Document:

CLIFFORD                                          LIMITED LIABILITY PARTNERSHIP
CHANCE

                                    [o] 2002

                                BARCLAYS BANK PLC

                                    as Lender

                       GRACECHURCH CARD FUNDING (NO.2) PLC

                                    as Issuer

                                     - and -

                              THE BANK OF NEW YORK

                                 as Note Trustee

                        ---------------------------------
                             EXPENSES LOAN AGREEMENT
                        ---------------------------------

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                                    CONTENTS

CLAUSE                                                                  PAGE
1.      Definitions.......................................................1

2.      The Facility......................................................4

3.      Interest..........................................................5

4.      Payments..........................................................5

5.      Repayment.........................................................5

6.      Prepayment........................................................6

7.      Representations Of The Issuer.....................................6

8.      Enforcement Event.................................................6

9.      Enforcement And Subordination.....................................6

10.     Notices...........................................................7

11.     Costs And Expenses................................................8

12.     Invalidity........................................................8

13.     Assignment And Variation..........................................8

14.     Remedies And Waivers..............................................8

15.     Information And Variation.........................................8

16.     Section 349 Bank..................................................9

17.     Counterparts......................................................9

18.     Entire Agreement..................................................9

19.     Governing Law And Jurisdiction....................................9

SCHEDULE 1               MANDATORY COSTS.................................11

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THIS EXPENSES LOAN AGREEMENT is made on [_]2002

BETWEEN:

(A)   BARCLAYS BANK PLC, a company incorporated in England and Wales having its
      registered office at 54 Lombard Street, London, EC3P 3AH (the "LENDER");

(B)   GRACECHURCH CARD FUNDING (NO.2) PLC, a company incorporated in England and
      Wales having its registered office at 200 Aldersgate Street, London, EC1A
      4JJ (the "ISSUER"); and

(C)   THE BANK OF NEW YORK, a New York banking corporation whose London branch
      is at One Canada Square, London E14 5AL (the "NOTE TRUSTEE", which
      expression shall, whenever the context so admits, include any other
      trustee or trustees for the time being pursuant to the Trust Deed referred
      to below).

WHEREAS:

(A)   The Issuer proposes to issue Notes pursuant to a trust deed dated the
      Closing Date between the Issuer and the Note Trustee (the "TRUST DEED").

(B)   The Lender is willing to advance funds to the Issuer, to be used with the
      net proceeds of the issue of the Notes to subscribe for the MTNs and to
      meet certain expenses incurred by the Issuer in regard to the issue of the
      Notes, all on the terms and subject to the conditions contained herein.

(C)   The Note Trustee is the trustee for the holders of the Notes.

IT IS HEREBY AGREED as follows:-

1.    DEFINITIONS

1.1   In this Agreement and in the Recitals hereto, except so far as the context
      otherwise requires:-

"ADVANCE" shall have the meaning set out in Clause 2;

"BARCLAYCARD" means Barclays Bank PLC, acting through its business unit
"Barclaycard";

"BARCLAYS CAPITAL" means Barclays Bank PLC, acting through its investment
banking unit, "Barclays Capital";

"BELGIAN PLEDGE" means the pledge granted by the Issuer in favour of the Note
Trustee over the Issuer's rights, title and interest in and to the MTN and
governed by Belgian law;

"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday, a public
holiday or a day on which banking institutions in London, England or New York
are authorised or obliged by law or executive order to be closed;

"CLOSING DATE" shall mean the date of this Agreement or such other date as shall
be agreed between all relevant parties for the closing of the issue of the
Notes;

                                      -1-

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"COMMITMENT" means(pound)[_];

"CONDITIONS" means the terms and conditions applicable to the Notes in the form
or substantially in the form set out in the Seventh Schedule of the Trust Deed
and any reference in these presents to a particular numbered Condition shall be
construed accordingly;

"DEED OF CHARGE" means the deed of charge dated on or about the Closing Date
between, amongst others, the Issuer, the Note Trustee and the Lender;

"ENFORCEMENT NOTICE" means a notice given by the Note Trustee to the Issuer
under Condition [_] of the Notes;

"FACILITY" means the subordinated expenses loan facility the terms and
conditions of which are set out in this Agreement;

"FINAL REPAYMENT DATE" means the earlier of 15 [_] and the Interest Payment Date
on which the Issuer makes the final payment of interest, deferred interest and
additional interest (if any) and final repayment of principal in respect of each
class of the Notes;

