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. . . . .

DATED 1997

READING MORT GAGE S plcto be renamed

Bristol & West plc

- and -

T H E L A W D E B E N T U R E T R U S T C O R P O R A T I O N p.l.c.

T R U S T D E E Dconstituting75,000,000

13 3/a per cent. Unsecured Perpetual Subordinated Bonds

Fo r the Issuer:

fo r the Trustee:

Slaughter and M a y35 Basinghall StreetLondon E C 2 V 5 D B(R ef : EGLW)A l l e n & OveryOn e New ChangeLondon E C 4 M 9QQ(Ref : P C / M M O K )

. Y

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S C H E D U L E 2 T E R M S A N D C O N D I T I O N S O F T H E B O N D S1. T I T L E A N D D E N O M I N A T I O N2 . S TA T U S A N D S U B O R D I N A T I O N3 . I N T E R E S T4 . R E D E M P T I O N5 . P A Y M E N T S6 . T A X A T I O N

7 . E V E N T S O F D E FA U L T A N D E N F O R C E M E N T8 . P R E S C R I P T I O N9 . I N D E M N I F I C A T I O N O F T H E T R U S T E E

3 1313 23 4363 73 7

383 93 9

1 0. M E E T I N G S O F B O N D H O L D E R S , M O D I F I C A T IO N S , W A I V E R A N D S U B S T I T U T I O NO F P R I N C I P A L D E B T O R

1 1 . R E P L A C E M E N T O F B O N D S1 2 . N O T I C E S1 3 . F U R T H E R I S S U E S1 4 . G O V E R N I N G L A W A N D J U R I S D I C T I O NS C H E D U L E 3 R E G I S T ER A N D T R A N S F E R O F B O N D SS C H E D U L E 4 P R O V IS IO N S F O R M E E T I N G S O F B O N D H O L D E R S

3 9414141414 24 4

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THIS TRUST DEED is made on t T t ^ 1 9 9 7B E T W E E N :(1) R E A D I N G M O R T G A G E S plc (registered in England and Wales No. 2l |24201), a

company to be renamed B r i s t o l & West plc, whose registered office i? at PlazaWest, Bridge Street, Reading, Berkshire R G 1 2LZ (the "Issuer"); and

(2) T H E L A W D E B E N T U R E T R U S T C O R P O R A T I O N p.l.c. (registered in Englandand Wales No. 1675231) whose registered off ice is at Princes House, 95Gresham Street, London E C 2 V 7L Y (the "Trustee", which expression shall,where the context so admits, include all persons for the time being the trusteeor trustees of this Trust Deed).

W H E R E A S :(A )

(B)

(C)

B y a resolution of the Board of Directors of the Issuer passed on 25 j i l y 1997the Issuer has created and resolved to issue 75,000,000 13 3 / 8 per cent.Unsecured Perpetual Subordinated Bonds to be constituted by this Trust Deed.O n 26 February 1997 The B r i s t o l and West B u i l d i n g Society (the "Sodiety"),the Issuer and The Governor and Company of the Bank of Ireland entlered intoa transfer agreement pursuant to which the whole of the business of theSociety w i l l be transferred to the Issuer, a wholly-owned subsidiary of TheGovernor and Company of the Bank of Ireland, on 28 July 1997 (the ["VestingDate").The Issuer w i l l , on the Vesting Date, assume a l i ab i l i ty in respect of eachholder of a 13 3 / 8 per cent, permanent interest bearing share issued by theSociety (the "PIBS") as if such holder (each a "Subordinated Depositor") hadmade a deposit on a subordinated basis (each a "Subordinated Deposit") with

(D)

(E)

the Issuer in an amount equal to the principal amount of the P I B S held by suchholder.O n the Vesting Date each Subordinated Deposit w i l l be applied in thesubscription of a principal amount o fthe said 75,000,000 13 3/8 per cent.Unsecured Perpetual Subordinated Bonds ofthe Issuer equal to the principalamount of such Subordinated Deposit.The Law Debenture Trust Corporation p.l.c. has agreed, on the terms andsubject to the conditions set out below, to act as trustee of the trusts created bythis Trust Deed for the benefit ofthe holders ofthe said 75,000,000 13 3 / e percent. Unsecured Perpetual Subordinated Bonds ofthe Issuer, but assumes noresponsibility for or in relation to the holders of the P I B S or the SubordinatedDepositors (save in relation to the PIBS Interest Payment, as defined below)

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N O W T H I S D E E D W I T N E S S E S A N D IT IS H E R E B Y D E C L A R E D W I T H E F I fE C T F R O MA N D I N C L U D I N G T H E V E S T I N G D A T E as follows:1. I N T E R P R E T A T I O N(A ) Definitions: In this Trust Deed the following expressions shall have the

following meanings:"Arrears of Interest""Assets""Auditors"

"banking subsidiary"

"Bondholders"

'Bonds"

'Conditions"

has the meaning set out in Condition 3(d);has the meaning set out in Condition 2(d);means the auditors for the time being of the Issueror , if they are unable or unwilling to carry out any

is Trust Deed, suchction requested of them under thother f i r m of auditors as may be njominated orapproved inwriting by the Trustee for the purposeand which the Issuer has approved prior to suchnomination (such approval, in each case, not to beunreasonably withheld or delayed);means a subsidiary of the Issuer havingprincipal business the business ofshall be deemed to include the businessauthorised institution within theBanking Act 1987 or merchant banking)banking activity which is, at thegenerally recognised as an integralbusiness of banking;

as itsDanking (which

o f ananing of the

o r anytime,

part of therelevant

means the several persons who are for the timebeing registered as the holders of jthe Bonds;means the registered bonds in the denominationof1,000 each or integral multiples thereof comprisingthe 75,000,000 l 3 3 / 8 per cent. UnsecuredPerpetual Subordinated Bonds of the Issuerconstituted by this Trust Deed and for the time beingoutstanding or, as the context may require, a specificnumber of them;means the Terms and Conditions to be endorsed onthe certificates for the Bonds in the form orsubstantially in the form set out in Schedule 2 as thesame may from time to time be modified in

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"Event of Default""Extraordinary Resolution"

accordance with this Trust Deed and any referencein this Trust Deed to a particular specified Conditionor paragraph of a Condition shall in relation to theBonds be construed accordingly;means any of the events described in Condition 7(a);has the meaning set out in paragraph 1 ofSchedule 4;

"First Interest Payment Date""Group"

"interest"

"Interest Payment Date"" L i a b i l i t i e s ""outstanding"

" P I B S Interest Payment""Registrar"

has the meaning set out in Condition 3(a);|

means the Issuer, any subsidiary of the Issuer, anycompany of which the Issuer is a subsidiary or anyother subsidiary of any such company;includes Arrears of Interest and the P I B S InterestPayment;has the meaning set out in Condition 3(a);has the meaning set out in Condition 2(d);means, in relation to the Bonds, all tiie Bonds issuedother than (a) those which have been redeemed inaccordance with the Conditions, (b) iliose in respectof which the date for redemption in accordance withthe Conditions has occurred and the redemptionmoneys (including all interest accrued on suchBonds to the date fo r such redemptiojn) have beenduly paid to the Trustee or to the Registrar asprovided in clause 2 and remain available forpayment in accordance with the Conditions,(c) those in respect of which claims hjave becomeprescribed under Condition 8 and (d) those whichhave been purchased and cancelled as provided inCondition 4;

has the meaning set out in Condition 3(b);means The R o y a l Bank of Scotland plc or such otherregistrar for the Bonds for the time being as mayhave been appointed as such by the Issuer with theapproval of the Trustee (such approval not to be

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unreasonably withheld);"Registrar's Agreement"

"Relevant Date""repay", "redeem" and "pay"

"Reserved Matter"

"Senior Creditors""subsidiary"

"The Stock Exchange""this Trust Deed"

"trust corporation'

means the agreement dated 25 July 1997 and madebetween the Issuer, the Registrar and the Trusteeand/or any other agreement for the time being inforce the terms ofwhich have been approved by theTrustee (such approval not to be unreasonablywithheld) appointing the Registrar or in connectionwith its duties together with any other agreementfor the time being in force the terms of which havebeen approved by the Trustee (such approval not tobe unreasonably withheld) amending or modifyingany of the aforesaid agreements;

has the meaning set out in Condition 8;shall each include both of the others and "repaid","repayable" and "repayment", "redeemed","redeemable" and "redemption" and "paid","payable", and "payment" shall be construedaccordingly;has the meaning set out in paragraph 1 ofSchedule 4;has the meaning set out in Condition 2(d);has the meaning ascribed to it by Section 736 of theCompanies Act 1985;means London Stock Exchange L i m i t e d ;means this Deed, the Schedules (as from time to timemodified in accordance with this Deed) and any otherdocument executed in accordance with this Deed (asfrom time to time so modif ied) and expressed to besupplemental to this Deed;means a corporation entitled by rules made under thePublic Trustee Act 1906 or entitled pursuant to anyother legislation applicable to a trustee in anyjurisdiction other than England to carry out thefunctions of a custodian trustee.

