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Exhibit 2(b).2.1
  
 NATIONAL GRID GAS HOLDINGS plc
 (incorporated with limited liability in England and Wales on 27 November 1998 under registered number 3675375)
 NATIONAL GRID GAS plc
 (incorporated with limited liability in England and Wales on 1 April 1986 under registered number 2006000)
 Euro 10,000,000,000
 Euro Medium Term Note Programme
     
  Arranger for the Programme
 HSBC
 The Dealers
 BARCLAYS CAPITAL
    
    CREDIT SUISSEDEUTSCHE BANK
    
    HSBCJPMORGAN CAZENOVE
    
    MIZUHO INTERNATIONAL PLC
 THE ROYAL BANK OF SCOTLAND




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IMPORTANT NOTICES
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In connection with the issue of any Tranche (as defined in Overview of the Programme), the Dealer
or Dealers (if any) named as the stabilising manager(s) (the Stabilising Manager(s)) in the
applicable Final Terms (or any person acting on behalf of any Stabilising Manager(s)) may
over-allot Instruments (provided that, in the case of any
Tranche to be admitted to trading on the Market, the aggregate principal amount of Instruments
allotted does not exceed 105 per cent. of the aggregate principal amount of the relevant Tranche)
or effect transactions with a view to supporting the market price of the Instruments at a level
higher than that which might otherwise prevail. However, there is no assurance that the Stabilising
Manager(s) (or any person acting on behalf of any Stabilising Manager) will undertake stabilisation
action. Any stabilisation action may begin on or after the date on which adequate public disclosure
of the final terms of the offer of the relevant Tranche is made and, if begun, may be ended at any
time, but it must end no later than the earlier of 30 days after the issue date of the relevant
Tranche and 60 days after the date of the allotment of the relevant Tranche.
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CONTENTS
 PageDOCUMENTS INCORPORATED BY REFERENCE
    
    
    5SUPPLEMENTAL PROSPECTUS
    
    
    6OVERVIEW OF THE PROGRAMME
    
    
    7RISK FACTORS
    
    
    13TERMS AND CONDITIONS OF THE INSTRUMENTS
    
    
    23SUMMARY OF PROVISIONS RELATING TO THE INSTRUMENTS WHILE IN GLOBAL FORM
    
    
    47USE OF PROCEEDS
    
    
    52DESCRIPTION OF NATIONAL GRID GAS HOLDINGS plc
    
    
    53DESCRIPTION OF NATIONAL GRID GAS plc
    
    
    55UNITED KINGDOM TAXATION
    
    
    60PLAN OF DISTRIBUTION
    
    
    62FORM OF FINAL TERMS
    
    
    65GENERAL INFORMATION
    
    
    76
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DOCUMENTS INCORPORATED BY REFERENCE
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SUPPLEMENTAL PROSPECTUS
 Supplemental Prospectus
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OVERVIEW OF THE PROGRAMME
  Issuers
    
    National Grid Gas Holdings plc (registered number 3675375).National Grid Gas plc (registered number 2006000).Description
    
    Euro Medium Term Note Programme.Size
    
    Up to Euro 10,000,000,000 (or the equivalent in other currencies at the date
of issue) aggregate nominal amount of Instruments outstanding at any one time.Arranger
    
    HSBC Bank plcPrincipal Dealers
    
    Barclays Bank PLCCredit Suisse Securities (Europe) LimitedDeutsche Bank AG, London BranchHSBC Bank plcJ.P. Morgan Securities Ltd.Mizuho International plcThe Royal Bank of Scotland plcThe Issuers may from time to time terminate the appointment of
any dealer under the Programme or appoint additional dealers either in respect
of one or more Tranches or in respect of the whole Programme. References in this
Prospectus to Permanent Dealers are to the persons listed above as Dealers and
to such additional persons that are appointed as dealers in respect of the whole
Programme (and whose appointment has not been terminated) and to Dealers are
to all Permanent Dealers and all persons appointed as a dealer in respect of one
or more Tranches.Trustee
    
    The Law Debenture Trust Corporation p.l.c.Issuing and Paying Agent
    
    JPMorgan Chase Bank, N.A.Other Paying Agents
    
    Kredietbank S.A. Luxembourgeoise.Method of Issue
    
    The Instruments will be issued on a syndicated or non-syndicated basis. The
Instruments will be issued in series (each a Series) having one or more issue
dates and on terms otherwise identical (or identical other than in respect of
the first payment of interest), the Instruments of each Series being intended
to be interchangeable with all other Instruments of that Series. Each
Series may be issued in tranches (each a Tranche) on the same or different
issue dates. The specific terms of each Tranche (which will be completed, where
necessary, with supplemental terms and conditions and, save in respect of the
issue date, issue price, first payment of interest and nominal amount of the
Tranche, will be identical to the terms of other Tranches of the same Series)
will be completed in the final terms document (the Final Terms).
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Issue Price
    
    Instruments may be issued at their nominal amount
or at a discount or premium to their nominal
amount. Partly Paid Instruments may be issued, the
issue price of which will be payable in two or
more instalments.Form of Instruments
    
    The Instruments may be issued in bearer form only.
Each Tranche of Instruments will be represented on
issue by a temporary Global Instrument if (a)
Definitive Instruments are to be made available to
Instrumentholders following the expiry of 40
days after their issue date or (b) such
Instruments have an initial maturity of more than
one year and are being issued in compliance with
the D Rules (as defined in Selling
Restrictions below), otherwise such Tranche
will be represented by a permanent
Global Instrument. Any permanent Global Instrument
shall only be exchanged for Instruments in
definitive form in the limited circumstances set
out in the permanent Global Instrument.Clearing Systems
    
    Clearstream, Luxembourg, Euroclear and, in
relation to any Tranche, such other clearing
system as may be agreed between the relevant
Issuer, the Issuing and Paying Agent, the Trustee
and the relevant Dealer.Initial Delivery of Instruments
    
    On or before the issue date for each Tranche, the
Global Instrument representing the relevant
Instruments may be deposited with a common
depositary for Euroclear and Clearstream,
Luxembourg. Global Instruments may also be
deposited with any other clearing system
or may be delivered outside any clearing system
provided that the method of such delivery has been
agreed in advance by the relevant Issuer, the
Issuing and Paying Agent, the Trustee and the
relevant Dealer.Currencies
    
    Subject to compliance with all relevant laws,
regulations and directives, Instruments may be
issued in U.S. dollars, Australian dollars,
Canadian dollars, Danish krone, Euro, Hong Kong
dollars, New Zealand dollars, Sterling, Swedish
krona, Swiss francs or Japanese yen or in other
currencies if the relevant Issuer and the relevant
Dealer(s) so agree. Instruments may, subject to
compliance as above, be issued as Dual Currency
Instruments.Maturities
    
    Subject to compliance with all relevant laws,
regulations and directives, any maturity from one
month to perpetuity.Any Instruments having a maturity of less than one
year from their date of issue must (a) have a
minimum redemption value of £100,000 (or its
equivalent in other currencies) and be issued only
to persons whose ordinary activities involve them
in acquiring, holding, managing or
disposing of investments (as principal or agent)
for the purposes of their businesses; or who it is
reasonable to expect will acquire, hold, manage or
dispose of investments (as principal or
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agent) for the purposes of their
businesses or (b) be issued in
other circumstances which do
not constitute a
contravention of Section 19 of the
FSMA by the relevant Issuer.Denominations
    
    Definitive Instruments will be in
such denominations as may be
specified in the relevant Final
Terms, save that (a) in the case of
any Instruments which are to be
admitted to trading on a regulated
market within the European Economic
Area or offered to the public in a
Member State of the European
Economic Area in
circumstances which require
the publication of a prospectus
under the Prospectus Directive, the
minimum denomination shall
be 50,000 (or its
equivalent in any other currency as
at the date of issue of the
Instruments) and (b) unless
otherwise permitted by then current
laws and regulations, Instruments
which have a maturity of less
than one year will have a
minimum denomination of £100,000
(or its equivalent in
other currencies).Fixed Rate Instruments
    
    Fixed interest will be payable in
arrear on the date or dates in each
year specified in the relevant
Final Terms and at maturity.Floating Rate Instruments
    
    Floating Rate Instruments will bear interest set separately for each Series as follows:(a)  on the same basis as the
floating rate under a notional
interest rate swap transaction in
the relevant Specified Currency
governed by an agreement
incorporating the 2000 ISDA
Definitions published by the
International Swaps and Derivatives
Association, Inc. or(b)  by reference to LIBOR,
LIBID, LIMEAN or EURIBOR (or such
other benchmark as may be specified
in the relevant Final Terms) as
adjusted for any applicable margin.
Interest periods will be
selected by the relevant Issuer
prior to issue and specified in the
relevant Final Terms. Floating Rate
Instruments may also have a
maximum interest rate, a
minimum interest rate, or both.Zero Coupon Instruments
    
    Zero Coupon Instruments may be
issued at their nominal amount or
at a discount to it and will not
bear interest.Dual Currency Instruments
    
    Payments (whether in respect of
principal or interest and whether
at maturity or otherwise) in
respect of Dual Currency
Instruments will be made in such
currencies, and based on such rates
of exchange as may be specified in
the relevant Final Terms.Index Linked Instruments
    
    Payments of principal in respect of
Index Linked Redemption Instruments
or of interest in respect of Index
Linked Interest Instruments will be
calculated by reference to such
index and/or formula as may be
specified in the relevant Final
Terms and (if applicable)
the relevant Supplemental Prospectus.
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Interest Periods and
Rates of Interest
    