"INTEREST PAYMENT DATE" means the 15th day of each calendar month, or, if such
day is not a Business Day, the next following Business Day, PROVIDED that the
first Interest Payment Date shall fall on 15 [_] 2002;

"INTEREST PERIOD" means each successive period of three months commencing from
the first Interest Payment Date. The first Interest Period shall be the period
from and including the Closing Date to but excluding the first Interest Payment
Date;

"ISSUER BANK AGREEMENT" means the bank agreement of even date to be made between
the Issuer and the Lender regarding the establishment and operation of the
Issuer Expense Account and the Series 02-1 Issuer Bank Account;

"ISSUER'S EXPENSE ACCOUNT" shall mean the account with Barclays Bank PLC at 54
Lombard Street, London, EC3P 3AH with account number [_] sort code: 20-19-90;

"LIBOR" shall mean, for any Interest Period, the London interbank offered rate
for one-month sterling deposits determined by or on behalf of the Lender for
each Interest Period on the following basis:

(i)   on the first day of the Interest Period for which the rate will apply (or
      if such day is not a Business Day, the next succeeding Business Day), the
      offered quotation to leading banks in the London Interbank Market for
      three month sterling deposits by reference to the display designated as
      the British Bankers Association LIBOR Rates as quoted on the Moneyline
      Telerate Screen No. 3750 (or (aa) such other page as may replace Moneyline
      Telerate Screen No. 3750 on that service for the purposes of displaying
      such information or (bb) if that service ceases to display such
      information, such page as displays such information on such service as may
      replace the Moneyline Telerate Monitor) as at or about 11.00 a.m. (London
      time) on that date (the "SCREEN Rate");

                                      -2-

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(ii)  if, on the relevant date, the Screen Rate does not appear on the Moneyline
      Telerate Screen page, as aforesaid, the Lender will:

      (A)   request the principal London office of each of Barclays Bank PLC and
            three other major banks as may be selected by the Lender (together
            the "REFERENCE BANKS") to provide the Lender with its offered
            quotation to leading banks in the London Interbank Market for three
            month sterling deposits as at approximately 11.00 a.m. (London time)
            on the relevant date in question and in an amount that is
            representative for a single transaction in that market at that time;
            and

      (B)   determine the arithmetic mean (rounded upwards to four decimal
            places) of such quotations; and

(iii) if on the relevant date the Screen Rate is unavailable and two or three
      only of the Reference Banks provide offered quotations, the rate of
      interest for the relevant Interest Period shall be determined in
      accordance with the provisions of paragraph (ii) on the basis of the
      arithmetic mean (rounded upwards to four decimal places) of the offered
      quotations of those Reference Banks providing the offered quotations;

(iv)  if fewer than two such quotations are provided by the Reference Banks as
      requested, the Lender will determine the arithmetic mean (rounded upwards
      to four decimal places) of the rates quoted by major banks in London,
      selected by the Lender, at approximately 11.00 a.m. (London time) on the
      first day of the relevant Interest Period for loans in pounds sterling to
      leading banks for a period equal to the relevant Interest Period and in
      amount that is representative for a single transaction in that market at
      that time,

PROVIDED, that if the Lender is unable to determine the Screen Rate or, as the
case may be, the arithmetic mean in accordance with provisions in relation to
any Interest Period, LIBOR during such Interest Period will be the Screen Rate
or, as the case may be, the arithmetic mean last determined in relation to this
Agreement in respect of a preceding Interest Period;

"LOAN" means the principal amount of the Advance from time to time outstanding
as such amount is reduced from time to time by repayments hereunder;

"MANDATORY COST RATE" means the rate determined in accordance with Schedule 1
(Mandatory Costs);

"MARGIN" means [_] per cent. per annum;

"MTN ISSUER" means Barclaycard Funding PLC a public limited company incorporated
in England and Wales whose registered office is at 54 Lombard Street, London
EC3P 3AH;

"MTN" means the medium term note to be issued by the MTN Issuer on or about the
Closing Date;

                                      -3-

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"NOTES" means the $[_] Class A Asset-Backed Floating Rate Notes due [_], $[_]
Class B Asset-Backed Floating Rate Notes due [_], and $[_] Class C Asset-Backed
Floating Rate Notes due [_] constituted by the Trust Deed;