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(B) Construction of Certain References:References to:(i)

(i i )

costs, charges, remuneration or expenses shall mclude any value addedtax, tumover tax or similar tax charged in respect thereof;clauses and Schedules are to clauses of, and Schedules to, this Deedand references to sub-clauses, paragraphs and sub-paragraphs are tothe relevant sub-clauses, paragraphs and sub-paragraphs of the clausein which the reference appears;

(iii)

(C)(D)

(iv)

(v)

(vi)

the singular shall, where the context so admits, include a refethe plural and vice versa; any reference to the masculine gendbe construed as including the other genders; references toinclude corporations;

rence tosr shall

shallersons

"pounds", "pounds sterling" or the sign ""shall be construed asreferences to the currency of the United Kingdom of Great B r i t a i n andNorthern Ireland;the remedies of the Trustee or the Bondholders being restricted tobringing proceedings in England for the winding-up of the Issuer shallnot restrict the right of the Trustee or the Bondholders to prove (in thecase of the Bondholders, where permitted in and pursuant to Condition7(d) mutatis mutandis) in any winding-up of the Issuer in Englandcommenced by any other person, and such proof shall be deemed riotto be the exercise of a remedy or the enforcement of a right; andany provision of any statute shall be deemed also to refer to anystatutory modification or re-enactment thereof or any statutoryinstrument, order or regulation made thereunder or under such re-enactment.

Headings: Headings shall be ignored in construing this Trust Deed.Schedules: The Schedules are part of this Deed and shall have effectaccordingly.

(E) Outstanding Bonds: For the purposes of:(i) the exercise of any right of the relevant Bondholders (other than to

payment);

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(i i ) the determination of how many Bonds are outstanding forof rhe provisions for meetings of Bondholders referred toConditions or ascertaining whether a requirement underDeed or the Conditions for a specified percentage of the principalamount of the Bonds outstanding has been satisfied;

(iii)

(iv)

the purposesin the

this Trust

the exercise of any discretion, power or authority which the Trustee isrequired, expressly or impliedly, to exercise in or by referelnce to theinterests of the Bondholders; andthe certification (where relevant) by the Trustee as to whether anyevent or circumstance is in its opinion materially prejudicial to theinterests of the Bondholders,

those Bonds which are beneficially held by or on behalf of any member of theGroup and not cancelled shall (unless no longer so held) be deemed not toremain outstanding.

2. A M O U N T OF T H E B O N D S A N D C O V E N A N T TO PA Y(A ) Amount of the Bonds: The aggregate principal amount of the Bonds is limited

to 7 5 , 0 0 0 , 0 0 0 .(B) Covenant to Pay. Subject to the subordination provisions contained in clause

3 and Condition 2, the Issuer shall:(i)

(ii)

on any date when the Bonds or any of them become due to beredeemed (subject to the Conditions) pay to or to the ordeir of theTrustee in London in pounds sterling in immediately available fundsthe principal amount of the Bonds becoming due fo r redemption onthat date and shall (subject to the Conditions) until such payment(both before and after any judgment) unconditionally pay to or to theorder of the Trustee as aforesaid interest on the principal amount of theBonds outstanding at the rate of 133/8 per cent, per annum (subject toany deduction pursuant to Condition 6) semi-annually in arrear on 7thM a y and 7th November in each year, save that the first such paymento f interest, which shall be made on the First Interest Payment Date,shall be in respect of the period from, and including, the Vesting Dateto, but excluding, the First Interest Payment Date and shall amount to37.37671 (subject to any deduction pursuant to Conditk^ 6) inrespect of each 1,000 in principal amount of Bonds; andon the First Interest Payment Date pay to or to the order o f the Trusteein London in pounds sterling in immediately available funds theaggregate amount of the P I B S Interest Payment (subject to anydeductions pursuant to Condition 6) which shall amount to 30.04795

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(subject to any deduction as aforesaid) in respect of each 1,000principal amount of Bonds, '

(C)

(D )

provided that (1) every payment of. any sum due in respect of the Bonds(including the P I B S Interest Payment) made to the Registrar as proviked in theRegistrar's Agreement shall, to such extent, satisfy such obligation exjcept tothe extent that there is failure in its subsequent payment to the Bondholdersunder the Conditions and (2) in the case of any payment made pursuant toCondition 7, payment w i l l be deemed to have been made when the f u l lamount due has been received by the Registrar or the Trustee, except to theextent that there is fai lure in the subsequent payment to the Bondholders (i fany) under the Conditions.Discharge: Subject to sub-clause (D), any payment to be made in resjpect ofthe Bonds (including the P I B S Interest Payment) by the Issuer or the jTrusteemay be made as provided in the Conditions and any payment so madp shall(subject to sub-clause (D)) to such extent be a good discharge to the Issuer orthe Trustee, as the case may be.Payment after a Default: At any time after an Event of Default has occurredthe Trustee may:

(i) by notice in writing to the Issuer and the Registrar, require theRegistrar, until notified by the Trustee to the contrary, so far aspermitted by any applicable law:(a) to act, in relation to payments to se made by or on behalf of the

Trustee, as agent of the Trustee under this Trust Deed and theBonds on the terms of the Registrar's Agreement (with!consequential amendments as necessary and except that the .Trustee's l i ab i l i ty for the indemnification, remuneration and allother out-of-pocket expenses of the Registrar w i l l be limited tothe amounts for the time being held by the Trustee in respect ofthe Bonds on the terms of this Trust Deed) and thereafter tohold all certificates for Bonds and a l l moneys, documents andrecords held by it in respect of such Bonds to the order of theTrustee; or

(b)

(ii)

to deliver all certificates for Bonds and al l moneys, documentsan d records held by it in respect of the Bonds to the Trustee oras the Trustee directs in such notice; and

by notice in writing to the Issuer require' it to make all subsequentpayments in respect of the Bonds to or to the order of the Trustee andnot to the Registrar.

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(E) Interest after a Default: Subject to clause 3 and Condition 2:(i) in the case of any payment or provision fo r payment in respect o f the

principal amount of the Bonds made to the Trustee or to oij to theaccount of or with the Registrar after the due date, or where any suchpayment or provision is not made by reason of clause 3 or Condition 2,interest at the rate of 133/8 per centl per annum shall continue toaccrue on the principal amount of the Bonds due for redemption or asregards which such payment or provision is not made up to butexcluding the f i n a l date (being not later than 30 days after the date onwhich the whole of such principal amount, together with an amountequal to the interest which has accrued and is to accrue up to butexcluding such f i n a l date, has been received by the Trustee or theRegistrar) which the Trustee determines to be the date on and afterwhich payment is to be made to the Bondholders in respect of theBonds as stated in a notice given pursuant to Condition 12 or the dayupon which payment is in fact so made, whichever first occurs (and sothat to the extent that interest is provided by the Issuer in excess ofthat to which the Bondholders are entitled, such excess shall promptlybe refunded to the Issuer); and

(ii) in any case where payment in respect of the whole or any part of theprincipal amount of any Bond is improperly withheld or refused (otherthan in the circumstances contemplated by paragraph (i) above) or,once made to the Trustee or to or to the account of or with theRegistrar, is not made by reason of clause 3 or Condition 2, interest atthe rate of 13 3 / B per cent, per annum shall accrue on the principalamount of such Bond payment ofwhich has been so improperlywithheld or refused or not made as aforesaid from and including thedate of such withholding or refusal or (as the case may be) from andincluding the date payment should otherwise have been made up tobut excluding the date (ofwhich not less than 10 days' notice is givenin accordance with Condition 12) on and from which the f u l l amountin pounds sterling payable in respect of such Bond is available forpayment or the day upon which payment is in fact so made, whicheverfirst occurs (and so that to the extent that interest is provided by theIssuer in excess of that to which the Bondholder is entitled, such excessshall promptly be refunded to the Issuer) provided that interest shallnot cease to accrue on the day stipulated unless subsequen tly, subjectalways to Condition 5, upon due presentation of such Bond payment inf u l l is in fact made. !

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3 . S U B O R D I N A T I O N(A ) The claims of the Bondholders are subordinated to the claims of Senior

Creditors in that payments of principal and interest in respect of the Bonds(including the P I B S Interest Payment) are conditional upon the Issuer beingsolvent at the time for payment by the Issuer and in that no principal orinterest (including the P I B S interest) shall be payable in respect of llhe Bondsexcept to the extent that the Issuer could make such payment and st i l l besolvent immediately thereafter (subject always to the provisions of llhe lastsentence of Condition 7(a)). Interest w i l l continue to accrue on any Bondspayment of the principal of which is not made by virtue of the operation ofthis clause subject to and in accordance with the provisions of clause 2(E) andthe Conditions.F or the purposes of this clause, the Issuer shall be solvent if:(i ) to the extent that any determination as to solvency falls to be made

prior to the commencement of winding up in England of the Issuer, it isable to pay its debts to Senior Creditors as they f a l l due; and

(ii) its Assets exceed its Liab i l i t ie s to Senior Creditors.(B ) The Issuer may at any time and shall whenever requested by the Trustee

procure that two directors of the Issuer or (if the Issuer is in winding-up) theliquidator of the Issuer shall give a report in writing as to whether or not theIssuer is or would in any specified circumstances be solvent for the purposes ofsub-clause 3(A) and in the absence of manifest error any such report shall betreated and accepted by the Issuer, the Trustee and the Bondholders as correctan d sufficient evidence of such fact. In the absence of any such repo'rt to thecontrary, it shall for the purposes of this Trust Deed be assumed (unljsss thecontrary is proved prior to the date of payment or, for the purposes ofparagraph (ii) of clause 8 ( A ) , within 30 days after receipt by the Trustee ofany moneys in respect of the Bonds (including the P I B S Interest Payment)) that the Issuer is and w i l l after any payment under this Trust Deed be solventfo r such purposes. In the event of a delivery of a report of two directors thatthe Issuer is not solvent, the Issuer shall procure that the Auditors sh'allprovide a report of the Auditors within 30 days of the date of the repjort of thetw o directors as to whether the Issuer is solvent for the purposes of sjub-clause3 ( A ) and such report of the Auditors shall, if it is to the effect that thfe Issuer issolvent, supersede the report of the two directors fo r all purposes of this TrustDeed.

