Business Day and without any
            interest or other payment in respect of such delay unless such day
            shall fall within the

<PAGE>

                                     - 120 -

            next calendar month whereupon such payment will be made on the
            preceding Dollar Business Day;

     (vii)  dividends payable on Non-cumulative Convertible Dollar Preference
            Shares shall accrue from and to the dates determined by the
            Directors prior to allotment thereof, and the amount of dividend
            payable in respect of any period shorter than a full dividend period
            will be calculated on the basis of twelve 30 day months, a 360 day
            year and the actual number of days elapsed in such period;

     (viii) if any dividend stated to be payable on the Non-cumulative
            Convertible Dollar Preference Shares on the most recent dividend
            payment date has not been declared and paid in full, or if a sum has
            not been set aside to provide for such payment in full, no dividends
            may be declared on any other share capital of the Company (other
            than the Cumulative Preference Shares), and no sum may be set aside
            for the payment thereof, unless, on the date of declaration relative
            to any such payment, an amount equal to the dividend stated to be
            payable on the Non-cumulative Convertible Dollar Preference Shares
            in respect of the then current dividend period is set aside for the
            payment in full of such dividend on the dividend payment date
            relating to the then current dividend period; and

     (ix)   if any dividend stated to be payable on the Non-cumulative
            Convertible Dollar Preference Shares on any dividend payment date
            has not been declared and paid in full, or if a sum has not been set
            aside to provide for such payment in full, the Company may not
            redeem or purchase or otherwise acquire for any consideration any
            other share capital of the Company, and may not set aside any sum
            nor establish any sinking fund for the redemption or purchase or
            other such acquisition thereof, until such time as dividends stated
            to be payable on the Non-cumulative Convertible Dollar Preference
            Shares in respect of successive dividend periods together
            aggregating no less than twelve months shall thereafter have been
            declared and paid in full.

2.3  Capital

     The right on a winding up or liquidation, voluntary or otherwise other than
     (unless otherwise provided by the terms of issue of such share) a
     redemption or purchase by the Company of any shares of any class to receive
     in Dollars out of the surplus assets of the Company available for
     distribution amongst the members:-

     (i)   after payment of the arrears (if any) of the fixed cumulative
           preferential dividends stated to be payable on the Cumulative
           Preference Shares to the holders thereof in accordance with Article
           4(B) FIRSTLY and pari passu with the holders of any other New
           Preference Shares expressed to rank pari passu therewith as regards
           participation in profits and in priority to the holders of the
           Ordinary Shares of the Company a sum equal to:-

           (A)    the amount of any dividend which is due for payment after the
                  date of commencement of the winding up or liquidation but
                  which is payable in respect of a period ending on or before
                  such date; and

           (B)    any further amount of dividend payable in respect of the
                  period from the preceding dividend payment date to the date of
                  payment in accordance with this sub-paragraph (i);

<PAGE>

                                     - 121 -

            but only to the extent that any such amount or further amount was,
            or would have been payable as a dividend in accordance with or
            pursuant to this Part of Schedule 2 (other than pursuant to this
            provision); and

      (ii)  subject thereto, pari passu with the holders of the Cumulative
            Preference Shares and any other New Preference Shares expressed to
            rank pari passu therewith as regards participation in surplus assets
            in priority to the holders of the Ordinary Shares of the Company, a
            sum equal to the amount paid up or credited as paid up on the Non-
            cumulative Convertible Dollar Preference Shares (including any
            premium paid to the Company in respect thereof on issue).

            If upon any such winding-up or liquidation, the amounts available
            for payment are insufficient to cover the amounts payable in full on
            the Cumulative Preference Shares, the Non-cumulative Convertible
            Dollar Preference Shares and on any other New Preference Shares
            expressed to rank pari passu therewith as regards participation in
            surplus assets, then the holders of the Cumulative Preference
            Shares, the Non-cumulative Convertible Dollar Preference Shares and
            such other New Preference Shares will share rateably in the
            distribution of surplus assets (if any) in proportion to the full
            respective preferential amounts to which they are entitled. No
            Non-cumulative Convertible Dollar Preference Share shall confer any
            right to participate in the surplus assets of the Company other than
            that set out in this paragraph 2.3.

2.4   Receipt of Notices

      The right to have sent to the holder of each Non-cumulative Convertible
      Dollar Preference Share (at the same time as the same are sent to the
      holders of Ordinary Shares) a copy of the Company's Annual Report and
      Accounts and Interim Financial Statement together with notice of any
      General Meeting of the Company at which such holder is entitled to attend
      and vote.

2.5   Attendance and Voting at Meetings

      The right to attend at a General Meeting of the Company and to speak to or
      vote upon any Resolution proposed thereat in the following circumstances:-

      (i)   in respect of a Resolution which is to be proposed at the Meeting
            either varying or abrogating any of the rights attached to the
            Non-cumulative Convertible Dollar Preference Shares or proposing the
            winding up of the Company (and then in each such case only to speak
            to and vote upon any such Resolution);

      (ii)  in circumstances where the dividend stated to be payable on the
            Non-cumulative Convertible Dollar Preference Shares in respect of
            such number of dividend periods as the Directors shall determine
            prior to allotment thereof has not been declared and paid in full,
            and until such date as the Directors shall likewise determine; and

      (iii) in such other circumstances as the Directors may determine prior to
            allotment of the Non-cumulative Convertible Dollar Preference
            Shares,

      but not otherwise, together with the right, in such circumstances and on
      such terms, if any, as the Directors may determine prior to allotment of
      the Non-cumulative Convertible Dollar Preference Shares, to seek to
      requisition a General Meeting of the Company. Whenever holders of
      Non-cumulative Convertible Dollar Preference Shares are so entitled to
      vote on a

<PAGE>

                                     - 122 -

      Resolution, on a show of hands every such holder who is present in person
      shall have one vote and, on a poll, every such holder who is present in
      person or by proxy shall have such number of votes for each Non-cumulative
      Convertible Dollar Preference Share held as may be determined by the
      Directors prior to allotment of such Non-cumulative Convertible Dollar
      Preference Shares.

2.6   Redemption

      Each series of Non-cumulative Convertible Dollar Preference Shares shall,
      subject to the provisions of the Statutes, be redeemable at the option of
      the Company in accordance with the following provisions:-

      (A)   the Company may, subject thereto, redeem on any Redemption Date (as
            hereinafter defined) all or some only of the Non-cumulative
            Convertible Dollar Preference Shares by giving to the holders of the
            Non-cumulative Convertible Dollar Preference Shares to be redeemed
            not less than 120 days' nor more than 150 days' prior notice in
            writing (a "Notice of Redemption") of the relevant Redemption Date.
            "Redemption Date" means, in relation to a Non-cumulative Convertible
            Dollar Preference Share, any date which falls no earlier than five
            years and one day (or such longer period (if any) as may be fixed by
            the Directors prior to allotment of such Share) after the date of
            allotment of the Non-cumulative Convertible Dollar Preference Share
            to be redeemed. The Company shall not be entitled (save with the
            consent of the relevant holder) to give a Notice of Redemption under
            this sub-paragraph (A) in respect of any share for which a
            Conversion Notice (as defined in paragraph 5 of Part 4 of this
            Schedule 2) has been given in accordance with that Part and not
            withdrawn;

      (B)   there shall be paid on each Non-cumulative Convertible Dollar
            Preference Share so redeemed, in Dollars, the aggregate of the
            nominal amount thereof together with any premium paid on issue and
            together with arrears (if any) of dividends thereon (whether earned
            or declared or not) in respect of the period from the dividend
            payment date last preceding the Redemption Date to the Redemption
            Date;

      (C)   in the case of a redemption of some only of the Non-cumulative
            Convertible Dollar Preference Shares in any series, the Company
            shall for the purpose of determining the particular Non-cumulative
            Convertible Dollar Preference Shares to be redeemed cause a drawing
            to be made at the Office or such other place as the Directors may
            approve in the presence of the Auditors for the time being of the
            Company, provided that there shall be excluded from such drawing any
            Non-cumulative Convertible Dollar Preference Shares to be converted
            pursuant to Part 4 of this Schedule 2;

      (D)   any Notice of Redemption given under sub-paragraph (A) above shall
            specify the applicable Redemption Date, the particular
            Non-cumulative Convertible Dollar Preference Shares to be redeemed
            and the redemption price (specifying the amount of the accrued and
            unpaid dividend per share to be included therein and stating that
            dividends on the Non-cumulative Convertible Dollar Preference Shares
            to be redeemed will cease to accrue on redemption), and shall state
            the place or places at which documents of title in respect of such
            Non-cumulative Convertible Dollar Preference Shares are to be
            presented and surrendered for redemption and payment of the
            redemption monies is to be effected. Upon such Redemption Date, the
            Company shall redeem the particular Non-cumulative Convertible
            Dollar Preference Shares to be redeemed on that date subject to the
            provisions of this paragraph and of

<PAGE>

                                     - 123 -

            the Statutes. No defect in the Notice of Redemption or in the giving
            thereof shall affect the validity of the redemption proceedings;

      (E)   subject to sub-paragraph (I) below, the provisions of this and the
            following sub-paragraph shall have effect in relation to
            Non-cumulative Convertible Dollar Preference Shares for the time
            being issued and registered in the Register of Members ("Registered
            Shares") and represented by certificates ("Certificates") and in
            relation to Non-cumulative Convertible Dollar Preference Shares
            which, in accordance with Article 52 of these presents, are for the
            time being issued and represented by a Warrant (as defined in the
            said Article 52) ("Bearer Shares"). Payments in respect of the
            amount due on redemption of a Registered Share shall be made by
            Dollar cheque drawn on a bank in London or in the City of New York
            or upon the request of the holder or joint holders not later than
            the date specified for the purpose in the Notice of Redemption by
            transfer to a Dollar account maintained by the payee with a bank in
            London or in the City of New York. Such payment will be against
            presentation and surrender of the relative Certificate at the place
            or one of the places specified in the Notice of Redemption and if
            any Certificate so surrendered includes any Non-cumulative
            Convertible Dollar Preference Shares not to be redeemed on the
            relevant Redemption Date (other than Non-cumulative Convertible
            Dollar Preference Shares to be converted pursuant to Part 4 of this
            Schedule 2) the Company shall within fourteen days thereafter issue
            to the holder, free of charge, a fresh Certificate in respect of
            such Non-cumulative Convertible Dollar Preference Shares. Payment in
            respect of the amount due on redemption of a Bearer Share shall be
            made by Dollar cheque drawn on a bank in London or in the City of
            New York or upon the request of the holder not later than the date
            specified for the purpose in the Notice of Redemption by transfer to
            a Dollar account maintained by the payee with a bank in London or in
            the City of New York. Such payments will be made against
            presentation and surrender of the Warrant and all unmatured dividend
            coupons and talons (if any) at the place or the places specified in
            the Notice of Redemption. Upon the relevant Redemption Date all
            unmatured dividend coupons and any talon for additional dividend
            coupons appertaining thereto (whether or not returned) shall become
            void and no payment will be made in respect thereof. If the Warrant
            so surrendered represents any Non-cumulative Convertible Dollar
            Preference Shares not to be redeemed on the relevant Redemption Date
            (other than Non-cumulative Convertible Dollar Preference Shares to
            be converted pursuant to Part 4 of this Schedule 2) the Company
            shall issue, free of charge, a fresh Warrant representing such
            Bearer Shares which are not to be redeemed on such Redemption Date.
            All payments in respect of redemption monies will in all respects be
            subject to any applicable fiscal or other laws;

      (F)   as from the relevant Redemption Date the dividend on the
            Non-cumulative Convertible Dollar Preference Shares due for
            redemption shall cease to accrue except on any such Non-cumulative
            Convertible Dollar Preference Share in respect of which, upon the
            due surrender of the Certificate or, as the case may be, the Warrant
            and all unmatured dividend coupons and talons (if any) in respect
            thereof, in accordance with sub-paragraph (E) above, payment of the
            redemption monies due on such Redemption Date shall be improperly
            withheld or refused, in which case such dividend, at the rate then
            applicable, shall be deemed to have continued and shall accordingly
            continue to accrue from the relevant Redemption Date to the date of
            payment of such redemption monies. Such Non-cumulative Convertible
            Dollar Preference Share shall not be treated as having been redeemed
            until the redemption monies in question together with the accrued
            dividend thereon shall have been paid;

<PAGE>

                                     - 124 -

      (G)   if the due date for the payment of the redemption monies on any
            Non-cumulative Convertible Dollar Preference Shares is not a Dollar
            Business Day then payment of such monies will be made on the next
            succeeding day which is a Dollar Business Day and without any
            interest or other payment in respect of such delay unless such day
            shall fall within the next calendar month whereupon such payment
            will be made on the preceding Dollar Business Day;

      (H)   the receipt of the holder for the time being of any Registered Share
            (or in the case of joint holders the receipt of any one of them) and
            the receipt of the person delivering any Warrant to the place or one
            of the places specified pursuant to sub-paragraph (D) above in
            respect of the monies payable on redemption on such Registered Share
            or, as the case may be, such Bearer Share, shall constitute an
            absolute discharge to the Company; and

      (I)   subject as aftermentioned, the provisions of sub-paragraphs (E) and
            (F) above shall have effect in relation to Registered Shares which
            are in uncertificated form within the meaning of the Uncertificated
            Securities Regulations 1995 (as in force on the date of adoption of
            this Schedule 2) in the same manner as they have effect in relation
            to Registered Shares represented by Certificates, save that (i) any
            provision of the said paragraphs requiring presentation and
            surrender of a Certificate shall be satisfied in the manner
            prescribed or permitted by the said Regulations (or by any enactment
            or subordinate legislation which amends or supersedes those
            Regulations) or (subject to those Regulations or such enactment or
            subordinate legislation) in such manner as may from time to time be
            prescribed by the Directors), and (ii) the Company shall not be
            under any obligation to issue a fresh Certificate under sub-
            paragraph (E).

2.7   Purchase

      Subject to the provisions of the Statutes and any other applicable laws,
      the Company may at any time and from time to time purchase any
      Non-cumulative Convertible Dollar Preference Shares upon such terms as the
      Directors shall determine provided that, in the case of Non-cumulative
      Convertible Dollar Preference Shares which are listed on the London Stock
      Exchange, the purchase price, exclusive of expenses and accrued dividends,
      shall not exceed (i) in the case of a purchase in the open market, or by
      tender (which shall be available alike to all holders of the
      Non-cumulative Convertible Dollar Preference Shares), the average of the
      closing middle market quotations of such Non-cumulative Convertible Dollar
      Preference Shares on the London Stock Exchange (as derived from The London
      Stock Exchange Daily Official List) for the last ten dealing days
      preceding the date of purchase or (if higher), in the case of a purchase
      in the open market only, the market price on the date of purchase provided
      that such market price is not more than 105 per cent of such average and
      (ii) in the case of a purchase by private treaty, 120 per cent of the
      closing middle market quotation of such Non-cumulative Convertible Dollar
      Preference Shares on the London Stock Exchange (as derived from The London
      Stock Exchange Daily Official List) for the last dealing day preceding the
      date of purchase: but so that this proviso shall not apply to any purchase
      of Non-cumulative Convertible Dollar Preference Shares made in the
      ordinary course of a business of dealing in securities.

2.8   Conversion

      The Non-cumulative Convertible Dollar Preference Shares shall be
      convertible into Ordinary Shares in the manner set out in (and subject to
      the provisions of) Part 4 of this Schedule 2. The provisions of paragraph
      2.6 of this Part 2 regarding redemption are without prejudice to

<PAGE>

                                     - 125 -

      any provisions in the said Part 4 providing for the effecting of
      conversion by means of redemption.

3.    (a)   Save with the written consent of the holders of three-quarters in
            nominal value of, or with the sanction of an Extraordinary
            Resolution passed at a separate General Meeting of the holders of,
            the Non-cumulative Convertible Dollar Preference Shares, the
            Directors shall not authorise or create, or increase the amount of,
            any shares of any class or any security convertible into shares of
            any class ranking as regards rights to participate in the profits or
            assets of the Company (other than on a redemption or purchase by the
            Company of any such shares) in priority to the Non-cumulative
            Convertible Dollar Preference Shares.

      (b)   The special rights attached to any series of Non-cumulative
            Convertible Dollar Preference Shares allotted or in issue shall not
            (unless otherwise provided by their terms of issue) be deemed to be
            varied by the creation or issue of any New Shares ranking as regards
            participation in the profits or assets of the Company in some or all
            respects pari passu with or after such Non-cumulative Convertible
            Dollar Preference Shares. Any new shares ranking in some or all
            respects pari passu with such Non-cumulative Convertible Dollar
            Preference Shares may without their creation or issue being deemed
            to vary the special rights attached to any Non-cumulative
            Convertible Dollar Preference Share then in issue either carry
            rights identical in all respects with such Non-cumulative
            Convertible Dollar Preference Shares or any of them or carry rights
            differing therefrom in any respect, including, but without prejudice
            to the generality of the foregoing, in that:-

            (i)   the rate or means of calculating the dividend may differ and
                  the dividend may be cumulative or non-cumulative;

            (ii)  the New Shares or any series thereof may rank for dividend as
                  from such date as may be provided by the terms of issue
                  thereof and the dates for payment of dividend may differ;

            (iii) the New Shares may be denominated in Sterling or in any
                  Foreign Currency;

            (iv)  a premium may be payable on return of capital or there may be
                  no such premium;

            (v)   the New Shares may be redeemable at the option of the holder
                  or of the Company, or may be non-redeemable and if redeemable
                  at the option of the Company, they may be redeemable at
                  different dates and on different terms from those applying to
                  the Non-cumulative Convertible Dollar Preference Shares; and

            (vi)  the New Shares may be convertible into Ordinary Shares or any
                  other class of shares ranking as regards participation in the
                  profits and assets of the Company pari passu with or after
                  such Non-cumulative Convertible Dollar Preference Shares in
                  each case on such terms and conditions as may be prescribed by
                  the terms of issue thereof.

<PAGE>

                                     - 126 -

                                     PART 3

                NON-CUMULATIVE CONVERTIBLE EURO PREFERENCE SHARES

      1.    The Non-cumulative Convertible Euro Preference Shares are New
            Preference Shares. They shall rank after the Cumulative Preference
            Shares to the extent specified in Article 4 and this Schedule 2, and
            shall rank pari passu inter se and (save as aforesaid) with the
            Cumulative Preference Shares and with all other New Preference
            Shares. They shall confer the rights and be subject to the
            restrictions set out or referred to in this Part 3 of Schedule 2 and
            shall also confer such further rights (not being inconsistent with
            the rights set out or referred to in Part 3) as may be attached by
            the Directors to such shares in accordance with this Part 3 prior to
            allotment. Whenever the Directors have power under this Part to
            determine any of the rights attached to any of the Non-cumulative
            Convertible Euro Preference Shares, the rights so determined need
            not be the same as those attached to the Non-cumulative Convertible
            Euro Preference Shares then allotted or in issue. The Non-cumulative
            Convertible Euro Preference Shares may be issued in one or more
            separate series, and each series shall be identified in such manner
            as the Directors may determine without any such determination or
            identification requiring any alteration to these presents.

      2.    Each Non-cumulative Convertible Euro Preference Share shall confer
            the following rights as to participation in the profits and assets
            of the Company, receipt of notices, attendance and voting at
            meetings, redemption and conversion:

      2.1   Income

            The right (subject to the provisions of paragraph 2.2, if
            applicable) to a non-cumulative preferential dividend not exceeding
            a specified amount payable in Euro at such rate (which, in the case
            of any series allotted after 11th April 2001, may be fixed or
            variable and may be subject to recalculation at fixed intervals) on
            such dates (each a "dividend payment date") in respect of such
            periods (each a "dividend period") and on such other terms and
            conditions as may be determined by the Directors prior to allotment
            thereof. References in these presents to a "dividend" on the
            Non-cumulative Convertible Euro Preference Shares include a
            reference to each dividend in respect of each dividend period
            applicable thereto and references in this Part of the Schedule to
            dividend payment dates and dividend periods are to dividend payment
            dates and dividend periods in respect of the Non-cumulative
            Convertible Euro Preference Shares only. Such dividends shall be
            paid in priority to the payment of any dividends on the Ordinary
            Shares. The Non-cumulative Convertible Euro Preference Shares shall
            rank for dividend after the Cumulative Preference Shares, pari passu
            with the Non-cumulative Sterling Preference Shares, the
            Non-cumulative Dollar Preference Shares, the Category II
            Non-cumulative Dollar Preference Shares, all other Convertible
            Preference Shares and all other New Preference Shares expressed to
            rank pari passu therewith as regards participation in profits and
            otherwise in priority to any other share capital in the Company.

      2.2   Further provisions as to income

            All or any of the following provisions shall apply in relation to
            any particular Non-cumulative Convertible Euro Preference Shares if
            so determined by the Directors prior to allotment thereof:-

            (i)   if, in the opinion of the Directors, the distributable profits
                  of the Company are sufficient to cover the payment in full of
                  dividends on the Non-cumulative Convertible Euro Preference
                  Shares on any dividend payment date and also the payment in
                  full of all other dividends stated to be payable on such date
                  on any other

<PAGE>

                                     - 127 -

                  New Preference Share expressed to rank pari passu therewith as
                  regards participation in profits, after payment in full, or
                  the setting aside of a sum to cover the payment in full, of
                  all dividends stated to be payable on such date on any
                  Cumulative Preference Share, then each such dividend shall be
                  declared and paid in full;

            (ii)  if, in the opinion of the Directors, the distributable profits
                  of the Company are insufficient to cover the payment in full
                  of dividends on the Non-cumulative Convertible Euro Preference
                  Shares on any dividend payment date and also the payment in
                  full of all other dividends stated to be payable on such date
                  on any other New Preference Share expressed to rank pari passu
                  therewith as regards participation in profits, after payment
                  in full, or the setting aside of a sum to cover the payment in
                  full, of all dividends stated to be payable on or before such
                  date on any Cumulative Preference Share, then dividends shall
                  be declared by the Directors pro rata for the Non-cumulative
                  Convertible Euro Preference Shares and such other New
                  Preference Shares to the extent of the available distributable
                  profits (if any) to the intent that the amount of dividend
                  declared per share on each such Non-cumulative Convertible
                  Euro Preference Share and other New Preference Share will bear
                  to each other the same ratio as the dividends accrued per
                  share on each such Non-cumulative Convertible Euro Preference
                  Share and other New Preference Share bear to each other. If it
                  shall subsequently appear that any such dividend which has
                  been paid should not, in accordance with the provisions of
                  this sub-paragraph, have been so paid, then provided the
                  Directors shall have acted in good faith, they shall not incur
                  any liability for any loss which any shareholder may suffer in
                  consequence of such payment having been made;

            (iii) if, in the opinion of the Directors, the payment of any
                  dividend on any Non-cumulative Convertible Euro Preference
                  Shares would breach or cause a breach of the capital adequacy
                  requirements of the Financial Services Authority (or any
                  person or body to whom the banking supervision functions of
                  the Financial Services Authority are transferred) applicable
                  to the Company and/or any of its subsidiaries, then none of
                  such dividend shall be declared or paid;

            (iv)  subject to sub-paragraph (v) below, the Non-cumulative
                  Convertible Euro Preference Shares shall carry no further
                  right to participate in the profits of the Company and if and
                  to the extent that any dividend or part thereof is on any
                  occasion not paid for the reasons described in sub-paragraph
                  (ii) or (iii) above, the holders of such shares shall have no
                  claim in respect of such non-payment;

            (v)   if any dividend or part thereof on any Non-cumulative
                  Convertible Euro Preference Share is not payable for the
                  reasons specified in sub-paragraphs (ii) or (iii) above and if
                  they so resolve, the Directors may, subject to the Statutes,
                  pay a special non-cumulative preferential dividend on the
                  Non-cumulative Convertible Euro Preference Shares at a rate
                  not exceeding E0.01 per share (but so that reference
                  elsewhere in this Schedule 2 and in these presents to any
                  dividend payable on any Non-cumulative Convertible Euro
                  Preference Shares shall not be treated as including a
                  reference to any such special dividend);

            (vi)  if any date on which dividends are payable on Non-cumulative
                  Convertible Euro Preference Shares is not a day on which
                  TARGET is operating and banks in London are open for business,
                  and on which foreign exchange dealings may be conducted in
                  London (a "Euro Business Day"), then payment of the dividend
                  payable on such date will be made on the succeeding Euro
                  Business Day and without any interest or other payment in
                  respect of such delay unless such day shall fall within the
                  next

<PAGE>

                                     - 128 -

                  calendar month whereupon such payment will be made on the
                  preceding Euro Business Day; for these purposes "TARGET" means
                  the Trans-European Real-Time Gross Settlement Express Transfer
                  (TARGET) system;

           (vii)  dividends payable on Non-cumulative Convertible Euro
                  Preference Shares shall accrue from and to the dates
                  determined by the Directors prior to allotment thereof, and
                  the amount of dividend payable in respect of any period
                  shorter than a full dividend period will be calculated on the
                  basis of twelve 30 day months, a 360 day year and the actual
                  number of days elapsed in such period;

           (viii) if any dividend stated to be payable on the Non-cumulative
                  Convertible Euro Preference Shares on the most recent dividend
                  payment date has not been declared and paid in full, or if a
                  sum has not been set aside to provide for such payment in
                  full, no dividends may be declared on any other share capital
                  of the Company (other than the Cumulative Preference Shares),
                  and no sum may be set aside for the payment thereof, unless,
                  on the date of declaration relative to any such payment, an
                  amount equal to the dividend stated to be payable on the
                  Non-cumulative Convertible Euro Preference Shares in respect
                  of the then current dividend period is set aside for the
                  payment in full of such dividend on the dividend payment date
                  relating to the then current dividend period; and

           (ix)   if any dividend stated to be payable on the Non-cumulative
                  Convertible Euro Preference Shares on any dividend payment
                  date has not been declared and paid in full, or if a sum has
                  not been set aside to provide for such payment in full, the
                  Company may not redeem or purchase or otherwise acquire for
                  any consideration any other share capital of the Company, and
                  may not set aside any sum nor establish any sinking fund for
                  the redemption or purchase or other such acquisition thereof,
                  until such time as dividends stated to be payable on the
                  Non-cumulative Convertible Euro Preference Shares in respect
                  of successive dividend periods together aggregating no less
                  than twelve months shall thereafter have been declared and
                  paid in full.