"PAYING AGENCY AND AGENT BANK AGREEMENT" means the paying agency and agent bank
agreement dated on or about the Closing Date between the Issuer and The Bank of
New York;

"RELEVANT DOCUMENTS" means the Trust Deed, the Deed of Charge, the Paying Agency
and Agent Bank Agreement, the Depository Agreement, the Belgian Pledge, the
Issuer Bank Agreement and any mandate or other agreement relating to the Series
02-1 Distribution Account;

"SERIES 02-1 ISSUER ACCOUNTS" means the sterling bank accounts in the name of
the Issuer to be established in accordance with the provisions of the Issuer
Bank Agreement;

"SWAP AGREEMENTS" means the currency and interest rate swap agreements to be
made between the Issuer and the Swap Counterparty on the Closing Date;

"SWAP COUNTERPARTY" means Barclays Capital;

"TRUST DEED" means the trust deed for the Notes dated on or about the Closing
Date between the Note Trustee and the Issuer.

1.2   Terms defined in the Trust Deed shall, unless otherwise defined herein or
      the context otherwise requires, bear the same meanings herein.

1.3   The headings in this Agreement shall not affect its interpretation.

1.4   Words denoting the singular number only shall include the plural number
      also and vice versa; words denoting one gender only shall include the
      other genders and words denoting persons only shall include firms and
      corporations and vice versa.

1.5   Save where the contrary is indicated, any reference in this Agreement to
      this Agreement or any other agreement or document shall be construed as a
      reference to this Agreement or, as the case may be, such other agreement
      or document as the same may have been, or may from time to time be
      amended, varied, novated or supplemented.

2.    THE FACILITY

      Simultaneously with the completion of the issue of the Notes on the
      Closing Date, the Lender will advance to the Issuer for the credit of the
      Issuer's Expense Account an amount (the "ADVANCE") equal to the lower of
      (a) the Commitment and (b) the aggregate of (i) the costs and expenses of
      the Issuer arising in respect of the issue of Notes and (ii) the
      difference between the purchase price for the MTN and the sterling amount
      received by the Issuer on the Closing Date from the Swap Counterparty
      under the terms of the Swap Agreements. Any Commitment which remains
      undrawn after the Advance has been made shall be cancelled.

                                      -4-

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3.    INTEREST

3.1   The period for which the Advance is outstanding hereunder shall be divided
      into periods which shall correspond with the Interest Periods.

3.2   Subject to Clause 8, the Issuer shall pay interest on the Advance, at the
      rate per annum which is the aggregate of (i) the Margin, (ii) LIBOR for
      the relevant Interest Period and (iii) the Mandatory Cost Rate in respect
      thereof. Interest will accrue from day to day and will be calculated on
      the basis of actual days elapsed and a year of 365 days (or 366 days if
      the relevant Interest Period ends in a leap year) and will be (subject to
      Clause 9) payable in arrear on each Interest Payment Date.

3.3   To the extent that the aggregate of the monies available to the Issuer in
      the Series 02-1 Distribution Account on any Interest Payment Date is less
      than the amount of interest then due to the Lender after taking into
      account all other payments to be made therefrom on such date in accordance
      with the Trust Deed in priority to such interest, payment of the amount of
      the shortfall ("DEFERRED INTEREST") will be deferred to the extent of
      available funds until the earlier of (a) the Interest Payment Date
      thereafter on which funds are available to the Issuer to pay such Deferred
      Interest and (b) the Final Repayment Date whereupon any amount which has
      been deferred and remains unpaid shall cease to be a debt due from the
      Issuer and any liability of the Issuer in respect of such amount shall be
      extinguished.

3.4   Any payments made by the Issuer under this Agreement shall be paid after
      deduction of withholding for tax where such deduction or withholding is
      required by law.

3.5   The Lender shall promptly notify the Issuer of each determination of LIBOR
      made pursuant to this Agreement.

3.6   A statement made by the Lender as to any amount of interest payable
      pursuant to this Clause shall, in the absence of manifest error, be
      conclusive.

4.    PAYMENTS

      All payments required to be made by the Issuer hereunder shall be
      calculated without reference to any set-off or counterclaim and shall be
      made in sterling in immediately available funds.