    The length of the interest periods for the Instruments and the applicable interest rate or its
method of calculation may differ from time to time or be constant for any Series. Instruments may
have a maximum interest rate, a minimum interest rate, or both. The use of interest accrual
periods permits the Instruments to bear interest at different rates in the same interest period.
All such information will be set out in the relevant Final Terms.Redemption
    
    The relevant Final Terms will specify the basis for calculating the redemption amounts
payable, which may be by reference to a stock index or formula or as otherwise provided in
the relevant Final Terms.Unless permitted by then current laws and regulations, Instruments which have a maturity of less
than one year must have a minimum redemption amount of £100,000 (or its equivalent in other
currencies).Redemption by Instalments
    
    The Final Terms issued in respect of each issue of Instruments that are redeemable in
two or more instalments will set out the dates on which, and the amounts in which, such
Instruments may be redeemed.Other Instruments
    
    Terms applicable to high interest Instruments, low interest Instruments, step-up Instruments,
step-down Instruments, Dual Currency Instruments, reverse Dual Currency
Instruments, optional Dual Currency Instruments, Partly Paid Instruments and any other type of
Instrument that the relevant Issuer, the Trustee and any Dealer or Dealers may agree to issue
under the Programme, subject to compliance with all relevant laws, regulations and directives,
will be set out in the relevant Final Terms and (if applicable) the relevant Supplemental
Prospectus.Optional Redemption
    
    The Final Terms issued in respect of each issue of Instruments will state whether
such Instruments may be redeemed prior to their stated maturity at the option of the relevant
Issuer (either in whole or in part) and/or the holders, and if so the terms applicable to such
redemption.Status of Instruments
    
    The Instruments will constitute unsubordinated and unsecured obligations of the
relevant Issuer, all as described in Terms and Conditions of the Instruments  Status.Negative Pledge
    
    Neither of the Issuers will give any negative pledge in respect of Instruments to be issued under
the Programme.Cross Default
    
    The events of default in respect of Instruments in any Series will not contain any cross default
provision in respect of any other indebtedness of the relevant Issuer whether with respect to
Instruments in any other Series or otherwise.Events of Default
    
    The events of default under the Instruments are as specified below under Terms and Conditions of
the Instruments -Events of Default.
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Early Redemption
    
    Except as provided
in Optional
Redemption above
and subject always
to the regulations
and any other
laws, regulations
and directives
applicable to the
relevant currency
in which such
Instruments are
denominated,
Instruments will be
redeemable at the
option of the
relevant Issuer
prior to maturity
only for tax
reasons. See Terms
and Conditions of
the Instruments -
Redemption,
Purchase and
Options.Withholding Tax
    
    All payments of
principal and
interest in respect
of the Instruments
will be made free
and clear of
withholding taxes
of the United
Kingdom save as
compelled by law.
In the event that
any deduction or
withholding on
account of tax is
required to be
made, the Issuer
will, in the
circumstances
provided in Terms
and Conditions of
the Instruments
- Taxation and
subject to the
exceptions
therein, pay
additional amounts
so as to compensate
for the amounts
withheld or
deducted.Governing Law
    
    English.Listing
    
    Each Series may be
admitted to the
Official List and
admitted to trading
on the Market
and/or admitted to
listing, trading
and/or quotation by
any other listing
authority, stock
exchange and/or
quotation system
as may be agreed
between the
relevant Issuer and
the relevant
Dealer(s) and
specified in the
relevant Final
Terms or may be
unlisted.Ratings
    
    Tranches of
Instruments may be
rated or unrated.
Where a Tranche of
Instruments is
rated, such rating
will be specified
in the
relevant Final
Terms. A
rating is not
a recommendation
to buy, sell or
hold securities and
may be subject to
suspension,
reduction or
withdrawal at any
time by the
assigning rating
agency.Selling Restrictions
    
    United States,
United Kingdom,
European Economic
Area (in the case
of unlisted
Instruments) and
Japan. See Plan of
Distribution.Category 2 selling
restrictions will
apply to the
Instruments for the
purposes of
Regulation S under
the Securities Act.The Instruments
will be issued in
compliance with
U.S. Treas. Reg.
§1.163-5(c)(2)(i)(D)
(the D Rules)
unless (a) the
relevant Final
Terms states that
Instruments are
issued in
compliance with
U.S. Treas. Reg.
§1.163-5(c)(2)(i)(C)
(the C Rules) or
(b) the Instruments
are issued other
than in compliance
with the D
Rules or the C
Rules but in
circumstances in
which the
Instruments will
not constitute
registration
required
obligations under
the United States
Tax Equity and
Fiscal
Responsibility Act
of 1982 (TEFRA),
which circumstances
will be referred to
in the relevant
Final Terms as a
transaction to
which TEFRA is not
applicable.Terms and Conditions
    
    The Terms and
Conditions
applicable to each
Series will be as
agreed between the
relevant Issuer,
the Trustee and the
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relevant Dealer(s) or other purchaser at or prior to the time of
issuance of such Series and will be specified in the relevant
Final Terms. The Terms and Conditions applicable to each Series
will therefore be those as set out in Terms and Conditions of
the Instruments below as supplemented, modified or replaced by
the relevant Final Terms.
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RISK FACTORS
 The relevant Issuer believes that the following factors may affect its ability to fulfil its
obligations under Instruments issued under the Programme. All of these factors are contingencies
which may or may not occur and the relevant Issuer is not in a position to express a view on the
likelihood of any such contingency occurring.
 Factors which the relevant Issuer believes may be material for the purpose of assessing the market
risks associated with Instruments issued under the Programme are also described below.
 The relevant Issuer believes that the factors described below represent the principal risks
inherent in investing in Instruments issued under the Programme, but the relevant Issuer may be
unable to pay interest, principal or other amounts on or in connection with any Instruments for
other reasons and such Issuer does not represent that the statements below regarding the risks of
holding any Instruments are exhaustive. Prospective investors should also read the detailed
information set out elsewhere in this Prospectus (including any documents deemed to be incorporated
by reference herein) and reach their own views prior to making any investment decision.
 Risks relating to National Grid Gas Holdings plc and its business
  Changes in law or regulation could have an adverse effect on National Grid Gass results of
operations and may thereby have an adverse effect on National Grid Gas Holdings
  Breaches of environmental or health and safety laws or regulations could expose National Grid Gas
to claims for financial compensation and adverse regulatory consequences and could damage National
Grid Gas and National Grid Gas Holdings reputation
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Network failure or the inability to carry out critical non-network operations may have significant
adverse impacts on both National Grid Gas and National Grid Gas Holdings financial position and
reputation
  National Grid Gas and National Grid Gas Holdings results of operations depend on a number of
factors relating to business performance of National Grid Gas including the ability to outperform
regulatory targets and to deliver anticipated costs and efficiency savings
  Changes to the regulatory treatment of commodity costs may have an adverse effect on the results of
operations
  National Grid Gas and National Grid Gas Holdings reputations may be harmed if consumers of energy
suffer a disruption to their supply even if this disruption is outside of National Grid Gass
control
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National Grid Gas, and thereby National Grid Gas Holdings, are subject to the risk that business
development activity, such as significant acquisitions or disposals, will be based on incorrect
assumptions or conclusions or that significant liabilities will be overlooked or there may be other
unanticipated adverse impacts
  The nature and extent of National Grid Gas and National Grid Gas Holdings borrowings means that an
increase in interest rates could have an adverse impact on the companies financial position and
business results
  National Grid Gas and National Grid Gas Holdings overall financial position may be adversely
affected by a number of factors including restrictions in borrowing and debt arrangements, changes
to credit ratings and effective tax rates
  New or revised accounting standards, rules and interpretations by the UK, or international
accounting standard setting boards and other relevant bodies could have an adverse effect on
National Grid Gas and National Grid Gas Holdings reported financial results
  Risks relating to National Grid Gas and its business
 Changes in law or regulation could have an adverse effect on National Grid Gass results of
operations
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Breaches of environmental or health and safety laws or regulations could expose National Grid Gas
to claims for financial compensation and adverse regulatory consequences and could damage National
Grid Gass reputation
  Network failure or the inability to carry out critical non-network operations may have significant
adverse impacts on both National Grid Gass financial position and its reputation
  National Grid Gass results of operations depend on a number of factors relating to business
performance including the ability to outperform regulatory targets and to deliver anticipated costs
and efficiency savings
  Changes to the regulatory treatment of commodity costs may have an adverse effect on the results of
operations
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National Grid Gass reputation may be harmed if consumers of energy suffer a disruption to their
supply even if this disruption is outside of National Grid Gass control
  National Grid Gas is subject to the risk that business development activity, such as significant
acquisitions or disposals, will be based on incorrect assumptions or conclusions or that
significant liabilities will be overlooked or there may be other unanticipated adverse impacts
  The nature and extent of National Grid Gass borrowings means that an increase in interest rates
could have an adverse impact on its financial position and business results
  National Grid Gass overall financial position may be adversely affected by a number of factors
including restrictions in borrowing and debt arrangements, changes to credit ratings and effective
tax rates
  New or revised accounting standards, rules and interpretations by the UK, or international
accounting standard setting boards and other relevant bodies could have an adverse effect on
National Grid Gass reported financial results
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Factors which are material for the purpose of assessing the market risks associated with
Instruments issued under the Programme
 Instruments may not be a suitable investment for all investors
  (i)
    
    have sufficient knowledge and experience to make a meaningful evaluation of the relevant
Instruments, the merits and risks of investing in the relevant Instruments and the information
contained or incorporated by reference in this Prospectus or any applicable supplement;(ii)
    