(C ) If at any time an order is made or an effective resolution is passed for thewinding up in England of the Issuer otherwise than a solvent winding upsolely for the purposes of a reconstruction or amalgamation on terms

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10

(D )

(E )

previously approved by the Trustee in writing or by an ExtraordinaryResolution of the Bondholders and which do not provide that the Bonds shallthereby become payable, there shall be payable on each Bond (in l i e u of anyother payment), but subject as provided in this clause, such amount, if any, aswould have been payable to the holder of such Bond if, on the day prio r to thecommencement of the winding up and thereafter, such Bondholder were theholder of a preference share in the capital of the Issuer having a pjreferentialright to a retum of assets in the winding up over the holders of all otherclasses of stock or shares for the time being in the share capital of the Issueron the assumption that such preference share was entitled to receive on aretum of assets in such winding up an amount equal to the principal amountof such Bond together with Arrears of Interest, if any, and any interest (otherthan Arrears of Interest) which has accrued up to (but excluding) the date ofrepayment (as provided in this Trust Deed). I

Subject to applicable law, no Bondholder may exercise or claim any right ofset-off in respect of any amount owed by it to the Issuer arising under or inconnection with the Bonds and each Bondholder shall, by virtue o!f being theperson in whose name a Bond is registered, be deemed to have waived all suchrights of set-off.Th e provisions of this clause 3 apply only to the principal and interest(including the P I B S Interest Payment) in respect of the Bonds, and nothing inthis clause shall affect or prejudice the payment of the costs, charges,expenses, liabilities or remuneration of the Trustee or the rights or remedies ofthe Trustee in respect of payment thereof.

(F ) Nothing contained in this Trust Deed shall in any way restrict the right of theIssuer to issue obligations or give guarantees in each case ranking in priority toor pari passu with or junior to the obligations of the Issuer in respect of theBonds and if in the opinion ofthe Trustee any modifications to the provisionsof this clause to permit such ranking is necessary or expedient the Trustee ishereby authorised to concur with the Issuer in executing a supplemental deedeffecting such modification.

4. F O R M OF T H E B O N D S(A ) The Bonds shall be in registered form and the certificates therefor shall be inor substantially in the form set out in Schedule 1. The Bonds shal. be issued in

the denomination of 1,000 or integral multiples of 1 , 0 0 0 , and thecertificates for the Bonds shall be serially numbered and shall be endorsedwith a form of transfer and with the Conditions. Title to the Bonds w i l l passupon registration of their transfer in accordance with this Trust Deed.

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11

(B ) The certif icates for the Bonds shall have affixed to them the o f f i c i a l !teal of theIssuer. Certificates so executed shall be v a l i d evidence of the obligations of theIssuer in respect of the Bonds.

(C ) The person in whose name a Bond is registered shall be deemed to be, andshall be treated as, its absolute owner for the purpose of receiving payment of,or payment or delivery on account of, the Bond (notwithstanding aniy writingon the certificate for the Bond or notice of ownership) and for all otherpurposes whether or not such Bond is overdue.

5. S T A M P D U T I E STh e Issuer shall pay any English stamp, issue, registration, documentary orother taxes and duties, including interest and penalties, in respect of theconstitution and issue of the Bonds and the execution and delivery of thisDeed provided that the l i ab i l i ty to pay such taxes or duties arises from a lawwhich is in effect on the Vesting Date. The Issuer w i l l also indemnify theTrustee and the Bondholders from and against all stamp, issue, regis Tation,documentary or other taxes payable by any of them in England (but notelsewhere) in connection with any supplemental deed or solely by virtue of orin connection with any action taken by or on behalf of the Trustee or as thecase may be, (where entitled under Condition 7 to do so) the Bondholders toenforce the obligations of the Issuer under this Trust Deed or the Bonds. Saveas provided in this clause 5, the Issuer w i l l not be responsible for stamp, issue,registration, documentary or other taxes otherwise imposed in conne'ction withthe Bonds or this Trust Deed. In particular, without prejudice to the generalityof the foregoing, the Issuer w i l l not be responsible for any penalties arising onaccount of the late payment of any such taxes or duties by any Bondllolder.

6. C O V E N A N T TO O B S E R V E T H E C O N D I T I O N SThe Issuer hereby covenants with the Trustee that it w i l l comply with andperform its obligations under and observe the Conditions, which sha 1 bebinding on the Issuer and the Bondholders. The Trustee shall be entitled toenforce the obligations under the Bonds and the Conditions as if the samewere set out in this Trust Deed, which shall be read and construed as onedocument with the Bonds, subject always to the restrictions on enforcementand institution of proceedings contained in the Conditions and otherwise inthis Trust Deed.

7. E N F O R C E M E N T(A ) At any time after the occurrence of an Event of Default the Trustee (o

entitled to do so under Condition 7(d), any Bondholder in the nameTrustee) shall have the right, and only the right, described in Condition

ofr, where

the7(a) to

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12

enforce payment by the Issuer of amounts required to be paid pursuant to theConditions and this Trust Deed. '

(B ) The Trustee shall not be bound to institute any proceedings to enforce theperformance of any of the provisions of the Bonds or of this Trust Deed unlessdirected or requested to do so by an Extraordinary Resolution or in writing byBondholders holding at least one-fifth in principal amount of the Bonds thenoutstanding and in any case then only if it shall be indemnified to itssatisfaction against all actions, proceedings, claims and demands :owhich itmay thereby render itself liable and all costs, charges, damages and expenseswhich it may incur by so doing.

(C ) The rights of Bondholders to take action against the Issuer are and w i l l belimited as provided in Condition 7.

(D ) If any money is paid by the Issuer to the Trustee or any Bondholder at a timewhen, as a consequence of the operation of clause 3 or Condition 2, the Issueris under no obligation to pay the same, such money shall not (subiect only toclause 8(A)(ii)) be recoverable by the Issuer and the Issuer shall have no rightagainst the Trustee or any Bondholder in respect of such payment.

8. A P P L I C A T I O N OF M O N E Y S R E C E I V E D B Y T H E T R U S T E E(A ) Declaration of Trust: Subject to the provisions of clause 3 above, all moneys

received by the Trustee in respect of the Bonds or amounts payable under thisTrust Deed w i l l , regardless of any appropriation of a l l or part of them by theIssuer, be held by the Trustee upon trust to apply them (subject to subclause (B)):(i) first, in payment of all costs, charges, expenses and liabilities incurred

by the Trustee and all remuneration payable to the Trusteej in carryingout its functions under this Trust Deed;

(ii) secondly, if prior to receipt of such moneys or within 30 days thereafterthe Trustee is provided with a report pursuant to clause 3 (jwhich hasbeen requested by the Trustee on receipt of any such moneys) whichstates that the Issuer could not make or could not have made suchpayment in whole or in part and sti l l be or sti l l have been solvent forthe purposes of clause 3 immediately thereafter, in the retv m to theIssuer (in each case after any necessary deductions pursuant to thepreceding provisions of this sub-clause) of the whole of such payment,o r (if less) such part of such payment as could not have been madewithout thereby rendering the Issuer insolvent (and any moneys soretumed shall then be treated for the purposes of the Issuer'sobligations under this Trust Deed as if they had not been paid by the

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13

Issuer and their original payment shall not be deemed to haviedischarged any of the obligations of the Issuer under this Trust Deed);

(iii) thirdly, in payment of any principal and interest owing in respect of theBonds pari passu and rateably; and(iv) fourthly, in payment of the balance (i f any) to the Issuer for itself.Without prejudice to this sub-clause (A) , if the Trustee holds any moneyswhich represent principal or interest in respect of Bonds in respect of j whichclaims have become prescribed under Condition 8, the Trustee w i l l hold suchmoneys upon the above trusts. !

(B ) Accumulation: If the amount of the moneys at any time available for paymentin respect of the Bonds under sub-clause (A) is less than 10 per cent, of theprincipal amount of the Bonds then outstanding, the Trustee may, at itsdiscretion,' invest such moneys. The Trustee may retain such investments andaccumulate the resulting income until the investments and the accumulations,together with any other funds for the time being under the contro l of theTrustee and available for such payment, amount to at least 10 per cent, of theprincipal amount of the Bonds then outstanding and then such investments,accumulations and funds (after deduction of, or provision for, any applicabletaxes) w i l l be applied as specified in sub-clause (A).

(C ) Investment: A n y moneys held by the Trustee under the trusts contained in thisTrust Deed may be invested in the name or under the control of the Trustee inany investments or other assets in any part of the world whether or not theyproduce income or placed on deposit in the name or under the control of theTrustee at such bank or other financial institution and in such currency as theTrustee may, in its absolute discretion, think f i t . The Trustee may at any timevary or transpose any such investments for or into other such investments orconvert any moneys so deposited into any other currency, and w i l l not beresponsible for any loss occasioned thereby, whether by depreciation in value,fluctuation in exchange rates or otherwise.

(D ) Declaration of Trust o f Covenants: The Trustee w i l l hold the benefit of thecovenants given by the Issuer under this Trust Deed upon trust for itself andthe Bondholders according to its and their respective interests.