5.    REPAYMENT

      Subject to Clause 8, the Advance shall be repaid in full on the Final
      Repayment Date. The obligation of the Issuer to repay the Advance shall be
      limited to the amount of funds which are available in the Series 02-1
      Distribution Account on the Final Repayment Date to repay the loan in full
      (after taking into account all other payments to be made therefrom on such
      date in accordance with the Trust Deed in priority to repayment of the
      Advance). If such funds are insufficient to repay the Advance in full, the
      shortfall shall cease to be a debt due from the Issuer and any liability
      in respect of such amount shall be extinguished.

                                      -5-

<PAGE>

6.    PREPAYMENT

      The Issuer may not, so long as any of the Notes remain outstanding, prepay
      the whole or any part of the Advance without the prior written consent of
      the Note Trustee.

7.    REPRESENTATIONS OF THE ISSUER

      The Issuer represents and warrants to the Lender on the date hereof that:

      (a)   the Issuer is a company duly authorised under the laws of the
            England;

      (b)   the Issuer has full power and authority to deliver and perform this
            Agreement, and has taken all necessary action to authorise the
            execution, delivery and performance by it of this Agreement; and

      (c)   this Agreement has been duly executed and delivered by the Issuer
            and constitutes its legal, valid and binding obligation, enforceable
            in accordance with its terms subject to bankruptcy, insolvency,
            reorganisation, receivership and other laws relating to, or
            affecting generally, the enforcement of creditors' rights and
            remedies as the same may be applied in the event of the bankruptcy,
            insolvency, reorganisation, receivership or liquidation or a similar
            event of the Issuer or a moratorium applicable to the Issuer and to
            general principles of equity.

8.    ENFORCEMENT EVENT

      If the Note Trustee serves an Enforcement Notice on the Issuer pursuant to
      the Trust Deed it shall forthwith provide a copy thereof to the Lender,
      and the Loan, together with all interest thereon, shall, subject always to
      Clause 9, become immediately due and repayable.

9.    ENFORCEMENT AND SUBORDINATION

9.1   The Lender agrees with the Note Trustee and the Issuer to be bound by the
      terms of the Ninth Schedule to the Trust Deed (relating to priority of
      payments) and in particular confirms that no sum, whether in respect of
      principal or interest or otherwise relating to the Expenses Loan, shall be
      due and payable by the Issuer except in accordance with the Deed of Charge
      and the Ninth Schedule to the Trust Deed unless and until all sums thereby
      required to be paid or provided for in priority thereto have been paid or
      will be discharged in full.

9.2   The Lender shall not take any steps for the purpose of receiving any debts
      whatsoever owing to it by the Issuer in connection with this Agreement or
      enforcing any rights arising out of this Agreement against the Issuer or
      procuring the winding-up, administration or liquidation of the Issuer in
      respect of any of its liabilities whatsoever.

9.3   The Lender agrees that its rights against the Issuer under this Agreement
      are limited to the extent that the Lender will not take any action or
      proceedings against the Issuer to recover any amounts due and payable by
      the Issuer to the Lender under this Agreement, except to the extent that
      the Issuer has sufficient assets to meet the

                                      -6-

<PAGE>

      Lender's claim in full having taken into account all other liabilities
      both actual and contingent of the Issuer which rank in priority to its
      liabilities to the Lender under this Agreement and so that the Issuer
      shall not be obliged to make any payment to the Lender hereunder if and to
      the extent that the making of such payment would cause the Issuer to be or
      become unable to pay its debts within the meaning of Section 123 of the
      Insolvency Act 1986.

9.4   Without prejudice to the foregoing provisions of this Clause, the Lender
      hereby covenants with the Issuer and the Note Trustee that if, whether in
      the liquidation of the Issuer or otherwise (and notwithstanding the
      provisions of this Clause 9.4), any payment (which shall include any
      set-off, combination or withholding) is received by it in respect of the
      Loan or any interest thereon other than in accordance with the Trust Deed
      the amount so paid shall be paid over to the Note Trustee forthwith upon
      receipt PROVIDED, HOWEVER, that this Clause 9.4 shall have effect only to
      the extent that it does not constitute or create and is not deemed to
      constitute or create any mortgage, charge or other security interest of
      any kind, PROVIDED, FURTHER, that as between the Note Trustee and the
      Issuer or any liquidator thereof such amounts paid under this Clause 9.4
      shall be deemed to be paid and as between the Lender and the Issuer or any
      liquidator thereof such amounts paid under this Clause 9.4 shall be deemed
      not to have been paid.