    have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of
its particular financial situation, an investment in the relevant Instruments and the impact such
investment will have on its overall investment portfolio;(iii)
    
    have sufficient financial resources and liquidity to bear all of the risks of an investment
in the relevant Instruments, including where principal or interest is payable in one or more
currencies, or where the currency for principal or interest payments is different from the
potential investors currency;(iv)
    
    understand thoroughly the terms of the relevant Instruments and be familiar with the behaviour
of any relevant indices and financial markets; and(v)
    
    be able to evaluate (either alone or with the help of a financial adviser) possible scenarios
for economic, interest rate and other factors that may affect its investment and its ability to
bear the applicable risks.
  Risks related to the structure of a particular issue of Instruments
  Instruments subject to optional redemption by the Issuer
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Index Linked Instruments and Dual Currency Instruments
  (i)
    
    the market price of such Instruments may be volatile;(ii)
    
    they may receive no interest;(iii)
    
    payment of principal or interest may occur at a different time or in a different currency than expected;(iv)
    
    the amount of principal payable at redemption may be less than the nominal amount of such Instruments or even zero;(v)
    
    a Relevant Factor may be subject to significant fluctuations that may not correlate with
changes in interest rates, currencies or other indices;(vi)
    
    if a Relevant Factor is applied to Instruments in conjunction with a multiplier greater than
one or contains some other leverage factor, the effect of changes in the Relevant Factor on
principal or interest payable likely will be magnified; and(vii)
    
    the timing of changes in a Relevant Factor may affect the actual yield to investors, even if
the average level is consistent with their expectations. In general, the earlier the change in the
Relevant Factor, the greater the effect on yield.
 Partly-paid Instruments
  Variable rate Instruments with a multiplier or other leverage factor
  Fixed/Floating Rate Instruments
  Instruments issued at a substantial discount or premium
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Risks related to Instruments generally
  Modification, waivers and substitution
   European Monetary Union
  EU Savings Directive
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Change of law
  Integral multiples of less than Euro 50,000
  Risks related to the market generally
  The secondary market generally
  The Clearing Systems
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Exchange rate risks and exchange controls
   Interest rate risks
  Credit ratings may not reflect all risks
  Legal investment considerations may restrict certain investments
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TERMS AND CONDITIONS OF THE INSTRUMENTS
 The following is the text of the terms and conditions which, save for the text in italics and
subject to completion and amendment and as supplemented or varied in accordance with the provisions
of Part A of the relevant Final Terms, will be endorsed on the Instruments in definitive form (if
any) issued in exchange for the Global Instrument(s) representing each Series. Either (a) the full
text of these terms and conditions together with the relevant provisions of Part A of the Final
Terms or (b) these terms and conditions as so completed, amended, supplemented or varied (and
subject to simplification by the deletion of non-applicable provisions), shall be endorsed on such
Instruments. All capitalised terms which are not defined in these Conditions will have the meanings
given to them in the Trust Deed or Part A of the relevant Final Terms. Those definitions will be
endorsed on the Definitive Instruments. References in these terms and conditions to Instruments
are to the Instruments of one Series only of the relevant Issuer (as defined below), not to all
Instruments that may be issued under the Programme.National Grid Gas Holdings plc (National Grid Gas Holdings) and National Grid Gas plc (National
Grid Gas) (each an Issuer and together, the Issuers) have established a Euro Medium Term Note
Programme (the Programme) for the issuance of up to Euro 10,000,000,000 in aggregate principal
amount of debt instruments (the Instruments).The Instruments are constituted by an Amended and Restated Trust Deed (as amended or supplemented
from time to time, the Trust Deed) dated 24 February 2006 between the Issuers and The Law
Debenture Trust Corporation p.l.c. (the Trustee, which expression shall include all persons for
the time being the trustee or trustees under the Trust Deed) as trustee for the Instrumentholders
(as defined below). These terms and conditions include summaries of, and are subject to, the
detailed provisions of the Trust Deed, which includes the form of the Definitive Instruments,
Receipts, Coupons and Talons referred to below. An Amended and Restated Agency Agreement (as
amended or supplemented from time to time, the Agency Agreement) dated 24 February 2006 has been
entered into in relation to the Instruments between the Issuers, the Trustee, JPMorgan Chase Bank,
N.A. as initial issuing and paying agent and the other agent(s) named in it. The issuing and paying
agent, the paying agent(s) and the calculation agent(s) for the time being (if any) are referred to
below respectively as the Issuing and Paying Agent, the Paying Agents (which expression shall
include the Issuing and Paying Agent) and the Calculation Agent(s). Copies of the Trust Deed and
the Agency Agreement are available for inspection during usual business hours at the registered
office of the Trustee (as at 24 February 2006 at Fifth Floor, 100 Wood Street, London EC2V 7EX) and
at the specified offices of the Paying Agents.The Instrumentholders, the holders of the interest coupons (the Coupons) appertaining to interest
bearing Instruments and, where applicable in the case of such Instruments, talons for further
Coupons (the Talons) (the Couponholders) and the holders of the receipts for the payment of
instalments of principal (the Receipts) relating to Instruments of which the principal is payable
in instalments are entitled to the benefit of, are bound by, and are deemed to have notice of, all
the provisions of the Trust Deed and are deemed to have notice of those provisions of the Agency
Agreement applicable to them.1
    
    Form, Denomination and TitleThe Instruments are issued in bearer form in the Specified Denomination(s) specified in the
relevant Final Terms and are serially numbered. Instruments of one Specified Denomination are not
exchangeable for Instruments of another Specified Denomination.Instruments which are to be admitted to trading on a regulated market within the European Economic
Area or offered to the public in a Member State of the European Economic Area in circumstances
which require the publication of a prospectus under the Prospectus Directive, the minimum Specified
Denomination shall be 50,000 (or its equivalent in any other currency as at the date of issue
of the relevant Instruments).
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This Instrument is a Fixed Rate Instrument, a Floating Rate Instrument, a Zero Coupon
Instrument, a Perpetual Instrument, an Index Linked Interest Instrument, an Index Linked Redemption
Instrument, an Instalment Instrument, a Dual Currency Instrument or a Partly Paid Instrument, a
combination of any of the preceding or any other kind of Instrument, depending upon the Interest
and Redemption/Payment Basis specified in the relevant Final Terms.So long as the Instruments are represented bya temporary Global Instrument or permanent Global
Instrument and the relevant clearing system(s) so permit, the Instruments shall be tradeable only
in principal amounts of at least the Specified Denomination (or if more than one Specified
Denomination, the lowest Specified Denomination) provided in the relevant Final Terms and integral
multiples of the Tradeable Amount provided in the relevant Final Terms.Instruments are issued with Coupons (and, where appropriate, a Talon) attached, save in the case of
Zero Coupon Instruments in which case references to interest (other than in relation to interest
due after the Maturity Date), Coupons and Talons in these Conditions are not applicable.Instalment Instruments are issued with one or more Receipts attached. Title to the Instruments and
the Receipts, Coupons and Talons shall pass by delivery and except as ordered by a court of
competent jurisdiction or as required by law, the Issuer and the Paying Agents shall be entitled to
treat the bearer of any Instrument, Receipt, Coupon or Talon as the absolute owner of that
Instrument, Receipt, Coupon or Talon, as the case may be, and shall not be required to obtain any
proof of ownership as to the identity of the bearer.In these Conditions, Instrumentholder means the bearer of any Instrument of one Series only of an
Issuer and the Receipts relating to it, holder (in relation to an Instrument, Receipt, Coupon or
Talon) means the bearer of any Instrument, Receipt, Coupon or Talon and capitalised terms have the
meanings given to them herein, the absence of any such meaning indicating that such term is not
applicable to this Instrument.2
    
    StatusThe Instruments and the Receipts and Coupons relating to them constitute direct,
unconditional and unsecured obligations of the Issuer and rank pari passu without any preference or
priority among themselves. The payment obligations of the Issuer under the Instruments, Receipts
and Coupons shall, subject to such exceptions as are from time to time applicable under the laws of
England, rank equally with all other present and future unsecured obligations (other than
subordinated obligations, if any) of the Issuer.3
    
    Interest
 3.1
    
    Interest on Fixed Rate InstrumentsEach Fixed Rate Instrument bears interest on its outstanding nominal amount from the Interest
Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest,
payable in arrear on each Interest Payment Date.If a Fixed Coupon Amount or a Broken Amount is specified in the relevant Final Terms, the amount of
interest payable on each Interest Payment Date will amount to the Fixed Coupon Amount, or, if
applicable, the Broken Amount so specified and in the case of a Broken Amount will be payable on
the particular Interest Payment Date(s) specified in the relevant Final Terms.3.2
    
    Interest on Floating Rate Instruments and Index Linked Interest Instruments
 3.2.1
    
    Interest Payment DatesEach Floating Rate Instrument and Index Linked Interest Instrument bears interest on its
outstanding nominal amount from the Interest Commencement Date at the rate per annum
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(expressed as a percentage) equal to the Rate of Interest, such interest being payable in arrear on
each Interest Payment Date. Such Interest Payment Date(s) is/are either specified in the relevant
Final Terms as Specified Interest Payment Dates or, if no Specified Interest Payment Date(s) is/are
specified in the relevant Final Terms, Interest Payment Date shall mean each date which falls the
number of months or other period shown on this Instrument as the Interest Period after the
preceding Interest Payment Date or, in the case of the first Interest Payment Date, after the
Interest Commencement Date.3.2.2
    