2.3   Capital

      The right on a winding up or liquidation, voluntary or otherwise other
      than (unless otherwise provided by the terms of issue of such share) a
      redemption or purchase by the Company of any shares of any class to
      receive in Euro out of the surplus assets of the Company available for
      distribution amongst the members:-

      (i)   after payment of the arrears (if any) of the fixed cumulative
            preferential dividends stated to be payable on the Cumulative
            Preference Shares to the holders thereof in accordance with Article
            4(B) FIRSTLY and pari passu with the holders of any other New
            Preference Shares expressed to rank pari passu therewith as regards
            participation in profits and in priority to the holders of the
            Ordinary Shares of the Company a sum equal to:-

            (A)   the amount of any dividend which is due for payment after the
                  date of commencement of the winding up or liquidation but
                  which is payable in respect of a period ending on or before
                  such date; and

            (B)   any further amount of dividend payable in respect of the
                  period from the preceding dividend payment date to the date of
                  payment in accordance with this sub-paragraph (i);

<PAGE>

                                     - 129 -

                  but only to the extent that any such amount or further amount
                  was, or would have been payable as a dividend in accordance
                  with or pursuant to this Part of Schedule 2 (other than
                  pursuant to this provision); and

            (ii)  subject thereto, pari passu with the holders of the Cumulative
                  Preference Shares and any other New Preference Shares
                  expressed to rank pari passu therewith as regards
                  participation in surplus assets in priority to the holders of
                  the Ordinary Shares of the Company, a sum equal to the amount
                  paid up or credited as paid up on the Non-cumulative
                  Convertible Euro Preference Shares (including any premium paid
                  to the Company in respect thereof on issue).

                  If upon any such winding-up or liquidation, the amounts
                  available for payment are insufficient to cover the amounts
                  payable in full on the Cumulative Preference Shares, the
                  Non-cumulative Convertible Euro Preference Shares and on any
                  other New Preference Shares expressed to rank pari passu
                  therewith as regards participation in surplus assets, then the
                  holders of the Cumulative Preference Shares, the
                  Non-cumulative Convertible Euro Preference Shares and such
                  other New Preference Shares will share rateably in the
                  distribution of surplus assets (if any) in proportion to the
                  full respective preferential amounts to which they are
                  entitled. No Non-cumulative Convertible Euro Preference Share
                  shall confer any participate in the surplus assets of the
                  Company other than right to that set out in this paragraph
                  2.3.

2.4   Receipt of Notices

      The right to have sent to the holder of each Non-cumulative Convertible
      Euro Preference Share (at the same time as the same are sent to the
      holders of Ordinary Shares) a copy of the Company's Annual Report and
      Accounts and Interim Financial Statement together with notice of any
      General Meeting of the Company at which such holder is entitled to attend
      and vote.

2.5   Attendance and Voting at Meetings

      The right to attend at a General Meeting of the Company and to speak to or
      vote upon any Resolution proposed thereat in the following circumstances:-

      (i)   in respect of a Resolution which is to be proposed at the Meeting
            either varying or abrogating any of the rights attached to the
            Non-cumulative Convertible Euro Preference Shares or proposing the
            winding up of the Company (and then in each such case only to speak
            to and vote upon any such Resolution);

      (ii)  in circumstances where the dividend stated to be payable on the
            Non-cumulative Convertible Euro Preference Shares in respect of such
            number of dividend periods as the Directors shall determine prior to
            allotment thereof has not been declared and paid in full, and until
            such date as the Directors shall likewise determine; and

      (iii) in such other circumstances as the Directors may determine prior to
            allotment of the Non-cumulative Convertible Euro Preference Shares,

      but not otherwise, together with the right, in such circumstances and on
      such terms, if any, as the Directors may determine prior to allotment of
      the Non-cumulative Convertible Euro Preference Shares, to seek to
      requisition a General Meeting of the Company. Whenever holders of
      Non-cumulative Convertible Euro Preference Shares are so entitled to vote
      on a

<PAGE>

                                     - 130 -

      Resolution, on a show of hands every such holder who is present in person
      shall have one vote and, on a poll, every such holder who is present in
      person or by proxy shall have such number of votes for each Non-cumulative
      Convertible Euro Preference Share held as may be determined by the
      Directors prior to allotment of such Non-cumulative Convertible Euro
      Preference Shares.

2.6   Redemption

      Each series of Non-cumulative Convertible Euro Preference Shares shall,
      subject to the provisions of the Statutes, be redeemable at the option of
      the Company in accordance with the following provisions:-

      (A)   the Company may, subject thereto, redeem on any Redemption Date (as
            hereinafter defined) all or some only of the Non-cumulative
            Convertible Euro Preference Shares by giving to the holders of the
            Non-cumulative Convertible Euro Preference Shares to be redeemed not
            less than 120 days' nor more than 150 days' prior notice in writing
            (a "Notice of Redemption ") of the relevant Redemption Date.
            "Redemption Date" means, in relation to a Non-cumulative Convertible
            Euro Preference Share, any date which falls no earlier than five
            years and one day (or such longer period (if any) as may be fixed by
            the Directors prior to allotment of such Share) after the date of
            allotment of the Non-cumulative Convertible Euro Preference Share to
            be redeemed. The Company shall not be entitled (save with the
            consent of the relevant holder) to give a Notice of Redemption under
            this sub-paragraph (A) in respect of any share for which a
            Conversion Notice (as defined in paragraph 5 of Part 4 of this
            Schedule 2) has been given in accordance with that Part and not
            withdrawn;

      (B)   there shall be paid on each Non-cumulative Convertible Euro
            Preference Share so redeemed, in Euro, the aggregate of the nominal
            amount thereof together with any premium paid on issue and together
            with arrears (if any) of dividends thereon (whether earned or
            declared or not) in respect of the period from the dividend payment
            date last preceding the Redemption Date to the Redemption Date;

      (C)   in the case of a redemption of some only of the Non-cumulative
            Convertible Euro Preference Shares in any series, the Company shall
            for the purpose of determining the particular Non-cumulative
            Convertible Euro Preference Shares to be redeemed cause a drawing to
            be made at the Office or such other place as the Directors may
            approve in the presence of the Auditors for the time being of the
            Company, provided that there shall be excluded from such drawing any
            Non-cumulative Convertible Euro Preference Shares to be converted
            pursuant to Part 4 of this Schedule 2;

      (D)   any Notice of Redemption given under sub-paragraph (A) above shall
            specify the applicable Redemption Date, the particular
            Non-cumulative Convertible Euro Preference Shares to be redeemed and
            the redemption price (specifying the amount of the accrued and
            unpaid dividend per share to be included therein and stating that
            dividends on the Non-cumulative Convertible Euro Preference Shares
            to be redeemed will cease to accrue on redemption), and shall state
            the place or places at which documents of title in respect of such
            Non-cumulative Convertible Euro Preference Shares are to be
            presented and surrendered for redemption and payment of the
            redemption monies is to be effected. Upon such Redemption Date, the
            Company shall redeem the particular Non-cumulative Convertible Euro
            Preference Shares to be redeemed on that date subject to the
            provisions of this paragraph and of the Statutes. No defect in the
            Notice of Redemption or in the giving thereof shall affect the
            validity of the redemption proceedings;

<PAGE>

                                     - 131 -

      (E)   subject to sub-paragraph (I) below, the provisions of this and the
            following sub-paragraph shall have effect in relation to
            Non-cumulative Convertible Euro Preference Shares for the time being
            issued and registered in the Register of Members ( "Registered
            Shares ") and represented by certificates ( "Certificates ") and in
            relation to Non-cumulative Convertible Euro Preference Shares which,
            in accordance with Article 52 of these presents, are for the time
            being issued and represented by a Warrant (as defined in the said
            Article 52) ( "Bearer Shares "). Payments in respect of the amount
            due on redemption of a Registered Share shall be made by Euro cheque
            drawn on a bank in London or upon the request of the holder or joint
            holders not later than the date specified for the purpose in the
            Notice of Redemption by transfer to a Euro account maintained by the
            payee with a bank in London. Such payment will be against
            presentation and surrender of the relative Certificate at the place
            or one of the places specified in the Notice of Redemption and if
            any Certificate so surrendered includes any Non-cumulative
            Convertible Euro Preference Shares not to be redeemed on the
            relevant Redemption Date (other than Non-cumulative Convertible Euro
            Preference Shares to be converted pursuant to Part 4 of this
            Schedule 2) the Company shall within fourteen days thereafter issue
            to the holder, free of charge, a fresh Certificate in respect of
            such Non-cumulative Convertible Euro Preference Shares. Payment in
            respect of the amount due on redemption of a Bearer Share shall be
            made by Euro cheque drawn on a bank in London or upon the request of
            the holder not later than the date specified for the purpose in the
            Notice of Redemption by transfer to a Euro account maintained by the
            payee with a bank in London. Such payments will be made against
            presentation and surrender of the Warrant and all unmatured dividend
            coupons and talons (if any) at the place or the places specified in
            the Notice of Redemption. Upon the relevant Redemption Date all
            unmatured dividend coupons and any talon for additional dividend
            coupons appertaining thereto (whether or not returned) shall become
            void and no payment will be made in respect thereof. If the Warrant
            so surrendered represents any Non-cumulative Convertible Euro
            Preference Shares not to be redeemed on the relevant Redemption Date
            (other than Non-cumulative Convertible Euro Preference Shares to be
            converted pursuant to Part 4 of this Schedule 2) the Company shall
            issue, free of charge, a fresh Warrant representing such Bearer
            Shares which are not to be redeemed on such Redemption Date.

            All payments in respect of redemption monies will in all respects be
            subject to any applicable fiscal or other laws;

      (F)   as from the relevant Redemption Date the dividend on the
            Non-cumulative Convertible Euro Preference Shares due for redemption
            shall cease to accrue except on any such Non-cumulative Convertible
            Euro Preference Share in respect of which, upon the due surrender of
            the Certificate or, as the case may be, the Warrant and all
            unmatured dividend coupons and talons (if any) in respect thereof,
            in accordance with sub-paragraph (E) above, payment of the
            redemption monies due on such Redemption Date shall be improperly
            withheld or refused, in which case such dividend, at the rate then
            applicable, shall be deemed to have continued and shall accordingly
            continue to accrue from the relevant Redemption Date to the date of
            payment of such redemption monies. Such Non-cumulative Convertible
            Euro Preference Share shall not be treated as having been redeemed
            until the redemption monies in question together with the accrued
            dividend thereon shall have been paid;

      (G)   if the due date for the payment of the redemption monies on any
            Non-cumulative Convertible Euro Preference Shares is not a Euro
            Business Day then payment of such

<PAGE>

                                     - 132 -

            monies will be made on the next succeeding day which is a Euro
            Business Day and without any interest or other payment in respect of
            such delay unless such day shall fall within the next calendar month
            whereupon such payment will be made on the preceding Euro Business
            Day;

      (H)   the receipt of the holder for the time being of any Registered Share
            (or in the case of joint holders the receipt of any one of them) and
            the receipt of the person delivering any Warrant to the place or one
            of the places specified pursuant to sub-paragraph (D) above in
            respect of the monies payable on redemption on such Registered Share
            or, as the case may be, such Bearer Share, shall constitute an
            absolute discharge to the Company; and

      (I)   subject as aftermentioned, the provisions of sub-paragraphs (E) and
            (F) above shall have effect in relation to Registered Shares which
            are in uncertificated form within the meaning of the Uncertificated
            Securities Regulations 1995 (as in force on the date of adoption of
            this Schedule 2) in the same manner as they have effect in relation
            to Registered Shares represented by Certificates, save that (i) any
            provision of the said paragraphs requiring presentation and
            surrender of a Certificate shall be satisfied in the manner
            prescribed or permitted by the said Regulations (or by any enactment
            or subordinate legislation which amends or supersedes those
            Regulations) or (subject to those Regulations or such enactment or
            subordinate legislation) in such manner as may from time to time be
            prescribed by the Directors), and (ii) the Company shall not be
            under any obligation to issue a fresh Certificate under sub-
            paragraph (E).

2.7   Purchase

      Subject to the provisions of the Statutes and any other applicable laws,
      the Company may at any time and from time to time purchase any
      Non-cumulative Convertible Euro Preference Shares upon such terms as the
      Directors shall determine provided that, in the case of Non-cumulative
      Convertible Euro Preference Shares which are listed on the London Stock
      Exchange, the purchase price, exclusive of expenses and accrued dividends,
      shall not exceed (i) in the case of a purchase in the open market, or by
      tender (which shall be available alike to all holders of the
      Non-cumulative Convertible Euro Preference Shares), the average of the
      closing middle market quotations of such Non-cumulative Convertible Euro
      Preference Shares on the London Stock Exchange (as derived from The London
      Stock Exchange Daily Official List) for the last ten dealing days
      preceding the date of purchase or (if higher), in the case of a purchase
      in the open market only, the market price on the date of purchase provided
      that such market price is not more than 105 per cent of such average and
      (ii) in the case of a purchase by private treaty, 120 per cent of the
      closing middle market quotation of such Non-cumulative Convertible Euro
      Preference Shares on the London Stock Exchange (as derived from The London
      Stock Exchange Daily Official List) for the last dealing day preceding the
      date of purchase: but so that this proviso shall not apply to any purchase
      of Non-cumulative Convertible Euro Preference Shares made in the ordinary
      course of a business of dealing in securities.

2.8   Conversion

      The Non-cumulative Convertible Euro Preference Shares shall be convertible
      into Ordinary Shares in the manner set out in (and subject to the
      provisions of) Part 4 of this Schedule 2. The provisions of paragraph 2.6
      of this Part 3 regarding redemption are without prejudice to any
      provisions in the said Part 4 providing for the effecting of conversion by
      means of redemption.

<PAGE>

                                     - 133 -

3.    (a)   Save with the written consent of the holders of three-quarters in
            nominal value of, or with the sanction of an Extraordinary
            Resolution passed at a separate General Meeting of the holders of,
            the Non-cumulative Convertible Euro Preference Shares, the Directors
            shall not authorise or create, or increase the amount of, any shares
            of any class or any security convertible into shares of any class
            ranking as regards rights to participate in the profits or assets of
            the Company (other than on a redemption or purchase by the Company
            of any such shares) in priority to the Non-cumulative Convertible
            Euro Preference Shares.

      (b)   The special rights attached to any series of Non-cumulative
            Convertible Euro Preference Shares allotted or in issue shall not
            (unless otherwise provided by their terms of issue) be deemed to be
            varied by the creation or issue of any New Shares ranking as regards
            participation in the profits or assets of the Company in some or all
            respects pari passu with or after such Non-cumulative Convertible
            Euro Preference Shares. Any new shares ranking in some or all
            respects pari passu with such Non-cumulative Convertible Euro
            Preference Shares may without their creation or issue being deemed
            to vary the special rights attached to any Non-cumulative
            Convertible Euro Preference Share then in issue either carry rights
            identical in all respects with such Non-cumulative Convertible Euro
            Preference Shares or any of them or carry rights differing therefrom
            in any respect, including, but without prejudice to the generality
            of the foregoing, in that:-

            (i)   the rate or means of calculating the dividend may differ and
                  the dividend may be cumulative or non-cumulative;

            (ii)  the New Shares or any series thereof may rank for dividend as
                  from such date as may be provided by the terms of issue
                  thereof and the dates for payment of dividend may differ;

            (iii) the New Shares may be denominated in Sterling or in any
                  Foreign Currency;

            (iv)  a premium may be payable on return of capital or there may be
                  no such premium;

            (v)   the New Shares may be redeemable at the option of the holder
                  or of the Company, or may be non-redeemable and if redeemable
                  at the option of the Company, they may be redeemable at
                  different dates and on different terms from those applying to
                  the Non-cumulative Convertible Euro Preference Shares; and

            (vi)  the New Shares may be convertible into Ordinary Shares or any
                  other class of shares ranking as regards participation in the
                  profits and assets of the Company pari passu with or after
                  such Non-cumulative Convertible Euro Preference Shares in each
                  case on such terms and conditions as may be prescribed by the
                  terms of issue thereof.

<PAGE>

                                     - 134 -

                                     PART 4

                   CONVERSION OF CONVERTIBLE PREFERENCE SHARES

1.    Each holder of Convertible Preference Share(s) shall be entitled in the
      manner set out in (and subject to the provisions of) this Part 4 to
      convert into fully paid Ordinary Shares such of his Convertible Preference
      Shares as have not, as at the Conversion Notice Date, either been redeemed
      or been the subject of a valid Notice of Redemption given under paragraph
      2.6 of Part 1, 2 or 3 (as applicable) of this Schedule 2 and specifying a
      date on or before the Second Conversion Date as the Redemption Date.

2.    For the purposes of this Part 4:

      (A)   the First Conversion Date shall be 25 London Stock Exchange dealing
            days prior to the Second Conversion Date and the Second Conversion
            Date shall be, in relation to any Convertible Preference Share, the
            date specified as such by the Directors prior to allotment thereof
            which falls not earlier than five years and one day after the issue
            of that share;

      (B)   the Conversion Notice Date shall be 120 days prior to the Second
            Conversion Date;

      (C)   the conversion right shall be exercisable by completion of a
            Conversion Notice (as defined in paragraph 5 below) submitted by
            holders of Convertible Preference Shares ("Converting Holders")
            setting out the number of Convertible Preference Shares which are to
            be converted pursuant to such notice (the "Conversion Amount") and
            lodging such Conversion Notice with the Company's Registrar at any
            time during the period and in the manner referred to in paragraph 8
            below;

      (D)   the Redemption Amount in relation to a Convertible Preference Share
            means the nominal amount thereof together with any premium paid on
            issue;

      (E)   The First Exchange Rate shall be the applicable Foreign
            Currency/Sterling exchange rate determined by the Broker (as defined
            below) as determination agent by taking the weighted average
            (rounded, if necessary, to the nearest L0.0001, L0.00005
            being rounded upwards) of the spot rate of exchange for the purchase
            of the Foreign Currency in which the relevant Conversion Amount is
            denominated with Sterling as quoted at the request of the Broker by
            three major banks in the London foreign exchange market selected by
            the Broker at 11:00 a.m. (London time) on each day during the Broker
            Bid Period (as defined below) that such banks provide such quote to
            the Broker. The Second Exchange Rate shall be the applicable Foreign
            Currency/Sterling exchange rate determined by the Broker as
            determination agent by taking the weighted average (rounded, if
            necessary, to the nearest L0.0001, L0.00005 being
            rounded upwards) of the spot rate of exchange for the purchase of
            the Foreign Currency in which the relevant Conversion Amount is
            denominated with sterling as quoted at the request of the Broker by
            three major banks in the London foreign exchange market selected by
            the Broker at 11:00 a.m. (London time) on each day during the
            Calculation Period (as defined below) that such banks provide such
            request to the Broker. For the avoidance of doubt, references in
            this Part 4 to the conversion of any Conversion Price into the
            Foreign Currency in which the relevant Conversion Amount is
            denominated shall only apply in the case of a Conversion Amount
            denominated in Foreign Currency, and shall otherwise be disregarded.

<PAGE>

                                     - 135 -

            Each Convertible Preference Share which is the subject of a
            Conversion Notice shall be subject to the cash settlement provisions
            of this Part 4. The Company will use its reasonable endeavours, to
            the extent permitted by applicable law, to arrange for the sale of
            the Ordinary Shares into which such Convertible Preference Shares
            will convert so as to raise net cash proceeds of an amount equal to
            the aggregate Redemption Amount of such Convertible Preference
            Shares. The sale will be conducted by means of a process pursuant to
            which a broker selected by the Company (the "Broker") will solicit
            bids for the relevant Ordinary Shares (the "Placing"). Such bids
            will be solicited during the period of the 20 London Stock Exchange
            dealing days ending five London Stock Exchange dealing days before
            the First Conversion Date (the "Broker Bid Period").

      3.    The number of Ordinary Shares to be issued on the conversion of each
            Convertible Preference Share shall be determined by dividing the
            Redemption Amount by the Conversion Price.

            (A)   In the case of Convertible Preference Shares which are
                  converted on the First Conversion Date, the Conversion Price
                  shall be established by reference to the bids received and
                  accepted by the Broker pursuant to the Placing and shall be
                  converted into the Foreign Currency in which the relevant
                  Conversion Amount is denominated by reference to the First
                  Exchange Rate (provided that the Company will not in any
                  circumstances be obliged to issue Ordinary Shares in
                  connection with the Placing at a price per share of less than
                  either (aa) 95% of the weighted average closing price per
                  Ordinary Share on the London Stock Exchange during the Broker
                  Bid Period; or (bb) their nominal amount. The Directors shall
                  specify prior to allotment of any particular series of
                  Convertible Preference Shares which of (aa) or (bb) shall
                  apply in respect of that series (the "Base Price")). The
                  Conversion Price shall be the highest price per Ordinary Share
                  at or above the Base Price at which the Broker is able to
                  place Ordinary Shares so as to raise net cash proceeds
                  (converted as aforesaid) of an amount equal to the aggregate
                  Redemption Amount of the Conversion Amount.

                  On the First Conversion Date:

                  (i)   the Company shall issue to the Broker or as the Broker
                        shall direct the Ordinary Shares so placed (and lodging
                        by a Converting Holder of a Conversion Notice with the
                        Company's Registrar shall be deemed irrevocably to
                        authorise and instruct the Directors to allot the
                        Ordinary Shares arising on conversion of his Convertible
                        Preference Shares pursuant to this Part 4 to the Broker
                        or as the Broker shall direct);

                  (ii)  the Broker shall collect the net cash proceeds of the
                        Placing, exchange such proceeds at the First Exchange
                        Rate into the currency in which the Convertible
                        Preference Shares which have been converted are
                        denominated and hold such proceeds in separate bank
                        account(s) until the Second Conversion Date.

            (B)   On the Second Conversion Date the net cash proceeds of the
                  Placing (if any) held by the Broker (the "Total Cash Amount")
                  shall be paid to the Converting Holders such that each
                  Converting Holder receives the Redemption Amount of his
                  Conversion Amount, provided that if the Total Cash Amount
                  falls short of the aggregate Redemption Amount of the
                  Conversion Amount:

                  (i)   the Total Cash Amount shall be paid to the Converting
                        Holders pro rata to their holding of Conversion Amount,
                        (and the amount (if any) by which the

<PAGE>

                                     - 136 -

                        cash paid or payable to a Converting Holder falls short
                        of the aggregate Redemption Amount of his Conversion
                        Amount shall be the "Remaining Redemption Amount"); and

                  (ii)  the Company shall issue to each Converting Holder the
                        whole number of Ordinary Shares (if any) calculated by
                        dividing the Remaining Redemption Amount by the
                        Conversion Price, being 95% of the weighted average
                        closing price per Ordinary Share on the London Stock
                        Exchange during the period of the 20 London Stock
                        Exchange dealing days ending five London Stock Exchange
                        dealing days before the Second Conversion Date (the
                        "Calculation Period") (converted into Sterling at the
                        Second Exchange Rate).

      Fractions of Ordinary Shares will not be issued on conversion and no cash
      adjustment will be made. However, if more than one Convertible Preference
      Share held by any holder is to be converted and the Ordinary Shares
      arising on conversion are to be registered in the same name, the number of
      Ordinary Shares to be issued in respect thereof shall be calculated on the
      basis of the aggregate Redemption Amount of such Convertible Preference
      Shares.

      If at the time that the Conversion Price or Base Price is to be calculated
      the Ordinary Shares are not listed and traded on the London Stock
      Exchange, references in this article to the London Stock Exchange shall be
      to such other exchange on which the Ordinary Shares are listed and traded.

4.    The entitlement of holders of Convertible Preference Shares to convert
      such shares into fully paid Ordinary Shares shall be conditional on:-

      (A)   the Company, as at the First Conversion Date or the Second
            Conversion Date (as the case may be), having sufficient authorised
            but unissued share capital to issue the Ordinary Shares falling to
            be issued on such date in connection with the conversion of
            Convertible Preference Shares;

      (B)   the number of Ordinary Shares into which the Directors have been
            authorised pursuant to Section 80 of the 1985 Act to issue rights to
            convert being sufficient, as at the First Conversion Date or the
            Second Conversion Date (as the case may be) to allot the Ordinary
            Shares falling to be allotted on such date in connection with the
            conversion of Convertible Preference Shares or the Directors having
            been authorised prior to such date pursuant to section 80 to allot
            such shares (together with the condition set out in (A) above, the
            "Relevant Shareholder Approvals"); and

      (C)   the delivery by the relevant Converting Holder of the Certificates
            (or an appropriate form of indemnity) for such Convertible
            Preference Shares as are the subject of a Certificated Conversion
            Notice (as defined in paragraph 6 below) or (as the case may be) the
            transfer of such Convertible Preference Shares as are the subject of
            an Uncertificated Conversion Notice (as defined in paragraph 7
            below) into such account as may be specified in such notice.

      The Company undertakes to review, prior to each Annual General Meeting
      (the "relevant Annual General Meeting"), whether sufficient Relevant
      Shareholder Approvals would be available to permit the allotment and issue
      of three times the number of Ordinary Shares that would fall to be
      allotted and issued if all of the Convertible Preference Shares were to be
      converted into Ordinary Shares on a deemed conversion date (the "Deemed
      Conversion Date") which was 60 days prior to the relevant Annual General
      Meeting, using a deemed Conversion Price of 95% of the weighted average
      closing price per Ordinary Share on the

<PAGE>

                                     - 137 -

      London Stock Exchange during the 20 London Stock Exchange dealing days
      ending five London Stock Exchange dealing days prior to such Deemed
      Conversion Date converted into the Foreign Currency in which the relevant
      Conversion Amount is denominated by reference to the First Exchange rate
      provided that for these purposes the Broker Bid Period shall be the 20
      London Stock Exchange dealing days ending five London Stock Exchange
      dealing days prior to such Deemed Conversion Date. If and to the extent
      that the Relevant Shareholder Approvals would be insufficient to permit
      the allotment and issue of three times the number of Ordinary Shares that
      would fall to be so allotted and issued, the Company undertakes to propose
      such resolutions at the relevant succeeding Annual General Meeting, that,
      when approved, would permit the allotment and issue of three times the
      number of Ordinary Shares that would fall to be so allotted and issued.

      If the Relevant Shareholder Approvals are insufficient to permit the
      allotment and issue of such number of Ordinary Shares as fall to be
      allotted and issued on the First Conversion Date or the Second Conversion
      Date in connection with the conversion of Convertible Preference Shares,
      the Company undertakes to convert the maximum number of Convertible
      Preference Shares which it is legally permitted to convert under the
      existing Relevant Shareholder Approvals pro rata to the respective
      Conversion Amounts of Converting Holders. Converting Holders may, within
      60 days of the Second Conversion Date submit a written notice to the
      Company (the "Withdrawal Notice") setting out the number of Convertible
      Preference Shares which they wish to withdraw from the conversion
      procedure set out in this Part 4. Any Convertible Preference Shares so
      withdrawn will lose the right to convert into Ordinary Shares. In relation
      to any Convertible Preference Shares so withdrawn which are the subject of
      a Certificated Conversion Notice, the Company will as soon as practicable
      after receipt of the relevant Withdrawal Notice, return the relevant
      Certificates for such shares which were lodged with the relevant
      Conversion Notice. In relation to any Convertible Preference Shares so
      withdrawn which are the subject of an Uncertificated Conversion Notice,
      the Company will as soon as practicable after receipt of the relevant
      Withdrawal Notice, transfer the relevant Convertible Preference Shares
      into such account as may be specified by the relevant Converting Holder.
      Any Convertible Preference Shares which were the subject of a Conversion
      Notice and which could not be converted under the Relevant Shareholder
      Approvals in place as at the First Conversion Date and the Second
      Conversion Date and which are not the subject of a Withdrawal Notice shall
      be "Unconverted Preference Shares". The Company undertakes that for so
      long as Unconverted Preference Share(s) remain outstanding, such
      resolutions will be proposed at each subsequent Annual General Meeting
      that, when approved, would permit the conversion of the Unconverted
      Preference Shares. Following shareholder approval of the relevant
      resolutions, the Unconverted Preference Shares will be converted into
      Ordinary Shares and paragraphs 2 and 3 of this Part 4 shall apply to the
      conversion of such Unconverted Preference Shares subject to the following
      amendments:-

      (A)   the Second Conversion Date shall be 60 London Stock Exchange dealing
            days after the granting of shareholder approval for the relevant
            resolutions; and

      (B)   the Conversion Price shall be converted into the Foreign Currency in
            which the relevant Conversion Amount is denominated by reference to
            the Second Exchange Rate, provided that for these purposes the
            Calculation Period shall be the 20 London Stock Exchange dealing
            days ending five London Stock Exchange dealing days prior to the
            Second Conversion Date.