9.5   The Lender hereby covenants with the Note Trustee and the Issuer that it
      will not, except as may apply by operation of law, set off or claim to set
      off the Loan or any interest thereon or any part of either thereof against
      any liability owed by it to the Issuer.

10.   NOTICES

      (i)   Each communication to be made hereunder shall, unless otherwise
            stated, be made in writing but, unless otherwise stated, may be made
            by telex, facsimile or letter.

      (ii)  Any communication, notice or document to be made or delivered by any
            one person to another pursuant to this Agreement shall (unless that
            other person has by fifteen days' written notice to the other
            parties hereto specified another address) be made or delivered to
            that other person at the address identified below and shall be
            deemed to have been made or delivered when despatched and
            confirmation of transmission received by the sending machine (in the
            case of any communication made by telefax) or (in the case of any
            communication made by telex) when despatched and the appropriate
            answerback or identification symbol received by the sender or (in
            the case of any communications made by letter) when left at that
            address or (as the case may be) ten days after being deposited in
            the post, postage prepaid, in an envelope addressed to it at that
            address PROVIDED, HOWEVER, that each telefax or telex communication
            made by one party hereto to another shall be made to that other
            person at the telefax or telex number notified to such party by that
            other person from time to time:

                                      -7-

<PAGE>

            (a)   in the case of the Lender, to its address at 54 Lombard
                  Street, London EC3P 3AH for the attention of the Relationship
                  Director, City Markets Team;

            (b)   in the case of the Issuer, to its address appearing at the
                  beginning of this Agreement; and

            (c)   in the case of the Note Trustee, to its address appearing at
                  the beginning of this Agreement for the attention of Corporate
                  Trust Administration,

            or to such other address or for the attention of such other person
            as may from time to time be notified by either party to the other by
            written notice in accordance with the provisions of this Clause 10.

11.   COSTS AND EXPENSES

      The Issuer shall promptly on demand of the Lender and the Note Trustee pay
      to the Lender and the Trustee the amount of all costs and expenses
      (including legal fees) reasonably incurred by any of them in connection
      with the negotiation, preparation and execution of this Agreement. No fees
      shall be payable in connection herewith.

12.   INVALIDITY

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

13.   ASSIGNMENT AND VARIATION

      Each of the parties hereto agree that the Lender may not assign its rights
      hereunder and that the rights of the Issuer hereunder may be assigned to
      the Note Trustee.

14.   REMEDIES AND WAIVERS

      No failure to exercise, nor any delay in exercising, on the part of the
      Issuer or the Lender, any right or remedy hereunder shall operate as a
      waiver thereof, nor shall any single or partial exercise of any right or
      remedy prevent any further or other exercise thereof or the exercise of
      any other right or remedy. The rights and remedies herein provided are
      cumulative and not exclusive of any rights or remedies provided by law.

15.   INFORMATION AND VARIATION

      15.1 The Lender shall provide to the Note Trustee such information and
      evidence in respect of any dealing between the Issuer and the Lender under
      this Agreement or otherwise as the Note Trustee may reasonably request for
      the purpose of discharging the duties, trusts, powers, authorities and
      discretions vested in the Note Trustee in or under the Relevant Documents
      or by operation of law and the Issuer hereby waives any right or duty of
      confidentiality which it may have or which may be owed to it by the Lender
      in respect of such information and evidence.

                                      -8-

<PAGE>

15.2  No variation of this Agreement shall be effective unless it is duly
      executed and delivered by (or by some person duly authorised by) each of
      the parties.

16.   SECTION 349 BANK

      The Lender warrants that it is a Bank as defined for the purposes of
      Section 349(3)(a) of the Income and Corporation Taxes Act 1988 and will be
      within the charge to United Kingdom corporation tax as respects all
      amounts regarded as interest for United Kingdom tax purposes received by
      it under this Agreement.

17.   COUNTERPARTS

      This Agreement may be executed in any number of copies, and by the
      different parties hereto on the same or separate counterparts, each of
      which shall be deemed to be an original and all of which when taken
      together shall constitute one and the same agreement.

18.   ENTIRE AGREEMENT

      This Agreement constitutes the entire agreement between the parties in
      respect of the subject matter hereof. Any previous agreement among the
      parties with respect to the subject matter hereof is superseded by this
      Agreement. Nothing in this Agreement, expressed or implied, is intended to
      confer upon any party other than the parties hereto any rights, remedies,
      obligations or liabilities under or by reason of this Agreement.