9. C O V E N A N T SSo long as any Bond is outstanding (or, in the case of paragraph (L), SD long asany claim fo r payment of principal or interest (including the P I B S InterestPayment) in respect of any Bond remains liable to prescription), the Issuerw i l l :

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(A ) Carrying on affairs: at all times carry on and conduct its affairs ahd procureits subsidiaries to carry on and conduct their respective affairs in a; proper andefficient manner;

(B) Books of Account: keep and procure that its subsidiaries keep proper books ofaccount and, so far as permitted by applicable law, allow the Trustee andanyone appointed by it access to such books of account at all reasonable timesduring normal business hours;

(C) Accounts: cause to be prepared and certified by the Auditors in respect o feach financial accounting period accounts in such form as w i l l comply with allrelevant legal and accounting requirements and all requirements fbr the timebeing of The Stock Exchange;

II

(D) Notice of Events of Default: notify the Trustee in writing immediately uponbecoming aware of the occurrence of any Event of Default or any event which,with the giving of notice and/or lapse of time, would constitute ari Event ofDefault;

(E) Information: so far as permitted by applicable law, give to the Trustee suchinformation and evidence as it requires for the performance of its functionsvested in it under this Trust Deed or by operation of law;

(F) Financial Statements etc.: send to the Trustee at the time of their issue and inthe case of annual and interim financial statements in any event not more than180 and 90 days respectively after the end of the periods to which they relate,two copies of every balance sheet, prof it and loss account, and eve ry report orother notice, statement or circular issued generally, or which shoul;d, under theprovisions of applicable law be issued generally, to the creditors arid/orshareholders (or any class of either of them) of the Issuer in its or theircapacity as such;

(G) Certif icate of directors: send to the Trustee promptly after the publication ofits audited balance sheet and profi t and loss account in respect of eachfinancial period commencing with the financial period ended 31 March 1998and in any event not later than 180 days after the end of such financial periodand also within 14 days after any request by the Trustee a certificate of theIssuer signed by any two of its directors to the effect that, having made allreasonable enquiries, to the best of the knowledge, information and belief ofthe Issuer as at a date (the "Certification Date") being not more than five daysbefore the date of the certificate there did not exist and had not existed sincethe Certification Date of the previous certificate (or, in the case of the firstsuch certificate, the date of this Deed) any Event of Default or any|eventwhich, with the giving of notice and/or lapse of time, would constitute anEvent of Default and that during the period from and including the:

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Certification Date of the last such certificate (or, in the case of the first suchcertificate, the date of this Deed) to and including the Certification oSate ofsuch certificate the Issuer has comphed with all its obligations contained inthis Trust Deed or (if such is not the case) specifying the respects in which ithas not complied;

(H) Notices to Bondholders: send to the Trustee not less than 14 days prior to thedate of publication thereof, a proof copy of the form of each notice to theBondholders to be pubhshed in accordance with Condition 12 and uponpublication two copies of each notice so published (such notice to be in a formapproved by the Trustee in writing prior to the date of such publication andsuch approval not to be approval for the purposes of section 57 of theFinancial Services Act 1986 ofthe United Kingdom of any such notice which isan investment advertisement (as therein defined));

(I) Further acts: so far as permitted by applicable law, do all such further acts asmay be necessary in the opinion of the Trustee to give effect to this TrustDeed;

(J) Notice of late payment: give notice to the Bondholders in accordance withCondition 12 of any unconditional payment to the Registrar or the Trustee ofany sum due in respect of the Bonds made after the due date fo r suchpayment;

(K ) L i s t i n g : use its best endeavours to maintain the listing of the Bonds onThe Stock Exchange. If, however, it is unable to do so, having used suchendeavours, or if the maintenance of such listing is agreed by the Trustee to beunduly onerous and the Trustee is satisfied that the interests of theBondholders would not be thereby materially prejudiced, the Issuer w i l linstead use its best endeavours to obtain and maintain a listing of the Bondson such other stock exchange as it may (with the prior written approval of theTrustee) decide;

(L ) Change in Registrar: subject to the provisions of the Registrar's Agreement,give not less than 60 days' prior notice to the Bondholders in accordance withCondition 12 of any future appointment or any resignation or removal of theRegistrar or of any change in its specifiedoffice, not make any suchappointment or removal or change without the written approval of the Trusteeand not amend the terms and provisions of the Registrar's Agreement withoutthe prior consent in writing of the Trustee (such approval and consent not tobe unreasonably withheld);

( M ) Bonds held by Issuer etc.: send to the Trustee as soon as practicable afterbeing so requested by the Trustee a certificate of the Issuer signed by any two

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CN)

(O )CP)

directors setting out the total number of Bonds which, at the date of suchcertificate, were held by or on behalf of any member of the Group;jRegistrar's Agreement: at al l times maintain a Registrar in accorjdance withthe Conditions and comply with all of its obligations under the Registrar'sAgreement;Conditions: comply with all of its obligations under the Conditions; andCertificate: if at any time the directors of the Issuer determine a ; provided inthe definition of Compulsory Interest Payment Date in Condition 3(f),forthwith deliver to the Trustee a certificate signed by two directors of theIssuer to the effect that such determination has been made.Nothing in this clause 9 shall entitle the Trustee to any information regardingmatters:(i) fo r which the Issuer or any of its subsidiarieswould be entitled to claim

exemption from disclosure by reason of the provisions of Part III ofSchedule 9 to the Companies A ct 1985 or any other statute in anyjurisdiction in which it operates analogous thereto and irrespective ofwhether any such exemption is being claimed or has been waived forany other purpose; or

(ii) which the Issuer or any subsidiary of the Issuer is under a duty imposedby law not to disclose; or

(iii) the disclosure of which could properly be regarded by the Issuer or anyof its subsidiaries as improper.

1 0 . R E M U N E R A T I O N A N D I N D E M N I F I C A T I O N OF T H E T R U S T E E(A ) Normal Remuneration: So long as any Bond is outstanding the Issuer w i l l pay

to the Trustee by way of remuneration for its services as Trustee s ach sum asma y from time to time be agreed between them. Such remuneration w i l laccrue from day to day from the date of this Trust Deed and w i l l be payable onsuch dates as may from time to time be agreed between the Issuer and theTrustee. If any payment to a Bondholder of the moneys due in respect of anyBond is improperly withheld or refused upon due presentation of such Bond,such remuneration w i l l again accrue as from the date of such presentationuntil payment to such Bondholder is duly made.

(B ) Extra Remuneration: At any time after the occurrence of an Event of Defaultor if the Trustee finds it expedient or necessary or is requested by the Issuer toundertake duties which the Trustee and the Issuer agree to be of an

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(C)

exceptional nature or otherwise outside the scope of the normal duties of theTrustee under this Trust Deed, the Issuer w i l l pay such additionalremuneration as may be agreed between them or, f a i l i n g agreement; as to anyof the matters in this sub-clause (or as to such sums referred to in subclause (A)), as determined by a merchant bank (acting as an expert) selectedby the Trustee and approved by the Issuer or, f a i l i n g such approval, nominatedby the President for the time being of The Law Society of England and Wales,the expenses involved in such nomination and the fee of such merchant bankbeing discharged by the Issuer. The determination of such mercham: bank w i l lbe conclusive and binding on the Issuer, the Trustee and the Bondholders.

Expenses: The Issuer w i l l also pay or discharge all costs, charges, liabilitiesand expenses properly incurred by the Trustee in relation to the preparationand execution of this Trust Deed and the canying out of its function:; underthis Trust Deed including, but not limited to, legal and travelling expenses andany stamp, registration, documentary or other taxes or duties paid by theTrustee in connection with any permissible legal proceedings brought orcontemplated by the Trustee against the Issuer for enforcing any obligationunder this Trust Deed or the Bonds.

(D ) Payment of Expenses: A l l costs, charges, liabilities and expenses properlyincurred and payments properly made by the Trustee in the l a w f u lperformance of its functions under this Trust Deed w i l l be payable oijreimbursable by the Issuer on demand by the Trustee and:(i) in the case of payments made by the Trustee prior to such demand w i l l

carry interest from the date on which the demand is made at a rateequal to two per cent, above the base rate of National WestminsterBank Plc on the date on which such payments were made by :heTrustee; and

(ii) in all other cases w i l l carry interest at such rate from the date|which is30 days after the date on which the demand is made or (where thedemand specifies that payment is to be made on an earlier date) fromsuch earlier date.

(E ) Indemnity: The Issuer w i l l indemnify the Trustee in respect of all liabilitiesand expenses properly incurred by it or by anyone properly appointed by it orto whom any of its functions may properly be delegated by it in the carryingout of its functions and against any loss, l iabi l i ty, cost, claim, action, demandor expense (including, but not limited to, all costs, charges and expensesproperly paid or incurred in disputing or defending any of the foregoing)which any of them may properly incur or which may be made against any ofthem arising out of or in relation to or in connection with its appointment orthe exercise of its functions under this Trust Deed.

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(F ) Provisions Continuing: The provisions of sub-clauses (C), (D) and (E) w i l lcontinue in f u l l force and effect in relation to the Trustee even if it may haveceased to be Trustee.

(G ) Tax: The Issuer shall in addition pay to the Trustee an amount equal to theamount of any value added tax or similar tax chargeable in respect of itsremuneration under this clause.