5.    For the purposes of this Part 4, a Conversion Notice means, in relation to
      any Convertible Preference Shares that, as at the date of such notice, are
      Registered Shares (as defined in Part 1, 2 or 3 (as the case may be) of
      this Schedule 2), a Certificated Conversion Notice (as

<PAGE>

                                     - 138 -

      defined in paragraph 6 below) or, in relation to any Convertible
      Preference Shares that, as at the date of such notice, are Bearer Shares
      (as defined in Part 1, 2 or 3 (as the case may be) of this Schedule 2), an
      Uncertificated Conversion Notice (as defined in paragraph 7 below).

6.    In relation to any Convertible Preference Shares that, as at the date of
      the relevant Conversion Notice are Registered Shares, the right to convert
      shall be exercised if the registered holder of any such Convertible
      Preference Shares, shall have delivered to the Company's Registrar, at any
      time during the period referred to in paragraph 8 below, a duly signed and
      completed Conversion Notice in such form as may from time to time be
      prescribed by the Directors (and obtainable from the Company's Registrar)
      (a "Certificated Conversion Notice ") together with the Certificate for
      such shares (or an appropriate form of indemnity).

7.    In relation to any Convertible Preference Shares that, as at the date of
      the relevant Conversion Notice, are Bearer Shares, the right to convert
      shall be exercised if an Uncertificated Conversion Notice is received as
      referred to below at any time during the period referred to in paragraph 8
      below. For these purposes, an Uncertificated Conversion Notice shall mean
      an instruction and/or notification received by the Company or such person
      as it may require in such form and having such effect as may in each case
      from time to time be prescribed by the Directors (subject always to the
      facilities and requirements of the relevant system) and details of which
      shall be obtainable from the Company's Registrar. Without prejudice to the
      generality of the foregoing, the form of Conversion Notice referred to
      above may be such as to require the holder of the Convertible Preference
      Shares concerned to transfer such Convertible Preference Shares into such
      account as may be specified by the Company in the Uncertificated
      Conversion Notice.

8.    The period referred to in paragraphs 6 and 7 above for the delivery of a
      Conversion Notice is the period falling not less than 90 and not more than
      120 days prior to the Second Conversion Date. Unless the Directors
      otherwise determine in any case or cases, a Conversion Notice once
      delivered shall be irrevocable (save by means of a valid Withdrawal Notice
      given pursuant to paragraph 4).

9.    The following provisions shall apply to conversion of the Convertible
      Preference Shares:-

      (A)   conversion may be effected in such manner as the Directors shall,
            subject to the requirements of applicable law and the provisions
            hereof, from time to time determine and, without prejudice to the
            generality of the foregoing, may be effected:

            (aa)  by the redemption of Convertible Preference Shares on the
                  relevant Conversion Date for the Redemption Amount (converted
                  into Sterling by reference to the rate which the Directors
                  determine on the First Conversion Date in the case of
                  Convertible Preference Shares converted on the First
                  Conversion Date and on the Second Conversion Date in the case
                  of Convertible Preference Shares converted on the Second
                  Conversion Date to be the appropriate rate for the purchase of
                  Sterling with the currency in which the relevant Redemption
                  Amount is denominated) and the application of the redemption
                  moneys on behalf of the holder of the Convertible Preference
                  Shares so redeemed as herein provided. In the case of a
                  conversion effected by means of the redemption of Convertible
                  Preference Shares, the Directors may effect redemption of the
                  relevant Convertible Preference Shares out of profits of the
                  Company which would otherwise be available for dividend, out
                  of the proceeds of a fresh issue of shares or in any other
                  manner for the time being permitted by law. In the case of
                  redemption

<PAGE>

                                     - 139 -

                  out of profits, the Directors shall apply the Redemption
                  Amount (converted into Sterling as aforesaid) in the name of
                  the holder of the Convertible Preference Shares to be
                  converted in subscribing for the appropriate number of
                  Ordinary Shares as determined in accordance with the
                  provisions hereof at such premium per Ordinary Share as shall
                  represent the amount (if any) by which the aggregate
                  Redemption Amount (converted into Sterling as aforesaid)
                  exceeds the aggregate nominal amount of the Ordinary Shares to
                  which the holder is so entitled divided by the number of such
                  Ordinary Shares. In the case of redemption out of the proceeds
                  of a fresh issue of shares, the Directors may arrange for the
                  issue of the appropriate number of Ordinary Shares to the
                  secretary of the Company or any other person selected by the
                  Directors on terms that such person will subscribe and pay, as
                  agent on the holder's behalf, for such shares at such premium
                  per Ordinary Share as shall represent the amount (if any) by
                  which the aggregate Redemption Amount (converted into Sterling
                  as aforesaid) exceeds the aggregate nominal amount of the
                  Ordinary Shares to which the holder is so entitled divided by
                  the number of such Ordinary Shares (and such person shall be
                  deemed to have authority to borrow for such purpose) and, in
                  any such case, the Conversion Notice given by or relating to a
                  holder of the relevant Convertible Preference Shares shall be
                  deemed irrevocably to authorise and instruct the Directors to
                  apply the Redemption Amount (converted into Sterling as
                  aforesaid) in payment to the holder's agent, who shall be
                  entitled to retain the same for his own benefit without being
                  accountable therefor to the holder. In relation to any
                  Convertible Preference Shares which at the date of the
                  relevant Conversion Notice are Bearer Shares, and which are to
                  be redeemed in accordance with this paragraph 9(A)(aa) the
                  Directors shall be entitled in their absolute discretion to
                  determine the procedures for the redemption and cancellation
                  of such Convertible Preference Shares (subject always to the
                  facilities and requirements of the relevant system concerned
                  and to the redemption on the relevant Conversion Date of the
                  Convertible Preference Shares concerned) and the provisions of
                  this paragraph shall apply mutatis mutandis in respect of such
                  redemption; or

            (bb)  by means of a capitalisation issue and consolidation. In that
                  case the requisite capitalisation issue and consolidation may
                  be effected pursuant to the authority conferred by the passing
                  of the resolution which created the Convertible Preference
                  Shares, by the Company capitalising from profits or reserves
                  (including any share premium account or capital redemption
                  reserve) such number of new Ordinary Shares as shall bring the
                  total nominal amount of the Convertible Preference Shares
                  (converted into sterling by reference to the rate which the
                  Directors determine on the First Conversion Date in the case
                  of Convertible Preference Shares converted on the First
                  Conversion Date and on the Second Conversion Date in the case
                  of Convertible Preference Shares converted on the Second
                  Conversion Date to be the appropriate rate for the purchase of
                  Sterling with the currency in which the relevant Redemption
                  Amount is denominated) and the new Ordinary Shares to at least
                  the total nominal amount of the Ordinary Shares into which the
                  Convertible Preference Shares will convert on the relevant
                  Conversion Date, consolidating all the relevant shares into
                  one share (the "Consolidated Share") and sub-dividing the
                  Consolidated Share into the number of Ordinary Shares arising
                  from the conversion of the Convertible Preference Shares. The
                  balance of such sub-divided share (including any fraction)
                  shall be non-voting deferred shares of such nominal amount as
                  the

<PAGE>

                                     - 140 -

      Directors may determine ("Non-Voting Deferred Shares"), shall be
      certificated shares and shall have the following rights and restrictions:-

      (1)   on a winding-up or other return of capital, the Non-Voting Deferred
            Shares shall entitle the holders of the shares only to payment of
            the amounts paid up on those shares, after repayment to the holders
            of the Ordinary Shares of the nominal amount paid up on the Ordinary
            Shares held by them respectively and the payment of L0.01 on
            each Ordinary Share;

      (2)   the Non-Voting Deferred Shares shall not entitle the holders of the
            shares to the payment of any dividend or to receive notice of or to
            attend or vote at any general meeting of the Company;

      (3)   the Non-Voting Deferred Shares shall not, save as provided in sub-
            paragraph (4) below, be transferable;

      (4)   such conversion shall be deemed to confer irrevocable authority on
            the Company to appoint any person to execute on behalf of the
            holders of any Non-Voting Deferred Shares an instrument of transfer
            of the shares, and/or an agreement to transfer the shares, to such
            person or persons as the Company may determine as a custodian of the
            shares or to purchase or to cancel the shares in accordance with the
            provisions of the Statutes in any such case for not more than
            L0.01 for all the shares being transferred, purchased or
            cancelled (to be paid to such one of the holders as may be selected
            by lot) without obtaining the sanction of the holder or holders of
            the shares, and pending such transfer or purchase or cancellation to
            retain the certificate for such Non-Voting Deferred Shares; and

      (5)   the Company may at its option at any time after the creation of any
            Non-Voting Deferred Shares redeem all of those shares then in issue
            at a price not exceeding L0.01 for all the shares redeemed at
            any one time (to be paid to such one of the holders as may be
            selected by lot), upon giving the holders of the Non-Voting Deferred
            Shares not less than 28 days' previous notice in writing of its
            intention so to do, fixing a time and place for the redemption. The
            Non-Voting Deferred Shares will not be listed on the London Stock
            Exchange. Upon or after the redemption of any Non-Voting Deferred
            Shares pursuant to this sub-paragraph (bb) the Directors may
            pursuant to the authority conferred by the passing of the resolution
            which created the Convertible Preference Shares consolidate and/or
            sub-divide and/or convert the authorised Non-Voting Deferred Share
            capital existing as a consequence of such redemption into shares of
            any other class of share capital into which the authorised share
            capital of the Company is or may at that time be divided of a like
            nominal amount (as nearly as may be) as the shares of such class or
            into unclassified shares of the same nominal amount (as nearly as
            may be) as the shares of such class or into unclassified shares of
            the same nominal amount as the Non-Voting Deferred Shares;

(B)   the preferential dividend on Convertible Preference Shares which converted
      pursuant to this Part 4 shall cease to accrue with effect from the First
      Conversion Date in the

<PAGE>

                                     - 141 -

      case of Convertible Preference Shares converted on such date and with
      effect from the Second Conversion Date in the case of Convertible
      Preference Shares converted on such date. Ordinary Shares arising on
      conversion will be allotted and registered as of the First Conversion Date
      in the case of Ordinary Shares arising from Convertible Preference Shares
      converted on such date and as of the Second Conversion Date in the case of
      Ordinary Shares arising from Convertible Preference Shares converted on
      such date, in each case to and in the name of the holder of the relevant
      Convertible Preference Shares or, subject to paragraph 3(A)(i) of this
      Part 4, his nominee and shall rank pari passu with the Ordinary Shares in
      issue on such Conversion Date except that the Ordinary Shares so allotted
      will not rank for any dividend or other distribution which has been
      announced, declared, recommended or resolved prior to such Conversion Date
      by the Directors or by the Company in general meeting to be paid or made,
      if the record date for such dividend or other distribution is on or prior
      to such Conversion Date or (in any other case) if and so far as an
      adjustment relating to the dividend, distribution or right has become
      effective;

(C)   unless the Directors otherwise determine, or unless the Uncertificated
      Securities Regulations and/or the requirements of the relevant system
      otherwise require, the Ordinary Shares arising on conversion of any
      Convertible Preference Shares shall be or shall be issued (as appropriate)
      as certificated shares (where the Convertible Preference Shares converted
      were, on the date of the relevant Conversion Notice, Registered Shares or
      where the relevant Converting Holder has not specified a Crest account for
      this purpose in the relevant Uncertificated Conversion Notice) or as
      uncertificated shares (where the Convertible Preference Shares converted
      were, on the date of the relevant Conversion Notice, uncertificated shares
      and the relevant Converting Holder has specified a Crest account for this
      purpose in the relevant Uncertificated Conversion Notice), provided that
      if the Company is unable under the facilities and requirements of the
      relevant system to issue Ordinary Shares in respect of the person entitled
      thereto in uncertificated form, such shares shall be issued as
      certificated shares; and

(D)   the Company shall procure that there shall be despatched or made free of
      charge (but uninsured and at the risk of the holder or the person entitled
      thereto, or the first-named thereof, as the case may be):-

      (aa)  a certificate in respect of Ordinary Shares arising on conversion
            which are, in accordance with sub-paragraph (C) above, certificated
            shares, and a new certificate for any unconverted Convertible
            Preference Shares comprised in any share certificate surrendered by
            the holder, not later than 28 days after the relevant Conversion
            Date; and

      (bb)  payment in respect of the accrued preferential dividend on the
            Convertible Preference Shares converted, on the payment date in
            respect of such dividend next following the relevant Conversion Date
            (unless such Conversion Date is also a dividend payment date, in
            which case on such dividend payment date).

(E)   For the purposes of this paragraph 9, whether any Convertible Preference
      Shares are certificated shares or uncertificated shares on the relevant
      Conversion Date shall be determined by reference to the register of
      members as at 12.01 a.m. on the relevant Conversion Date or such other
      time as the Directors may (subject to the facilities and requirements of
      the relevant system concerned) in their absolute discretion determine.

<PAGE>

                                     - 142 -

(F)   The Company shall use reasonable endeavours to procure that the Ordinary
      Shares arising on conversion of Convertible Preference Shares are admitted
      to the Official List of The London Stock Exchange at the earliest
      practicable date following issue and allotment of such.

<PAGE>

                                     - 143 -

                                   SCHEDULE 3

        NON-CUMULATIVE CATEGORY II CONVERTIBLE STERLING PREFERENCE SHARES

1.    The Non-cumulative Category II Convertible Sterling Preference Shares are
      New Preference Shares. They shall rank after the Cumulative Preference
      Shares to the extent specified in Article 4 and this Schedule 3, and shall
      rank pari passu inter se and (save as aforesaid) with the Cumulative
      Preference Shares and with all other New Preference Shares. They shall
      confer the rights and be subject to the restrictions set out or referred
      to in this Schedule 3. The Non-cumulative Category II Convertible Sterling
      Preference Shares may be issued in one or more separate series, and each
      series shall be identified in such manner as the Directors may determine
      without any such determination or identification requiring any alteration
      to these presents.

2.    Each Non-cumulative Category II Convertible Sterling Preference Share
      shall confer the following rights as to participation in the profits and
      assets of the Company, receipt of notices, attendance and voting at
      meetings, redemption and conversion:

2.1   INCOME

      The right (subject to the provisions of paragraph 2.2, if applicable) to a
      non-cumulative preferential dividend at nine per cent per annum, accruing
      daily, payable twice yearly on 31 March and 30 September (each a "dividend
      payment date" and each such period being a "dividend period") (whether
      earned or declared or not) with the first dividend payment date being 31
      March 2000. References in these presents to a "dividend" on the
      Non-cumulative Category II Convertible Sterling Preference Shares include
      a reference to each dividend in respect of each dividend period applicable
      thereto and references in this Schedule to dividend payment dates and
      dividend periods are to dividend payment dates and dividend periods in
      respect of the Non-cumulative Category II Convertible Sterling Preference
      Shares only. Such dividends shall be paid in priority to the payment of
      any dividends on the Ordinary Shares. The Non-cumulative Category II
      Convertible Sterling Preference Shares shall rank for dividend after the
      Cumulative Preference Shares, pari passu with the Non-cumulative Sterling
      Preference Shares, the Non-cumulative Dollar Preference Shares, the
      Category II Non-cumulative Dollar Preference Shares, all other Convertible
      Preference Shares and all other New Preference Shares expressed to rank
      pari passu therewith as regards participation in profits and otherwise in
      priority to any other share capital in the Company.

2.2   FURTHER PROVISIONS AS TO INCOME

      The following provisions shall apply:

      (i)   if, in the opinion of the Directors, the distributable profits of
            the Company are sufficient to cover the payment in full of dividends
            on the Non-cumulative Category II Convertible Sterling Preference
            Shares on any dividend payment date and also the payment in full of
            all other dividends stated to be payable on such date on any other
            New Preference Share expressed to rank pari passu therewith as
            regards participation in profits, after payment in full, or the
            setting aside of a sum to cover the payment in full, of all
            dividends stated to be payable on such date on any Cumulative
            Preference Share, then each such dividend shall be paid in full;

      (ii)  if, in the opinion of the Directors, the distributable profits of
            the Company are insufficient to cover the payment in full of
            dividends on the Non-cumulative

<PAGE>

                                     - 144 -

            Category II Convertible Sterling Preference Shares on any dividend
            payment date and also the payment in full of all other dividends
            stated to be payable on such date on any other New Preference Share
            expressed to rank pari passu therewith as regards participation in
            profits, after payment in full, or the setting aside of a sum to
            cover the payment in full, of all dividends stated to be payable on
            or before such date on any Cumulative Preference Share, then
            dividends shall be paid pro rata for the Non-cumulative Category II
            Convertible Sterling Preference Shares and such other New Preference
            Shares to the extent of the available distributable profits (if any)
            to the intent that the amount of dividend paid per share on each
            such Non-cumulative Category II Convertible Sterling Preference
            Share and other New Preference Share will bear to each other the
            same ratio as the dividends accrued per share on each such
            Non-cumulative Category II Convertible Sterling Preference Share and
            other New Preference Share bear to each other. If it shall
            subsequently appear that any such dividend which has been paid
            should not, in accordance with the provisions of this sub-paragraph,
            have been so paid, then provided the Directors shall have acted in
            good faith, they shall not incur any liability for any loss which
            any shareholder may suffer in consequence of such payment having
            been made;

     (iii)  if, in the opinion of the Directors, the payment of any dividend on
            any Non-cumulative Category II Convertible Sterling Preference
            Shares would breach or cause a breach of the capital adequacy
            requirements of the Financial Services Authority (or any person or
            body to whom the banking supervision functions of the Financial
            Services Authority are transferred) applicable to the Company and/or
            any of its subsidiaries, then none of such dividend shall be
            declared or paid;

     (iv)   subject to sub-paragraph (v) below, the Non-cumulative Category II
            Convertible Sterling Preference Shares shall carry no further right
            to participate in the profits of the Company and if and to the
            extent that any dividend or part thereof is on any occasion not paid
            for the reasons described in sub-paragraph (ii) or (iii) above, the
            holders of such shares shall have no claim in respect of such
            non-payment;

     (v)    if any date on which dividends are payable on Non-cumulative
            Category II Convertible Sterling Preference Shares is not a day on
            which banks in London are open for business (a Sterling Business
            Day), then payment of the dividend payable on such date will be made
            on the succeeding Sterling Business Day and without any interest or
            other payment in respect of such delay unless such day shall fall
            within the next calendar month whereupon such payment will be made
            on the preceding Sterling Business Day;

     (vi)   dividends payable on Non-cumulative Category II Convertible Sterling
            Preference Shares shall accrue from and including the date of issue
            thereof, and the amount of dividend payable in respect of any period
            shorter than a full dividend period will be calculated on the basis
            of twelve 30 day months, a 360 day year and the actual number of
            days elapsed in such period;

     (vii)  if any dividend stated to be payable on the Non-cumulative Category
            II Convertible Sterling Preference Shares on the most recent
            dividend payment date has not been paid in full, no dividends may be
            paid on any other share capital of the Company (other than the
            Cumulative Preference Shares); and

     (viii) if any dividend stated to be payable on the Non-cumulative Category
            II Convertible Sterling Preference Shares on any dividend payment
            date has not been paid in full, or if a sum has not been set aside
            to provide for such payment in full, the Company may

<PAGE>

                                     - 145 -

            not redeem or purchase or otherwise acquire for any consideration
            any other share capital of the Company, and may not set aside any
            sum nor establish any sinking fund for the redemption or purchase of
            other such acquisition thereof, until such time as dividends stated
            to be payable on the Non-cumulative Category II Convertible Sterling
            Preference Shares in respect of successive dividend periods together
            aggregating no less than twelve months shall thereafter have been
            declared and paid in full.

2.3   CAPITAL

      Subject to sub-paragraph 2.3(iii), the right on a winding up or
      liquidation, voluntary or otherwise other than (unless otherwise provided
      by the terms of issue of such share) a redemption or purchase by the
      Company of any shares of any class to receive in Sterling out of the
      surplus assets of the Company available for distribution amongst the
      members:

      (i)   after payment of the arrears (if any) of the fixed cumulative
            preferential dividends stated to be payable on the Cumulative
            Preference Shares to the holders thereof in accordance with Article
            4(B) FIRSTLY and pari passu with the holders of any other New
            Preference Shares expressed to rank pari passu therewith as regards
            participation in profits and in priority to the holders of the
            Ordinary Shares of the Company a sum equal to:

      (A)   the amount of any dividend which is due for payment after the date
            of commencement of the winding up or liquidation but which is
            payable in respect of a period ending on or before such date; and

      (B)   any further amount of dividend payable in respect of the period from
            the preceding dividend payment date to the date of payment in
            accordance with this sub-paragraph (i);

            but only to the extent that any such amount or further amount was,
            or would have been payable as a dividend in accordance with or
            pursuant to this Schedule 3 (other than pursuant to this provision);
            and

      (ii)  subject thereto, pari passu with the holders of the Cumulative
            Preference Shares and any other New Preference Shares expressed to
            rank pari passu therewith as regards participation in surplus assets
            in priority to the holders of the Ordinary Shares of the Company, a
            sum equal to the amount paid up or credited as paid up on the Non-
            cumulative Category II Convertible Sterling Preference Shares
            (including any premium paid to the Company in respect thereof on
            issue).

            If upon any such winding-up or liquidation, the amounts available
            for payment are insufficient to cover the amounts payable in full on
            the Cumulative Preference Shares, the Non-cumulative Category II
            Convertible Sterling Preference Shares and on any other New
            Preference Shares expressed to rank pari passu therewith as regards
            participation in surplus assets, then the holders of the Cumulative
            Preference Shares, the Non-cumulative Category II Convertible
            Sterling Preference Shares and such other New Preference Shares will
            share rateably in the distribution of surplus assets (if any) in
            proportion to the full respective preferential amounts to which they
            are entitled. No Non-cumulative Category II Convertible Sterling
            Preference Share shall confer any right to participate in the
            surplus assets of the Company other than that set out in this
            paragraph 2.3.

<PAGE>

                                     - 146 -

      (iii) If, whilst any Non-cumulative Category II Convertible Sterling
            Preference Shares remain in issue, an effective resolution is passed
            or an order of a court of competent jurisdiction is made for the
            winding-up of the Company, then (unless it be for the purpose of a
            solvent reconstruction, amalgamation, merger or other similar
            arrangement) the Company will forthwith give notice in writing to
            the holders of any Non-cumulative Category II Convertible Sterling
            Preference Shares that such a resolution has been passed or such an
            order has been made. Any holder of any Non-cumulative Category II
            Convertible Sterling Preference Shares shall be entitled at any time
            within three months after the date on which such notice is published
            to elect by notice in writing delivered to the Company to be treated
            as if he had, immediately before the date of the passing of such
            resolution or the making of such order exercised his right to
            convert in respect of some or all (as specified in such latter
            notice) of any Non-cumulative Category II Convertible Sterling
            Preference Shares held by him pursuant to the procedure for
            conversion set out in paragraph 2.7 below and by reference to a
            deemed Conversion Date being the date of the passing of such
            resolution or the making of such order and he shall be entitled to
            receive out of the assets which would otherwise be available in the
            liquidation to the Ordinary Shareholders, such a sum, if any, which
            he would have received had he been the holder of the Ordinary Shares
            to which he would have become entitled by virtue of such exercise.

2.4   RECEIPT OF NOTICES

      The right to have sent to the holder of each Non-cumulative Category II
      Convertible Sterling Preference Share (at the same time as the same are
      sent to the holders of Ordinary Shares) a copy of the Company's Annual
      Report and Accounts and Interim Financial Statement and any other document
      sent to holders of Ordinary Shares.

2.5   ATTENDANCE AND VOTING AT MEETINGS

      The right to attend at a General Meeting of the Company and to speak to or
      vote upon any Resolution proposed thereat in the following circumstances:

      (i)   in respect of a Resolution which is to be proposed at the Meeting
            either varying or abrogating any of the rights attached to the
            Non-cumulative Category II Convertible Sterling Preference Shares or
            proposing the winding up of the Company (and then in each such case
            only to speak to and vote upon any such Resolution); and

      (ii)  in circumstances where, at the date of the notice convening the
            relevant meeting, the dividend stated to be payable on the
            Non-cumulative Category II Convertible Sterling Preference Shares in
            respect of the last completed dividend period has not been paid in
            full, and until the next dividend payment date when the dividend in
            respect of a dividend period is paid in full

      but not otherwise, together with the right, in such circumstances and on
      such terms, if any, as the Directors may determine prior to allotment of
      the Non-cumulative Category II Convertible Sterling Preference Shares, to
      seek to requisition a General Meeting of the Company. Whenever holders of
      Non-cumulative Category II Convertible Sterling Preference Shares are so
      entitled to vote on a Resolution, on a show of hands every such holder who
      is present in person shall have one vote and, on a poll, every such holder
      who is present in person or by proxy shall have such number of votes for
      each Non-cumulative Category II Convertible Sterling Preference Share held
      he would have had if that share had been converted into Ordinary Shares on
      the date of the notice of the meeting pursuant to the

<PAGE>

                                     - 147 -

      conversion procedure set out in paragraph 2.7 of this Schedule 3 and at a
      price per Ordinary Share calculated on the basis that the date of the
      notice of the meeting was a Conversion Date.