19.   GOVERNING LAW AND JURISDICTION

19.1  This Agreement is governed by, and shall be construed in accordance with,
      English Law.

19.2  Each of the parties hereto irrevocably agrees for the benefit of each
      other party that the courts of England shall have exclusive jurisdiction
      to hear and determine any suit, action or proceeding, and to settle any
      disputes, which may arise out of or in connection with this Agreement,
      and, for such purposes, irrevocably submits to the exclusive jurisdiction
      of such courts.

19.3  Each party hereto irrevocably waives any objection which it might now or
      hereafter have to the courts of England referred to above being nominated
      as the forum to hear and determine any suit, action or proceeding, and to
      settle any dispute, which may arise out of or in connection with this
      Agreement and agrees not to claim that any such court is not a convenient
      or appropriate forum.

19.4  Each party hereto (if it is not incorporated in England) irrevocably
      appoints the person specified against it name on the execution pages
      hereto below to accept service of any process on its behalf and further
      undertakes to the other parties hereto that it will at all times during
      the continuance of this Agreement maintain the appointment of some person
      in England as its agent for the service of process and irrevocably agrees
      that service of any writ, notice or other document for the purposes of any
      suit, action or proceeding in the courts of England shall be duly served
      upon it if delivered or sent by

                                      -9-

<PAGE>

      registered post to the address of such appointee (or to such other address
      in England as that party may notify to the other parties hereto).

IN WITNESS WHEREOF the parties hereto have signed and executed this Agreement
the day and year first above written.

                                      -10-

<PAGE>

                                   SCHEDULE 1

                                 MANDATORY COSTS

1.    The Mandatory Cost Rate is an addition to the interest rate to compensate
      the Bank for the cost of compliance with the requirements of:

      (i)   the Bank of England and/or the Financial Services Authority (or, in
            either case, any other authority which replaces all or any of its
            functions); or

      (ii)  the requirements of the European Central Bank.

2.    On the first day of each Interest Period (or as soon as possible
      thereafter) the Bank shall calculate the Mandatory Cost Rate as a
      percentage rate in accordance with the formulae set out below.

3.    The Mandatory Cost Rate will be calculated as follows:

      (a)   in relation to sterling Advances:

                           AB + C(B - D) + E x 0.01
                           ------------------------ per cent. per annum
                                100 - (A + C)

      (b)   in relation to Advances in any currency other than sterling:

                                   E x 0.01
                                   -------- per cent. per annum.
                                     300

      Where:

      A     is the percentage of eligible liabilities (assuming these to be in
            excess of any stated minimum) which the Bank is from time to time
            required to maintain as an interest free cash ratio deposit with the
            Bank of England to comply with cash ratio requirements.

      B     is the percentage rate of interest (excluding the Margin and the
            Mandatory Cost Rate) payable for the relevant Interest Period on the
            Advance.

      C     is the percentage (if any) of eligible liabilities which the Bank is
            required from time to time to maintain as interest bearing special
            deposits with the Bank of England.

      D     is the percentage rate per annum payable by the Bank of England to
            the Bank on interest bearing special deposits.

      E     is the rate of charge payable by the Bank to the Financial Services
            Authority pursuant to the Fees Rules (calculated for this purpose by
            the Bank as being the average of the fee tariffs specified in the
            Fees Rules under the activity group A.1 Deposit acceptors, ignoring
            any minimum fee or zero rated fee

                                      -11-

<PAGE>

            required pursuant to the Fees Rules) and expressed in pounds per
            (pound)1,000,000 of the Tariff Base of the Bank.

      For the purposes of this Schedule:

            (a)   "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the
                  meanings given to them from time to time under or pursuant to
                  the Bank of England Act 1998 or (as may be appropriate) by the
                  Bank of England;

            (b)   "FEES RULES" means the rules on supervision fees contained in
                  the FSA Supervision Manual or such other law as may be in
                  force from time to time in respect of the payment of fees for
                  the acceptance of deposits; and

                  "TARIFF BASE" has the meaning given to it, and will be
                  calculated in accordance with, the Fees Rules.

                  In application of the above formulae, A, B, C and D will be
                  included in the formulae as percentages (i.e. 5 per cent. will
                  be included in the formula as 5 and not as 0.05). A negative
                  result obtained by subtracting D from B shall be taken as
                  zero. The resulting figures shall be rounded to four decimal
                  places.