11 . P R O V I S I O N S S U P P L E M E N T A L TO T H E T R U S T E E A C T 1925

(A )

B y way of supplement to the Trustee Act 1925 it is expressly declared asfollows:

suchA d v i c e : The Trustee may act on the opinion or advice of, or informationobtained from, any expert (including an adviser to the Issuer) ancresponsible to anyone for any loss occasioned by so acting. Anyadvice or information may be given orally and confirmed by letteiobtained by letter, telex or facsimile transmission and the Trusteeliable to anyone for acting in good faith on any opinion, advice orpurporting to be conveyed by such means even if it contains somenot authentic.

w i l l not beopinion,

or sent orw i l l not beinformationerror or is

(B )

(C )

(D )

Trustee to Assume Due Performance: The Trustee need not notify anyone ofthe execution of this Trust Deed or do anything to ascertain whether any Evento f Default or any breach by the Issuer of the Trust Deed or Conditions hasoccurred and, until it has actual knowledge or express notice to the contrary,the Trustee may assume that no such event or breach has occurred and thatthe Issuer is performing all its obligations under this Trust Deed and theBonds.

Resolutions of Bondholders: The Trustee w i l l not be responsible for havingacted in good faith upon a resolution purporting to have been passed at ameeting of Bondholders in respect of which minutes have been made andsigned even though it may later be found that there was a defect m theconstitution of such meeting or the passing of such resolution or that suchresolution was not v a l i d or binding upon the Bondholders.

Certificate signed by duly authorised signatories: The Trustee may c a l l fo rand may accept as sufficient evidence of any fact or matter or of theexpediency of any act a certificate of the Issuer signed by any two directors ofthe Issuer as to any fact or matter upon which the Trustee may, in the exerciseof any of its functions, require to be satisfied or to have information or to theeffect that, in the opinion of the person or persons so certifying, ajny particularact is expedient and the Trustee need not c a l l for further evidencej and w i l l notbe responsible for any loss that may be occasioned by acting on any such

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certificate. The Trustee may also so accept and act on any report delivered bythe Auditors or the liquidator of the Issuer pursuant to clause 3.

(E ) Deposit of Documents: The Trustee may deposit this Trust Deed and anyother documents in any part of the world with any banker or bankingcompany or entity whose business includes undertaking the safe custody ofdocuments or with any lawyer or f i r m of lawyers believed by it to be of goodrepute and may pay all sums to be paid on account of or in respect of any such

n (G)

(H )

deposit.CF) Discretion of Trustee: The Trustee w i l l have absolute and uncontro le d

discretion as to the exercise of its functions and, except in the case of its ownw i l f u l misconduct, negligence or breach of the terms of this Trust Deed, w i l lnot be responsible for any loss, l iabi l i ty, cost, claim, action, demand, expensesor inconvenience which may result from their exercise or non-exercise.Agents: Whenever it considers it expedient in the interests of the Bondholders,the Trustee may, in the conduct of its trust business, instead of actingpersonally, employ and pay an agent selected by it, whether or not a lawyer orother professional person, to transact or conduct, or concur in transe cting orconducting, any business and to do or concur in doing all acts required to bedone by the Trustee Cincluding the receipt and payment of money). If theTrustee exercises reasonable care in the selection of such agent the Trustee w i l lnot be responsible to anyone for any misconduct or omission on the part ofany such agent so employed by it or be bound to supervise the proceedings oracts of any such agent.Delegation: Whenever it considers it expedient in the interests of theBondholders, the Trustee may delegate to any person or body of personsfluctuating in number selected by it all or any of the duties, powers, trusts,authorities and discretions vested in the Trustee in connection with this TrustDeed and any such delegation may be by power of attorney or in such othermanner as the Trustee may think fi t and may be made upon terms andconditions (including power to sub-delegate) and subject to such regulationsas the Trustee shall think f i t . If the Trustee exercises reasonable care in theselection of such delegate, it w i l l not be under any obligation to supervise suchdelegate or be responsible for any loss, l iabi l i ty, cost, claim, action, demand orexpense incurred by reason of any misconduct or default by any such delegateor sub-delegate.Forged Bonds: The Trustee w i l l not be liable to the Issuer or any Bondholderby reason of having accepted as val id or not having rejected any certif icate fo rany Bond purporting to be such and later found to be forged or not authentic.

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(J)

(K)

Confidentiality: Unless ordered to do so by a court of competent] jurisdthe Trustee shall not be required to disclose to any Bondholderconfidential fmancial or other information made available to thethe Issuer.

iction

Trustee byany

Determinations Conclusive: As between itself and the Bondholdjers theTrustee may determine all questions and doubts arising in relation to any ofthe provisions of this Trust Deed. Every such determination, whether madeupon such a question actually raised or implied in the acts or proceedings ofthe Trustee, w i l l be conclusive and shall bind the Trustee and the! Bondholders.

(L ) Payment for and Delivery of Bonds: The Trustee w i l l not be responsible forthe receipt or application by the Issuer of the proceeds of the issue of theBonds, or the delivery of the certificates for the Bonds to the persons entitledto them.

(M ) Bonds held by the Issuer: In the absence of knowledge or express notice tothe contrary, the Trustee may assume without enquiry (other than requesting acertificate of the Issuer under clause 9(K)) that no Bonds are for Ihe timebeing held by or on behalf of any member of the Group.

(N ) Limitation of L i a b i l i t y to Individual Bondholders etc.: In connection with theexercise by it of any of its trusts, powers, authorities and discretions vested init by this Trust Deed (including, without limitation, any modification, waiver,authorisation or substitution), the Trustee shall have regard to the generalinterests of the Bondholders as a class but shall not have regard to anyinterests arising from circumstances particular to individual Bondholders(whatever their number) and, in particular but without limitation, shall nothave regard to the consequences of the exercise of its trusts, powers,authorities and discretions for individual Bondholders (whatever their

inumber) resulting from their being for any purpose domiciled or resident in,or otherwise connected with, or subject to thejurisdiction of, any] particularterritory or any political sub-division thereof and the Trustee shall not beentitled to require, nor shall any Bondholder be entitled to claim,: from theIssuer, the Trustee or any other person any indemnification or payment inrespect of any tax consequence of any such exercise upon individualBondholders.

(O ) Notifications to be f i n a l : A l l notifications, opinions, determinations,certificates, calculations, quotations and decisions given, expressed, made orobtained for the purposes of the Conditions by the Trustee shall bje binding onthe Issuer and the Bondholders and no l i ab i l i ty to the Issuer or theBondholders shall attach to the Trustee in connection with the exercise or non-exercise by it of its powers, duties and discretions in the Conditions.

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(P) Consents of Trustee: Any consent given by the Trustee fo r the purpjoses ofthis Trust Deed may be given on such terms and subject to such conditions (ifany) as the Trustee in its absolute discretion thinks fi t and may be givenretrospectively.

1 2 . T R U S T E E L I A B L E FOR N E G L I G E N C ENothing in this Trust Deed shall in any case in which the Trustee has failed toshow the degree of care and diligence required of it as trustee relieve orindemnify it from or against any l i ab i l i ty which by virtue of any rule of lawwould otherwise attach to it in respect of any negligence, default, breach ofduty or breach of trust of which it may be guilty.

1 3 . W A I V E R A N D P R O O F OF D E F A U L T

in g ofw i l l not

ention of

(A ) Waiver: The Trustee may, without the consent of the Bondholders and withoutprejudice to its rights in respect of any subsequent breach or Event of Default,from time to time and at any time, if in its opinion the interests of theBondholders w i l l not be materially prejudiced thereby, waive or authorise, onsuch terms and conditions as seem expedient to it, any breach or proposedbreach by the Issuer of any of the provisions of this Trust Deed or the Bonds ordetermine that any Event of Default or any event which, with the givinotice and/or the lapse of time, would constitute an Event of Defaul:be treated as such provided that the Trustee w i l l not do so in contraviany express direction given by an Extraordinary Resolution or a request madepursuant to Condition 7(c) but no such direction or request w i l l affect anyprevious waiver, authorisation or determination. Any such waiver,authorisation or determination shall be binding on the Bondholders and, if theTrustee so requires, shall be notified to the Bondholders as soon as practicable.

(B ) Proof of Default: If it is proved that as regards any specified Bond the Issuerhas made default in paying any sum due to the relevant Bondholder suchproof w i l l (unless the contrary be proved) be sufficient evidence that the samedefault has been made as regards all other Bonds which are then pay.

14. T R U S T E E NOT P R E C L U D E D F R O M E N T E R I N G I N T O C O N T R A C T Sable.

Neither the Trustee nor any director or officerof a corporation acting as aTrustee or holding or associated company of such corporation shall beprecluded from acquiring, holding, dealing in or disposing of any Bonds or anyother securities, notes, bonds, debenture stock or debentures whatsoever ofthe Issuer or any company in which the Issuer is interested or ofwhich theIssuer is a subsidiary or from otherwise at any time contracting or enteringinto any financial or other transactions with the Issuer or from beinginterested in any contract or transaction or from accepting and holding the

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office of trustee for the holders of any other securities of or relating to theIssuer or any company in which the Issuer is interested or of which the Issueris a subsidiary and shall not be liable to account for any prof it arisingtherefrom.

1 5 . M O D I F I C A T I O N A N D S U B S T I T U T I O N(A ) Modification: The Trustee may agree without the consent of the Bondholders

to any modification to this Trust Deed (including the Conditions) which is of aformal, minor or technical nature or is made to correct a manifest error. TheTrustee may also so agree to any modification to this Trust Deed (including theConditions) which is in its opinion not materially prejudicial to the interests ofthe Bondholders. Any modification made pursuant to this sub-clause (A) shall,if the Trustee so requires, be notified to the Bondholders as soon aspracticable.