2.6   REDEMPTION

      Each series of Non-cumulative Category II Convertible Sterling Preference
      Shares shall, subject to the provisions of the Statutes, and subject,
      where applicable, to the prior consent of the Financial Services
      Authority, be redeemable at the option of the Company in accordance with
      the following provisions:

      (A)   the Company may, subject thereto, redeem on any Redemption Date (as
            hereinafter defined) all or some only of the Non-cumulative Category
            II Convertible Sterling Preference Shares by giving to the holders
            of the Non-cumulative Category II Convertible Sterling Preference
            Shares to be redeemed not less than 7 days' nor more than 14 days'
            prior notice in writing (a Notice of Redemption) of the relevant
            Redemption Date. Redemption Date means in relation to a
            Non-cumulative Category II Convertible Sterling Preference Share,
            any date which falls no earlier than 30 days after the date of
            allotment of the Non-cumulative Category II Convertible Sterling
            Preference Share to be redeemed. The Company shall not be entitled
            (save with the consent of the relevant holder) to give a Notice of
            Redemption under this sub-paragraph (A) in respect of any share for
            which a Conversion Notice (as defined in paragraph 2.7(v) of this
            Schedule 3) has been given in accordance with that Part and not
            withdrawn;

      (B)   there shall be paid on each Non-cumulative Category II Convertible
            Sterling Preference Share so redeemed in Sterling, the aggregate of
            the nominal amount thereof together with any premium paid on issue
            and together with accruals (if any) of dividends thereon in respect
            of the period from the dividend payment date last preceding the
            Redemption Date (whether earned or declared or not)to the Redemption
            Date;

      (C)   in the case of a redemption of some only of the Non-cumulative
            Category II Convertible Sterling Preference Shares in any series,
            the Company shall for the purpose of determining the particular
            Non-cumulative Category II Convertible Sterling Preference Shares to
            be redeemed cause a drawing to be made at the Office or such other
            place as the Directors may approve in the presence of the Auditors
            for the time being of the Company, provided that there shall be
            excluded from such drawing any Non-cumulative Category II
            Convertible Sterling Preference Shares to be converted pursuant to
            paragraph 2.7 of this Schedule 3;

      (D)   any Notice of Redemption given under sub-paragraph (A) above shall
            specify the applicable Redemption Date, the particular
            Non-cumulative Category II Convertible Sterling Preference Shares to
            be redeemed and the redemption price (specifying the amount of the
            accrued and unpaid dividend per share to be included therein and
            stating that dividends on the Non-cumulative Category II Convertible
            Sterling Preference Shares to be redeemed will cease to accrue on
            redemption), and shall state the place or places at which documents
            of title in respect of such Non-cumulative Category II Convertible
            Sterling Preference Shares are to be presented and surrendered for
            redemption and payment of the redemption monies is to be effected.
            Upon such Redemption Date, the Company shall redeem the particular
            Non-cumulative Category II Convertible Sterling Preference Shares
            to be redeemed on that date subject to the provisions of this
            paragraph and of the Statutes. No defect in

<PAGE>

                                     - 148 -

            the Notice of Redemption or in the giving thereof shall affect the
            validity of the redemption proceedings;

      (E)   subject to sub-paragraph (I) below, the provisions of this and the
            following sub-paragraph shall have effect in relation to
            Non-cumulative Category II Convertible Sterling Preference Shares
            for the time being issued and registered in the Register of Members
            (Registered Shares) and represented by certificates (Certificates)
            and in relation to Non-cumulative Category II Convertible Sterling
            Preference Shares which, in accordance with Article 52 of these
            presents, are for the time being issued and represented by a Warrant
            (as defined in the said Article 52) (Bearer Shares). Payments in
            respect of the amount due on redemption of a Registered Share shall
            be made by Sterling cheque drawn on a bank in London or upon the
            request of the holder or joint holders not later than the date
            specified for the purpose in the Notice of Redemption by transfer to
            a Sterling account maintained by the payee with a bank in London.
            Such payment will be against presentation and surrender of the
            relative Certificate at the place or one of the places specified in
            the Notice of Redemption and if any Certificate so surrendered
            includes any Non-cumulative Category II Convertible Sterling
            Preference Shares not to be redeemed on the relevant Redemption Date
            (other than Non-cumulative Category II Convertible Sterling
            Preference Shares to be converted pursuant to paragraph 2.7 of this
            Schedule 3) the Company shall within fourteen days thereafter issue
            to the holder, free of charge, a fresh Certificate in respect of
            such Non-cumulative Category II Convertible Sterling Preference
            Shares. Payment in respect of the amount due on redemption of a
            Bearer Share shall be made by Sterling cheque drawn on a bank in
            London or upon the request of the holder not later than the date
            specified for the purpose in the Notice of Redemption by transfer to
            a Sterling account maintained by the payee with a bank in London.
            Such payments will be made against presentation and surrender of the
            Warrant and all unmatured dividend coupons and talons (if any) at
            the place or the places specified in the Notice of Redemption. Upon
            the relevant Redemption Date all unmatured dividend coupons and any
            talon for additional dividend coupons appertaining thereto (whether
            or not returned) shall become void and no payment will be made in
            respect thereof. If the Warrant so surrendered represents any Non-
            cumulative Category II Convertible Sterling Preference Shares not to
            be redeemed on the relevant Redemption Date (other than
            Non-cumulative Category II Convertible Sterling Preference Shares to
            be converted pursuant to paragraph 2.7 of this Schedule 3) the
            Company shall issue, free of charge, a fresh Warrant representing
            such Bearer Shares which are not to be redeemed on such Redemption
            Date.

            All payments in respect of redemption monies will in all respects be
            subject to any applicable fiscal or other laws;

      (F)   as from the relevant Redemption Date the dividend on the
            Non-cumulative Category II Convertible Sterling Preference Shares
            due for redemption shall cease to accrue except on any such
            Non-cumulative Category II Convertible Sterling Preference Shares in
            respect of which, upon the due surrender of the Certificate or, as
            the case may be, the Warrant and all unmatured dividend coupons and
            talons (if any) in respect thereof, in accordance with sub-paragraph
            (E) above, payment of the redemption monies due on such Redemption
            Date shall be improperly withheld or refused, in which case such
            dividend, at the rate then applicable, shall be deemed to have
            continued and shall accordingly continue to accrue from the relevant
            Redemption Date to the date of payment of such redemption monies.
            Such Non-cumulative Category II Convertible Sterling Preference
            Share shall not be treated as

<PAGE>

                                     - 149 -

            having been redeemed until the redemption monies in question
            together with the accrued dividend thereon shall have been paid;

      (G)   if the due date for the payment of the redemption monies on any
            Non-cumulative Category II Convertible Sterling Preference Shares is
            not a Sterling Business Day then payment of such monies will be made
            on the next succeeding day which is a Sterling Business Day and
            without any interest or other payment in respect of such delay
            unless such day shall fall within the next calendar month whereupon
            such payment will be made on the preceding Sterling Business Day;

      (H)   the receipt of the holder for the time being of any Registered Share
            (or in the case of joint holders the receipt of any one of them) and
            the receipt of the person delivering any Warrant to the place or one
            of the places specified pursuant to sub-paragraph (D) above in
            respect of the monies payable on redemption on such Registered Share
            or, as the case may be, such Bearer Share, shall constitute an
            absolute discharge to the Company; and

      (I)   subject as aftermentioned, the provisions of sub-paragraph (E) and
            (F) above shall have effect in relation to Registered Shares which
            are in uncertificated form within the meaning of the Uncertificated
            Securities Regulations 1995 (as in force on the date of adoption of
            this Schedule 3) in the same manner as they have effect in relation
            to Registered Shares represented by Certificates, save that (i) any
            provision of the said paragraphs requiring presentation and
            surrender of a Certificate shall be satisfied in the manner
            prescribed or permitted by the said Regulations (or by any enactment
            or subordinate legislation which amends or supersedes those
            Regulations) or (subject to those Regulations or such enactment or
            subordinate legislation) in such manner as may from time to time be
            prescribed by the Directors), and (ii) the Company shall not be
            under any obligation to issue a fresh Certificate under sub-
            paragraph (E).

2.7   CONVERSION

      (i)   Each holder of Non-cumulative Category II Convertible Sterling
            Preference Shares shall be entitled in the manner set out in (and
            subject to the provisions of) this paragraph 2.7 to convert into
            fully paid Ordinary Shares such of his Non-cumulative Category II
            Convertible Sterling Preference Shares as have not, as at the last
            date, prior to the relevant Conversion Date, for the provision of
            notice of conversion under sub-paragraph (viii) below, either been
            redeemed or been the subject of a valid Notice of Redemption given
            under paragraph 2.6 of this Schedule 3.

      (ii)  If, as at the Final Conversion Date, any of the Non-cumulative
            Category II Convertible Sterling Preference Shares have not been
            either redeemed, the subject of a valid Notice of Redemption given
            under paragraph 2.6 of this Schedule 3 or converted into Ordinary
            Shares, then all such Non-cumulative Category II Convertible
            Sterling Preference Shares will convert into fully paid Ordinary
            Shares in the manner set out in (and subject to the provisions of)
            this paragraph 2.7.

      (iii) For the purpose of this paragraph 2.7:

            (A)   the Conversion Dates shall be 30 September 2001, 31 March
                  2002, 30 September 2002 and the Final Conversion Date (which
                  is also for the avoidance of doubt a Conversion Date) shall be
                  31 March 2003;

<PAGE>

                                     - 150 -

            (B)   the conversion right referred to in sub-paragraph (i) above
                  shall be exercisable by completion of a Conversion Notice (as
                  defined in sub-paragraph (v) below) submitted by holders of
                  Non-cumulative Category II Convertible Sterling Preference
                  Shares (Converting Holders) setting out the number of
                  Non-cumulative Category II Convertible Sterling Preference
                  Shares which are to be converted pursuant to such notice (the
                  Conversion Amount) and lodging such Conversion Notice with the
                  Company's Registrar at any time during the period and in the
                  manner referred to in sub-paragraph (viii) below;

            (C)   the Redemption Amount in relation to a Non-cumulative Category
                  II Convertible Sterling Preference Share means the nominal
                  amount thereof together with any premium paid on issue;

      (iv)  The number of Ordinary Shares to be issued on the conversion of each
            Non-cumulative Category II Convertible Sterling Preference Share
            shall be determined by dividing the Redemption Amount by the
            Conversion Price. In the case of Non-cumulative Category II
            Convertible Sterling Preference Shares which are converted on any of
            the Conversion Dates, the Conversion Price shall be the higher of:

            (A)   the weighted average closing price per Ordinary Share on the
                  London Stock Exchange during the period of the 20 London Stock
                  Exchange dealing days (on which the trading in the Ordinary
                  Shares is not fully suspended) ending five London Stock
                  Exchange dealing days before the relevant Conversion Date; and

            (B)   L5

            Fractions of Ordinary Shares will not be issued on conversion and no
            cash adjustment will be made. However, if more than one
            Non-cumulative Category II Sterling Preference Share held by any
            holder is to be converted and the Ordinary Shares arising on
            conversion are to be registered in the same name, the number of
            Ordinary Shares to be issued in respect thereof shall be calculated
            on the basis of the aggregate Redemption Amount of such
            Non-cumulative Category II Sterling Preference Shares.

            If at the time that the Conversion Price is to be calculated the
            Ordinary Shares are not listed and traded on the London Stock
            Exchange, references in this article to the London Stock Exchange
            shall be to such other exchange on which the Ordinary Shares are
            listed and traded.

      (v)   For the purposes of conversion pursuant to sub-paragraph (i) above,
            a Conversion Notice means, in relation to any Non-cumulative
            Category II Convertible Sterling Preference Shares, which as at the
            date of such notice, are Registered Shares (as defined in paragraph
            2.6 of this Schedule 3), a Certificated Conversion Notice (as
            defined in sub-paragraph (vi) below) or, in relation to any
            Non-cumulative Category II Convertible Sterling Preference Shares
            that, as at the date of such notice, are Bearer Shares (as defined
            in the said paragraph 2.6), an Uncertificated Conversion Notice (as
            defined in sub-paragraph (vii) below).

      (vi)  In relation to any Non-cumulative Category II Convertible Sterling
            Preference Shares that, as at the date of the relevant Conversion
            Notice, are Registered Shares, the right to convert shall be
            exercised if the registered holder of any such Category II

<PAGE>

                                     - 151 -

            Convertible Sterling Preference Shares, shall have delivered to the
            Company's Registrar, at any time during the period referred to in
            sub-paragraph (viii) below, a duly signed and completed Conversion
            Notice in such form as may from time to time be prescribed by the
            Directors (and obtainable from the Company's Registrar) (a Certified
            Conversion Notice) together with the Certificate for such shares (or
            an appropriate form of indemnity).

     (vii)  In relation to any Non-cumulative Category II Convertible Sterling
            Preference Shares that, as at the date of the relevant Conversion
            Notice, are Bearer Shares, the right to convert shall be exercised
            if an Uncertificated Conversion Notice is received as referred to
            below at any time during the period referred to in sub-paragraph
            (viii) below. For these purposes, an Uncertificated Conversion
            Notice shall mean an instruction and/or notification received by the
            Company or such person as it may require in such form and having
            such effect as may in each case from time to time be prescribed by
            the Directors (subject always to the facilities and requirements of
            the relevant system) and details of which shall be obtainable from
            the Company's Registrar. Without prejudice to the generality of the
            foregoing, the form of Conversion Notice referred to above may be
            such as to require the holder of the Non-cumulative Category II
            Convertible Sterling Preference Shares concerned to transfer such
            Non-cumulative Category II Convertible Sterling Preference Shares
            into such account as may be specified by the Company in the
            Uncertified Conversion Notice.

     (viii) The period referred to in sub-paragraphs (vi) and (vii) above for
            the delivery of a Conversion Notice is the period falling not less
            than 7 and not more than 30 days prior to the relevant Conversion
            Date. Unless the Directors otherwise determine in any case or cases,
            a Conversion Notice once delivered shall be irrevocable.

     (ix)   The following provisions shall apply to conversion of the
            Non-cumulative Category II Convertible Sterling Preference Shares:-

            (A)   conversion may be effected in such manner as the Directors
                  shall, subject to the requirements of applicable law and the
                  provisions hereof, from time to time determine and, without
                  prejudice to the generality of the foregoing, may be effected:

                  (aa)  by the redemption of Non-cumulative Category II
                        Convertible Sterling Preference Shares on the relevant
                        Conversion Date for the Redemption Amount and the
                        application of the redemption moneys on behalf of the
                        holder of the Non-cumulative Category II Convertible
                        Sterling Preference Shares so redeemed as herein
                        provided. In the case of a conversion effected by means
                        of the redemption of Non-cumulative Category II
                        Convertible Sterling Preference Shares, the Directors
                        may effect redemption of the relevant Non-cumulative
                        Category II Convertible Sterling Preference Shares out
                        of profits of the Company which would otherwise be
                        available for dividend, out of the proceeds of a fresh
                        issue of shares or in any other manner for the time
                        being permitted by law. In the case of redemption out of
                        profits, the Directors shall apply the Redemption Amount
                        in the name of the holder of the Non-cumulative
                        Category II Convertible Sterling Preference Shares to be
                        converted in subscribing for the appropriate number of
                        Ordinary Shares as determined in accordance with the
                        provisions hereof at such premium per Ordinary Share as
                        shall represent the amount (if

<PAGE>

                                     - 152 -

                        any) by which the aggregate Redemption Amount exceeds
                        the aggregate nominal amount of the Ordinary Shares to
                        which the holder is so entitled divided by the number of
                        such Ordinary Shares. In the case of redemption out of
                        the proceeds of a fresh issue of shares, the Directors
                        may arrange for the secretary of the Company or any
                        other person selected by the Directors to subscribe and
                        pay, as agent on the holder's behalf, for the
                        appropriate number of Ordinary Shares at such premium
                        per Ordinary Share as shall represent the amount (if
                        any) by which the aggregate Redemption Amount exceeds
                        the aggregate nominal amount of the Ordinary Shares to
                        which the holder is so entitled divided by the number of
                        such Ordinary Shares (and such person shall be deemed to
                        have authority to borrow for such purpose) and, in any
                        such case, a holder of Non-cumulative Category II
                        Convertible Sterling Preference Shares shall be deemed
                        irrevocably to have authorised and instructed the
                        Directors to apply the Redemption Amount in payment to
                        the holder's agent, who shall be entitled to retain the
                        same for his own benefit without being accountable
                        therefor to the holder. In relation to any
                        Non-cumulative Category II Convertible Sterling
                        Preference Shares which at the date of the relevant
                        Conversion Notice are Bearer Shares, and which are to be
                        redeemed in accordance with this sub-paragraph
                        (ix)(A)(aa) the Directors shall be entitled in their
                        absolute discretion to determine the procedures for the
                        redemption and cancellation of such Non-cumulative
                        Category II Convertible Sterling Preference Shares
                        (subject always to the facilities and requirements of
                        the relevant system concerned and to the redemption on
                        the relevant Conversion Date of the Non-cumulative
                        Category II Convertible Sterling Preference Shares
                        concerned) and the provisions of this sub-paragraph
                        shall apply mutatis mutandis in respect of such
                        redemption; or

                  (bb)  by means of a capitalisation issue and consolidation. In
                        that case the requisite capitalisation issue and
                        consolidation may be effected pursuant to the authority
                        conferred by the passing of the resolution which created
                        the Non-cumulative Category II Convertible Sterling
                        Preference Shares, by the Company capitalising from
                        profits or reserves (including any share premium
                        account, merger reserve or capital redemption reserve)
                        such number of new Ordinary Shares as shall bring the
                        total nominal amount of the Non-cumulative Category II
                        Convertible Sterling Preference Shares and the new
                        Ordinary Shares to at least the total nominal amount of
                        the Ordinary Shares into which the Non-cumulative
                        Category II Convertible Sterling Preference Shares will
                        convert on the relevant Conversion Date, consolidating
                        all the relevant shares into one share (the Consolidated
                        Share) and sub-dividing the Consolidated Share into the
                        number of Ordinary Shares arising from the conversion of
                        the Convertible Preference Shares. The balance of such
                        sub-divided share (including any fraction) shall be
                        non-voting deferred shares of such nominal amount as the
                        Directors may determine (Non-Voting Deferred Shares),
                        shall be certificated shares and shall have the
                        following rights and restrictions:

<PAGE>

                                     - 153 -

                  (1)   on a winding-up or other return of capital, the
                        Non-Voting Deferred Shares shall entitle the holders of
                        the shares only to payment of the amounts paid up on
                        those shares, after repayment of the holders of the
                        Ordinary Shares of the nominal amount paid up on the
                        Ordinary Shares held by them respectively and the
                        payment of L0.01 on each Ordinary Share;

                  (2)   the Non-Voting Deferred Shares shall not entitle the
                        holders of the shares to the payment of any dividend or
                        to receive notice of or to attend or vote at any general
                        meeting of the Company;

                  (3)   the Non-Voting Deferred Shares shall not, save as
                        provided in sub-paragraph (4) below, be transferable;

                  (4)   such conversion shall be deemed to confer irrevocable
                        authority on the Company to appoint any person to
                        execute on behalf of the holders or any Non-Voting
                        Deferred Shares an instrument of transfer of the shares,
                        and/or an agreement to transfer the shares, to such
                        person or persons as the Company may determine as a
                        custodian of the shares or to purchase or to cancel the
                        shares in accordance with the provisions of the Statutes
                        in any such case for not more than L0.01 for all
                        the shares being transferred, purchased or cancelled (to
                        be paid to such one of the holders as may be selected by
                        lot) without obtaining the sanction of the holder or
                        holders of the shares, and pending such transfer or
                        purchase or cancellation to retain the certificate for
                        such Non-Voting Deferred Shares; and

                  (5)   the Company may at its option at any time after the
                        creation of any Non-Voting Deferred Shares redeem all of
                        those shares then in issue at a price not exceeding
                        L0.01 for all the shares redeemed at any one time
                        (to be paid to such one of the holders as may be
                        selected by lot), upon giving the holders of the
                        Non-Voting Deferred Shares not less than 28 days'
                        previous notice in writing of its intention so to do,
                        fixing a time and place for the redemption. The
                        Non-Voting Deferred Shares will not be listed on the
                        London Stock Exchange. Upon or after the redemption of
                        any Non-Voting Deferred Shares pursuant to this
                        sub-paragraph (bb) the Directors may pursuant to the
                        authority conferred the passing of the resolution which
                        created the Non-cumulative Category II Convertible
                        Sterling Preference Shares consolidate and/or sub-divide
                        and/or convert the authorised Non-Voting Deferred Share
                        capital existing as a consequence of such redemption
                        into shares of any other class of share capital into
                        which the authorised share capital of the Company is or
                        may at that time be divided of a like nominal amount (as
                        nearly as may be) as the shares of such class or into
                        unclassified shares of the same nominal amount (as
                        nearly as may be) as the shares of such class or into

<PAGE>

                                     - 154 -

                        unclassified shares of the same nominal amount as the
                        Non-Voting Deferred Shares.

      (B)   the preferential dividend on Non-cumulative Category II Convertible
            Sterling Preference Shares which are converted pursuant to this
            paragraph 2.7 shall cease to accrue with effect from the relevant
            Conversion Date. Ordinary Shares arising on conversion will be
            allotted and registered as of the relevant Conversion Date, in each
            case to and in the name of the holder of the relevant Non-cumulative
            Category II Convertible Sterling Preference Shares and shall rank
            pari passu with the Ordinary Shares in issue on such Conversion Date
            except that the Ordinary Shares so allotted will not rank for any
            dividend or other distribution which has been announced, declared,
            recommended or resolved prior to such Conversion Date by the
            Directors or by the Company in general meeting to be paid or made,
            if the record date for such dividend or other distribution is on or
            prior to such Conversion Date;

      (C)   unless the Directors otherwise determine, or unless the
            Uncertificated Securities Regulations and/or the requirements of the
            relevant system otherwise require, the Ordinary Shares arising on
            conversion of any Non-cumulative Category II Convertible Sterling
            Preference Shares shall be or shall be issued (as appropriate) as
            certificated shares (where the Non-cumulative Category II
            Convertible Sterling Preference Shares converted were, on the date
            of the relevant Conversion Notice, Registered Shares or where the
            relevant Converting Holder has not specified a Crest account for
            this purpose in the relevant Uncertificated Conversion Notice) or as
            uncertificated shares (where the Non-cumulative Category II
            Convertible Sterling Preference Shares converted were, on the date
            of the relevant Conversion Notice, uncertificated shares and the
            relevant Converting Holder has specified a Crest account for this
            purpose in the relevant Uncertificated Conversion Notice), provided
            that if the Company is unable under the facilities and requirements
            of the relevant system to issue Ordinary Shares in respect of the
            person entitled thereto in uncertificated form, such shares shall be
            issued as certificates shares; and

      (D)   the Company shall procure that there shall be dispatched or made
            free of charge (but uninsured and at the risk of the holder or the
            person entitled thereto, or the first-named thereof, as the case may
            be):

            (aa)  a certificate in respect of Ordinary Shares arising on
                  conversion which are, in accordance with sub-paragraph (C)
                  above, certificated shares, and a new certificate for any
                  unconverted Non-cumulative Category II Convertible Sterling
                  Preference Shares comprised in any share certificate
                  surrendered by the holder, not later than 28 days after the
                  relevant Conversion Date; and

            (bb)  payment in respect of the accrued preferential dividend on the
                  Non-cumulative Category II Convertible Sterling Preference
                  Shares converted, on the payment date in respect of such
                  dividend next following the relevant Conversion Date (unless
                  such Conversion Date is also a dividend payment date, or
                  unless there are no Non-cumulative Category II Convertible
                  Sterling Preference Shares outstanding following such
                  conversion in which case on such dividend payment date).

<PAGE>

                                     - 155 -

            (E)   For the purposes of this paragraph 2.7, whether any
                  Non-cumulative Category II Convertible Sterling Preference
                  Shares are certificated shares or uncertificated shares on the
                  relevant Conversion Date shall be determined by reference to
                  the register of members as at 12.01 a.m. on the relevant
                  Conversion Date or such other time as the Directors may
                  (subject to the facilities and requirements of the relevant
                  system concerned) in their absolute discretion determine.

            (F)   The Company shall use reasonable endeavours to procure that
                  the Ordinary Shares arising on conversion of Non-cumulative
                  Category II Convertible Sterling Preference Shares are
                  admitted to the Official List of The London Stock Exchange at
                  the earliest practicable date following issue and allotment of
                  such.

            (G)   The Company shall ensure that at the relevant Conversion Dates
                  sufficient authorised but unissued share capital is available
                  in order to permit conversion of the Non-cumulative Category
                  II Convertible Sterling Preference Shares outstanding on such
                  relevant Conversion Date;

3.    (a)   save with the written consent of the holder(s) of three-quarters in
            nominal value of, or with the sanction of an Extraordinary
            Resolution passed at a separate General Meeting of the holders of,
            the Non-cumulative Category II Convertible Sterling Preference
            Shares, the Directors shall not: (i) authorise or create, or
            increase the amount of, any shares of any class or any security
            convertible into shares of any class ranking as regards rights to
            participate in the profits or assets of the Company (other than on a
            redemption or purchase by the Company of any such shares) in
            priority to the Non-cumulative Category II Convertible Sterling
            Preference Shares; or (ii) delist the Ordinary Shares from the
            London Stock Exchange, except in connection with a listing of such
            shares on another stock exchange of comparable standing;

      (b)   the special rights attached in any series of Non-cumulative Category
            II Convertible Sterling Preference Shares allotted or in issue shall
            not (unless otherwise provided by their terms of issue) be deemed to
            be varied by the creation or issue of any New Shares ranking as
            regards participation in the profits and assets of the Company pari
            passu with or after such Non-cumulative Category II Convertible
            Sterling Preference Shares. Any new shares ranking pari passu with
            such Non-cumulative Category II Convertible Sterling Preference
            Shares may without their creation or issue being deemed to vary the
            special rights attached to any Non-cumulative Category II
            Convertible Sterling Preference Share then in issue either carry
            rights identical in all respects with such Non-cumulative Category
            II Convertible Sterling Preference Shares or any of them or carry
            rights differing therefrom in any respect, including, but without
            prejudice to the generality of the foregoing, in that:

            (i)   the rate or means of calculating the dividend may differ and
                  the dividend may be cumulative or non-cumulative;

            (ii)  the New Shares or any series thereof may rank for dividend as
                  from such date as may be provided by the terms of issue
                  thereof and the dates for payment of dividend may differ;

            (iii) the New Shares may be denominated in Sterling or any Foreign
                  Currency;

<PAGE>

                                     - 156 -

            (iv)  a premium may be payable on return of capital or there may be
                  no such premium;

            (v)   the New Shares may be redeemable at the option of the holder
                  or of the Company, or may be non-redeemable and if redeemable
                  at the option of the Company, they may be redeemable at
                  different dates and on different terms from those applying to
                  the Non-cumulative Category II Convertible Sterling Preference
                  Shares; and

            (vi)  the New Shares may be convertible into Ordinary Shares or any
                  other class of shares ranking as regards participation in the
                  profits and assets of the Company pari passu with or after
                  such Non-cumulative Category II Convertible Sterling
                  Preference Shares in each case on such terms and conditions as
                  may be prescribed by the terms of issue thereof.

      (c)   Prior to 30 September 2000 the directors may, in their absolute
            discretion and without giving any reason refuse to register the
            transfer of a Non-cumulative Category II Sterling Convertible
            Preference Share to any person, whether or not it is fully paid.

<PAGE>

                                     - 157 -

                                   SCHEDULE 4

                             ADDITIONAL VALUE SHARES

1.    The Company shall have a class of Additional Value Shares. They shall
      confer the rights and be subject to the restrictions set out or referred
      to in this Schedule 4.

2.    Each Additional Value Share shall confer the following rights as to
      participation in the profits and assets of the Company, receipt of
      notices, attendance and voting at meetings and conversion.