    Business Day ConventionIf any date which is specified to be subject to adjustment in accordance with a Business Day
Convention would
otherwise fall on a day which is not a Business Day, then, if the Business Day Convention specified
is (A) the Floating Rate Convention, such date shall be postponed to the next day which is a
Business Day unless it would then fall into the next calendar month, in which event (x) such date
shall be brought forward to the immediately preceding Business Day and (y) each subsequent such
date shall be the last Business Day of the month in which such date would have fallen had it not
been subject to adjustment, (B) the Following Business Day Convention, such date shall be postponed
to the next day which is a Business Day; (C) the Modified Following Business Day Convention, such
date shall be postponed to the next day which is a Business Day unless it would then fall into the
next calendar month, in that event such date shall be brought forward to the immediately preceding
Business Day or (D) the Preceding Business Day Convention, such date shall be brought forward to
the immediately preceding Business Day.3.2.3
    
    Rate of Interest for Floating Rate InstrumentsThe Rate of Interest in respect of Floating Rate Instruments for each Interest Accrual Period shall
be determined in the manner specified in the relevant Final Terms and the provisions below relating
to either ISDA Determination or Screen Rate Determination shall apply, depending upon which is
specified on this Instrument.
 (A)
    
    ISDA Determination for Floating Rate Instruments: Where ISDA Determination is specified in
the relevant Final Terms as the manner in which the Rate of Interest is to be determined, the Rate
of Interest for each Interest Accrual Period shall be determined by the Calculation Agent as a rate
equal to the relevant ISDA Rate. For the purposes of this sub-paragraph (a), ISDA Rate for an
Interest Accrual Period means a rate equal to the Floating Rate which would be determined by the
Calculation Agent under a Swap Transaction under the terms of an agreement incorporating the ISDA
Definitions and under which:
 (a)
    
    the Floating Rate Option is as specified in the relevant Final Terms;(b)
    
    the Designated Maturity is a period specified in the relevant Final Terms; and(c)
    
    the relevant Reset Date is the first day of that Interest Accrual Period unless otherwise
specified in the relevant Final Terms.For the purposes of this sub-paragraph (A), Floating Rate, Calculation Agent, Floating Rate
Option, Designated Maturity, Reset Date and Swap Transaction have the meanings given to
those terms in the ISDA Definitions.
 (B)
    
    Screen Rate Determination for Floating Rate Instruments: Where Screen Rate Determination
is specified in the relevant Final Terms as the manner in which the Rate of Interest is to be
determined, the Rate of Interest for each Interest Accrual Period shall be determined by the
Calculation Agent at or about the Relevant Time
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on the Interest Determination Date in respect of such Interest Accrual Period in accordance with
the following:
 (x)
    
    if the Primary Source for Floating Rate is a Page, subject as provided below, the Rate of
Interest shall be:
 (a)
    
    the Relevant Rate (where such Relevant Rate on such Page is a composite quotation or is
customarily supplied by one entity); or(b)
    
    the arithmetic mean of the Relevant Rates of the persons whose Relevant Rates appear on
that Page,in each case appearing on such Page at the Relevant Time on the Interest Determination Date;
 (y)
    
    if the Primary Source for the Floating Rate is Reference Banks or if sub-paragraph (x) (a)
applies and no Relevant Rate appears on the Page at the Relevant Time on the Interest Determination
Date or if sub-paragraph (x) (b) above applies and fewer than two Relevant Rates appear on the Page
at the Relevant Time on the Interest Determination Date, subject as provided below, the Rate of
Interest shall be the arithmetic mean of the Relevant Rates that each of the Reference Banks is
quoting to leading banks in the Relevant Financial Centre at the Relevant Time on the Interest
Determination Date, as determined by the Calculation Agent; and(z)
    
    if paragraph (y) above applies and the Calculation Agent determines that fewer than two
Reference Banks are so quoting Relevant Rates, subject as provided below, the Rate of Interest
shall be the arithmetic mean of the rates per annum (expressed as a percentage) that the
Calculation Agent determines to be the rates (being the nearest equivalent to the Benchmark) in
respect of a Representative Amount of the Specified Currency that at least two out of five leading
banks selected by the Calculation Agent in the principal financial centre of the country of the
Specified Currency or, if the Specified Currency is Euro in those Member States of the European
Union which are participating in European economic and monetary union as selected by the
Calculation Agent (the Principal Financial Centre) are quoting at or about the Relevant Time on
the date on which such banks would customarily quote such rates for a period commencing on the
Effective Date for a period equivalent to the
Specified Duration (I) to leading banks carrying on business in Europe, or (if the Calculation
Agent determines that fewer than two of such banks are so quoting to leading banks in Europe) (II)
to leading banks carrying on business in the Principal Financial Centre; except that, if fewer than
two of such banks are so quoting to leading banks in the Principal Financial Centre, the Rate of
Interest shall be the Rate of Interest determined on the previous Interest Determination Date
(after readjustment for any difference between any Margin, Rate Multiplier or Maximum or Minimum
Rate of Interest applicable to the preceding Interest Accrual Period and to the relevant Interest
Accrual Period).
 3.2.4
    
    Rate of Interest for Index Linked Interest InstrumentsThe Rate of Interest in respect of Index Linked Interest Instruments for each Interest Accrual
Period shall be determined in the manner specified in the relevant Final Terms and
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interest will accrue by reference to an Index or Formula as specified in the relevant Final Terms
 (a)
    
    Zero Coupon InstrumentsWhere an Instrument, the Interest Basis of which is specified to be Zero Coupon, is repayable prior
to the Maturity Date and is not paid when due, the amount due and payable prior to the Maturity
Date shall be the Early Redemption Amount of such Instrument. As from the Maturity Date, the Rate
of Interest for any overdue principal of such an Instrument shall be a rate per annum (expressed as
a percentage) equal to the Amortisation Yield (as defined in Condition5.4.1(b)).(b)
    
    Dual Currency InstrumentsIn the case of Dual Currency Instruments, if the rate or amount of interest falls to be determined
by reference to a Rate of Exchange or a method of calculating a Rate of Exchange, the rate or
amount of interest payable shall be determined in the manner specified in the relevant Final Terms.(c)
    
    Partly Paid InstrumentsIn the case of Partly Paid Instruments (other than Partly Paid Instruments which are Zero Coupon
Instruments), interest will accrue as previously stated on the paid-up nominal amount of such
Instruments and otherwise as specified in the relevant Final Terms.(d)
    
    Accrual of InterestInterest shall cease to accrue on each Instrument on the due date for redemption unless, upon due
presentation, payment is improperly withheld or refused, in which event interest shall continue to
accrue (as well after as before judgment) at the Rate of Interest in the manner provided in this
Condition 3 to the Relevant Date (as defined in Condition 7).(e)
    
    Margin, Maximum/Minimum Rates of Interest, Instalment Amounts and Redemption
Amounts, Rate Multipliers and Rounding
 (i)
    
    If any Margin or Rate Multiplier is specified in the relevant Final Terms (either (x)
generally, or (y) in relation to one or more Interest Accrual Periods), an adjustment shall be made
to all Rates of Interest, in the case of (x), or the Rates of Interest for the specified Interest
Accrual Periods, in the case of (y), calculated in accordance with Condition 3.2 above, by adding
(if a positive number) or subtracting (if a negative number) the absolute value of such Margin or
multiplying by such Rate Multiplier, subject always to the next paragraph.(ii)
    
    If any Maximum or Minimum Rate of Interest, Instalment Amount or Redemption Amount is
specified in the relevant Final Terms, then any Rate of Interest, Instalment Amount or Redemption
Amount shall be subject to such maximum or minimum, as the case may be.(iii)
    
    For the purposes of any calculations required pursuant to these Conditions (unless otherwise
specified), (x) all percentages resulting from such calculations shall be rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point (with halves being rounded up), (y) all
figures shall be rounded to seven significant figures (with halves being
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rounded up) and (z) all currency amounts that fall due and payable shall be rounded to the nearest
unit of such currency (with halves being rounded up), save in the case of yen, which shall be
rounded down to the nearest yen. For these purposes unit means the lowest amount of such currency
which is available as legal tender in the country of such currency.
 (f)
    
    CalculationsThe amount of interest payable in respect of any Instrument for any period shall be calculated by
multiplying the product of the Rate of Interest and the outstanding nominal amount of such
Instrument by the Day Count Fraction, unless an Interest Amount (or a formula for its calculation)
is specified in the relevant Final Terms in respect of such period, in which case the amount of
interest payable in respect of such Instrument for such period shall equal such Interest Amount (or
be calculated in accordance with such formula). Where any Interest Period comprises two or more
Interest Accrual Periods, the amount of interest payable in respect of such Interest Period shall
be the sum of the amounts of interest payable in respect of each of those Interest Accrual Periods.(g)
    