(B ) Substitution(i ) The Trustee may, without the consent of the Bondholders, but subject

to the Issuer having gained the approval of the Bank of England andhaving provided the Trustee with satisfactory evidence of s jchapproval, agree to the substitution of any subsidiary of the Issuer orany company of which the Issuer is a subsidiary or any other subsidiaryo f any such company (the "Substituted Obligor") in place of the Issuer(or of any previous substitute under this sub-clause) as the principaldebtor under this Trust Deed, and the Bonds provided that(a) a trust deed is executed or some other form of undertaking is

given by the Substituted Obligor to the Trustee, in form andmanner satisfactory to the Trustee, agreeing to be bjound by theterms of this Trust Deed and the Bonds with any consequentialamendments which the Trustee may deem appropriate as f u l l yas if the Substituted Obligor had been named in this Trust Deedand on the Bonds as the principal debtor in place of the Issuer;

(b) the Bonds being irrevocably and unconditionally guaranteed(o n a subordinated basis equivalent, mutatis mutandis, to thesubordination set out in clause 3) by the Issuer in a form andmanner satisfactory to the Trustee;

(c) without prejudice to paragraph (b) above, where theSubstituted Obligor is a banking subsidiary, the obligations ofthe Substituted Obligor in respect of the Bonds may besubordinated in a winding-up of the Substituted Obligor to therights of Senior Creditors (as defined in clause 1 but with the

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substitution in such definition of references to "the SubstitutedCompany" in place of references to "the Issuer"); j

(d)

(e)

if any two of the directors ofthe Substituted Obligor certify thatit w i l l be solvent immediately after such substitution, theTrustee need not have regard to the financial condition, profitso r prospects of the Substituted Obligor or compare them withthose of the Issuer;the Issuer and the Substituted Obligor comply with siach otherrequirements as the Trustee may direct in the interests of theBondholders; and

(f ) the Trustee is satisfied (without prejudice to its rights to rely onparagraph (d)) that the said substitution is not materiallyprejudicial to the interests of Bondholders.

(ii) Any such agreement by the Trustee pursuant to paragraph (i) w i l l , if soexpressed, operate to release the Issuer (or any such previoussubstitute) from any or all of its obligations as principal debtor underthis Trust Deed and the Bonds. Not later than 14 days after theexecution of any such documents and after compliance with 'suchrequirements, notice of the substitution w i l l be given to theBondholders.

(iii) Upon the execution of such documents and compliance with [suchrequirements, the Substituted Obligor w i l l be deemed to be riamed inthis Trust Deed and on the Bonds as the principal debtor in place of theIssuer (or of any previous substitute under paragraph (i)) and thisTrust Deed and the Bonds w i l l be deemed to be modified in suchmanner as shall be necessary to give effect to the substitution.

1 6 . A P P O I N T M E N T , R E T I R E M E N T A N D R E M O V A L OF T H E T R U S T E E(A ) Appointment: The Issuer shall have the power of appointing new trustees of

the trusts constituted by this Trust Deed but no person shall be so appointedunless previously approved by an Extraordinary Resolution. A trustcorporation shall at all times be a Trustee and may be the sole Trustee. Anyappointment of a new Trustee shall be notif ied by the Issuer to theBondholders as soon as practicable in accordance with the provisions ofCondition 12. j

(B ) Retirement and Removal: A n y Trustee may retire at any time on giving notless than three months' notice in writing to the Issuer without giving anyreason and without being responsible for any costs occasioned by such

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retirement and the Bondholders may by Extraordinary Resolution Remove anyTrustee provided that the retirement or removal of any sole trustee or soletrust corporation w i l l not become effectiveuntil a trust corporation isappointed as successor Trustee. If a sole trustee or sole trust corporation givesnotice of retirement or an Extraordinary Resolution is passed for its removalunder this clause, the Issuer shall use all reasonable endeavours to procurethat another trust corporation be appointed as Trustee.

(C ) Separate or Co-Trustees: The Trustee may, despite sub-clause ( A ) , by notice inwriting to the Issuer, appoint anyone to act either as a separate trustee or as aco-trustee jointly with the Trustee:(i ) if the Trustee considers such appointment to be in the interests of the

Bondholders;(ii) for the purpose of conforming with any legal requirement, restriction

or condition in any jurisdiction in which any particular act is to beperformed; or

(iii) for the purpose of obtaining a judgment in any jurisdiction br theenforcement in any jurisdiction against the Issuer of either a judgmentalready obtained or any of the provisions of this Trust Deed

Subject to the provisions of this Trust Deed the Trustee may confer on anyperson so appointed such functions as it thinks f i t . The Trustee may by noticein writing to the Issuer and such person remove any person so appointed. Atthe request of the Trustee, the Issuer shall forthwith do all things as may berequired to perfect such appointment or removal and it irrevocably appointsthe Trustee to be its attomey in its name and on its behalf to do so* Such aperson shall (subject always to the provisions of this Trust Deed) have suchtrust, powers, authorities and discretions (not exceeding those conferred onthe Trustee by this Trust Deed) and such duties and obligations as shall beconferred or imposed by the instrument of appointment. Such reasonableremuneration as the Trustee may pay to any such person, together [with anyattributable costs, charges, liabilities and expenses incurred by it in performingits functions as such separate or co-trustee shall for the purposes ofthi s TrustDeed be treated as remuneration, liabilities, costs, charges and expjensesincurred by the Tmstee.

(D ) Competence of a Majority of Trustees: If there are more than two Trusteesthe majority of such Trustees w i l l (provided such majority includesla tmstcorporation) be competent to carry out all or any of the Tmstee's functions.

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1 7 . C O M M U N I C A T I O N SA n y communication shall be by letter or by fax transmission:

in the case of the Issuer, to it at:P O B o x 27Broad QuayB r i s t o l BS99 7 A DFax No :Attention:

and in the case of the Trustee, to it at:Princes House95 Gresham StreetLondon EC 2 V 7 LYFa x No:

0 1 1 7 929 1115General Counsel

Attention:0171 696 5261T h e Manager, Trust Administration

A n y such notice, if delivered in person or by f ax , shall be deemed to lave beengiven on receipt if received before 5.00 p.m. on a business day and otherwiseto have been received at 9.00 a.m. on the next following business day. Anysuch notice, if delivered by post, shall be deemed to have been givenjonreceipt. Either party may change its address for the purpose of this clause 17by giving written notice of such change to the other.

1 8 . E X E C U T I O N IN C O U N T E R P A R T S

This document may be executed in counterparts (and in engrossment,photocopy or facsimile form) and the executed documents shall, from the dateo n which both parties hereto have executed a counterpart hereof, be construedand have effect as though all such counterparts were one document executedby the parties hereto.

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19. GOVERNING LAWThis Trust Deed and the Bonds are governed by, and shall be construed inaccordance with, Enghsh law.

IN WITNESS whereof this Trust Deed has been executed as a deed on theat the beginning. date stated

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SCHEDULE 1FORM OFCERTIFICATE FOR BOND

O n the front:Certificate N o . [ ][

A N Y U N I T E D S TA T ES P E R S O N W H O H O L D S T H I S O B L I G A T IO N W I L L B E S U B J E C TT O L I M I TA T I O N S U N D E R T H E U N I T E D S T A T ES I N C O M E T A X L A W S , I N C L U D I N G

T H E L I M I T A T I O N S P R O V I D E D IN S E C T I O N S 1650) A N D 1287(a) OF T H E IN T E R N A LR E V E N U E C O D E .

B R I S T O L & W E S T plc(Incorporated in England with limited l iabi l i ty

under the Companies Act 1985, registered number 2124201)

)

I S S U E OF 75,000,000 I S V g P E R C E N T. U N S E C U R E D P E R P E T U A L S U B O R D I N A T E DB O N D S

T h e issue of the above Bonds (the "Bonds") was authorised by a resolution of theBoard of Directors of Bristol & West plc (the "Issuer") passed on 25 July 1997.T h e Bond represented by this certificate forms one of a series of registered Bonds inprincipal amounts of 1,000 each or integral multiples thereof, in an aggregateprincipal amount of 7 5 , 0 0 0 , 0 0 0 , all constituted by a Trust Deed dated 25 July 1997made between the Issuer and The Law Debenture Trust Corporation p.l.c.T H I S IS TO C E R T I F Y thatis/are the registered holder(s) of in principal amount of the above-mentioned Bonds and is/are entitled on such date as

itionsuch principal amount may become repayable in accordance with the Condendorsed hereon to the repayment of such principal amount, except in the event ofthe winding-up in England of the Issuer, in which event his/their entitlement shall beas set out in Condition 2 endorsed hereon.Interest is payable semi-annually in arrear on the said principal amount at the rate of1 3 3 / 8 per cent, per annum from and including the Vesting Date, payment to be madeo n the Compulsory Interest Payment Dates and otherwise as specified in theConditions, subject to and in accordance with the said Conditions.

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Givenunder the Official Seal of the Issueron

This certificate must be surrendered before any transfer of the whole orp t of theregistered Bonds herein mentioned can be registered.