2.1   Income

      The right to dividends to be paid out of the distributable profits of the
      Company, subject in each case to declaration by and at the discretion of
      the Directors and the provisions of sub-paragraph 2.2, as follows:

      (i)   15 pence per Additional Value Share on 1 December 2001;

      (ii)  30 pence per Additional Value Share on 1 December 2002; and

      (iii) 55 pence per Additional Value Share on 1 December 2003 (the "Final
            Dividend Date").

      References in this Schedule to a "dividend" on the Additional Value Shares
      include a reference to each dividend paid on the Additional Value Shares
      (whether or not in accordance with the proposed dividends set out in this
      sub-paragraph 2.1 and including any dividend of a lesser amount than
      stated or any dividend aggregating two or more such dividends or any part
      thereof) and references to "dividend payment dates" are to dividend
      payment dates in respect of the Additional Value Shares only (such
      dividend payment dates being, subject to sub-paragraph 2.2, those
      specified in this sub-paragraph 2.1).

2.2   Further provisions as to income

      The following provisions shall apply:

      (i)   In deciding whether to declare and pay a dividend on the Additional
            Value Shares the Directors shall have regard inter alia to the
            following factors:

            (A)   whether the distributable profits of the Company are
                  sufficient to cover the payment in full of dividends on the
                  Additional Value Shares on any dividend payment date and also
                  the payment in full of all other dividends (if any) stated to
                  be payable on any Cumulative Preference Share or New
                  Preference Share provided that in any event the Directors
                  shall not pay any dividend due on the Additional Value Shares
                  if in their opinion the distributable profits of the Company
                  are not likely to be sufficient to pay any dividend due on any
                  Cumulative Preference Share or New Preference Share due for
                  payment within 90 days of the relevant dividend payment date;

            (B)   whether the distributable profits of the Company are adequate
                  or are likely to be adequate having regard to the Company's
                  obligation to make dividend payments on any Cumulative
                  Preference Share or New Preference Share;

<PAGE>

                                     - 158 -

            (C)   the effect of the payment of such dividend on the regulatory
                  capital structure of the Company and on its consolidated
                  banking and trading book target and trigger ratios as
                  prescribed by the Financial Services Authority Limited from
                  time to time; and

            (D)   the Company's best interests having regard to its future cash
                  requirements and actual and contingent liabilities.

     (ii)   Without prejudice to the foregoing and for the avoidance of doubt,
            no dividend shall be paid on the Additional Value Shares if and to
            the extent that such payment would constitute an unauthorised
            variation or abrogation of the rights as to participation in profits
            attached to the Cumulative Preference Shares or any New Preference
            Shares.

     (iii)  Holders of Additional Value Shares shall have no claim in respect of
            the failure of the Directors to declare and/or pay any dividend(s)
            and the Directors shall not be bound to give their reasons for not
            declaring or paying such a dividend save that the Directors shall
            announce their intention in respect of the payment of any dividend
            referred to in sub-paragraph 2.1 no later than 14 days prior to the
            relevant dividend payment date (save in respect of the Final
            Dividend Date in which case notice must be given on or before 1
            September 2003).

     (iv)   Dividends declared by the Directors shall be payable without
            necessity for any resolution on the part of the Company in General
            Meeting on the relevant dividend payment date to holders of
            Additional Value Shares entered on the register of members at the
            close of business on the date which falls one calendar month before
            the relevant dividend payment date (or on such other date prior to
            the relevant dividend payment date as the Directors may in their
            absolute discretion decide).

     (v)    Subject to sub-paragraph 2.1 and this sub-paragraph 2.2, if and to
            the extent that any dividend is not declared for payment on any
            dividend payment date (whether in whole or in part), such amount
            shall fall to be considered for payment on the following dividend
            payment date in addition to any dividend falling to be considered
            for payment on that date.

     (vi)   No Additional Value Share shall carry any right to participate in
            the profits of the Company other than as set out in sub-paragraph
            2.1 above and this sub-paragraph 2.2.

     (vii)  If any dividend payment date in respect of which dividends are
            declared to be payable in accordance with sub-paragraph 2.1 above is
            not a day on which banks in London are open for business (a
            "Business Day"), then payment of the dividend payable on such date
            will be made on the next succeeding Business Day and without any
            interest or other payment in respect of such delay.

     (viii) Save as set out in sub-paragraph 2.7(xiv) and for the avoidance of
            doubt, the Company shall be free to pay dividends or make other
            distributions to any holder of any other class of shares in the
            capital of the Company (including for the avoidance of doubt, the
            Cumulative Preference Shares, New Preference Shares and the Ordinary
            Shares) notwithstanding that the Directors have not declared and/or
            paid any dividend on the Additional Value Shares.

<PAGE>

                                     - 159 -

2.3   Capital

      The right on a winding up, liquidation or other return of capital other
      than a redemption or purchase by the Company of any shares of any class,
      to receive in respect of each Additional Value Share in Sterling out of
      the surplus assets of the Company available for distribution amongst the
      members in priority to the holders of the Ordinary Shares of the Company
      but after payment of all amounts outstanding to holders of Cumulative
      Preference Shares and New Preference Shares and any other share in the
      capital of the Company expressed to rank as to participation in capital or
      assets in priority to the Additional Value Shares, an amount of L1 less
      the aggregate amount of any dividends paid in respect of each Additional
      Value Share prior to the date of the winding up or liquidation (but for
      the avoidance of doubt excluding any distribution paid in the winding up
      or liquidation).

      If on any such winding up, liquidation or other return of capital the
      amounts available for payment are insufficient to cover in full the
      amounts payable on the Additional Value Shares on such return of capital,
      the holders of such Additional Value Shares will share rateably in the
      distribution of assets (if any) in proportion to the full amounts to which
      they are respectively entitled under this sub-paragraph 2.3.

      No Additional Value Share shall confer any further right to participate in
      the capital or assets of the Company available for distribution among the
      members other than as set out in this sub-paragraph 2.3.

2.4   Receipt of Notices

      The right to have sent to the holder of each Additional Value Share (at
      the same time as the same are sent to the holders of Ordinary Shares) a
      copy of the Company's Annual Report and Accounts and/or Interim Financial
      Statement together with any notice of any General Meeting of the Company
      at which such holder is entitled to attend and vote.

2.5   Attendance and Voting at Meetings

      The right to attend at a General Meeting of the Company and to speak to or
      vote upon any Resolution proposed thereat in circumstances where it is
      proposed at the Meeting either to vary or abrogate any of the rights
      attached to the Additional Value Shares or proposing the winding up of the
      Company (and then in each such case only to speak to and vote upon any
      such Resolution) but not otherwise.

      Whenever holders of Additional Value Shares are so entitled to vote on a
      Resolution, on a show of hands every such holder who is present in person
      shall have one vote and, on a poll, every such holder who is present in
      person or by proxy shall have such number of votes for the Additional
      Value Shares held by him as he would have had if those shares had been
      converted into Ordinary Shares on the date of the notice of the meeting
      pursuant to the conversion procedure set out in paragraph 2.7 of this
      Schedule 4 and at a price per Additional Value Share calculated on the
      basis that the date of the notice of the meeting was the Second Conversion
      Date.

2.6   De-listing and Conversion into Non-Voting Deferred Shares

      The Directors shall be entitled (without being required to obtain the
      sanction of any holder of any Additional Value Share) in their absolute
      discretion and shall have irrevocable authority at any time after the
      payment of aggregate dividends of L1 in respect of each Additional Value
      Share to procure that the Additional Value Shares be de-listed from the
      Official List of the UK

<PAGE>

                                     - 160 -

      Listing Authority and from trading on the London Stock Exchange's market
      for listed securities. The Additional Value Shares shall convert
      automatically into non-voting deferred shares of L0.01 ("Non-Voting
      Deferred Shares"), which shall be certificated shares and shall have the
      following rights and restrictions only:

      (i)   On a winding-up or other return of capital, the Non-Voting Deferred
            Shares shall entitle the holders of such shares only to payment of
            the amounts paid up on those shares, after repayment to the holders
            of Ordinary Shares of the nominal amount paid up on the Ordinary
            Shares held by them respectively and the payment of L100,000
            on each Ordinary Share.

      (ii)  The Non-Voting Deferred Shares shall not entitle the holders of such
            shares to the payment of any dividend or other distribution or to
            receive notice of or to attend or vote at any general meeting of the
            Company or otherwise receive any shareholder communication.

      (iii) The Non-Voting Deferred Shares shall not, save as provided below or
            otherwise with the written consent of the Directors, be
            transferable.

      (iv)  Notwithstanding any other provision in these presents and unless
            specifically required by the provisions of the 1985 Act, the Company
            shall not be required to issue any certificates in respect of any
            Non-Voting Deferred Shares.

      (v)   Following conversion, the Non-Voting Deferred Shares shall be
            transferred for no consideration to such person as may be nominated
            by the Directors, whether or not an officer of the Company (and for
            such purposes the Directors shall have irrevocable authority to
            appoint a person on behalf of any holder of Non-Voting Deferred
            Shares to enter into an agreement to transfer and to execute and
            deliver a transfer of his Non- Voting Deferred Shares to such other
            person).

2.7   Conversion into Ordinary Shares

      (i)   If on 1 September 2003 aggregate dividends of L1 have not been
            paid in respect of each Additional Value Share, then unless the
            Directors have resolved that a dividend be paid on the Additional
            Value Shares on or before the Final Dividend Date of such amount
            that aggregate dividends paid on Additional Value Shares will
            be L1 (and that dividend is duly paid on or before the Final
            Dividend Date or the following Business Day where that date is not a
            Business Day), the Additional Value Shares shall be converted into
            fully paid up Ordinary Shares in the manner set out (and subject to
            the provisions of) this paragraph 2.7 and the Company shall use its
            reasonable efforts, to the extent permitted by applicable law, to
            arrange for a sale of the Ordinary Shares arising on conversion
            pursuant to paragraph 2.7(iii) below.

      (ii)  For the purpose of this paragraph 2.7:

            (A)   the Settlement Amount in relation to each Additional Value
                  Share means an amount of L1 less the aggregate amount of
                  any dividends paid in respect of that share;

            (B)   the Aggregate Settlement Amount in relation to any particular
                  holding of Additional Value Shares means the aggregate
                  Settlement Amount relating to the number of Additional Value
                  Shares comprised in that holding and where the

<PAGE>

                                     - 161 -

                  context requires, the Aggregate Settlement Amount relating to
                  all Additional Value Shares to be converted;

            (C)   the First Conversion Date shall be 25 London Stock Exchange
                  trading days prior to the Second Conversion Date and the
                  Second Conversion Date shall be the Final Dividend Date;

            (D)   the expression "holder" shall include a person entitled by
                  transmission and the expressions "hold" and "holding" shall be
                  construed accordingly; and

            (E)   each joint holding in respect of which names of the joint
                  holders differ or are listed in a different order shall be
                  treated as a separate holding and the expressions "held" and
                  "holder" shall be construed accordingly.

      (iii) The Company will use its reasonable efforts, to the extent permitted
            by applicable law, to arrange for the sale of the Ordinary Shares
            into which such Additional Value Shares will convert so as to raise
            net cash proceeds of an amount equal to the Aggregate Settlement
            Amount in respect of such Additional Value Shares. The sale will be
            conducted by means of a process pursuant to which a broker selected
            by the Company (the "Broker ") will solicit bids for the relevant
            Ordinary Shares (the "Placing "). Such bids will be solicited during
            the period of 20 London Stock Exchange trading days ending five
            London Stock Exchange trading days before the First Conversion Date.
            The Company will not in any circumstances be obliged to procure the
            transfer of Ordinary Shares in connection with the Placing at a
            price per share of less than the nominal value of the Ordinary
            Shares (the "Base Price ").

      (iv)  On the First Conversion Date there shall be converted in accordance
            with sub-paragraph 2.7(xv) the whole or such proportion of each
            holding of Additional Value Shares as shall be determined by the
            Directors in the light of the outcome of the Placing. The number of
            Ordinary Shares into which each Additional Value Share which is
            converted on the First Conversion Date is to be converted shall be
            such that the aggregate number of Ordinary Shares arising on the
            First Conversion Date shall be sufficient for the purposes of the
            Placing.

      (v)   On the First Conversion Date:

            (A)   the Company shall procure the transfer to the Broker or as the
                  Broker shall direct, of the Ordinary Shares so placed; and

            (B)   the Broker shall collect the net cash proceeds of the Placing
                  and hold such proceeds in separate bank account(s) until the
                  Second Conversion Date.

            The Directors shall have irrevocable authority on behalf of each
            holder of an Additional Value Share to appoint any person on behalf
            of such holder to enter into an agreement to transfer and to execute
            and deliver a transfer of the Ordinary Shares resulting from
            conversion on the First Conversion Date.

      (vi)  If the proceeds of the Placing are sufficient to enable the Company
            to pay to each holder of Additional Value Shares the Aggregate
            Settlement Amount in respect of his holding, the whole of the
            Additional Value Shares shall be converted on the First Conversion
            Date and on the Second Conversion Date the net cash proceeds of the
            Placing (if any) held by the Broker (the "Total Cash Amount") shall
            be paid to the persons who were holders of the Additional Value
            Shares immediately prior to conversion.

<PAGE>

                                     - 162 -

      (vii) If the proceeds of the Placing are not sufficient to enable the
            Company to pay to each holder of Additional Value Shares the
            Aggregate Settlement Amount then part only of the Additional Value
            Shares (determined in accordance with paragraph (iv) above) shall be
            converted on the First Conversion Date and on the Second Date:

            (A)   the Total Cash Amount shall be paid to the persons who were
                  holders of the Additional Value Shares immediately prior to
                  conversion pro rata to their holding of Additional Value
                  Shares, and the amount (if any) by which the cash paid or
                  payable to a holder falls short of the Aggregate Settlement
                  Amount shall be the "Remaining Settlement Amount"; and

            (B)   on the Second Conversion Date the remaining Additional Value
                  Shares shall be converted into such number of Ordinary Shares
                  so that the persons who were holders of Additional Value
                  Shares immediately prior to conversion receive the whole
                  number of Ordinary Shares (if any) calculated by dividing the
                  Remaining Settlement Amount by the Conversion Price, being the
                  higher of (i) 95% of the weighted average closing price per
                  Ordinary Share on the London Stock Exchange during the period
                  of 20 London Stock Exchange dealing days ending five London
                  Stock Exchange dealing days before the Second Conversion Date
                  and (ii) the nominal value of the Ordinary Shares.

      (viii) If there is no Placing or if a dividend resolved upon as at 1
            September 2003 is not paid on the Final Dividend Date (or the
            following Business Day where that date is not a Business Day) then
            on or as soon as possible after the Second Conversion Date all the
            Additional Value Shares shall be converted into such number of
            Ordinary Shares so that each holder receives the whole number of
            Ordinary Shares (if any) calculated by dividing the Settlement
            Amount by the Conversion Price, being the higher of (i) 95% of the
            weighted average closing price per Ordinary Share on the London
            Stock Exchange during the period of 20 London Stock Exchange dealing
            days ending five London Stock Exchange dealing days before the
            Second Conversion Date and (ii) the nominal value of the Ordinary
            Shares.

      (ix)  Where the conversion would otherwise result in a holder being
            entitled to a fraction of an Ordinary Share such holder's
            entitlement shall be rounded up or down as the Directors may
            determine.

      (x)   If at the time that the Conversion Price or Base Price is to be
            calculated the Ordinary Shares are not traded on the London Stock
            Exchange, references in this article to the London Stock Exchange
            shall be to such other competent authority or exchange with or on
            which the Ordinary Shares are listed or traded (as the case may be).

      (xi)  The conversion of Additional Value Shares into fully paid Ordinary
            Shares shall be conditional on:

            (A)   the Company, as at the First Conversion Date or the Second
                  Conversion Date (as the case may be), having sufficient
                  authorised but unissued share capital to issue such Non-Voting
                  Deferred Shares of L0.01 as may fall to be issued on such date
                  in connection with the conversion of Additional Value Shares;

            (B)   the number of Non-Voting Deferred Shares of L0.01 which the
                  Directors have been authorised to issue pursuant to Section 80
                  of the 1985 Act being sufficient, as at the First Conversion
                  Date or the Second Conversion Date (as the case may

<PAGE>

                                     - 163 -

                  be) to allot the shares falling to be allotted on such date in
                  connection with the conversion of Additional Value Shares or
                  the Directors having been authorised prior to such date
                  pursuant to section 80 to allot such shares (together with the
                  condition set out in (A) above, the "Relevant Shareholder
                  Approvals"); and

            (C)   there being sufficient profits or reserves available for
                  capitalisation to enable the Company to allot credited as
                  fully paid the number of Non-Voting Deferred Shares of
                  L0.01 each falling to be allotted as aforesaid.

      (xii) The Company shall use its reasonable efforts to ensure that
            sufficient authorised but unissued share capital and sufficient
            profits or reserves are available in order to permit conversion of
            the Additional Value Shares outstanding on the relevant Conversion
            Date. If the Relevant Shareholder Approvals (or profits or reserves)
            are insufficient to permit the allotment and issue of such number of
            Non-Voting Deferred Shares as fall to be allotted and issued on the
            First Conversion Date or the Second Conversion Date in connection
            with the conversion of Additional Value Shares, the Company
            undertakes to convert the maximum number of Additional Value Shares
            which it is legally permitted to convert under the existing Relevant
            Shareholder Approvals (and having regard to existing profits or
            reserves) pro rata to the respective entitlement of holders. Any
            Additional Value Shares which could not be converted as at the First
            Conversion Date and the Second Conversion Date shall be "Unconverted
            Additional Value Shares ".

      (xiii) Unconverted Additional Value Shares will be converted into Ordinary
            Shares as soon as the Company has sufficient authorised and unissued
            shares, and sufficient available profits or reserves, to permit
            conversion of Unconverted Additional Value Shares in full.
            Paragraphs (ii) to (x) of this Paragraph 2.7 shall apply to the
            conversion of such Unconverted Additional Value Shares provided that
            the Second Conversion Date shall be 60 London Stock Exchange dealing
            days after the first day of the month following the month in which
            the Company becomes able to convert such shares in full. The Company
            undertakes that for so long as Unconverted Additional Value Shares
            remain outstanding:

            (A)   such resolutions will be proposed at each subsequent Annual
                  General Meeting that, when approved, would permit the
                  Unconverted Additional Value Shares to be converted in full;
                  and

            (B)   no available profit or reserve will be applied by the Company
                  for any other purpose.

      (xiv) If any Additional Value Shares are to be converted pursuant to this
            paragraph 2.7, but have not, on the Final Dividend Date (or the
            following Business Day where that date is not a Business Day) been
            so converted, ( "converted" for the avoidance of doubt, comprising
            the payment to each holder of Additional Value Shares of the
            Aggregate Settlement Amount and/or the allotment of Ordinary Shares
            in respect of the settlement of any Remaining Settlement Amount (as
            the case may be)) no dividends may be declared on any Ordinary Share
            in the capital of the Company, and no sum may be set aside for the
            payment thereof, unless on the date of declaration relative to any
            such payment, the Aggregate Settlement Amount has been paid in full
            or set aside or Ordinary Shares delivered in respect of the
            Aggregate Settlement Amount or any Remaining Settlement Amount.

<PAGE>

                                     - 164 -

      (xv)  The following provisions shall apply to conversion of the Additional
            Value Shares:

            (A)   Conversion of Additional Value Shares may be effected in such
                  manner as the Directors shall, subject to the requirements of
                  applicable law and the provisions hereof, from time to time
                  determine and, without prejudice to the generality of the
                  foregoing, may be effected, in each case pursuant to the
                  authority conferred by the passing of the resolution which
                  created the Additional Value Shares, by the Company:

                  (aa)  capitalising from profits or reserves (including,
                        without limitation, any share premium account, merger
                        reserve or capital redemption reserve) and allotting and
                        issuing to a holder of Additional Value Shares to be
                        converted such number of new Non-Voting Deferred Shares
                        of L0.01 each having the rights and restrictions set out
                        in paragraph 2.6 above as shall bring the total nominal
                        amount of the Additional Value Shares and the new
                        Non-Voting Deferred Shares to the total nominal amount
                        of the Ordinary Shares into which the Additional Value
                        Shares are to be converted on the relevant Conversion
                        Date, consolidating all the Non-Voting Deferred Shares
                        and Additional Value Shares to be converted into one
                        Share (the "Consolidated Share") and sub-dividing and
                        redesignating the Consolidated Share into the number of
                        Ordinary Shares into which the Additional Value Shares
                        are to be converted;

                  (bb)  consolidating such Additional Value Shares into one
                        share (the "Consolidated Share") and sub-dividing and
                        redesignating the Consolidated Share into the number of
                        Ordinary Shares into which the Additional Value Shares
                        are to be converted and as to any balance into
                        Non-Voting Deferred Shares of L0.01 such Non-Voting
                        Deferred Shares being certificated shares having the
                        rights and restrictions set out in sub- paragraph 2.6
                        above.

            (B)   Ordinary Shares arising on conversion shall rank pari passu
                  with the Ordinary Shares in issue on the relevant Conversion
                  Date except that the Ordinary Shares so arising will not rank
                  for any dividend or other distribution which has been
                  announced, declared, recommended or resolved on prior to the
                  relevant Conversion Date by the Directors or by the Company in
                  general meeting, if the record date for such dividend or other
                  distribution is on or prior to the relevant Conversion Date.

            (C)   Unless the Directors otherwise determine, or unless the
                  Uncertificated Securities Regulations and/or the requirements
                  of the relevant system otherwise require, the Ordinary Shares
                  arising on conversion of any Additional Value Shares shall be
                  in certificated form (where the Additional Value Shares
                  converted were, on the date of conversion, in certificated
                  form) or as uncertificated shares (where the Additional Value
                  Shares converted were, on the date of conversion, in
                  Uncertificated Form) provided that if the Company is unable
                  under the facilities and requirements of the relevant system
                  to arrange for Ordinary Shares in respect of the person
                  entitled thereto to be held in Uncertificated Form, such
                  shares shall be in certificated form.

            (D)   The Company shall procure that there shall be dispatched or
                  made free of charge (but uninsured and at the risk of the
                  holder or the person entitled thereto, or the first-named
                  thereof, as the case may be) a certificate in respect of
                  Ordinary

<PAGE>

                                     - 165 -

                  Shares arising on conversion which are, in accordance with
                  sub-paragraph 2.7(xv)(C) above, certificated shares not later
                  than 28 days after the relevant Conversion Date.

            (E)   For the purposes of this paragraph 2.7(xv), whether any
                  Additional Value Shares are in certificated form or
                  Uncertificated Form on the Conversion Date shall be determined
                  by reference to the register of members as at 12.01 a.m. on
                  the relevant Conversion Date or such other time as the
                  Directors may (subject to the facilities and requirements of
                  the relevant system concerned) in their absolute discretion
                  determine.

            (F)   The Company shall use reasonable efforts to procure that the
                  Ordinary Shares arising on conversion of Additional Value
                  Shares are admitted to the Official List of the UK Listing
                  Authority and admitted to trading on the London Stock
                  Exchange's market for listed securities at the earliest
                  practicable date.

2.8   Class Rights

      The Company may from time to time create, allot and issue further shares,
      whether ranking pari passu with, in priority to, or behind the Additional
      Value Shares in any respect (including, without limitation, as to priority
      in payment of dividends or as to capital in a liquidation of the Company),
      and such creation, allotment or issue of any such further shares (whether
      or not ranking in any respect in priority to the Additional Value Shares
      and whether or not the same confer on the holders voting rights more
      favourable than those conferred by the Additional Value Shares) shall be
      deemed not to involve a variation of the rights attaching to the
      Additional Value Shares for any purpose.

2.9   Additional Limitations

      No Additional Value Share shall (save as otherwise specifically set out
      herein) confer any right to participate in:

      (i)   the profits or assets of the Company;

      (ii)  any offer or invitation by way of rights or otherwise to subscribe
            for additional shares in the capital of the Company; or

      (iii) any future capitalisation or bonus issue of shares in the capital of
            the Company.