    Determination and Publication of Rates of Interest, Interest Amounts, Final Redemption
Amounts, Early Redemption Amounts, Optional Redemption Amounts and Instalment AmountsAs soon as practicable after the Relevant Time on each Interest Determination Date, or such other
time on such date as the Calculation Agent may be required to calculate any rate or amount, obtain
any quotation or make any determination or calculation, it shall determine such rate and calculate
the Interest Amounts in respect of each Specified Denomination of the Instruments for the relevant
Interest Accrual Period, calculate the Redemption Amount or Instalment Amount, obtain such quote or
make such determination or calculation, as the case may be, and cause the Rate of Interest and the
Interest Amounts for each Interest Period and the relevant Interest Payment Date and, if required
to be calculated, the Final Redemption Amount, Early Redemption Amount, Optional Redemption Amount
or any Instalment Amount to be notified to the Trustee, the Issuer, each of the Paying Agents, the
Instrumentholders, any other Calculation Agent appointed in respect of the Instruments that is to
make a further calculation upon receipt of such information and, if the Instruments are listed on a
stock exchange and the rules of such exchange so require, such exchange as soon as possible after
their determination but in no event later than (i) the commencement of the relevant Interest
Period, if determined prior to such time, in the case of notification to such exchange of a Rate of
Interest and Interest Amount, or (ii) in all other cases, the fourth Business Day after such
determination. Where any Interest Payment Date or Interest Period Date is subject to adjustment
pursuant to Condition 3.2.2, the Interest Amounts and the Interest Payment Date so published may
subsequently be amended (or appropriate alternative arrangements made with the consent of the
Trustee by way of adjustment) without notice in the event of an extension or shortening of the
Interest Period. If the Instruments become due and payable under Condition 9, the accrued interest
and the Rate of Interest payable in respect of the Instruments shall nevertheless continue to be
calculated as previously in accordance with this Condition but no publication of the Rate of
Interest or the Interest Amount so calculated need be made unless the Trustee otherwise requires.
The determination of any rate or amount, the obtaining of each quotation and the making of each
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determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error)
be final and binding upon all parties.(h)
    
    Determination or Calculation by TrusteeIf the Calculation Agent does not at any time for any reason determine or calculate the Rate of
Interest for an Interest Period or any Interest Amount, Instalment Amount, Final Redemption Amount,
Early Redemption Amount or Optional Redemption Amount the Trustee shall do so (or shall appoint an
agent on its behalf to do so) and such determination or calculation shall be deemed to have been
made by the Calculation Agent. In doing so, the Trustee shall apply the preceding provisions of
this Condition, with any necessary consequential amendments, to the extent that, in its opinion, it
can do so, and, in all other respects it shall do so in such manner as it shall deem fair and
reasonable in all the circumstances.(i)
    
    DefinitionsIn these Conditions, unless the context otherwise requires, the following defined terms shall have
the meanings set out below:Business Day means:
 (i)
    
    in the case of a currency other than Euro, a day (other than a Saturday or Sunday) on which
commercial banks and foreign exchange markets settle payments in the principal financial centre for
such currency; and/or(ii)
    
    in the case of Euro, a day on which the TARGET System is operating (a TARGET Business Day);
and/or(iii)
    
    in the case of a currency and/or one or more Business Centres as specified in the relevant
Final Terms, a day (other than a Saturday or a Sunday) on which commercial banks and foreign
exchange markets settle payments in such currency or, if no currency is indicated, generally in
each of the Business Centres.
 Day Count Fraction means, in respect of the calculation of an amount of interest on any
Instrument for any period of time (from and including the first day of such period to but excluding
the last) (whether or not constituting an Interest Period, the Calculation Period):
 (i)
    
    if Actual/365 or Actual/Actual-ISDA is specified in the relevant Final Terms, the actual
number of days in the Calculation Period divided by 365 (or, if any portion of that Calculation
Period falls in a leap year, the sum of (i) the actual number of days in that portion of the
Calculation Period falling in a leap year divided by 366 and (ii) the actual number of days in that
portion of the Calculation Period falling in a non-leap year divided by 365);(ii)
    
    if Actual/365 (Fixed) is specified in the relevant Final Terms, the actual number of days in
the Calculation Period divided by 365;(iii)
    
    if Actual/360 is specified in the relevant Final Terms, the actual number of days in the
Calculation Period divided by 360;(iv)
    
    if 30/360, 360/360 or Bond Basis is specified in the relevant Final Terms, the number of
days in the Calculation Period divided by 360 (the number of days to be calculated on the basis of
a year of 360 days with 12 30-day months (unless (i) the last day of the Calculation Period is the
31st day of a
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month but the first day of the Calculation Period is a day other than the 30th or 31st day of a
month, in which case the month that includes that last day shall not be considered to be shortened
to a 30-day month, or (ii) the last day of the Calculation Period is the last day of the month of
February, in which case the month of February shall not be considered to be lengthened to a 30-day
month);(v)
    
    if 30E/360 or Eurobond Basis is specified in the relevant Final Terms, the number of days
in the Calculation Period divided by 360 (the number of days to be calculated on the basis of a
year of 360 days with 12 30-day months, without regard to the date of the first day or last day of
the Calculation Period unless, in the case of a Calculation Period ending on the Maturity Date, the
Maturity Date is the last day of the month of February, in which case the month of February shall
not be considered to be lengthened to a 30-day month); and(vi)
    
    if Actual/Actual-ICMA is specified in the relevant Final Terms,
 (a)
    
    if the Calculation Period is equal to or shorter than the Determination Period during
which it falls, the actual number of days in the Calculation Period divided by the product of (x)
the actual number of days in such Determination Period and (y) the number of
Determination Periods in any year; and(b)
    
    if the Calculation Period is longer than one Determination Period, the sum of:
 (x)
    
    the actual number of days in such Calculation Period falling in the Determination Period in
which it begins divided by the product of (1) the actual number of days in such Determination
Period and (2) the number of Determination Periods in any year; and(y)
    
    the actual number of days in such Calculation Period falling in the next Determination Period
divided by the product of (1) the actual number of days in such Determination Period and (2) the
number of Determination Periods in any year,where:Determination Period means the period from and including a Determination Date in any year to but
excluding the next Determination Date; andDetermination Date means the date specified as such in the relevant Final Terms or, if none is so
specified, the Interest Payment Date.
 Effective Date means, with respect to any Floating Rate to be determined on an Interest
Determination Date, the date specified as such in the relevant Final Terms or, if none is so
specified, the first day of the Interest Accrual Period to which such Interest Determination Date
relates.Euro-zone means the region comprising of Member States of the European Union that adopt the
single currency in accordance with the Treaty establishing the European Community as amended.
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Interest Accrual Period means the period beginning on (and including) the Interest Commencement
Date and ending on (but excluding) the first Interest Period Date and each successive period
beginning on (and including) an Interest Period Date and ending on (but excluding) the next
succeeding Interest Period Date.Interest Amount means the amount of interest payable, and in the case of Fixed Rate Instruments,
means the Fixed Coupon Amount or Broken Amount, as the case may be.Interest Commencement Date means the Issue Date or such other date as may be specified in the
relevant Final Terms.Interest Determination Date means, with respect to a Rate of Interest and Interest Accrual
Period, the date specified as such in the relevant Final Terms or, if none is so specified, (i) the
first day of such Interest Accrual Period if the Specified Currency is Sterling or (ii) the day
falling two Business Days in London prior to the first day of such Interest Accrual Period if the
Specified Currency is neither Sterling nor Euro or (iii) the day falling two TARGET Business Days
prior to the first day of such Interest Accrual Period if the Specified Currency is Euro.Interest Payment Date means the date or dates specified as such in, or determined in accordance
with the provisions of, the relevant Final Terms and, if a Business Day Convention is specified in
the relevant Final Terms, as the same may be adjusted in accordance with the relevant Business Day
Convention.Interest Period means the period beginning on (and including) the Interest Commencement Date and
ending on (but excluding) the first Interest Payment Date and each successive period beginning on
(and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest
Payment Date.Interest Period Date means each Interest Payment Date unless otherwise specified in the relevant
Final Terms.ISDA Definitions means the 2000 ISDA Definitions as published by the International Swaps and
Derivatives Association, Inc., unless otherwise specified in the relevant Final Terms.Page means such page, section, caption, column or other part of a particular information service
(including, but not limited to, the Reuters Market 3000 (Reuters) and the Telerate Service
(Telerate)) as may be specified for the purpose of providing a Relevant Rate, or such other page,
section, caption, column or other part as may replace it on that information service or on such
other information service, in each case as may be nominated by the person or organisation providing
or sponsoring the information appearing there for the purpose of displaying rates or prices
comparable to that Relevant Rate.Rate of Interest means the rate of interest payable from time to time in respect of this
Instrument and that is either specified on, or calculated in accordance with the provisions in the
relevant Final Terms.Redemption Amount means, as appropriate, the Final Redemption Amount, the Early Redemption Amount
(Tax), the Optional Redemption Amount (Call), the Optional Redemption Amount (Put), the Early
Termination Amount or such other amount in the nature of a redemption amount as may be specified
in, or determined in accordance with the provisions of the relevant Final Terms.
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Reference Banks means the institutions specified as such in the relevant Final Terms or, if none,
five leading banks selected by the Calculation Agent in the interbank market (or, if appropriate,
money, swap or over-the-counter index options market) that is most closely connected with the
Benchmark (which, if EURIBOR is the relevant Benchmark, shall be Europe).Relevant Financial Centre means, with respect to any Floating Rate to be determined in accordance
with a Screen Rate Determination on an Interest Determination Date, the financial centre as may be
specified as such in the relevant Final Terms or, if none is so specified, the financial centre
with which the relevant Benchmark is most closely connected (which, in the case of EURIBOR, shall
be Europe) or, if none is so connected, London.Relevant Rate means the Benchmark for a Representative Amount of the Specified Currency for a
period (if applicable or appropriate to the Benchmark) equal to the Specified Duration commencing
on the Effective Date.Relevant Time means, with respect to any Interest Determination Date, the local time in the
Relevant Financial Centre specified in the relevant Final Terms or, if no time is specified, the
local time in the Relevant Financial Centre at which it is customary to determine bid and offered
rates in respect of deposits in the Specified Currency in the interbank market in the Relevant
Financial Centre or, if no such customary local time exists, 11.00 hours in the Relevant Financial
Centre and, for the purpose of this definition local time means, with respect to Europe as a
Relevant Financial Centre, Brussels time.Representative Amount means, with respect to any Floating Rate to be determined in accordance
with a Screen Rate Determination on an Interest Determination Date, the amount specified as such in
the relevant Final Terms or, if none is specified, an amount that is representative for a single
transaction in the relevant market at the time.Specified Currency means the currency specified as such in the relevant Final Terms or, if none
is specified, the currency in which the Instruments are denominated.Specified Duration means, with respect to any Floating Rate to be determined in accordance with a
Screen Rate Determination on an Interest Determination Date, the duration specified in the relevant
Final Terms or, if none is
specified, a period of time equal to the relevant Interest Accrual Period, ignoring any adjustment
pursuant to Condition 3.2.2.TARGET System means the Trans-European Automated Real-Time Gross Settlement Express Transfer
(TARGET) System or any successor to it.(j)
    