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O n the back:FORM O F TRANSFER OF BONDFO R V A LU E R E C E I V E D the undersigned hereby sellCs), assign(s) and transfer(s) to

(please print or type name and address (including postal code) of transferee) principal amount of this registered Bond and all rights hereunder,; subject toand in accordance with the Trust Deed and the Conditions, hereby irrevocablyconstituting and appointing the Registrar as agent to transfer such principall amountof this Bond in the register maintained by the Registrar with f u l l power ofsubstitution.

Signature(s) of transferor(s)

Date:N . B . :

This form of transfer must be accompanied by such documents, evidence andinformation as may be required pursuant to the Conditions and must Ibeexecuted under the hand of the transferor or, if the transferor is a corporation,either under its common seal or under the hand of two of its officers jdulyauthorised in writing and, in such latter case, the document so authorisingsuch officers must be delivered with this form of transfer.T h e signature(s) ofthe person(s) effecting a transfer shall conform taj any listo f duly authorised specimen signatures supplied by the registered holder(s) orbe certified by a recognised bank, notary public or in such other manner as theRegistrar may require.

T h e signature(s) on this form of transfer must correspond with the n^me(s) asit/they appear(s) on the face of this registered Bond in every particular.Registered Bonds are only transferable in amounts of 1,000 or any integralmultiples thereof.N o transfer is effective until it has been registered.

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TERMS AND CONDITIONSOF TH E 75,000,000 133/. PER CENT. UNSECURED PERPETUAL SUBORDINATED

BONDS OF BRISTOL & WEST plc[Here w i l l be set out the Terms and Conditions

which appear in Schedule 2]

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S C HE DU L E 2T E R M S AND CONDITIONS OF T H E BONDS

The 75,000,000 IsVsPer cent. Unsecured Perpetual Subordinated Bonds (the"Bonds") of B r i s t o l & West plc (the "Issuer") are constituted by a trust deed dated 25July 1997 (the "Trust Deed") between (1) the Issuer and (2) The Law DebentureTrust Corporation p.l.c., as trustee, (the "Trustee", which expression shall include itssuccessors). The Trustee acts as trustee for the Bondholders (as defined below) inaccordance with the provisions of the Trust Deed. The Bondholders are entitled to thebenefit of, are bound by, and are deemed to have notice of, all the provisionscontained in the Trust Deed. The Bondholders are also bound by, and are deemed tohave notice of, all the provisions contained in a registrar's agreement dated 25 July1997 (the "Registrar's Agreement") between the Issuer, The R o y a l Bank of Scotlandplc, as registrar, (the "Registrar", which, expression shall include its successors) andthe Trustee. Copies of the Trust Deed and the Registrar's Agreement are available forinspection by Bondholders during normal business hours at the registered office forthe time being of the Trustee (being at the date of the Trust Deed at Princes House,95 Gresham Street, London EC 2 V 7 LY) and at the specified office of the Registrar.The date on which the Trust Deed takes effect is referred to in these Terms andConditions as the "Vesting Date".1. T I T L E A N D D E N O M I N A T I O N(a) The Bonds are in certificated registered form in principal amounts of 1,000 or

integral multiples of 1,000 ("authorised denominations").(b) Title to the Bonds passes upon registration in a register of the Bonds (the

"Register") which the Issuer shall procure to be kept by the Registrar.The person in whose name a Bond is registered (a "Bondholder") shall bedeemed to be, and shall be treated as, its absolute owner for the purpose ofreceiving payment of, or payment or delivery on account of, the Bond(notwithstanding any writing on the certificate for the Bond or notice ofownership) and for all other purposes whether or not such Bond is overdue.

(c) Bonds may, subject to the terms of the Registrar's Agreement and toparagraph (f) of this Condition, be transferred in whole or in part in anauthorised denomination by lodging the certificate for the relevant Bond (withthe relative form of application for transfer endorsed thereon duly executedand duly stamped where applicable) at the specifiedoffice of the Registrar. Notransfer of a Bond shall be v a l i d unless and until entered on the Register. ABond may be registered only in the name of, and transferred only to, a namedperson (or persons, not exceeding 4 in number).

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(d) The Issuer shall procure that the Registrar w i l l within 7 business days (notincluding any day during which neither the Issuer nor the Registrar is requiredto register the transfer of any Bond pursuant to paragraph (f) of thisCondition) of any duly made apphcation fo r the transfer of a Bond or a part ofa Bond in an authorised denomination deliver a certificate for a Bond in therelevant denomination to the transferee (and, in the case of a transfer of partonly of a Bond, deliver a certificate for a Bond comprising the untransferredbalance to the transferor) at the specified office of the Registrar or (at the riska n d , if mailed at the request of the transferee or, as the case may be, thetransferor otherwise than by ordinary uninsured m a i l , at the expense of thetransferee or, as the case may be, the transferor) m a i l the certificate for theBond to such address, other than an address in the United States, as thetransferee or, as the case may be, the transferor may request.

In these Terms and Conditions, "business day" means a day (other than aSaturday or Sunday) on which banks in London are open for business.(e) Any transfer of the whole or part of a Bond in accordance with paragraph (c)

o f this Condition shall be effected without charge subject to (i) the personmaking such application fo r transfer paying or procuring the payment of anytaxes, duties and other govemmental charges payable in connection therewith,(ii) the Registrar being satisfiedwith the documents of title and/or identity ofthe person making the application and (iii) such reasonable regulations as theIssuer may from time to time agree with the Tmstee and the Registrar.

(f ) Neither the Issuer nor the Registrar shall be required to register the transfer ofany Bond during the period of 7 business days immediately prio r to any datef i x e d for payment in respect of the Bonds.

2 . S T A TU S A N D S U B O R D I N A T I O N(a) The Bonds constitute unsecured and, as described below, subordinated

obligations of the Issuer and rank pari passu without any preference amongthemselves.

(b) The claims of the Bondholders are subordinated to the claims of SeniorCreditors (as defined below) in that payments of principal and interest inrespect of the Bonds (including the PIBS Interest Payment, as defined inCondition 3(b)) are conditional upon the Issuer being solvent (as definedbelow) at the time for payment by the Issuer and in that no principal orinterest (including the P I B S Interest Payment) shall be payable in respect ofthe Bonds except to the extent that the Issuer could make such payment andsti l l be solvent immediately thereafter. For this purpose, the Issuer shall beconsidered to be solvent if :

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(i) to the extent that any determination as to solvency falls to be madeprior to the commencement of winding up in England of the Issuer, it isable to pay its debts to Senior Creditors as they f a l l due; and

(i i ) its Assets exceed its Liab i l i t ie s (each as defined below) to SeniorCreditors.

(c) A report as to the solvency of the Issuer by 2 directors of the Issuer or, incertain circumstances as provided in the Trust Deed, the Auditors (as definedin the Trust Deed) or, if the Issuer is being wound up, its liquidatorshall,unless the contrary is proved, be treated and accepted by the Issuer, theTrustee and the Bondholders as correct and sufficient evidence of the mattersstated in such report.

^ (d) In these Terms and Conditions, "Senior Creditors" means creditors of theIssuer (i) who are unsubordinated depositors or other unsubordinatedcreditors of the Issuer or (ii) who are subordinated creditors of the Issuer(including the holders of any dated subordinated debt) other than those whoseclaims rank, or are expressed to rank, pari passu with or junior to the claims ofthe Bondholders (whether only in the event of a winding up of the Issuer orotherwise); "Assets" means the total non-consolidated gross assets ofthe Issuerand "Liabi l i t i es" means the total non-consolidated gross liabilities of the Issuer,a l l as shown by the latest published audited balance sheet of the Issuer butadjusted for contingencies and fo r subsequent events in such manner and tosuch extent as such directors, the Auditors or, as the case may be, suchliquidator may determine to be appropriate.

(e) If at any time an order is made or an effective resolution is passed for thewinding up in England of the Issuer otherwise than a solvent winding upsolely for the purpose of a reconstruction or amalgamation on terms previouslyapproved by the Trustee in writing or by an Extraordinary Resolution (asdefined in the Trust Deed) of the Bondholders and which do not provide thatthe Bonds shall thereby become repayable, there shall be payable on eachBond (in l i eu of any other payment), but subject as provided in this Condition,such amount, if any, as would have been payable to the relevant Bondholder if,on the day prior to the commencement ofthe winding up and thereafter, suchBondholder were the holder of a preference share in the capital of the Issuerhaving a preferential right to a retum of assets in the winding up over theholders of all other classes of stock or shares for the time being in the sharecapital of the Issuer on the assumption that such preference share was entitledto receive on a return of assets in such winding up an amount equal to theprincipal amount of such Bond together with Arrears of Interest (as defined inCondition 3(d)), if any, and any interest (other than Arrears of Interest) whichis payable as provided in the Tmst Deed.

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The obligations of the Issuer in respect of the Bonds are conditional uponthe Issuer being solvent for the purpose of Condition 2(e) immediatelybefore and after payment by the Issuer. If this condition is not satisfied,any amounts which might otherwise have been allocated in or towardspayment of principal and interest in respect of the Bonds may be used toabsorb losses.

(f) Subject to applicable law, no Bondholder may exercise or claim any right ofset-off in respect of any amount owed to it by the Issuer arising under or inconnection with the Bonds and each Bondholder shall, by virtue of being theperson in whose name a Bond is registered, be deemed to have waived all suchrights of set-off.