<PAGE>

                        INDEX TO ARTICLES OF ASSOCIATION

<TABLE>
<CAPTION>
Subject                             Description                                         Article No.     Page No.
--------------------                ----------------------------------------------      ----------      -------
<S>                                <C>                                                 <C>            <C>
ACCOUNTS                            Accounts to be sent to members                      154             92
                                    Preparation and laying of accounts                  153             92
                                    Right to inspect accounts                           152             92

AUDITORS                            Rights of auditors                                  156             93
                                    Validity of acts of auditors                        155             92

AUTHENTICATION                      Authentication of documents                         132             83
OF DOCUMENTS

BUSINESS                            Business activities                                 3               6

CALLS ON SHARES                     Deemed calls                                        25              48
                                    Differentiation of calls                            26              48
                                    Interest payable                                    24              48
                                    Liability of joint holders                          23              48
                                    Payment of calls in advance                         27              48
                                    Power to make calls                                 21              47
                                    Time when call made                                 22              47

CAPITAL                             Alteration of capital:
                                      Alterations permitted by ordinary
                                      resolution                                        10(A)           42
                                      Fractions arising                                 10(B)           43
                                      Increase of capital                               8               42
                                      New shares                                        9               42
                                      Power to purchase own shares                      11              43
                                      Power to reduce capital                           12              43
                                    Share capital:
                                      Additional Value Shares                           4D and
                                                                                        Schedule 4      41
                                      Capital rights of cumulative preference           4(B)            7
                                      shares
                                      Category II non-cumulative dollar                 4(E)            32
                                      preference shares
                                      Category II Non-cumulative Convertible            4C and          41
                                      Sterling Preference Shares                        Schedule 3
                                      Dividend rights of cumulative preference          4(A)            6
                                      shares
                                      Non-cumulative dollar preference shares           4(D)            21
                                      Non-cumulative euro preference shares             4A and          40
                                                                                        Schedule 1
</TABLE>

<PAGE>
                                    - 167 -

<TABLE>
<CAPTION>

Subject                              Description                                        Article No.     Page No.
--------------------                 ----------------------------------------------     ----------      -------
<S>                                <C>                                                 <C>            <C>
                                       Non-cumulative convertible preference            4B and          40
                                       shares (sterling, dollar and euro)               Schedule 2
                                       Non-cumulative sterling preference               4(C)            7
                                       shares
                                       Shares with special rights and redeemable        5               41
                                       shares

                                     Variation of rights:
                                       Method of varying class rights                   6               41
                                       When share rights deemed to be varied            7               42

CAPITALISATION                       Power to capitalise on adjustment of
OF PROFITS AND                       subscription price in an employee's share
RESERVES                             scheme                                             149(B)          91
                                     Power to capitalise profits                        148             90
                                     Procedure for capitalisation                       149(A)          90

CORPORATIONS                         Authority of representatives                       90              68
ACTING BY
REPRESENTATIVES

DEPARTMENTAL,                        Appointment of other officers                      128(D)          81
REGIONAL OR                          Attendance at board meetings                       128(C)          81
LOCAL DIRECTORS                      Powers and duties of appointee                     128(B)          81
AND OTHER                            Use of designation "Director"                      128(A)          81
APPOINTEES

DESTRUCTION OF                       Destruction of documents                           44              52
DOCUMENTS

DIRECTORS                            Alternate directors:
                                       Alternate may be paid expenses but not
                                       remuneration                                     109(D)          75
                                       Alternate to receive notices                     109(C)          74
                                       Power to appoint alternate directors             109(A)          74
                                       Termination                                      109(B)          74
                                       Appointments with other companies                97(B)           71
</TABLE>

<PAGE>
                                    - 168 -

<TABLE>
<CAPTION>

Subject                             Description                                               Article No.    Page No.
--------------------                ----------------------------------------------            ----------     -------
<S>                                <C>                                                       <C>            <C>
                                    Appointment & retirement of directors:
                                      Age limit                                                100           71
                                      Appointment by ordinary resolution or by
                                      directors                                                108           74
                                      Notice of intention to appoint a director                106           73
                                      Removal and replacement of directors                     107           74
                                      Resolution                                               105           73
                                      Retirement of directors by rotation                      102           72
                                      Selection of directors to retire                         103           72
                                      Vacation of office of director                           101           72
                                      When directors deemed to be
                                      re-appointed                                             104           73
                                    Borrowing powers:
                                      Power to borrow and grant security                       121           80
                                      Delegation of powers                                     99            71
                                      Directors need not be a member                           92            69
                                      Directors' interests in contracts with the
                                      company                                                  97(A)         70
                                      Directors' fees                                          93            69
                                      Executive Office                                         98(A)         71
                                      Expenses                                                 94            69
                                      Extra remuneration                                       95            69
                                    General powers of directors:
                                      Business to be managed by the directors                  122           80
                                      Execution by the company                                 127           81
                                      Local boards, etc                                        123           80
                                      Official seal for use abroad                             125           81
                                      Overseas registers                                       126           81
                                      Powers of attorney                                       124           80
                                      Insurance                                                96(B)         70
                                      Limit on number of directors                             91            69
                                    Proceedings of directors:
                                      Alternate directors                                      114(E)        78
                                      Authority to vote                                        111           76
                                      Chairman                                                 116           78
                                      Committees of directors                                  118           79
                                      Consideration of matters involving two or
                                      more directors                                           114(C)        77
</TABLE>

<PAGE>
                                    - 169 -

<TABLE>
<CAPTION>

Subject                             Description                                         Article No.   Page No.
--------------------                ----------------------------------------------      ----------    -------
<S>                                <C>                                                 <C>           <C>
                                      Director's interests                              113           76
                                      Materiality of directors' interests               114(D)        78
                                      Meetings of directors                             110(A)        75
                                      Participation in meetings by telephone            110(B)        75
                                      Proceedings in case of vacancies                  115           78
                                      Proceedings of committee                          119           79
                                      Quorum                                            112           76
                                      Relaxation of provisions                          114(F)        78
                                      Resolutions in writing                            117           79
                                      Restrictions on voting                            114(A)        76
                                      Validity of proceedings                           120           79
                                      Where interest does not prevent voting            114(B)        76
                                      Retirement and other benefits                     96(A)         70
                                      When termination of appointment
                                      automatic                                         98(B)         71
                                      When termination of appointment not
                                      automatic                                         98(C)         71

DIVIDENDS                           Currency of payment                                 144(D)        88
                                    Declaration of dividends                            133           83
                                    Directors' responsibility                           134(B)        84
                                    Dividends in specie                                 142           85
                                    Dividends on uncertificated shares                  144(B)        88
                                    Forfeiture of unclaimed dividends                   141           85
                                    Interest not payable                                136           84
                                    Interim dividends                                   134(A)        83
                                    Permitted deductions                                137           84
                                    Procedure for payment                               144(A)        87
                                    Profits and losses from past date                   135           84
                                    Receipts where joint holders                        145           89
                                    Retention of dividends                              138           84
                                    Scrip dividend                                      143           85
                                    Uncashed dividends                                  144(C)        88
                                    Unclaimed dividends                                 140           85
                                    Waiver of dividends                                 139           84

EVIDENCE OF                         Authentication and form of certificates             19            46
TITLE TO SHARES                     Cancellation and replacement of certificates        20            47
                                    Certificated shares                                 18            46
                                    Uncertificated shares                               17            45
</TABLE>

<PAGE>
                                    - 170 -

<TABLE>
<CAPTION>

Subject                            Description                                         Article No.  Page No.
--------------------               ----------------------------------------------      ----------   -------
<S>                               <C>                                                 <C>          <C>
EXECUTION OF                       Execution of documents                               131         82
DOCUMENTS

FORFEITURE,                        Application of proceeds                              35          50
SURRENDER AND                      Company to have lien on shares                       33          49
LIEN                               Content of notice                                    29          49
                                   Enforcement of lien by sale                          34          50
                                   Extinction of rights                                 32          49
                                   Forfeiture for non-compliance                        30          49
                                   Giving effect to the sale                            36          50
                                   Notice requiring payment of calls on default         28          48
                                   Sale of forfeited shares                             31          49

GENERAL                            Application to class meeting where no
MEETINGS                           variation of rights involved                         55          57
                                   Extraordinary general meetings                       54          57
                                   Types of general meetings                            53          57
                                   Notice of general meetings:
                                     Contents of notice                                 57          58
                                     Notice of resolutions                              59          59
                                     Period of notice                                   56          58
                                     Postponement of general meetings                   60          59
                                     Routine business                                   58          59
                                   Proceedings at general meetings:
                                     Adjournments                                       68          61
                                     Amendments to resolutions                          70          62
                                     Chairman                                           65          61
                                     Chairman's casting vote                            73          63
                                     Continuance of meeting                             75          63
                                     Declaration of result and conduct of poll          72          63
                                     Entitlement to attend and speak                    67          61
                                     If quorum not present                              63          60
                                     Orderly conduct                                    66          61
                                     Overflow arrangements for general
                                     meetings                                           61          60
                                     Method of voting                                   71          62
                                     Quorum                                             62          60
                                     Security arrangements                              64          61
                                     Time and place of adjourned meetings               69          62
                                     When poll to be taken                              74          63
</TABLE>

<PAGE>
                                    - 171 -

<TABLE>
<CAPTION>

Subject                          Description                                           Article No.    Page No.
--------------------             ----------------------------------------------        ----------     -------
<S>                             <C>                                                   <C>            <C>
                                 Restrictions on voting and other share rights:

                                   Cessation of disenfranchisement                      89(C)         67
                                   Disenfranchisement                                   89(A)         67
                                   Other restrictions                                   89(B)         67
                                   Person interested in shares; approved
                                   transfers                                            89(D)         68

                                 Votes of members:
                                   Calls in arrears                                     79            64
                                   Delivery of forms of proxy                           84            65
                                   Differing proxies                                    85            66
                                   Form and execution of proxies                        83            65
                                   Intervening events                                   88            66

                                   Issue of forms of proxy                              86            66
                                   Member under incapacity                              78            64
                                   Objection to voting                                  80            64
                                   Proxy need not be a member                           82            65
                                   Right to vote                                        76            63
                                   Rights conferred by form of proxy                    87            66
                                   Votes of joint holders                               77            64
                                   Votes on a poll                                      81            64

INDEMNITY                        Indemnity                                              169           96

MINUTES AND                      Keeping of minutes and books                           150           91
BOOKS                            Safeguarding of minutes and books                      151           91

NOTICES                          Advertisement of notices                               163           95
                                 Notice to be in writing                                157           93
                                 Notice during disruption of postal services            164           95
                                 Notice to joint holders                                159           94
                                 Notice to persons entitled by transmission             160           94
                                 Notice to warrant holders                              165           95
                                 Record date for service                                158(C)        94
                                 Service of notices                                     158(A)        93
                                 Signature                                              162           94
                                 Statutory requirements                                 166           95
                                 Untraced members                                       161           94
                                 When notice deemed served                              158(B)        93
</TABLE>

<PAGE>
                                    - 172 -

<TABLE>
<CAPTION>

Subject                             Description                                         Article No.   Page No.
--------------------                ----------------------------------------------      ----------    -------
<S>                                <C>                                                 <C>           <C>
PRELIMINARY                         Definitions and interpretation                      2             1
                                    Non-applications of statutory regulations           1             1

PROVISION FOR                       Provision for employees                             168           96
EMPLOYEES

RECORD DATE                         Record date                                         146           89

RESERVES                            Different currencies                                147(C)        90
                                    Limitation on carrying sums to reserve              147(B)        89
                                    Reserves                                            147(A)        89

SEALS                               Custody of seal                                     130(A)        82
                                    Formalities for affixing the seal                   130(B)        82
                                    Use of securities seal                              130(C)        82

SECRETARY                           Secretary                                           129           82

SHARES                              Calls on (see CALLS ON SHARES)
                                    Commission                                          14            45
                                    Directors' authority to allot shares and power
                                    to allot shares for cash                            13(B)         44
                                    Interest not recognised                             16            45
                                    Renunciation                                        15            45
                                    Restriction on share rights (see GENERAL
                                    MEETINGS)
                                    Shares at the disposal of the directors             13(A)         43

SHARE WARRANTS                      Bearer deemed to be a member                        52(B)         56
TO BEARER                           Certificate to attend meetings                      52(D)         56
                                    Coupon for dividend                                 52(I)         57
                                    Exercise of other rights                            52(F)         56
                                    Issue of new warrants                               52(G)         56
                                    Meetings                                            52(C)         56
                                    Power to issue share warrants to bearer             52(A)         55
                                    Return of warrant after meeting                     52(E)         56
                                    Surrender of warrant and registration of
                                    holder                                              52(J)         57
                                    Transfer of shares included in warrant              52(H)         57
                                    Variation of terms                                  52(K)         57
</TABLE>

<PAGE>
                                    - 173 -

<TABLE>
<CAPTION>

Subject                             Description                                         Article No.   Page No.
--------------------                ----------------------------------------------      ----------    -------
<S>                                <C>                                                 <C>           <C>
STOCK                               Conversion into stock                               49            55
                                    Rights of shareholders                              51            55
                                    Transfer of stock                                   50            55

TRANSFER OF                         Execution of transfers                              38            51
SHARES                              Further rights to decline to register transfer      41            51
                                    No fee payable for registration of transfers        42            52
                                    Renunciations recognised                            43            52
                                    Right to decline to register transfer of partly
                                    paid shares                                         40            51
                                    Suspension of registration                          39            51
                                    Transfers                                           37            50

TRANSMISSION OF                     Election for registration                           46(B)         53
SHARES                              Registration on death, bankruptcy, etc              46(A)         53
                                    Rights of persons entitled by transmission          47            53
                                    Transmission                                        45            53

UNTRACED                            Power to dispose of shares of untraced
SHAREHOLDERS                        shareholders                                        48(A)         54
                                    Sale procedure and application of proceeds          48(B)         54

WINDING UP                          Liquidator may distribute in specie                 167           95
</TABLE>EXHIBIT 10.11

                      STANDBY EQUITY DISTRIBUTION AGREEMENT
                      -------------------------------------

     THIS  AGREEMENT  dated  as  of  the  19th day of May 2004 (the "Agreement")
                                                                     ---------
between  CORNELL  CAPITAL  PARTNERS,  LP,  a  Delaware  limited partnership (the
"Investor"), and NS8 CORPORATION, a corporation organized and existing under the
      ---
laws  of  the  State  of  Delaware  (the  "Company").
                                           -------

     WHEREAS,  the  parties  desire  that,  upon  the  terms  and subject to the
conditions  contained  herein, the Company shall issue and sell to the Investor,
from  time  to time as provided herein, and the Investor shall purchase from the
Company  up  to  Twenty  Million  Dollars  ($20,000,000) of the Company's common
stock,  par  value  $.0001  per  share  (the  "Common  Stock");  and
                                               -------------

WHEREAS,  such  investments  will  be  made  in  reliance upon the provisions of
Regulation D ("Regulation D") of the Securities Act of 1933, as amended, and the
               ------------
regulations  promulgated  thereunder  (the  "Securities  Act"), and or upon such
                                             ---------------
other  exemption from the registration requirements of the Securities Act as may
be available with respect to any or all of the investments to be made hereunder.

WHEREAS,  the  Company  has  engaged  Newbridge  Securities  Corporation  (the
"Placement  Agent"),  to  act  as  the  Company's  exclusive  placement agent in
         --------
connection with the sale of the Company's Common Stock to the Investor hereunder
pursuant to the Placement Agent Agreement dated the date hereof by and among the
Company, the Placement Agent and the Investor (the "Placement Agent Agreement").
                                                    -------------------------

NOW,  THEREFORE,  the  parties  hereto  agree  as  follows:

                                     ARTICLE
                               CERTAIN DEFINITIONS

     Section     "Advance"  shall  mean  the  portion  of  the Commitment Amount
                  -------
requested  by  the  Company  in  the  Advance  Notice.

Section     "Advance  Date"  shall  mean  the  date  Butler  Gonzalez LLP Escrow
             -------------
Account is in receipt of the funds from the Investor and Butler Gonzalez LLP, as
the Investor's Counsel, is in possession of free trading shares from the Company
and  therefore  an Advance by the Investor to the Company can be made and Butler
Gonzalez  LLP  can  release  the free trading shares to the Investor. No Advance
Date  shall  be  less  than  six  (6) Trading Days after an Advance Notice Date.

Section     "Advance Notice" shall mean a written notice to the Investor setting
             --------------
forth  the  Advance  amount  that the Company requests from the Investor and the
Advance  Date.

Section     "Advance  Notice  Date" shall mean each date the Company delivers to
             ---------------------
the  Investor  an  Advance Notice requiring the Investor to advance funds to the

                                      E-2
<PAGE>

Company,  subject  to the terms of this Agreement.  No Advance Notice Date shall
be  less  than  seven  (7)  Trading  Days  after  the prior Advance Notice Date.

Section     "Bid  Price"  shall  mean,  on  any  date, the closing bid price (as
             ----------
reported  by  Bloomberg  L.P.) of the Common Stock on the Principal Market or if
the  Common  Stock is not traded on a Principal Market, the highest reported bid
price  for  the  Common  Stock,  as  furnished  by  the  National Association of
Securities  Dealers,  Inc.

Section     "Closing"  shall  mean one of the closings of a purchase and sale of
             -------
Common  Stock  pursuant  to  Section  2.3.

Section     "Commitment  Amount" shall mean the aggregate amount of up to Twenty
             ------------------
Million  Dollars  ($20,000,000)  which the Investor has agreed to provide to the
Company  in  order  to purchase the Company's Common Stock pursuant to the terms
and  conditions  of  this  Agreement.

Section     "Commitment  Period" shall mean the period commencing on the earlier
             ------------------
to occur of (i) the Effective Date, or (ii) such earlier date as the Company and
the  Investor  may  mutually  agree  in writing, and expiring on the earliest to
occur  of (x) the date on which the Investor shall have made payment of Advances
pursuant  to  this  Agreement  in the aggregate amount of Twenty Million Dollars
($20,000,000),  (y)  the  date  this Agreement is terminated pursuant to Section
2.5, or (z) the date occurring twenty-four (24) months after the Effective Date.

Section     "Common  Stock"  shall  mean  the  Company's common stock, par value
             -------------
$.001  per  share.

Section     "Condition  Satisfaction  Date"  shall have the meaning set forth in
             -----------------------------
Section  7.2.

Section     "Damages"  shall  mean any loss, claim, damage, liability, costs and
             -------
expenses  (including,  without  limitation,  reasonable  attorney's  fees  and
disbursements  and  costs  and  expenses of expert witnesses and investigation).

Section     "Effective Date" shall mean the date on which the SEC first declares
             --------------
effective  a  Registration  Statement  registering the resale of the Registrable
Securities  as  set  forth  in  Section  7.2(a).

Section     "Escrow  Agreement"  shall  mean  the  escrow  agreement  among  the
             -----------------
Company,  the  Investor,  and  Butler  Gonzalez  LLP,  dated  the  date  hereof.

Section     "Exchange  Act"  shall  mean the Securities Exchange Act of 1934, as
             -------------
amended,  and  the  rules  and  regulations  promulgated  thereunder.

Section     "Material Adverse Effect" shall mean any condition, circumstance, or
             -----------------------
situation that would prohibit or otherwise materially interfere with the ability
of  the  Company  to  enter  into  and perform any of its obligations under this
Agreement  or  the  Registration  Rights  Agreement  in  any  material  respect.

                                      E-3
<PAGE>

Section     "Market Price" shall mean the lowest VWAP of the Common Stock during
             ------------
the  Pricing  Period.

Section     "Maximum  Advance  Amount"  shall  be  Seven  Hundred Fifty Thousand
             ------------------------
Dollars  ($750,000)  per  Advance  Notice  .

Section  1.18     "NASD"  shall  mean  the  National  Association  of Securities
                   ----
Dealers,  Inc.

Section  1.19     "Person"  shall  mean  an  individual,  a  corporation,  a
                   ------
partnership,  an association, a trust or other entity or organization, including
a  government  or political subdivision or an agency or instrumentality thereof.

Section  1.20     "Placement Agent" shall mean Newbridge Securities Corporation,
                   ---------------
a  registered  broker-dealer.

Section  1.21     "Pricing  Period"  shall mean the five (5) consecutive Trading
                   ---------------
Days  after  the  Advance  Notice  Date.

Section  1.22     "Principal  Market" shall mean the Nasdaq National Market, the
                   -----------------
Nasdaq  SmallCap  Market, the American Stock Exchange, the OTC Bulletin Board or
the  New  York  Stock  Exchange,  whichever is at the time the principal trading
exchange  or  market  for  the  Common  Stock.

Section  1.23     "Purchase Price" shall be set at one hundred percent (100%) of
                   --------------
the  Market  Price  during  the  Pricing  Period.

Section  1.24     "Registrable Securities" shall mean the shares of Common Stock
                   ----------------------
to  be  issued  hereunder (i) in respect of which the Registration Statement has
not  been  declared  effective  by  the SEC, (ii) which have not been sold under
circumstances  meeting  all  of  the  applicable  conditions of Rule 144 (or any
similar  provision then in force) under the Securities Act ("Rule 144") or (iii)
                                                             --------
which  have not been otherwise transferred to a holder who may trade such shares
without  restriction  under  the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive  legend.

Section  1.25     "Registration  Rights  Agreement"  shall mean the Registration
                   -------------------------------
Rights Agreement dated the date hereof, regarding the filing of the Registration
Statement for the resale of the Registrable Securities, entered into between the
Company  and  the  Investor.

Section 1.26     "Registration Statement" shall mean a registration statement on
                  ----------------------
Form  S-1 or SB-2 (if use of such form is then available to the Company pursuant
to  the  rules of the SEC and, if not, on such other form promulgated by the SEC
for  which  the  Company  then qualifies and which counsel for the Company shall
deem  appropriate,  and  which  form  shall  be  available for the resale of the
Registrable  Securities  to  be  registered  thereunder  in  accordance with the
provisions  of  this  Agreement  and  the  Registration Rights Agreement, and in
accordance with the intended method of distribution of such securities), for the
registration  of  the resale by the Investor of the Registrable Securities under
the  Securities  Act.

                                      E-4
<PAGE>

Section 1.27     "Regulation D" shall have the meaning set forth in the recitals
                  ------------
of  this  Agreement.

Section  1.28     "SEC"  shall  mean  the  Securities  and  Exchange Commission.
                   ---

Section  1.29     "Securities  Act"  shall  have  the  meaning  set forth in the
                   ---------------
recitals  of  this  Agreement.

Section  1.30     "SEC  Documents"  shall  mean  Annual  Reports on Form 10-KSB,
                   --------------
Quarterly  Reports  on  Form  10-QSB,  Current  Reports  on  Form  8-K and Proxy
Statements  of  the  Company  as  supplemented  to the date hereof, filed by the
Company  for  a  period of at least twelve (12) months immediately preceding the
date  hereof  or  the  Advance  Date, as the case may be, until such time as the
Company  no  longer  has  an  obligation  to  maintain  the  effectiveness  of a
Registration  Statement  as  set  forth  in  the  Registration Rights Agreement.

Section  1.31     "Trading  Day"  shall  mean  any day during which the New York
                   ------------
Stock  Exchange  shall  be  open  for  business.

Section  1.32     "VWAP"     shall mean the volume weighted average price of the
                   ----
Company's  Common  Stock  as  reported  by  Bloomberg,  LP.

                                     ARTICLE

                                    ADVANCES

     Section     Investments.
                 -----------

          Advances.  Upon  the terms and conditions set forth herein (including,
          --------
without limitation, the provisions of Article VII hereof), on any Advance Notice
Date  the  Company  may request an Advance by the Investor by the delivery of an
Advance  Notice.  The  number  of shares of Common Stock that the Investor shall
receive  for  each  Advance  shall  be  determined by dividing the amount of the
Advance by the Purchase Price.  No fractional shares shall be issued. Fractional
shares  shall  be  rounded  to  the  next  higher  whole  number of shares.  The
aggregate maximum amount of all Advances that the Investor shall be obligated to
make  under  this  Agreement  shall  not  exceed  the  Commitment  Amount.

     Section     Mechanics.
                 ---------

          Advance Notice.  At any time during the Commitment Period, the Company
          --------------
may  deliver  an  Advance  Notice to the Investor, subject to the conditions set
forth  in  Section  7.2;  provided,  however,  the  amount  for  each Advance as
designated  by  the  Company in the applicable Advance Notice, shall not be more
than  the Maximum Advance Amount.  The aggregate amount of the Advances pursuant
to  this  Agreement  shall  not  exceed  the  Commitment  Amount.  The  Company
acknowledges  that  the  Investor  may sell shares of the Company's Common Stock
corresponding  with a particular Advance Notice on the day the Advance Notice is
received  by  the  Investor.  There shall be a minimum of seven (7) Trading Days
between  each  Advance  Notice  Date.

                                      E-5
<PAGE>

(b)     Date  of  Delivery of Advance Notice.  An Advance Notice shall be deemed
        ------------------------------------
delivered on (i) the Trading Day it is received by facsimile or otherwise by the
Investor  if  such  notice is received prior to 12:00 noon Eastern Time, or (ii)
the  immediately  succeeding  Trading  Day  if  it  is  received by facsimile or
otherwise after 12:00 noon Eastern Time on a Trading Day or at any time on a day
which  is not a Trading Day.  No Advance Notice may be deemed delivered on a day
that  is  not  a  Trading  Day.

(c)     Pre-Closing  Share  Credit.  Within  two  (2)  business  days  after the
        --------------------------
Advance  Notice  Date,  the  Company shall credit shares of the Company's Common
Stock  to  the  Investor's  counsel's  balance account with The Depository Trust
Company  through  its Deposit Withdrawal At Custodian system, in an amount equal
to  the  amount of the requested Advance divided by the closing Bid Price of the
Company's Common Stock as of the Advance Notice Date multiplied by one point one
(1.1).  Any  adjustments to the number of shares to be delivered to the Investor
at  the  Closing  as  a  result  of fluctuations in the closing Bid Price of the
Company's  Common Stock shall be made as of the date of the Closing.  Any excess
shares  shall  be credited to the next Advance.  In no event shall the number of
shares issuable to the Investor pursuant to an Advance cause the Investor to own
in  excess  of nine and 9/10 percent (9.9%) of the then outstanding Common Stock
of  the  Company.

(d)     Hardship.  In  the  event  the Investor sells the Company's Common Stock
        --------
pursuant  to  subsection  (c)  above  and  the  Company  fails  to  perform  its
obligations  as  mandated  in Section 2.5 and 2.2 (c), and specifically fails to
provide the Investor with the shares of Common Stock for the applicable Advance,
the  Company  acknowledges that the Investor shall suffer financial hardship and
therefore  shall  be  liable  for  any  and  all  losses,  commissions, fees, or
financial  hardship  caused  to  the  Investor.

     Section     Closings.  On each Advance Date, which shall be six (6) Trading
                 --------
Days  after  an  Advance  Notice  Date,  (i)  the  Company  shall deliver to the
Investor's  Counsel,  as defined pursuant to the Escrow Agreement, shares of the
Company's  Common  Stock, representing the amount of the Advance by the Investor
pursuant  to  Section  2.1  herein, registered in the name of the Investor which
shall  be  delivered to the Investor, or otherwise in accordance with the Escrow
Agreement  and  (ii)  the  Investor  shall  deliver  to Butler Gonzalez LLP (the
"Escrow  Agent")  the  amount  of the Advance specified in the Advance Notice by
--------------
wire  transfer  of  immediately  available funds which shall be delivered to the
Company,  or otherwise in accordance with the Escrow Agreement.  In addition, on
or prior to the Advance Date, each of the Company and the Investor shall deliver
to  the  other  through  the  Investor's Counsel, all documents, instruments and
writings  required  to be delivered by either of them pursuant to this Agreement
in  order to implement and effect the transactions contemplated herein.  Payment
of  funds  to  the  Company  and  delivery  of the Company's Common Stock to the
Investor shall occur in accordance with the conditions set forth above and those
contained  in  the  Escrow  Agreement; provided, however, that to the extent the
                                       --------  -------
Company  has  not paid the fees, expenses, and disbursements of the Investor and
the Investor's counsel in accordance with Section 12.4, the amount of such fees,
expenses,  and  disbursements may be deducted by the Investor (and shall be paid
to  the  relevant party) from the amount of the Advance with no reduction in the
amount  of  shares of the Company's Common Stock to be delivered on such Advance
Date.

                                      E-6
<PAGE>

Section     Termination  of  Investment.  The obligation of the Investor to make
            ---------------------------
an Advance to the Company pursuant to this Agreement shall terminate permanently
(including  with  respect  to  an Advance Date that has not yet occurred) in the
event  that  (i)  there  shall  occur  any  stop  order  or  suspension  of  the
effectiveness  of  the  Registration  Statement  for  an aggregate of fifty (50)
Trading  Days, other than due to the acts of the Investor, during the Commitment
Period,  and  (ii)  the Company shall at any time fail materially to comply with
the  requirements of Article VI and such failure is not cured within thirty (30)
days  after receipt of written notice from the Investor, provided, however, that
                                                         --------  -------
this  termination  provision  shall  not apply to any period commencing upon the
filing  of  a post-effective amendment to such Registration Statement and ending
upon  the  date  on which such post effective amendment is declared effective by
the  SEC.

     Section     Agreement  to  Advance  Funds.
                 -----------------------------

          The  Investor  agrees  to  advance the amount specified in the Advance
Notice  to  the Company after the completion of each of the following conditions
and  the  other  conditions  set  forth  in  this  Agreement:

          the  execution  and delivery by the Company, and the Investor, of this
Agreement  and  the  Exhibits  hereto;

     Investor's  Counsel  shall  have  received  the  shares  of  Common  Stock
applicable  to  the  Advance  in  accordance  with  Section  2.2(c)  hereof;

     the  Company's  Registration  Statement  with  respect to the resale of the
Registrable  Securities  in accordance with the terms of the Registration Rights
Agreement  shall  have  been  declared  effective  by  the  SEC;

     the  Company  shall  have  obtained all material permits and qualifications
required  by  any  applicable  state  for  the offer and sale of the Registrable
Securities,  or  shall  have the availability of exemptions therefrom.  The sale
and  issuance  of  the  Registrable Securities shall be legally permitted by all
laws  and  regulations  to  which  the  Company  is  subject;

     the  Company  shall  have  filed with the Commission in a timely manner all
reports, notices and other documents required of a "reporting company" under the
Exchange  Act  and  applicable  Commission  regulations;

     the  fees as set forth in Section 12.4 below shall have been paid or can be
withheld  as  provided  in  Section  2.3;  and

     the  conditions  set  forth  in  Section  7.2  shall  have  been satisfied.