    Calculation Agent and Reference Banks
 The Issuer shall procure that there shall at all times be five Reference Banks (or such other
number as may be required) with offices in the Relevant Financial Centre and one or more
Calculation Agents if provision is made for them in the relevant Final Terms and for so long as any
Instrument is outstanding. If any Reference Bank (acting through its relevant office) is unable or
unwilling to continue to act as a Reference Bank, then the Issuer shall (with the prior approval of
the Trustee) appoint another Reference Bank with an office in the Relevant Financial Centre to act
as such in its place. Where more than one Calculation Agent is appointed in respect of the
Instruments, references in these Conditions to the
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Calculation Agent shall be construed as each Calculation Agent performing its respective duties
under these Conditions. If the Calculation Agent is unable or unwilling to act as such or if the
Calculation Agent fails duly to establish the Rate of Interest for an Interest Period or Interest
Accrual Period or to calculate any Interest Amount, Instalment Amount, Final Redemption Amount,
Early Redemption Amount or Optional Redemption Amount, as the case may be, or to comply with any
other requirement, the Issuer shall (with the prior approval of the Trustee) appoint a leading bank
or investment banking firm engaged in the interbank market (or, if appropriate, money, swap or
over-the-counter index options market) which is most closely connected with the calculation or
determination to be made by the Calculation Agent (acting through its principal London office or
any other office actively involved in such market) to act as such in its place. The Calculation
Agent may not resign its duties without a successor having been appointed as specified in this
paragraph.
 4
    
    IndexationThis Condition 4 is applicable only if the relevant Final Terms specifies the Instruments as
Index Linked Instruments.
 4.1
    
    DefinitionsBase Index Figure means (subject to Condition 4.3(i)) the base index figure as specified in the
relevant Final Terms;Index or Index Figure means, subject as provided in Condition 4.3(i), the UK Retail Price Index
(RPI) (for all items) published by the Office for National Statistics (January 1987 = 100) or any
comparable index which may replace the RPI for the purpose of calculating the amount payable on
repayment of the Reference Gilt. Any reference to the Index Figure which is specified in the
relevant Final Terms as:
 (i)
    
    applicable to a particular month, shall, subject as provided in Conditions 4.3 and 4.5, be
construed as a reference to the Index Figure published in the seventh month prior to that
particular month and relating to the month before that of publication; or(ii)
    
    applicable to the first calendar day of any month shall, subject as provided in Conditions 4.3
and 4.5, be construed as a reference to the Index Figure published in the second month prior to
that particular month and relating to the month before that of publication; or(iii)
    
    applicable to any other day in any month shall, subject as provided in Conditions 4.3 and
4.5, be calculated by linear interpolation between (x) the Index Figure applicable to the first
calendar day of the month in which the day falls, calculated as specified in sub-paragraph (ii)
above and (y) the Index Figure applicable to the first calendar day of the month following,
calculated as specified in sub-paragraph (ii) above and rounded to the nearest fifth decimal place.
 If the Index is replaced, the Issuer will describe the replacement Index in a supplement to the
Prospectus;Index Ratio applicable to any month or date, as the case may be, means the Index Figure
applicable to such month or date, as the case may be, divided by the Base Index Figure and rounded
to the nearest fifth decimal place;Limited Index Ratio means (a) in respect of any month or date, as the case may be, prior to the
relevant Issue Date, the Index Ratio for that month or date, as the case may be, (b) in respect of
any Limited Indexation Date after the relevant Issue Date, the product of the Limited Indexation
Factor for that month or date, as the case may be, and the Limited Index Ratio as previously
calculated in respect of the month or date, as the case may be,
twelve months prior thereto; and
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(c) in respect of any other month, the Limited Index Ratio as previously calculated in respect of
the most recent Limited Indexation Month;
 Limited Indexation Date means any date falling during the period specified in the relevant Final
Terms for which a Limited Indexation Factor is to be calculated;Limited Indexation Factor means, in respect of a Limited Indexation Month or Limited Indexation
Date, as the case may be, the ratio of the Index Figure applicable to that month or date, as the
case may be, divided by the Index Figure applicable to the month or date, as the case may be,
twelve months prior thereto, provided that (a) if such ratio is greater than the Maximum Indexation
Factor specified in the relevant Final Terms, it shall be deemed to be equal to such Maximum
Indexation Factor and (b) if such ratio is less than the Minimum Indexation Factor specified in the
relevant Final Terms, it shall be deemed to be equal to such Minimum Indexation Factor;Limited Indexation Month means any month specified in the relevant Final Terms for which a
Limited Indexation Factor is to be calculated;Limited Index Linked Instruments means Index Linked Instruments to which a Maximum Indexation
Factor and/or a Minimum Indexation Factor (as specified in the relevant Final Terms) applies; andReference Gilt means the Treasury Stock specified as such in the relevant Final Terms for so long
as such stock is in issue, and thereafter such issue of index-linked Treasury Stock determined to
be appropriate by a gilt-edged market maker or other adviser selected by the Issuer (an Indexation
Adviser).4.2
    
    Application of the Index RatioEach payment of interest and principal in respect of the Instruments shall be the amount provided
in, or determined in accordance with, these Conditions, multiplied by the Index Ratio or Limited
Index Ratio in the case of Limited Index Linked Instruments applicable to the month or date, as the
case may be, on which such payment falls to be made and rounded in accordance with Condition
3.2.4(e).4.3
    
    Changes in Circumstances Affecting the Index
 (i)
    
    Change in base: If at any time and from time to time the Index is changed by the substitution
of a new base therefor, then with effect from the month from and including that in which such
substitution takes effect or the first date from and including that on which such substitution
takes effect, as the case may be, (1) the definition of Index and Index Figure in Condition 4.1
shall be deemed to refer to the new date or month in substitution for January 1987 (or, as the case
may be, to such other date or month as may have been substituted therefor), and (2) the new Base
Index Figure shall be the product of the existing Base Index Figure and the Index Figure for the
date on which such substitution takes effect, divided by the Index Figure for the date immediately
preceding the date on which such substitution takes effect.(ii)
    
    Delay in publication of Index if sub-paragraph (i) of the definition of Index Figure is
applicable: If the Index Figure which is normally published in the seventh month and which relates
to the eighth month (the relevant month) before the month in which a payment is due to be made is
not published on or before the fourteenth business day before the date on which such payment is due
(the date for payment), the Index Figure applicable to the month in which the date for payment
falls shall be (1) such substitute index figure (if any) as the Trustee considers (acting solely on
the advice of the Indexation Advisor) to have been published by the Bank of England for the
purposes of indexation of payments on the Reference Gilt or, failing such publication, on any one
or more issues of index-linked
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Treasury Stock selected by an Indexation Adviser (and approved by the Trustee (acting solely on the
advice of the Indexation Advisor)) or (2) if no such determination is made by such Indexation
Adviser within seven days, the Index Figure last published (or, if later, the substitute index
figure last determined pursuant to Condition 4.3(i)) before the date for payment.(iii)
    
    Delay in publication of Index if sub-paragraph (ii) and/or (iii) of the definition of Index
Figure is applicable: If the Index Figure relating to any month (the calculation month) which is
required to be taken into account for the purposes of the determination of the Index Figure for any
date is not published on or before the fourteenth business day before the date on which such
payment is due (the date for payment), the Index Figure applicable for the relevant calculation
month shall be (1) such substitute index figure (if any) as the Trustee considers (acting solely on
the advice of the Indexation Advisor) to have been published by the Bank of England for the
purposes of indexation of payments on the Reference Gilt or, failing such publication, on any one
or more issues of index-linked Treasury Stock selected by an Indexation Adviser (and approved by
the Trustee (acting solely on the advice of the Indexation Advisor)) or (2) if no such
determination is made by such Indexation Adviser within seven days,
the Index Figure last published (or, if later, the substitute index figure last determined pursuant
to Condition 4.3(i)) before the date for payment.
 4.4
    