      4.    The Bank may from time to time, after consultation with the Issuer,
            determine and notify to all parties any amendments which are
            required to be made to any of the formulae set out above in order to
            comply with any change in law, regulation or any requirements from
            time to time imposed by the Bank of England, the Financial Services
            Authority or the European Central Bank (or, in either case, any
            other authority which replaces all or any of its functions) and any
            such determination shall, in the absence of manifest error, be
            conclusive and binding on all the parties hereto.

                                      -12-

<PAGE>

LENDER

SIGNED for and on behalf of         )
BARCLAYS BANK PLC                   )

ISSUER

SIGNED for and on behalf of         )
GRACECHURCH CARD FUNDING            )
(NO.2) PLC                          )

NOTE TRUSTEE

SIGNED for and on behalf of         )
THE BANK OF NEW YORK                )
Acting through its London Branch    )

                                      -13-AMENDMENT NO.8 TO CONVERTIBLE PROMISSORY NOTE

          AMENDMENT NO. 8 TO  CONVERTIBLE  PROMISSORY  NOTE (this  "Agreement"),
dated as of September 30, 2002, by and between  eMAGIN  CORPORATION,  a Delaware
corporation (the "Borrower") and The Travelers Insurance Company (the "Lender"),
each a party to the Note  Purchase  Agreement  (the "Note  Purchase  Agreement")
entered  into as of  August  20,  2001 and a  Convertible  Promissory  Note (the
"Note") dated August 20, 2001, as amended to date.  All  capitalized  terms used
herein and not  otherwise  defined  herein  shall have the  respective  meanings
provided to such terms in the Note.

                              W I T N E S S E T H :
                              - - - - - - - - - -

          WHEREAS,  the  parties  wish to amend the Note to extend its  maturity
date;

          NOW,  THEREFORE,  in  consideration  of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby  acknowledged,  the  parties  hereto,  intending  to be legally
bound, hereby agree as follows:

                                   ARTICLE ONE

                                AMENDMENT TO NOTE

          SECTION 1.1  Amendment  to Note.  By  executing  this  Agreement,  the
Borrower and the Lender hereby agree and acknowledge  that Section 1 of the Note
is hereby amended by deleting "September 30, 2002" and inserting in the place of
such deletion "October 31, 2002."

                                   ARTICLE TWO

                                  MISCELLANEOUS

          SECTION 2.1 Counterparts.This  Agreement may be executed in any number
of counterparts  and by the different  parties hereto on separate  counterparts,
each of which  counterparts when executed and delivered  (including  delivery by
way of  facsimile)  shall  be an  original,  but  all of  which  shall  together
constitute one and the same instrument.  A complete set of counterparts shall be
lodged with the Borrower.

          SECTION 2.2 Governing  Law. This  Agreement  shall be governed by, and
construed  and enforced in accordance  with,  the laws of the State of New York,
excluding conflict of law principles that would cause the application of laws of
any other jurisdiction.

          SECTION 3.3 Effective Date. This Agreement shall become effective (the
"Effective Date") as of the date first referenced above.

          SECTION 3.4 Effect of Amendment.  From and after the  Effective  Date,
the Note and all references to the Note pursuant to the Note Purchase  Agreement
and the other documents  referenced  therein shall be deemed to be references to
the Note as modified  hereby.

<PAGE>

This Agreement is limited as specified and shall not constitute a  modification,
amendment,  acceptance  or waiver of any other  provision of the Note,  the Note
Purchase Agreement or any other document referenced therein or herein.

          SECTION 3.5 Headings. The article,  section and subsection headings in
this Agreement are for convenience  only and shall not constitute a part of this
Agreement  for any other  purpose and shall not be deemed to limit or affect any
of the provisions hereof.

          SECTION  3.6  Further  Assurances.  From  and  after  the date of this
Agreement,  upon the request of any party  hereto,  each party shall execute and
deliver such  instruments,  documents  and other  writings as may be  reasonably
necessary  or  desirable  to confirm and carry out and to  effectuate  fully the
intent and purposes of this Agreement.

                                    * * * * *

                                      2

<PAGE>

          IN  WITNESSES  WHEREOF,  the parties  hereto  have  caused  their duly
authorized  officers to execute and deliver this  Agreement as of the date first
above written.

                                 BORROWER:

                                 eMAGIN CORPORATION

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

                                 LENDER:

                                 THE TRAVELERS INSURANCE COMPANY

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

                                       3

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