     The  Company  shall  have provided to the Investor an acknowledgement, from
Singer Lewak Greenbaum & Goldstein LLP as to its ability to provide all consents
required  in  order  to  file  a  registration statement in connection with this
transaction;

     The  Company's  transfer  agent  shall  be  DWAC  eligible.

                                      E-7
<PAGE>

     Section     Lock  Up  Period.
                 -----------------

          During  the Commitment Period, the Company shall not issue or sell (i)
any Common Stock or Preferred Stock without consideration or for a consideration
per  share less than the Bid Price on the date of issuance or (ii) issue or sell
any  warrant,  option,  right,  contract,  call, or other security or instrument
granting  the  holder  thereof  the  right  to  acquire  Common  Stock  without
consideration  or  for  a consideration per share less than the Bid Price on the
date  of  issuance.  Notwithstanding  the foregoing the Company may upon fifteen
(15)  business  days  prior  written  notice to the Buyer(s) file a registration
statement  on Form S-8 for the issuance of shares of common stock and/or options
for  consultants and/or attorneys for bona fide services rendered or pursuant to
bona  fide  employee  stock  option  plans..

     On the date hereof, the Company shall obtain from each officer and director
a  lock-up  agreement,  as defined below, in the form annexed hereto as Schedule
2.6  agreeing to only sell in compliance with the volume limitation of Rule 144.

                                     ARTICLE
                   REPRESENTATIONS AND WARRANTIES OF INVESTOR

     Investor  hereby  represents  and warrants to, and agrees with, the Company
that  the  following  are  true and as of the date hereof and as of each Advance
Date:

     Section     Organization  and  Authorization.  The  Investor  is  duly
                 --------------------------------
incorporated  or  organized  and  validly  existing  in  the jurisdiction of its
incorporation  or  organization  and  has  all  requisite power and authority to
purchase and hold the securities issuable hereunder.  The decision to invest and
the  execution  and delivery of this Agreement by such Investor, the performance
by  such  Investor  of  its  obligations  hereunder and the consummation by such
Investor  of  the transactions contemplated hereby have been duly authorized and
requires  no other proceedings on the part of the Investor.  The undersigned has
the  right,  power  and  authority to execute and deliver this Agreement and all
other  instruments  (including,  without  limitations,  the  Registration Rights
Agreement),  on  behalf  of the Investor.  This Agreement has been duly executed
and  delivered  by  the Investor and, assuming the execution and delivery hereof
and  acceptance  thereof  by  the  Company, will constitute the legal, valid and
binding  obligations  of  the  Investor,  enforceable  against  the  Investor in
accordance  with  its  terms.

Section     Evaluation of Risks.  The Investor has such knowledge and experience
            -------------------
in  financial tax and business matters as to be capable of evaluating the merits
and  risks  of, and bearing the economic risks entailed by, an investment in the
Company and of protecting its interests in connection with this transaction.  It
recognizes  that  its  investment in the Company involves a high degree of risk.

Section     No Legal Advice From the Company.  The Investor acknowledges that it
            --------------------------------
had  the  opportunity to review this Agreement and the transactions contemplated
by  this  Agreement  with  his  or  its own legal counsel and investment and tax
advisors.  The  Investor  is relying solely on such counsel and advisors and not
on  any  statements  or  representations  of  the  Company  or  any  of  its
representatives  or  agents  for legal, tax or investment advice with respect to

                                      E-8
<PAGE>

this  investment,  the  transactions  contemplated  by  this  Agreement  or  the
securities  laws  of  any  jurisdiction.

Section     Investment  Purpose.  The  securities  are  being  purchased  by the
            -------------------
Investor  for  its  own  account,  for  investment  and  without any view to the
distribution, assignment or resale to others or fractionalization in whole or in
part.  The  Investor  agrees not to assign or in any way transfer the Investor's
rights  to  the  securities  or  any  interest therein and acknowledges that the
Company  will  not  recognize  any  purported  assignment  or transfer except in
accordance  with  applicable Federal and state securities laws.  No other person
has  or  will  have  a direct or indirect beneficial interest in the securities.
The  Investor  agrees  not  to  sell,  hypothecate  or  otherwise  transfer  the
Investor's  securities  unless  the  securities are registered under Federal and
applicable  state  securities  laws  or  unless,  in  the  opinion  of  counsel
satisfactory  to  the  Company,  an  exemption  from  such  laws  is  available.

Section     Accredited  Investor.  The  Investor  is an "Accredited Investor" as
            --------------------                         -------------------
that  term  is  defined in Rule 501(a)(3) of Regulation D of the Securities Act.

Section     Information.  The  Investor  and  its advisors (and its counsel), if
            -----------
any,  have  been furnished with all materials relating to the business, finances
and  operations  of  the Company and information it deemed material to making an
informed  investment decision.  The Investor and its advisors, if any, have been
afforded  the  opportunity  to  ask questions of the Company and its management.
Neither  such  inquiries nor any other due diligence investigations conducted by
such  Investor  or  its  advisors,  if any, or its representatives shall modify,
amend  or  affect  the Investor's right to rely on the Company's representations
and  warranties  contained in this Agreement.  The Investor understands that its
investment  involves  a  high  degree  of  risk.  The  Investor is in a position
regarding  the  Company,  which,  based  upon employment, family relationship or
economic  bargaining  power,  enabled  and  enables  such  Investor  to  obtain
information  from  the Company in order to evaluate the merits and risks of this
investment.  The  Investor  has sought such accounting, legal and tax advice, as
it has considered necessary to make an informed investment decision with respect
to  this  transaction.

Section     Receipt of Documents. The Investor and its counsel have received and
            --------------------
read  in  their  entirety:  (i)  this Agreement and the Exhibits annexed hereto;
(ii)  all  due  diligence and other information necessary to verify the accuracy
and  completeness  of  such representations, warranties and covenants; (iii) the
Company's  Form  10-KSB for the year ended year ended December 31, 2003 and Form
10-QSB  for  the period ended March 31, 2004 ; and (iv) answers to all questions
the  Investor  submitted  to the Company regarding an investment in the Company;
and  the  Investor  has  relied on the information contained therein and has not
been  furnished  any  other  documents,  literature,  memorandum  or prospectus.

Section     Registration  Rights  Agreement  and  Escrow Agreement.  The parties
            ------------------------------------------------------
have  entered  into  the Registration Rights Agreement and the Escrow Agreement,
each  dated  the  date  hereof.

Section     No  General  Solicitation.  Neither  the  Company,  nor  any  of its
            -------------------------
affiliates,  nor  any  person  acting on its or their behalf, has engaged in any
form  of  general  solicitation  or  general  advertising (within the meaning of

                                      E-9
<PAGE>

Regulation  D  under the Securities Act) in connection with the offer or sale of
the  shares  of  Common  Stock  offered  hereby.

Section     Not  an  Affiliate.  The  Investor  is not an officer, director or a
            ------------------
person that directly, or indirectly through one or more intermediaries, controls
or  is  controlled  by,  or  is  under  common  control  with the Company or any
"Affiliate"  of  the  Company  (as  that  term  is  defined  in  Rule 405 of the
------- --
Securities  Act).  Neither  the  Investor  nor  its Affiliates has an open short
position  in  the  Common  Stock of the Company, and the Investor agrees that it
will  not,  and  that  it  will cause its Affiliates not to, engage in any short
sales of or hedging transactions with respect to the Common Stock, provided that
the  Company  acknowledges and agrees that upon receipt of an Advance Notice the
Investor  will  sell  the  Shares  to  be issued to the Investor pursuant to the
Advance  Notice,  even  if  the  Shares have not been delivered to the Investor.

Section     Trading  Activities.  The Investor's trading activities with respect
            -------------------
to the Company's Common Stock shall be in compliance with all applicable federal
and  state  securities laws, rules and regulations and the rules and regulations
of the Principal Market on which the Company's Common Stock is listed or traded.
Neither the Investor nor its affiliates has an open short position in the Common
Stock  of the Company and, except as set forth below, the Investor shall not and
will  cause  its  affiliates  not  to engage in any short sale as defined in any
applicable  SEC  or  National  Association  of  Securities  Dealers rules on any
hedging  transactions  with  respect  to  the Common Stock. Without limiting the
foregoing,  the Investor agrees not to engage in any naked short transactions in
excess of the amount of shares owned (or an offsetting long position) during the
Commitment  Period.  The  Investor shall be entitled to sell Common Stock during
the  applicable  Pricing  Period.

                                     ARTICLE
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except  as  stated below, on the disclosure schedules attached hereto or in
the  SEC  Documents  (as  defined  herein),  the  Company  hereby represents and
warrants  to,  and  covenants with, the Investor that the following are true and
correct  as  of  the  date  hereof:

     Section     Organization  and  Qualification.  The  Company  is  duly
                 --------------------------------
incorporated  or  organized  and  validly  existing  in  the jurisdiction of its
incorporation  or  organization  and  has  all  requisite  power  and  authority
corporate  power to own its properties and to carry on its business as now being
conducted.  Each  of  the  Company  and  its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in  which  the  nature  of the business conducted by it makes such qualification
necessary,  except  to  the  extent that the failure to be so qualified or be in
good  standing  would  not have a Material Adverse Effect on the Company and its
subsidiaries  taken  as  a  whole.

Section     Authorization,  Enforcement, Compliance with Other Instruments.  (i)
            --------------------------------------------------------------
The  Company  has  the requisite corporate power and authority to enter into and
perform this Agreement, the Registration Rights Agreement, the Escrow Agreement,
the Placement Agent Agreement and any related agreements, in accordance with the
terms hereof and thereof, (ii) the execution and delivery of this Agreement, the

                                      E-10
<PAGE>

Registration  Rights  Agreement,  the  Escrow  Agreement,  the  Placement  Agent
Agreement  and  any related agreements by the Company and the consummation by it
of  the  transactions contemplated hereby and thereby, have been duly authorized
by  the  Company's Board of Directors and no further consent or authorization is
required  by the Company, its Board of Directors or its stockholders, (iii) this
Agreement,  the  Registration  Rights  Agreement,  the  Escrow  Agreement,  the
Placement Agent Agreement and any related agreements have been duly executed and
delivered  by  the  Company,  (iv)  this  Agreement,  the  Registration  Rights
Agreement,  the Escrow Agreement, the Placement Agent Agreement and assuming the
execution  and  delivery  thereof and acceptance by the Investor and any related
agreements  constitute  the  valid  and  binding  obligations  of  the  Company
enforceable  against  the Company in accordance with their terms, except as such
enforceability  may  be  limited  by  general principles of equity or applicable
bankruptcy,  insolvency, reorganization, moratorium, liquidation or similar laws
relating  to,  or  affecting generally, the enforcement of creditors' rights and
remedies.

Section     Capitalization.  As of the date hereof, the authorized capital stock
            --------------
of  the Company consists of 205,000,000 shares of Common Stock, par value $.0001
per  share and 5,000,000 shares of Preferred Stock of which 88,278,000 shares of
Common  Stock and no shares of Preferred Stock were issued and outstanding.  All
of  such  outstanding  shares  have  been  validly issued and are fully paid and
nonassessable.  Except  as  disclosed  in the SEC Documents, no shares of Common
Stock  are subject to preemptive rights or any other similar rights or any liens
or  encumbrances  suffered  or permitted by the Company.  Except as disclosed in
the  SEC Documents, as of the date hereof, (i) there are no outstanding options,
warrants,  scrip,  rights to subscribe to, calls or commitments of any character
whatsoever  relating to, or securities or rights convertible into, any shares of
capital  stock  of  the  Company  or  any  of  its  subsidiaries,  or contracts,
commitments,  understandings  or arrangements by which the Company or any of its
subsidiaries  is or may become bound to issue additional shares of capital stock
of the Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe  to,  calls or commitments of any character whatsoever relating to, or
securities  or  rights  convertible  into,  any  shares  of capital stock of the
Company  or  any  of  its  subsidiaries,  (ii)  there  are  no  outstanding debt
securities  (iii) there are no outstanding registration statements other than on
Form  S-8  and  (iv)  there  are  no  agreements or arrangements under which the
Company  or  any of its subsidiaries is obligated to register the sale of any of
their  securities  under the Securities Act (except pursuant to the Registration
Rights  Agreement).  There  are  no  securities  or  instruments  containing
anti-dilution  or similar provisions that will be triggered by this Agreement or
any  related  agreement or the consummation of the transactions described herein
or  therein.  The  Company has furnished to the Investor true and correct copies
of  the  Company's Articles of Incorporation, as amended and as in effect on the
date  hereof (the "Articles of Incorporation"), and the Company's By-laws, as in
                   -------------------------
effect  on  the  date  hereof  (the  "By-laws"), and the terms of all securities
                                      -------
convertible  into or exercisable for Common Stock and the material rights of the
holders  thereof  in  respect  thereto.

Section     No  Conflict.  The  execution,  delivery  and  performance  of  this
            ------------
Agreement by the Company and the consummation by the Company of the transactions
contemplated  hereby  will  not  (i)  result  in  a violation of the Articles of
Incorporation,  any  certificate  of  designations  of any outstanding series of
preferred  stock of the Company or By-laws or (ii) conflict with or constitute a
default  (or  an event which with notice or lapse of time or both would become a

                                      E-11
<PAGE>

default)  under,  or  give  to  others  any  rights  of  termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the  Company  or any of its subsidiaries is a party, or result in a violation of
any  law,  rule,  regulation,  order,  judgment or decree (including federal and
state  securities  laws  and  regulations  and  the rules and regulations of the
Principal  Market on which the Common Stock is quoted) applicable to the Company
or  any  of  its  subsidiaries or by which any material property or asset of the
Company  or any of its subsidiaries is bound or affected and which would cause a
Material  Adverse Effect.  Except as disclosed in the SEC Documents, neither the
Company  nor its subsidiaries is in violation of any term of or in default under
its  Articles  of  Incorporation  or  By-laws or their organizational charter or
by-laws,  respectively,  or  any  material  contract,  agreement,  mortgage,
indebtedness,  indenture,  instrument, judgment, decree or order or any statute,
rule  or regulation applicable to the Company or its subsidiaries.  The business
of  the  Company and its subsidiaries is not being conducted in violation of any
material  law,  ordinance,  regulation  of  any  governmental entity.  Except as
specifically contemplated by this Agreement and as required under the Securities
Act  and  any  applicable  state securities laws, the Company is not required to
obtain  any  consent,  authorization  or  order  of,  or  make  any  filing  or
registration  with, any court or governmental agency in order for it to execute,
deliver  or  perform  any  of  its  obligations  under  or  contemplated by this
Agreement  or  the  Registration  Rights  Agreement in accordance with the terms
hereof  or  thereof.  All  consents,  authorizations,  orders,  filings  and
registrations  which the Company is required to obtain pursuant to the preceding
sentence  have  been  obtained  or effected on or prior to the date hereof.  The
Company and its subsidiaries are unaware of any fact or circumstance which might
give  rise  to  any  of  the  foregoing.

Section     SEC  Documents;  Financial  Statements.  Since  May  15,  2002,  the
            --------------------------------------
Company  has filed all reports, schedules, forms, statements and other documents
required  to be filed by it with the SEC under of the Exchange Act.  The Company
has  delivered to the Investor or its representatives, or made available through
the  SEC's  website  at  http://www.sec.gov, true and complete copies of the SEC
Documents.  As  of  their  respective  dates,  the  financial  statements of the
Company  disclosed in the SEC Documents (the "Financial Statements") complied as
                                              --------------------
to form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.  Such financial
statements  have  been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be  otherwise  indicated  in  such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes  or may be condensed or summary statements) and, fairly present in all
material  respects the financial position of the Company as of the dates thereof
and  the  results  of  its  operations and cash flows for the periods then ended
(subject,  in  the  case  of  unaudited  statements,  to  normal  year-end audit
adjustments).  No  other  information provided by or on behalf of the Company to
the  Investor  which  is  not  included in the SEC Documents contains any untrue
statement  of  a  material fact or omits to state any material fact necessary in
order  to  make  the statements therein, in the light of the circumstances under
which  they  were  made,  not  misleading.

                                      E-12
<PAGE>

     Section     10b-5.  The  SEC Documents do not include any untrue statements
                 -----
of  material  fact,  nor  do they omit to state any material fact required to be
stated  therein  necessary  to  make  the  statements  made,  in  light  of  the
circumstances  under  which  they  were  made,  not  misleading.

     Section     No  Default.  Except  as  disclosed  in  the SEC Documents, the
                 -----------
Company  is  not  in  default  in  the performance or observance of any material
obligation,  agreement,  covenant  or  condition  contained  in  any  indenture,
mortgage, deed of trust or other material instrument or agreement to which it is
a  party  or  by which it is or its property is bound and neither the execution,
nor  the  delivery  by  the  Company,  nor the performance by the Company of its
obligations  under  this  Agreement or any of the exhibits or attachments hereto
will  conflict  with or result in the breach or violation of any of the terms or
provisions  of,  or constitute a default or result in the creation or imposition
of  any  lien  or  charge  on  any assets or properties of the Company under its
Articles  of  Incorporation,  By-Laws, any material indenture, mortgage, deed of
trust  or  other  material  agreement applicable to the Company or instrument to
which  the  Company  is  a party or by which it is bound, or any statute, or any
decree, judgment, order, rules or regulation of any court or governmental agency
or  body  having  jurisdiction  over the Company or its properties, in each case
which  default,  lien  or charge is likely to cause a Material Adverse Effect on
the  Company's  business  or  financial  condition.

Section     Absence  of  Events of Default.  Except for matters described in the
            ------------------------------
SEC  Documents  and/or  this  Agreement,  no Event of Default, as defined in the
respective  agreement  to which the Company is a party, and no event which, with
the  giving  of  notice or the passage of time or both, would become an Event of
Default  (as  so  defined),  has  occurred and is continuing, which would have a
Material  Adverse  Effect  on  the  Company's  business,  properties, prospects,
financial  condition  or  results  of  operations.

Section     Intellectual  Property Rights.  The Company and its subsidiaries own
            -----------------------------
or  possess  adequate  rights  or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent
rights,  copyrights,  inventions,  licenses,  approvals,  governmental
authorizations,  trade  secrets and rights necessary to conduct their respective
businesses  as now conducted.   The Company and its subsidiaries do not have any
knowledge  of  any infringement by the Company or its subsidiaries of trademark,
trade  name  rights,  patents,  patent rights, copyrights, inventions, licenses,
service  names, service marks, service mark registrations, trade secret or other
similar  rights  of  others,  and,  to the knowledge of the Company, there is no
claim,  action  or proceeding being made or brought against, or to the Company's
knowledge,  being  threatened against, the Company or its subsidiaries regarding
trademark,  trade  name,  patents, patent rights, invention, copyright, license,
service  names, service marks, service mark registrations, trade secret or other
infringement;  and  the Company and its subsidiaries are unaware of any facts or
circumstances  which  might  give  rise  to  any  of  the  foregoing.

Section     Employee Relations.  Neither the Company nor any of its subsidiaries
            ------------------
is  involved in any labor dispute nor, to the knowledge of the Company or any of
its  subsidiaries, is any such dispute threatened.  None of the Company's or its
subsidiaries'  employees  is  a  member  of  a  union  and  the  Company and its
subsidiaries  believe  that  their  relations  with  their  employees  are good.

                                      E-13
<PAGE>

Section     Environmental  Laws.  The  Company  and  its subsidiaries are (i) in
            -------------------
compliance  with  any  and  all  applicable material foreign, federal, state and
local  laws  and  regulations  relating  to  the  protection of human health and
safety,  the  environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), (ii) have received all permits, licenses
                  ------------------
or  other  approvals  required  of  them  under applicable Environmental Laws to
conduct  their  respective businesses and (iii) are in compliance with all terms
and  conditions  of  any  such  permit,  license  or  approval.

Section     Title.  Except  as  set  forth in the SEC Documents, the Company has
            -----
good  and  marketable  title  to its properties and material assets owned by it,
free  and  clear  of  any pledge, lien, security interest, encumbrance, claim or
equitable  interest  other  than such as are not material to the business of the
Company.  Any  real  property and facilities held under lease by the Company and
its subsidiaries are held by them under valid, subsisting and enforceable leases
with  such exceptions as are not material and do not interfere with the use made
and  proposed  to  be made of such property and buildings by the Company and its
subsidiaries.

Section     Insurance.  The  Company and each of its subsidiaries are insured by
            ---------
insurers  of  recognized  financial responsibility against such losses and risks
and  in  such  amounts  as  management of the Company believes to be prudent and
customary  in  the  businesses  in  which  the  Company and its subsidiaries are
engaged.  Neither  the  Company  nor  any  such  subsidiary has been refused any
insurance  coverage  sought  or applied for and neither the Company nor any such
subsidiary  has  any  reason  to  believe  that it will not be able to renew its
existing  insurance  coverage  as  and  when  such coverage expires or to obtain
similar  coverage  from  similar  insurers  as  may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial  or  otherwise, or the earnings, business or operations of the Company
and  its  subsidiaries,  taken  as  a  whole.

Section     Regulatory  Permits.  The  Company  and its subsidiaries possess all
            -------------------
material  certificates,  authorizations  and  permits  issued by the appropriate
federal,  state  or  foreign  regulatory  authorities necessary to conduct their
respective  businesses,  and  neither  the  Company  nor any such subsidiary has
received any notice of proceedings relating to the revocation or modification of
any  such  certificate,  authorization  or  permit.

Section     Internal  Accounting  Controls.  The  Company  and  each  of  its
            ------------------------------
subsidiaries  maintain  a  system  of internal accounting controls sufficient to
provide  reasonable  assurance  that (i) transactions are executed in accordance
with  management's  general  or  specific  authorizations, (ii) transactions are
recorded  as  necessary  to  permit  preparation  of  financial  statements  in
conformity  with  generally accepted accounting principles and to maintain asset
accountability,  (iii)  access  to  assets  is permitted only in accordance with
management's  general  or  specific  authorization  and  (iv)  the  recorded
accountability  for  assets  is  compared with the existing assets at reasonable
intervals  and  appropriate  action  is  taken  with respect to any differences.

Section     No  Material  Adverse Breaches, etc.  Except as set forth in the SEC
            -----------------------------------
Documents,  neither  the  Company  nor any of its subsidiaries is subject to any
charter,  corporate  or other legal restriction, or any judgment, decree, order,
rule  or  regulation  which  in the judgment of the Company's officers has or is
expected  in  the  future  to  have  a  Material Adverse Effect on the business,

                                      E-14
<PAGE>

properties,  operations, financial condition, results of operations or prospects
of  the  Company or its subsidiaries.  Except as set forth in the SEC Documents,
neither  the Company nor any of its subsidiaries is in breach of any contract or
agreement  which  breach,  in  the judgment of the Company's officers, has or is
expected  to  have  a  Material  Adverse  Effect  on  the  business, properties,
operations,  financial  condition,  results  of  operations  or prospects of the
Company  or  its  subsidiaries.

     Section     Absence  of  Litigation.  Except  as  set  forth  in  the  SEC
                 -----------------------
Documents, there is no action, suit, proceeding, inquiry or investigation before
or  by  any court, public board, government agency, self-regulatory organization
or body pending against or affecting the Company, the Common Stock or any of the
Company's subsidiaries, wherein an unfavorable decision, ruling or finding would
(i)  have a Material Adverse Effect on the transactions contemplated hereby (ii)
adversely  affect the validity or enforceability of, or the authority or ability
of  the  Company  to perform its obligations under, this Agreement or any of the
documents contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents,  have  a  Material  Adverse  Effect  on  the  business,  operations,
properties,  financial  condition or results of operation of the Company and its
subsidiaries  taken  as  a  whole.

     Section     Subsidiaries.  Except  as  disclosed  in the SEC Documents, the
                 ------------
Company  does not presently own or control, directly or indirectly, any interest
in  any  other  corporation,  partnership, association or other business entity.

Section     Tax  Status.  Except  as disclosed in the SEC Documents, the Company
            -----------
and  each of its subsidiaries has made or filed all federal and state income and
all  other tax returns, reports and declarations required by any jurisdiction to
which it is subject and (unless and only to the extent that the Company and each
of  its  subsidiaries  has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) has paid all taxes and other
governmental  assessments  and  charges  that  are  material in amount, shown or
determined  to  be  due  on such returns, reports and declarations, except those
being  contested  in  good  faith  and  has  set  aside  on  its books provision
reasonably  adequate  for the payment of all taxes for periods subsequent to the
periods  to  which  such  returns,  reports or declarations apply.  There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any  jurisdiction, and the officers of the Company know of no basis for any such
claim.

Section     Certain Transactions.  Except as set forth in the SEC Documents none
            --------------------
of  the officers, directors, or employees of the Company is presently a party to
any transaction with the Company (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing
for  the  furnishing  of  services  to  or  by,  providing for rental of real or
personal  property  to  or  from, or otherwise requiring payments to or from any
officer,  director  or  such  employee  or, to the knowledge of the Company, any
corporation,  partnership, trust or other entity in which any officer, director,
or  any  such  employee  has  a substantial interest or is an officer, director,
trustee  or  partner.

Section     Fees  and  Rights of First Refusal.  The Company is not obligated to
            ----------------------------------
offer  the  securities  offered  hereunder  on a right of first refusal basis or
otherwise  to any third parties including, but not limited to, current or former
shareholders  of  the  Company,  underwriters,  brokers,  agents  or other third
parties.

                                      E-15
<PAGE>

Section     Use  of Proceeds.  The Company represents that the net proceeds from
            ----------------
this offering will be used for general corporate purposes.  However, in no event
shall the net proceeds from this offering be used by the Company for the payment
(or  loaned  to  any  such  person  for  the  payment) of any judgment, or other
liability,  incurred  by any executive officer, officer, director or employee of
the Company, except for any liability owed to such person for services rendered,
or  if  any  judgment  or other liability is incurred by such person originating
from  services  rendered  to  the  Company,  or the Company has indemnified such
person  from  liability.

Section     Further  Representation  and Warranties of the Company.  For so long
            ------------------------------------------------------
as  any  securities  issuable hereunder held by the Investor remain outstanding,
the  Company acknowledges, represents, warrants and agrees that it will maintain
the  listing  of  its  Common  Stock  on  the  Principal  Market.

Section     Opinion  of  Counsel.  Investor shall receive an opinion letter from
            --------------------
Gottbetter  &  Partners,  LLP,  counsel  to  the  Company,  on  the date hereof.

Section     Opinion  of  Counsel.  The  Company will obtain for the Investor, at
            --------------------
the  Company's  expense, any and all opinions of counsel which may be reasonably
required in order to sell the securities issuable hereunder without restriction.