    Application of ChangesWhere the provisions of Condition 4.3(ii) or Condition 4.3(iii) apply, the determination of the
Indexation Adviser as to the Index Figure applicable to the month in which the date for payment
falls or the date for payment, as the case may be, shall be conclusive and binding. If, an Index
Figure having been applied pursuant to Condition 4.3(ii)(2) or Condition 4.3(iii)(2), the Index
Figure relating to the relevant month or relevant calculation month, as the case may be, is
subsequently published while an Instrument is still outstanding, then:
 (i)
    
    in relation to a payment of principal or interest in respect of such Instrument other than upon
final redemption of such Instrument, the principal or interest (as the case may be) next payable
after the date of such subsequent publication shall be increased or reduced, as the case may be, by
an amount equal to the shortfall or excess, as the case may be, of the amount of the relevant
payment made on the basis of the Index Figure applicable by virtue of Condition 4.3(ii)(2) or
Condition 4.3(iii)(2) below or above the amount of the relevant payment that would have been due if
the Index Figure subsequently published had been published on or before the fourteenth business day
before the date for payment; and(ii)
    
    in relation to a payment of principal or interest upon final redemption, no subsequent
adjustment to amounts paid will be made.
 4.5
    
    Cessation of or Fundamental Changes to the Index
 (i)
    
    If (1) the Trustee and the Issuer have been notified by the Calculation Agent that the Index
has ceased to be published or (2) any change is made to the coverage or the basic calculation of
the Index which constitutes a fundamental change which would, in the opinion of (A) the Issuer be
materially prejudicial to the interests of the Issuer, or (B) the Trustee acting solely on the
advice of an Indexation Adviser, be materially prejudicial to the interests of the
Instrumentholders, the Trustee will give written notice of such occurrence to the Issuer in the
case of (B), and the Issuer and the Trustee (acting solely on the advice of the Indexation Advisor)
together shall seek to agree for the purpose of the Instruments one or more adjustments to the
Index or a substitute index (with or without adjustments) with the intention that the same should
leave the Issuer and the Instrumentholders in no better
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and no worse position than they would have been had the Index not ceased to be published or the
relevant fundamental change not been made.(ii)
    
    If the Issuer and the Trustee (acting solely on the advice of the Indexation Advisor) fail to
reach agreement as mentioned above within 20 business days following the giving of notice as
mentioned in paragraph (i), a bank or other person in London shall be appointed by the Issuer and
the Trustee or, failing agreement on and the making of such appointment within 20 business days
following the expiry of the 20 day period referred to above, by the Trustee (acting solely on the
advice of the Indexation Advisor) (in each case, such bank or other person so appointed being
referred to as the Expert), to determine for the purpose of the Instruments one or more
adjustments to the Index or a substitute index (with or without adjustments) with the intention
that the same should leave the Issuer and the Instrumentholders in no better and no worse position
than they would have been had the Index not ceased to be published or the relevant fundamental
change not been made. Any Expert so appointed shall act as an expert and not as an arbitrator and
all fees, costs and expenses of the Expert and of any Indexation Adviser and of any of the Issuer
and the Trustee in connection with such appointment shall be borne by the Issuer.(iii)
    
    The Index shall be adjusted or replaced by a substitute index as agreed by the Issuer and the
Trustee (acting solely on the advice of the Indexation Advisor) or as determined by the Expert
pursuant to the foregoing paragraphs, as the case may be, and references in these Conditions to the
Index and to any Index Figure shall be deemed amended in such manner as the Trustee (acting solely
on the advice of the Indexation Advisor) and the Issuer agree are appropriate to give effect to
such adjustment or replacement. Such amendments shall be effective from the date of such
notification and binding upon the Issuer, the Trustee and the Instrumentholders, and the Issuer
shall give notice to the Instrumentholders in accordance with Condition 14 of such amendments as
promptly as practicable following such notification.
 4.6
    
    Redemption for Index ReasonsIf either (i) the Index Figure for three consecutive months is required to be determined on the
basis of an Index Figure previously published as provided in Condition 4.3(ii)(2) and the Trustee
has been notified by the Calculation Agent that publication of the Index has ceased or (ii) notice
is published by Her Majestys Treasury, or on its behalf, following a change in relation to the
Index, offering a right of redemption to the holders of the Reference Gilt, and (in either case) no
amendment or substitution of the Index shall have been advised by the Indexation Adviser to the
Issuer and such circumstances are continuing, the Issuer may, upon giving not more than 60 nor
less than 30 days notice to the Instrumentholders in accordance with Condition 14, redeem all, but
not some only, of the Instruments at their principal amount together with interest accrued but
unpaid up to and including the date of redemption (in each case adjusted in accordance with
Condition 4.2).
 5
    
    Redemption, Purchase and Options
 5.1
    
    Final RedemptionUnless previously redeemed, purchased and cancelled as provided below, this Instrument will
be redeemed at its Final Redemption Amount (which, unless otherwise provided, is its nominal
amount) on the Maturity Date specified in the relevant Final Terms provided, however, that if this
Instrument is a Perpetual Instrument it will only be redeemable and repayable in accordance with
the following provisions of this Condition 5.
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5.2
    
    Redemption for Taxation ReasonsIf, on the occasion of the next payment in respect of the Instruments the Issuer satisfies
the Trustee immediately before the giving of the notice referred to below that it would be unable
to make such payment without having to pay additional amounts as described in Condition 7, and such
requirement to pay such additional amounts arises by reason of a change in the laws of the United
Kingdom or any political sub-division of the United Kingdom or taxing authority in the United
Kingdom or any political sub-division of the United Kingdom or in the interpretation or application
of the laws of the United Kingdom or any political sub-division of the United Kingdom or in any
applicable double taxation treaty or convention, which change becomes effective on or after the
date on which agreement is reached to issue the first Tranche of the Instruments, and such
requirement cannot be avoided by the Issuer taking reasonable measures (such measures not involving
any material additional payments by, or expense for, the Issuer), the Issuer may, at its option, on
any Interest Payment Date or, if so specified in the relevant Final Terms, at any time, having
given not less than 30 nor more than 45 days notice to the Instrumentholders in accordance with
Condition 14, redeem all, but not some only, of the Instruments at their Early Redemption Amount
together with interest accrued to the date of redemption provided that the date fixed for
redemption shall not be earlier than 90 days prior to the earliest date on which the Issuer would
be obliged to pay such additional amounts or make such withholding or deduction, as the case may
be, were a payment in respect of the Instruments then due. Prior to the publication of any notice
of redemption pursuant to this Condition 5.2, the Issuer shall deliver to the Trustee a certificate
signed by two Directors of the Issuer stating that the requirement referred to above cannot be
avoided by the Issuer taking reasonable measures available to it and the Trustee shall be entitled
to accept such certificate as sufficient evidence of the satisfaction of the condition precedent
set out above in which event it shall be conclusive and binding on Instrumentholders and
Couponholders.5.3
    
    PurchasesThe Issuer and any of its subsidiary undertakings may at any time purchase Instruments
(provided that all unmatured Receipts and Coupons and unexchanged Talons appertaining to them are
attached or surrendered with them) in the open market or otherwise at any price.5.4
    
    Early Redemption
 5.4.1
    
    Zero Coupon Instruments:
 (a)
    
    The Early Redemption Amount payable in respect of any Zero Coupon Instrument, the
Early Redemption Amount of which is not linked to an index and/or a formula, upon redemption of
such Instrument pursuant to Condition 5.2 or upon it becoming due and payable as provided in
Condition 9 shall be the Amortised Face Amount (calculated as provided below) of such Instrument
unless otherwise specified in the relevant Final Terms.(b)
    
    Subject to the provisions of sub-paragraph (c) below, the Amortised Face Amount of any
such Instrument shall be the scheduled Final Redemption Amount of such Instrument on the Maturity
Date discounted at a rate per annum (expressed as a percentage) equal to the Amortisation Yield
(which, if none is specified in the relevant Final Terms, shall be such rate as would produce an
Amortised Face Amount equal to the issue price of the Instruments if they were discounted back to
their issue price on the Issue Date) compounded annually.(c)
    
    If the Early Redemption Amount payable in respect of any such Instrument, upon its
redemption pursuant to Condition 5.2 or, if applicable, Condition 5.5 or 5.6 or upon it becoming
due and payable as provided in Condition 9, is not paid when due, the
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Early Redemption Amount due and payable in respect of such Instrument shall be the Amortised Face
Amount of such Instrument as defined in sub-paragraph (b) above, except that such sub-paragraph
shall have effect as though the reference in that sub-paragraph to the date on which the Instrument
becomes due and payable was replaced by a reference to the Relevant Date as defined in Condition 7.
The calculation of the Amortised Face
Amount in accordance with this sub-paragraph shall continue to be made (as well after as before
judgment) until the Relevant Date, unless the Relevant Date falls on or after the Maturity Date, in
which case the amount due and payable shall be the scheduled Final Redemption Amount of such
Instrument on the Maturity Date together with any interest that may accrue in accordance with
Condition 3.2.
 Where such calculation is to be made for a period of less than one year, it shall be made on the
basis of the Day Count Fraction specified in the relevant Final Terms.5.4.2
    
    Other InstrumentsThe Early Redemption Amount payable in respect of any Instrument (other than Instruments described
in Condition 5.4.1 above), upon redemption of such Instrument pursuant to this Condition 5.4 or
upon it becoming due and payable as provided in Condition 9, shall be the Final Redemption Amount
unless otherwise specified in the relevant Final Terms.
 5.5
    