3. I N T E R E S T(a) The Bonds bear interest from and including the Vesting Date at the rate of

13 3 / 8per cent, per annum payable, subject as provided in these Terms andConditions, in arrear in equal semi-annual instalments on 7 May and7 November in each year (each an "Interest Payment Date"), except that thefirst such payment, which shall be made on the first interest payment datefollowing the Vesting Date (the "First Interest Payment Date"), shall be inrespect of the period from and including the Vesting Date to but excluding theFirst Interest Payment Date and shall amount to 37.37671 (subject to anydeduction pursuant to Condition 6) in respect of each 1,000 principalamount of Bonds.

(b) The Issuer shall, subject as provided in these Terms and Conditions, pay byway of interest to each Bondholder on the First Interest Payment Date30.04795 (subject to any deduction pursuant to Condition 6) in respect ofeach 1,000 principal amount of Bonds held by such Bondholder (the "PIBSInterest Payment"). The P I B S Interest Payment shall be in respect of interestaccrued on the 75,000,000 IsVsPer cent. Permanent Interest Bearing Sharesof The B r i s t o l and West B u i l d i n g Society (50,000,000 ofwhich were issuedon 7 November 1991, and 25,000,000 of which were issued on 31 December1991), in replacement for which the Bonds have been issued, for the periodfrom and including the interest payment date in respect thereof whichimmediately precedes the Vesting Date to but excluding the Vesting Date.

(c) Subject as provided in these Terms and Conditions, the aggregate amountpayable by the Issuer to each Bondholder pursuant to paragraphs (a) and (b)o f this Condition on the First Interest Payment Date shall be 67.42466(subject to any deduction pursuant to Condition 6) in respect of each 1,000principal amount of Bonds held by such Bondholder. Interest accruing on eachBond shall cease to accrue from the date for its redemption unless, upon duepresentation, payment of principal is improperly withheld or refused or is not

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made by reason of Condition 2, in which event interest shall continue toaccrue as provided in the Trust Deed.

(d) Interest payments on the Bonds (including the P I B S Interest Payment) shall(subject to Condition 2) be payable on each Compulsory Interest PaymentDate (as defined below). On any Optional Interest Payment Date (as definedbelow) there may be paid (if the Issuer so elects and gives notice of suchelection to the Bondholders in accordance with paragraph (e) of thisCondition) the interest (including the P I B S Interest Payment) payable on suchOptional Interest Payment Date, but the Issuer shall not have any obligation tomake such payment and any failure to pay shall not constitute a default by theIssuer for any purpose. A n y interest (including the P I B S Interest Payment)which is not paid on an Interest Payment Date shall, so long as the sameremains unpaid, constitute "Arrears of Interest". Arrears of Interest may, at theoption of the Issuer, be paid in whole or in part at any time upon theexpiration of not less than 7 days' notice to such effect given to theBondholders in accordance with Condition 12, but a l l Arrears of Interest on allBonds outstanding shall (subject to Condition 2) become due in f u l l onwhichever is the earliest of:(i) the date upon which a dividend is next paid on any class of share

capital of the Issuer;(ii) the date set for any redemption pursuant to Condition 4(a); or(iii) the commencement of winding up of the Issuer.Notwithstanding the foregoing, if notice is given by the Issuer of its intentionto pay the whole or part of Arrears of Interest, the Issuer shall be obliged(subject to Condition 2) to do so upon the expiration of such notice. Arrearso f Interest shall not themselves bear interest.

(e) The Issuer shall give not less than 30 days' notice prior to any OptionalInterest Payment Date to the Bondholders in accordance with Condition 12specifying whether the Issuer elects to pay the interest due on such OptionalInterest Payment Date.

(f) For the purposes of this Condition, the following expressions have thefollowing meanings:"Compulsory Interest means any Interest Payment Date unless (i) inPayment Date" the period of 6 calendar months immediately

preceding such Interest Payment Date the Issuerhas not declared or paid any dividend on anyclass of its share capital and (ii) the directors of

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the Issuer have determined and notified theTrustee that prudent capital ratios would nothave been maintained if payment of any suchdividend had been made in such period.

"Optional Interest Payment means any Interest Payment Date other than aDate" Compulsory Interest Payment Date.

If interest is required to be calculated for a period of less than one year (otherthan a f u l l semi-annual interest period), it shall be calculated on the basis ofthe actual number of days elapsed and a 365-day year.A l l references in these Terms and Conditions and the Trust Deed to interestshall, unless the context otherwise requires, include Arrears of Interest.

4 . R E D E M P T I O NTh e Issuer shall not be at liberty to redeem or purchase the Bonds except inaccordance with the following provisions of this Condition. A n y suchredemption or purchase is subject to the prior consent of the Bank of England(so long as the Issuer is required to obtain such consent).

(a) Redemption for Taxation ReasonsIf the Issuer satisfies the Trustee, immediately prior to the giving of the noticereferred to below, that on the next Interest Payment Date the payment ofinterest in respect of the Bonds (including, if applicable, the P I B S InterestPayment) would not be treated as a deductible expense for U K tax purposes,the Issuer may at its option (subject to Condition 2), having given not lessthan 30 nor more than 45 days' notice to the Bondholders, redeem a l l , but notsome only, of the Bonds at their principal amount and shall also pay Arrears ofInterest (if any) and any interest (other than Arrears of Interest) up to (butexcluding) the date of redemption.

(b) PurchaseT h e Issuer or any other member of the Group (as defined in the Trust Deed)may at any time purchase Bonds at any price in the open market or by tender(available to all Bondholders alike) or by private treaty.

(c) CancellationA l l Bonds which are (i) redeemed or (ii) purchased (otherwise than in theordinary course of a business of dealing in securities) by or on behalf of the

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Issuer or any other member of the Group may not be reissued or resold andshall in due course be cancelled.

5 . PAYME NT S(a) Payments of principal on the Bonds or accrued interest which is payable other

than on an Interest Payment Date shall be made to the persons shown in theRegister at the close of business on the date (the "Record Date") being theseventh business day prior to the relevant payment date subject to surrenderof the certificates for the Bonds at the specified office of the Registrar.Payments of interest (including the P I B S Interest Payment) due on an InterestPayment Date shall be made to the persons shown in the Register at the closeof business on the Record Date.Each such payment shall be made by sterling cheque drawn on a branch of abank in the United Kingdom and mailed not later than the business daypreceding the due date for payment (at the risk and, if mailed at the request ofthe Bondholder otherwise than by ordinary uninsured m a i l , expense of theBondholder) to the holder or to the first-named of joint holders of the relevantBonds at his registered address or in accordance with mandate instructionsacceptable to the Registrar. In no event shall interest payments be mailed toan address in the United States. Payments shall be subject in all cases to anyapplicable f i sc a l and other laws and regulations.Without prejudice to the generality of the foregoing, the Issuer reserves theright to require a Bondholder to provide such certification or information asma y be required to enable the Issuer to comply with the requirements of theUnited States federal income tax laws.

(b) Details of the i n i t i a l Registrar and its i n i t i a l specified office are set out below.The Issuer reserves the right, subject to the approval of the Trustee (suchapproval not to be unreasonably withheld), to vary or terminate theappointment .of the Registrar and appoint another Registrar at any time,provided that it w i l l at all times maintain a Registrar with a specified office inthe United Kingdom. Notice of any such tennination or appointment and ofany changes in the specified office of the Registrar w i l l be given to theBondholders promptly by the Issuer in accordance with Condition 12.

6. T AXAT IONA l l payments of principal and/or interest (including the P I B S InterestPayment) in respect of Bonds shall be made subject to deduction of any UnitedKingdom tax required to be withheld at source.

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7. E V E N T S OF D E FA U LT A N D E N F O R C E M E N T(a) If the Issuer fails to make any payment of principal in respect of the Bonds for

a period of 15 days or more after the due date fo r its payment or fails to makeany payment of interest Cincluding the P I B S Interest Payment) fo r a period of15 days or more after a Compulsory Interest Payment Date or any other dateupon which the payment of interest (including the P I B S Interest Payment) iscompulsory, the Trustee may, subject as provided below, at its discretion andwithout further notice, institute proceedings in England (but not elsewhere)fo r the winding up of the Issuer, but may take no further action in respect ofsuch default. For the purpose of this paragraph a payment otherwise due (inthe case of principal) or compulsory (in the case of interest (including theP I B S Interest Payment)) shall be deemed so due or compulsorynotwithstanding that the condition set out in Condition 2 is not satisfied.

(b) If at any time an order is made or an effective resolution is passed fo r thewinding up in England of the Issuer otherwise than a solvent winding upsolely for the purpose of a reconstruction or amalgamation on terms previouslyapproved by the Trustee in writing or by an Extraordinary Resolution of theBondholders and which do not provide that the Bonds shall thereby becomerepayable, the Trustee may, subject as provided below, at its discretion, givenotice to the Issuer that the Bonds are, and they shall accordingly therebyforthwith become, immediately due and repayable, together with accruedinterest as provided in the Trust Deed.

(c) The Trustee shall not be bound to take the action referred to in paragraph (a)or (b) of this Condition or any other action to enforce the obligations of theIssuer in respect of the Bonds unless (i) it is so requested by an ExtraordinaryResolution of the Bondholders or in writing by Bondholders holding at leastone-fifth in principal amount of the Bonds then outstanding and (ii) it shallhave been indemnified to its satisfaction.

(d) No Bondholder shall be entitled to institute proceedings for the winding up ofthe Issuer, or to prove in such winding up, except that if the Trustee, havingbecome bound to proceed against the Issuer as aforesaid, fails to do so, or,being able to prove in such winding up, fails to do so, in either case within areasonable period and such failure