Section     Dilution.  The  Company  is  aware and acknowledges that issuance of
            --------
shares  of  the  Company's  Common  Stock  could  cause  dilution  to  existing
shareholders  and  could significantly increase the outstanding number of shares
of  Common  Stock.

                                     ARTICLE

                                 INDEMNIFICATION

     The  Investor  and  the  Company  represent to the other the following with
respect  to  itself:

     Section     Indemnification.
                 ---------------

          In  consideration  of  the  Investor's  execution and delivery of this
Agreement,  and in addition to all of the Company's other obligations under this
Agreement,  the  Company  shall defend, protect, indemnify and hold harmless the
Investor,  and  all  of  its officers, directors, partners, employees and agents
(including,  without  limitation,  those  retained  in  connection  with  the
transactions  contemplated  by  this  Agreement)  (collectively,  the  "Investor
                                                                        --------
Indemnitees")  from  and  against  any and all actions, causes of action, suits,
-----------
claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection  therewith (irrespective of whether any such Investor Indemnitee is a
party  to  the  action  for  which  indemnification  hereunder  is  sought), and
including  reasonable  attorneys'  fees  and  disbursements  (the  "Indemnified
                                                                    -----------
Liabilities"),  incurred  by the Investor Indemnitees or any of them as a result
-----------
of, or arising out of, or relating to (a) any misrepresentation or breach of any
representation  or  warranty  made  by  the  Company  in  this  Agreement or the
Registration  Rights  Agreement or any other certificate, instrument or document
contemplated  hereby  or  thereby,  (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement or the Registration Rights
Agreement  or  any other certificate, instrument or document contemplated hereby
or  thereby,  or  (c) any cause of action, suit or claim brought or made against

                                      E-16
<PAGE>

such  Investor  Indemnitee  not  arising  out  of  any  action or inaction of an
Investor  Indemnitee,  and  arising  out  of  or  resulting  from the execution,
delivery,  performance or enforcement of this Agreement or any other instrument,
document  or  agreement  executed  pursuant  hereto  by  any  of  the  Investor
Indemnitees.  To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the  payment  and  satisfaction of each of the Indemnified Liabilities, which is
permissible  under  applicable  law.

     In consideration of the Company's execution and delivery of this Agreement,
and in addition to all of the Investor's other obligations under this Agreement,
the  Investor shall defend, protect, indemnify and hold harmless the Company and
all  of  its officers, directors, shareholders, employees and agents (including,
without  limitation,  those  retained  in  connection  with  the  transactions
contemplated  by  this Agreement) (collectively, the "Company Indemnitees") from
                                                      -------------------
and  against  any  and  all  Indemnified  Liabilities  incurred  by  the Company
Indemnitees or any of them as a result of, or arising out of, or relating to (a)
any  misrepresentation  or  breach of any representation or warranty made by the
Investor in this Agreement, the Registration Rights Agreement, or any instrument
or  document  contemplated  hereby  or thereby executed by the Investor, (b) any
breach  of any covenant, agreement or obligation of the Investor(s) contained in
this  Agreement,  the  Registration  Rights  Agreement or any other certificate,
instrument  or document contemplated hereby or thereby executed by the Investor,
or  (c)  any cause of action, suit or claim brought or made against such Company
Indemnitee  based on  misrepresentations or due to a  breach by the Investor and
arising  out  of  or  resulting  from  the  execution,  delivery, performance or
enforcement  of  this  Agreement  or any other instrument, document or agreement
executed  pursuant hereto by any of the Company Indemnitees.  To the extent that
the  foregoing  undertaking by the Investor may be unenforceable for any reason,
the Investor shall make the maximum contribution to the payment and satisfaction
of  each  of  the Indemnified Liabilities, which is permissible under applicable
law.

     (c)     The  obligations  of  the parties to indemnify or make contribution
under  this  Section  5.1  shall  survive  termination.

                                     ARTICLE
                            COVENANTS OF THE COMPANY

     Section     Registration  Rights.  The Company shall cause the Registration
                 --------------------
Rights Agreement to remain in full force and effect and the Company shall comply
in  all  material  respects  with  the  terms  thereof.

Section     Listing  of  Common  Stock.  The  Company  shall maintain the Common
            --------------------------
Stock's  authorization  for  quotation  on  the  Principal  Market.

Section     Exchange  Act Registration.  The Company will cause its Common Stock
            --------------------------
to  continue to be registered under Section 12(g) of the Exchange Act, will file
in a timely manner all reports and other documents required of it as a reporting
company under the Exchange Act and will not take any action or file any document

                                      E-17
<PAGE>

(whether  or not permitted by Exchange Act or the rules thereunder) to terminate
or suspend such registration or to terminate or suspend its reporting and filing
obligations  under  said  Exchange  Act.

Section     Transfer  Agent  Instructions.  Not later than two (2) business days
            -----------------------------
after  each  Advance Notice Date and prior to each Closing and the effectiveness
of  the  Registration  Statement and resale of the Common Stock by the Investor,
the  Company  will deliver instructions to its transfer agent to issue shares of
Common  Stock  free  of  restrictive  legends.

Section     Corporate  Existence.  The  Company will take all steps necessary to
            --------------------
preserve  and  continue  the  corporate  existence  of  the  Company.

Section     Notice of Certain Events Affecting Registration; Suspension of Right
            --------------------------------------------------------------------
to  Make  an Advance.  The Company will immediately notify the Investor upon its
--------------------
becoming  aware of the occurrence of any of the following events in respect of a
registration  statement  or  related  prospectus  relating  to  an  offering  of
Registrable Securities: (i) receipt of any request for additional information by
the  SEC  or any other Federal or state governmental authority during the period
of  effectiveness of the Registration Statement for amendments or supplements to
the  registration  statement or related prospectus; (ii) the issuance by the SEC
or  any  other  Federal  or  state  governmental  authority  of  any  stop order
suspending  the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the  Registrable  Securities  for  sale in any jurisdiction or the initiation or
threatening  of any proceeding for such purpose; (iv) the happening of any event
that  makes  any  statement  made  in  the  Registration  Statement  or  related
prospectus  of any document incorporated or deemed to be incorporated therein by
reference  untrue  in  any  material  respect or that requires the making of any
changes  in the Registration Statement, related prospectus or documents so that,
in  the  case  of  the  Registration  Statement,  it will not contain any untrue
statement  of  a material fact or omit to state any material fact required to be
stated  therein  or necessary to make the statements therein not misleading, and
that  in  the  case  of  the  related prospectus, it will not contain any untrue
statement  of  a material fact or omit to state any material fact required to be
stated  therein or necessary to make the statements therein, in the light of the
circumstances  under which they were made, not misleading; and (v) the Company's
reasonable  determination  that  a  post-effective amendment to the Registration
Statement  would be appropriate; and the Company will promptly make available to
the  Investor  any  such supplement or amendment to the related prospectus.  The
Company  shall  not  deliver  to  the  Investor  any  Advance  Notice during the
continuation  of  any  of  the  foregoing  events.

Section     Expectations  Regarding Advance Notices.  Within ten (10) days after
            ---------------------------------------
the  commencement  of  each  calendar  quarter  occurring  subsequent  to  the
commencement  of the Commitment Period, the Company must notify the Investor, in
writing, as to its reasonable expectations as to the dollar amount it intends to
raise  during  such  calendar  quarter,  if any, through the issuance of Advance
Notices.  Such  notification  shall  constitute  only  the  Company's good faith
estimate  and  shall in no way obligate the Company to raise such amount, or any
amount,  or otherwise limit its ability to deliver Advance Notices.  The failure
by  the  Company  to  comply  with  this provision can be cured by the Company's
notifying  the  Investor,  in  writing,  at  any  time  as  to  its  reasonable
expectations  with  respect  to  the  current  calendar  quarter.

                                      E-18
<PAGE>

Section     Restriction on Sale of Capital Stock.  During the Commitment Period,
            ------------------------------------
the  Company  shall  not  issue  or sell (i) any Common Stock or Preferred Stock
without  consideration  or for a consideration per share less than the bid price
of  the Common Stock determined immediately prior to its issuance, (ii) issue or
sell  any  Preferred  Stock  warrant,  option,  right,  contract, call, or other
security  or  instrument granting the holder thereof the right to acquire Common
Stock  without  consideration  or  for  a consideration per share less than such
Common  Stock's Bid Price determined immediately prior to its issuance, or (iii)
file  any  registration  statement on Form S-8 notwithstanding the foregoing the
Company may upon fifteen (15) business days prior written notice to the Buyer(s)
file  a  registration statement on Form S-8 for the issuance of shares of common
stock  and/or  options  for  consultants and/or attorneys for bona fide services
rendered  or  pursuant  to  bona  fide  employee  stock  option  plans.

Section     Consolidation; Merger.  The Company shall not, at any time after the
            ---------------------
date  hereof, effect any merger or consolidation of the Company with or into, or
a  transfer  of  all  or  substantially all the assets of the Company to another
entity  (a  "Consolidation  Event")  unless the resulting successor or acquiring
             --------------------
entity  (if  not  the  Company)  assumes by written instrument the obligation to
deliver  to  the Investor such shares of stock and/or securities as the Investor
is  entitled  to  receive  pursuant  to  this  Agreement.

Section     Issuance  of  the Company's Common Stock.  The sale of the shares of
            -----------------------------------------
Common Stock shall be made in accordance with the provisions and requirements of
Regulation  D  and  any  applicable  state  securities  law.

                                     ARTICLE
                CONDITIONS FOR ADVANCE AND CONDITIONS TO CLOSING

     Section     Conditions  Precedent  to  the Obligations of the Company.  The
                 ----------------------------------------------------------
obligation hereunder of the Company to issue and sell the shares of Common Stock
to  the  Investor  incident  to  each Closing is subject to the satisfaction, or
waiver by the Company, at or before each such Closing, of each of the conditions
set  forth  below.

          Accuracy  of  the  Investor's  Representations  and  Warranties.  The
          ---------------------------------------------------------------
representations  and warranties of the Investor shall be true and correct in all
material  respects.

     Performance  by the Investor.  The Investor shall have performed, satisfied
     ----------------------------
and  complied  in  all  respects  with  all covenants, agreements and conditions
required  by  this  Agreement  and  the  Registration  Rights  Agreement  to  be
performed,  satisfied  or  complied  with  by  the  Investor at or prior to such
Closing.

     Section     Conditions  Precedent to the Right of the Company to Deliver an
                 ---------------------------------------------------------------
Advance  Notice  and the Obligation of the Investor to Purchase Shares of Common
--------------------------------------------------------------------------------
Stock.  The right of the Company to deliver an Advance Notice and the obligation
-----
of  the Investor hereunder to acquire and pay for shares of the Company's Common
Stock incident to a Closing is subject to the fulfillment by the Company, on (i)
the date of delivery of such Advance Notice and (ii) the applicable Advance Date
(each  a  "Condition  Satisfaction  Date"), of each of the following conditions:
           -----------------------------

                                      E-19
<PAGE>

          Registration of the Common Stock with the SEC.  The Company shall have
          ---------------------------------------------
filed  with  the  SEC a Registration Statement with respect to the resale of the
Registrable  Securities  in accordance with the terms of the Registration Rights
Agreement.  As  set forth in the Registration Rights Agreement, the Registration
Statement  shall  have previously become effective and shall remain effective on
each  Condition  Satisfaction  Date and (i) neither the Company nor the Investor
shall  have  received  notice that the SEC has issued or intends to issue a stop
order  with  respect to the Registration Statement or that the SEC otherwise has
suspended  or  withdrawn the effectiveness of the Registration Statement, either
temporarily  or  permanently,  or intends or has threatened to do so (unless the
SEC's concerns have been addressed and the Investor is reasonably satisfied that
the  SEC  no  longer is considering or intends to take such action), and (ii) no
other  suspension  of  the  use  or  withdrawal  of  the  effectiveness  of  the
Registration  Statement  or  related  prospectus  shall exist.  The Registration
Statement  must  have  been  declared  effective  by  the SEC prior to the first
Advance  Notice  Date.

     Authority.  The  Company shall have obtained all permits and qualifications
     ---------
required  by  any  applicable  state  in accordance with the Registration Rights
Agreement  for  the  offer and sale of the shares of Common Stock, or shall have
the  availability  of exemptions therefrom.  The sale and issuance of the shares
of  Common Stock shall be legally permitted by all laws and regulations to which
the  Company  is  subject.

     Fundamental  Changes.  There shall not exist any fundamental changes to the
     --------------------
information  set  forth  in  the  Registration Statement which would require the
Company  to  file  a  post-effective  amendment  to  the Registration Statement.

     Performance  by  the  Company.  The Company shall have performed, satisfied
     -----------------------------
and  complied  in  all  material  respects  with  all  covenants, agreements and
conditions  required  by  this  Agreement  (including,  without  limitation, the
conditions  specified  in  Section  2.5  hereof)  and  the  Registration  Rights
Agreement to be performed, satisfied or complied with by the Company at or prior
to  each  Condition  Satisfaction  Date.

     No  Injunction.  No  statute,  rule,  regulation,  executive order, decree,
     --------------
ruling  or  injunction shall have been enacted, entered, promulgated or endorsed
by  any court or governmental authority of competent jurisdiction that prohibits
or  directly  and adversely affects any of the transactions contemplated by this
Agreement,  and no proceeding shall have been commenced that may have the effect
of  prohibiting  or  adversely affecting any of the transactions contemplated by
this  Agreement.

     No  Suspension  of Trading in or Delisting of Common Stock.  The trading of
     ----------------------------------------------------------
the  Common  Stock  is  not suspended by the SEC or the Principal Market (if the
Common Stock is traded on a Principal Market).  The issuance of shares of Common
Stock  with  respect  to  the  applicable Closing, if any, shall not violate the
shareholder  approval  requirements of the Principal Market (if the Common Stock
is  traded  on  a  Principal  Market).  The  Company shall not have received any
notice  threatening  the  continued listing of the Common Stock on the Principal
Market  (if  the  Common  Stock  is  traded  on  a  Principal  Market).

     Maximum  Advance Amount.  The amount of an Advance requested by the Company
     -----------------------
shall not exceed the Maximum Advance Amount.  In addition, in no event shall the
number  of  shares  issuable  to  the  Investor pursuant to an Advance cause the

                                      E-20
<PAGE>

Investor  to  own  in  excess  of  nine  and  9/10  percent  (9.9%)  of the then
outstanding  Common  Stock  of  the  Company.

     No  Knowledge.  The  Company  has  no knowledge of any event which would be
     -------------
more  likely  than not to have the effect of causing such Registration Statement
to  be  suspended  or  otherwise  ineffective.

     Other.  On  each  Condition  Satisfaction  Date,  the  Investor  shall have
     -----
received  the  certificate  executed by an officer of the Company in the form of
Exhibit  A  attached  hereto.
----------

                                     ARTICLE
         DUE DILIGENCE REVIEW; NON-DISCLOSURE OF NON-PUBLIC INFORMATION

     Section     Due  Diligence Review.  Prior to the filing of the Registration
                 ---------------------
Statement  the  Company  shall  make  available for inspection and review by the
Investor, its advisors and representatives, and any underwriter participating in
any disposition of the Registrable Securities on behalf of the Investor pursuant
to  the  Registration Statement, any such registration statement or amendment or
supplement  thereto  or  any  blue  sky, NASD or other filing, all financial and
other  records,  all SEC Documents and other filings with the SEC, and all other
corporate documents and properties of the Company as may be reasonably necessary
for  the purpose of such review, and cause the Company's officers, directors and
employees to supply all such information reasonably requested by the Investor or
any  such  representative,  advisor  or  underwriter  in  connection  with  such
Registration  Statement  (including,  without  limitation,  in  response  to all
questions  and  other  inquiries  reasonably  made or submitted by any of them),
prior  to  and  from  time  to  time  after  the filing and effectiveness of the
Registration  Statement  for  the sole purpose of enabling the Investor and such
representatives,  advisors and underwriters and their respective accountants and
attorneys  to  conduct  initial  and  ongoing  due diligence with respect to the
Company  and  the  accuracy  of  the  Registration  Statement.

Section     Non-Disclosure  of  Non-Public  Information.
            -------------------------------------------

          The Company shall not disclose non-public information to the Investor,
its  advisors,  or  its  representatives,  unless  prior  to  disclosure of such
information  the  Company  identifies  such  information  as  being  non-public
information  and  provides  the Investor, such advisors and representatives with
the  opportunity  to  accept or refuse to accept such non-public information for
review.  The  Company  may,  as  a  condition  to  disclosing  any  non-public
information  hereunder,  require  the Investor's advisors and representatives to
enter  into  a  confidentiality agreement in form reasonably satisfactory to the
Company  and  the  Investor.

     Nothing herein shall require the Company to disclose non-public information
to  the  Investor or its advisors or representatives, and the Company represents
that  it  does  not  disseminate  non-public  information  to  any investors who
purchase  stock  in  the  Company  in a public offering, to money managers or to
securities  analysts, provided, however, that notwithstanding anything herein to
the  contrary, the Company will, as hereinabove provided, immediately notify the
advisors  and  representatives of the Investor and, if any, underwriters, of any
event  or  the existence of any circumstance (without any obligation to disclose

                                      E-21
<PAGE>

the  specific  event  or  circumstance)  of which it becomes aware, constituting
non-public  information (whether or not requested of the Company specifically or
generally  during  the  course  of  due  diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration Statement
would  cause  such  prospectus  to  include a material misstatement or to omit a
material  fact  required  to  be stated therein in order to make the statements,
therein,  in light of the circumstances in which they were made, not misleading.
Nothing  contained  in  this  Section  8.2  shall be construed to mean that such
persons  or entities other than the Investor (without the written consent of the
Investor  prior  to  disclosure  of  such information) may not obtain non-public
information  in  the  course  of conducting due diligence in accordance with the
terms  of  this  Agreement  and nothing herein shall prevent any such persons or
entities  from  notifying  the  Company  of their opinion that based on such due
diligence  by such persons or entities, that the Registration Statement contains
an  untrue  statement  of  material fact or omits a material fact required to be
stated  in  the  Registration  Statement  or  necessary  to  make the statements
contained  therein,  in  light of the circumstances in which they were made, not
misleading.

                                     ARTICLE

                           CHOICE OF LAW/JURISDICTION

     Section     Governing  Law.  This  Agreement  shall  be  governed  by  and
                 --------------
interpreted  in accordance with the laws of the State of Delaware without regard
to  the  principles  of  conflict  of  laws.  The parties further agree that any
action  between  them shall be heard in Hudson County, New Jersey, and expressly
consent  to  the  jurisdiction  and  venue  of the Superior Court of New Jersey,
sitting in Hudson County, New Jersey and the United States District Court of New
Jersey,  sitting in Newark, New Jersey, for the adjudication of any civil action
asserted  pursuant  to  this  paragraph.

                                     ARTICLE
                             ASSIGNMENT; TERMINATION

     Section     Assignment.  Neither  this  Agreement  nor  any  rights  of the
                 ----------
Company  hereunder  may  be  assigned  to  any  other  Person.

Section     Termination.  The obligations of the Investor to make Advances under
            -----------
Article  II  hereof  shall terminate twenty-four (24) months after the Effective
Date.

                                     ARTICLE
                                     NOTICES

     Section     Notices.  Any  notices,  consents,  waivers,  or  other
                 -------
communications  required  or  permitted  to  be  given  under  the terms of this
Agreement  must be in writing and will be deemed to have been delivered (i) upon
receipt,  when  delivered personally; (ii) upon receipt, when sent by facsimile,
provided  a  copy  is  mailed  by U.S. certified mail, return receipt requested;
(iii)  three  (3)  days  after being sent by U.S. certified mail, return receipt
requested,  or  (iv)  one  (1)  day  after  deposit with a nationally recognized
overnight  delivery  service,  in  each  case properly addressed to the party to

                                      E-22
<PAGE>

receive  the  same.  The addresses and facsimile numbers for such communications
shall  be:
If  to  the  Company, to:    NS8  Corporation
                             Two  Union  Square
                             601  Union  Street  -  Suite  2400
                             Seattle,  WA  98101
                             Attention:      Peter  Hogendoorn
                             Telephone:    (206)  652-3338
                             Facsimile:     (206)  652-3205

                             NS8  Corporation
                             200-1311  Howe  Street
                             Vancouver,  BC  Canada  V6Z  2P3
                             Telephone:  (604)  677-6994
                             Facsimile:   (604)  677-7011

With  a  copy  to:           Gottbetter  &  Partners,  LLP
                             488  Madison  Avenue
                             New  York,  NY  10016
                             Attention:    Adam  S.  Gottbetter,  Esq.
                             Telephone:  (212)  400-6900
                             Facsimile:   (212)  400-6901

If  to  the  Investor(s):    Cornell  Capital  Partners,  LP
                             101  Hudson  Street  -Suite  3700
                             Jersey  City,  NJ  07302
                             Attention:  Mark  Angelo
                             Portfolio  Manager
                             Telephone:  (201)  985-8300
                             Facsimile:  (201)  985-8266

With  a  Copy  to:           Butler  Gonzalez  LLP
                             1416  Morris  Avenue  -  Suite  207
                             Union,  NJ  07083
                             Attention:  David  Gonzalez,  Esq.
                             Telephone:  (908)  810-8588
                             Facsimile:  (908)  810-0973

Each  party shall provide five (5) days' prior written notice to the other party
of  any  change  in  address  or  facsimile  number.

                                      E-23
<PAGE>

                                     ARTICLE
                                  MISCELLANEOUS

     Section     Counterparts.  This  Agreement  may  be executed in two or more
                 ------------
identical  counterparts,  all  of  which  shall  be  considered one and the same
agreement  and shall become effective when counterparts have been signed by each
party  and  delivered  to  the  other party.  In the event any signature page is
delivered  by  facsimile  transmission,  the  party using such means of delivery
shall  cause  four  (4)  additional  original  executed  signature  pages  to be
physically  delivered  to  the other party within five (5) days of the execution
and  delivery hereof, though failure to deliver such copies shall not affect the
validity  of  this  Agreement.

Section     Entire  Agreement;  Amendments.  This Agreement supersedes all other
            ------------------------------
prior  oral  or  written  agreements  between  the  Investor, the Company, their
affiliates  and  persons  acting  on  their  behalf  with respect to the matters
discussed  herein,  and  this  Agreement  and  the instruments referenced herein
contain  the  entire  understanding  of  the parties with respect to the matters
covered  herein  and  therein  and,  except  as specifically set forth herein or
therein,  neither  the  Company  nor  the  Investor  makes  any  representation,
warranty, covenant or undertaking with respect to such matters.  No provision of
this  Agreement  may be waived or amended other than by an instrument in writing
signed  by  the  party  to  be  charged  with  enforcement.

Section     Reporting  Entity for the Common Stock.  The reporting entity relied
            --------------------------------------
upon  for the determination of the trading price or trading volume of the Common
Stock  on  any  given  Trading  Day  for the purposes of this Agreement shall be
Bloomberg,  L.P.  or  any  successor thereto.  The written mutual consent of the
Investor and the Company shall be required to employ any other reporting entity.

Section     Fees  and  Expenses.  The Company hereby agrees to pay the following
            -------------------
fees:

          Legal  Fees.  Each  of the parties shall pay its own fees and expenses
          -----------
(including  the fees of any attorneys, accountants, appraisers or others engaged
by  such  party)  in  connection  with  this  Agreement  and  the  transactions
contemplated  hereby,  except that the Company will pay Fifteen Thousand Dollars
($15,000)  to  Butler  Gonzalez  LLP  for legal, administrative, and escrow fees
directly  from  the  gross  proceeds  of  the  First  Closing of the Convertible
Debenture  transaction  pursuant  to the Securities Purchase Agreement dated the
date  hereof.  Subsequently  on  each  advance date, the Company will pay Butler
Gonzalez  LLP,  the sum of Five Hundred Dollars ($500) for legal, administrative
and  escrow  fees  directly  out  the  proceeds  of  any  Advances  hereunder.

     Commitment  Fees.
     ----------------

          On  each  Advance Date the Company shall pay to the Investor, directly
from  the gross proceeds held in escrow, an amount equal to five percent (5%) of
the  amount of each Advance.  The Company hereby agrees that if such payment, as
is described above, is not made by the Company on the Advance Date, such payment
will  be  made  at  the  direction  of  the Investor as outlined and mandated by
Section  2.3  of  this  Agreement.

                                      E-24
<PAGE>

     Upon  the  execution  of  this  Agreement  the  Company  shall issue to the
Investor shares of the Company's Common Stock in an amount equal to Nine Hundred
Ninety  Thousand  Dollars ($990,000) divided by the VWAP of the Company's Common
Stock, as quoted by Bloomberg, LP, on the date hereof (the "Investor's Shares").
                                                            -----------------

(iii)     Fully  Earned.  The Investor's Shares  shall be deemed fully earned as
          -------------
of  the  date  hereof.

(iv)     Registration  Rights.  The  Investor's  Shares  will  have "piggy-back"
         --------------------
registration  rights.

(v)     Due  Diligence Fee.     Upon the submission of the due diligence package
        ------------------
to the Company shall pay to the Investor Five Thousand Dollars ($5,000) as a non
refundable  fee  in  order  to  defray  the  costs  of  due  diligence.

     Section     Brokerage.  Each  of  the parties hereto represents that it has
                 ---------
had  no  dealings  in connection with this transaction with any finder or broker
who  will  demand  payment  of  any fee or commission from the other party.  The
Company on the one hand, and the Investor, on the other hand, agree to indemnify
the  other  against  and hold the other harmless from any and all liabilities to
any  person  claiming  brokerage  commissions  or  finder's  fees  on account of
services  purported to have been rendered on behalf of the indemnifying party in
connection  with  this  Agreement  or  the  transactions  contemplated  hereby.

     Section     Confidentiality.  If  for  any  reason  the  transactions
                 ---------------
contemplated  by  this Agreement are not consummated, each of the parties hereto
shall  keep  confidential  any information obtained from any other party (except
information  publicly  available  or  in  such  party's domain prior to the date
hereof,  and except as required by court order) and shall promptly return to the
other  parties  all  schedules,  documents,  instruments,  work  papers or other
written information without retaining copies thereof, previously furnished by it
as  a  result  of  this  Agreement  or  in  connection  herein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      E-25
<PAGE>

     IN  WITNESS  WHEREOF,  the  parties  hereto have caused this Standby Equity
Distribution  Agreement  to  be  executed  by  the  undersigned,  thereunto duly
authorized,  as  of  the  date  first  set  forth  above.

                                                    COMPANY:
                                                    NS8  CORPORATION

                                                    By:  /s/  Peter  Hogendoorn
                                                         ----------------------
                                                    Name:  Peter  Hogendoorn
                                                    Title:  CEO

                                                    INVESTOR:
                                                    CORNELL CAPITAL PARTNERS, LP

                                                    BY:  YORKVILLE ADVISORS, LLC
                                                    ITS:  GENERAL  PARTNER

                                                    By:  Mark  A.  Angelo
                                                         ----------------
                                                    Name:  Mark  A.  Angelo
                                                    Title:  Portfolio  Manager

                                      E-26
<PAGE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}]]