    Redemption at the Option of the Issuer and Exercise of Issuers OptionsIf Call Option is specified in the relevant Final Terms, the Issuer may, on giving not less than 15
nor more than 30 days irrevocable notice to the Instrumentholders (or such other notice period as
may be specified in the relevant Final Terms), redeem, or exercise any Issuers option in relation
to, all or, if so provided, some of such Instruments on any Optional Redemption Date or Option
Exercise Date, as the case may be. Any such redemption of Instruments shall be at their Optional
Redemption Amount together with interest accrued to the date fixed for redemption. Any such
redemption or exercise must relate to Instruments of a nominal amount at least equal to the minimum
nominal amount (if any) to be redeemed specified hereon and no greater than the maximum nominal
amount (if any) to be redeemed specified on this Instrument.All Instruments in respect of which any such notice is given shall be redeemed, or the Issuers
option shall be exercised, on the date specified in such notice in accordance with this Condition.In the case of a partial redemption or a partial exercise of an Issuers option, the notice to
Instrumentholders shall also contain the serial numbers of the Instruments to be redeemed, which
shall have been drawn in such place as the Trustee may approve and in such manner as it deems
appropriate, subject to compliance with any applicable laws, listing authority and stock exchange
requirements.5.6
    
    Redemption at the Option of Instrumentholders and Exercise of Instrumentholders OptionsIf Put Option is specified in the relevant Final Terms, the Issuer shall, at the option of the
holder of any such Instrument, upon the holder of such Instrument giving not less than 15 nor more
than 30 days notice to the Issuer (or such other notice period as may be specified on this
Instrument) redeem such Instrument on the Optional Redemption Date(s) at its Optional Redemption
Amount together with interest accrued to the date fixed for redemption.To exercise such option or any other Instrumentholders option which may be set out on this
Instrument (which must be exercised on an Option Exercise Date) the holder must deposit such
Instrument with any Paying Agent at its specified office, together with a duly completed option
 38




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exercise notice (Exercise Notice) in the form obtainable from any Paying Agent within the
Instrumentholders Option Period (as specified in the relevant Final Terms). No Instrument so
deposited and option exercised may be withdrawn (except as provided in the Agency Agreement)
without the prior consent of the Issuer.5.7
    
    Partly Paid InstrumentsPartly Paid Instruments will be redeemed, whether at maturity, early redemption or otherwise,
in accordance with the provisions of this Condition and the provisions specified in the relevant
Final Terms.5.8
    
    Redemption by InstalmentsUnless previously redeemed, purchased and cancelled as provided in this Condition 5, each
Instrument which provides for Instalment Dates and Instalment Amounts will be partially redeemed on
each Instalment Date at the Instalment Amount specified in the relevant Final Terms. The
outstanding nominal amount of each such Instrument shall be reduced by the Instalment Amount (or,
if such Instalment Amount is calculated by reference to a proportion of the nominal amount of such
Instrument, such proportion) for all purposes with effect from the related Instalment Date, unless
payment of the Instalment Amount is improperly withheld or refused on presentation of the related
Receipt, in which case, such amount shall remain outstanding until the Relevant Date relating to
such Instalment Amount.5.9
    
    CancellationAll Instruments redeemed pursuant to any of the foregoing provisions will be cancelled
forthwith (together with all unmatured Receipts and Coupons and unexchanged Talons attached
thereto. All Instruments purchased by or on behalf of the Issuer or any of its subsidiary
undertakings may, at the option of the Issuer be held by or may be surrendered together with all
unmatured Receipts and Coupons and all unexchanged Talons attached to them to a Paying Agent for
cancellation, but may not be resold and when held by the Issuer or any of its respective
Subsidiaries shall not entitle the holder to vote at any meeting of Instrumentholders and shall not
be deemed to be outstanding for the purposes of calculating quorums at meetings of
Instrumentholders or for the purposes of Condition 11.
 6
    
    Payments and Talons
 6.1
    
    PaymentsPayments of principal and interest in respect of Instruments will, subject as mentioned
below, be made against presentation and surrender of the relevant Receipts (in the case of payments
of Instalment Amounts other than on the due date for redemption and provided that the Receipt is
presented for payment together with its relative Instrument), Instruments (in the case of all other
payments of principal and, in the case of interest, as specified in Condition 6.5.6) or Coupons (in
the case of interest, save as specified in Condition 6.5.6), as the case may be, at the specified
office of any Paying Agent outside the United States by a cheque payable in the currency in which
such payment is due drawn on, or, at the option of the holder, by transfer to an account
denominated in that currency with, a bank in the principal financial centre for that currency;
provided that in the case of Euro, the transfer shall be in a city in which banks have access to
the TARGET System.6.2
    
    Payments in the United StatesNotwithstanding the above, if any Instruments are denominated in U.S. dollars, payments in
respect of them may be made at the specified office of any Paying Agent in New York City in the
same manner as specified above if (a) the Issuer shall have appointed Paying Agents with specified
offices outside the United States with the reasonable expectation that such Paying
 39




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Agents would be able to make payment of the amounts on the Instruments in the manner provided above
when due, (b) payment in full of such amounts at all such offices is illegal or effectively
precluded by exchange controls or other similar restrictions on payment or receipt of such amounts
and (c) such payment is then permitted by United States law, without involving, in the opinion of
the Issuer, any adverse tax consequence to the Issuer.6.3
    
    Payments subject to Fiscal Laws etc.All payments are subject in all cases to any applicable fiscal or other laws, regulations and
directives, but without prejudice to the provisions of Condition 7. No commission or expenses shall
be charged to the Instrumentholders or Couponholders in respect of such payments.6.4
    
    Appointment of AgentsThe Issuing and Paying Agent, the Paying Agents and the Calculation Agent initially appointed by
the Issuer and their respective specified offices are listed below. The Issuing and Paying Agent,
the Paying Agents and the Calculation Agent act solely as agents of the Issuer and do not assume
any obligation or relationship of agency or trust for or with any holder. The Issuer reserves the
right at any time with the approval of the Trustee to vary or terminate the appointment of the
Issuing and Paying Agent, any other Paying Agent or the Calculation Agent and to appoint additional
or other Paying Agents, provided that the Issuer shall at all times maintain (i) an Issuing and
Paying Agent, (ii) a Paying Agent having a specified office in a continental European city, (iii) a
Calculation Agent where the Conditions so require one, (iv) so long as the Instruments are listed
on any stock exchange or admitted to listing by any other relevant authority, a Paying Agent having
a specified office in such place as may be required by the rules and regulations of the relevant
stock exchange or other relevant authority and (v) to the extent that the Issuer is able to do so
and not provided for by the foregoing provisions of this Condition 6.4, a Paying Agent with a
specified office in a European Union Member State that will not be obliged to withhold or deduct
tax pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or
introduced in order to conform to, such Directive. As used in these Conditions, the terms Issuing
and Paying Agent, Calculation Agent, and Paying Agent include any additional or replacement
Issuing and Paying Agent, Calculation Agent or Paying Agent appointed under this Condition.In addition, the Issuer shall forthwith appoint a Paying Agent in New York City in respect of any
Instruments denominated in U.S. dollars in the circumstances described in Condition 6.2.Notice of any such change or any change of any specified office shall promptly be given to the
Instrumentholders in accordance with Condition 14.6.5
    
    Unmatured Coupons and Receipts and unexchanged Talons:
 6.5.1
    
    Unless the Instrument provides that the relevant Coupons are to become void upon the
due date for redemption of those Instruments, Instruments should be surrendered for payment
together with all unmatured Coupons (if any) appertaining to them, failing which an amount equal to
the face value of each missing unmatured Coupon (or, in the case of payment not being made in full,
that proportion of the amount of such missing unmatured Coupon that the sum of principal so paid
bears to the total principal due) will be deducted from the Final Redemption Amount, Early
Redemption Amount or Optional Redemption Amount, as the case may be, due for payment. Any amount so
deducted shall be paid in the manner mentioned above against surrender of such missing Coupon
within a period of 10 years from the Relevant Date for the payment of such principal (whether or
not such Coupon has become void pursuant to Condition 8).
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6.5.2
    
    If the relevant Instrument so provides, upon the due date for redemption of any
Instrument, unmatured Coupons relating to such Instrument (whether or not attached) shall become
void and no payment shall be made in respect of them.6.5.3
    
    If the relevant Instrument so provides, upon the due date for redemption of any
Instrument, any unexchanged Talon relating to such Instrument (whether or not attached) shall
become void and no Coupon shall be delivered in respect of such Talon.6.5.4
    
    Upon the due date for redemption of any Instrument which is redeemable in instalments, all
Receipts relating to such Instrument having an Instalment Date falling on or after such due date
(whether or not attached) shall become void and no payment shall be made in respect of them.6.5.5
    
    Where any Instrument which provides that the relevant Coupons are to become void upon the
due date for redemption of those Instruments is presented for redemption without all unmatured
Coupons and any unexchanged Talon relating to it, and where any Instrument is presented for
redemption without any unexchanged Talon relating to it, redemption shall be made only against the
provision of such indemnity as the Issuer may require.6.5.6
    
    If the due date for redemption of any Instrument is not a due date for payment of
interest, interest accrued from the preceding due date for payment of interest or the Interest
Commencement Date, as the case may be, shall only be payable against presentation (and surrender if
appropriate) of the relevant Instrument. Interest accrued on an Instrument that only bears interest
after its Maturity Date shall be payable on redemption of that Instrument against presentation of
that Instrument.
 6.6
    
    Non-business daysIf any date for payment in respect of any Instrument, Receipt or Coupon is not a business
day, the holder shall not be entitled to payment until the next following business day nor to any
interest or other sum in respect of such postponed payment. In this paragraph, business day means
a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for
business in the relevant place of presentation, in such jurisdictions as shall be specified as
Financial Centres in the relevant Final Terms and:
 6.6.1
    
    (in the case of a payment in a currency other than Euro) where payment is to be made by
transfer to an account maintained with a bank in the relevant currency, on which foreign exchange
transactions may be carried on in the relevant currency in the principal financial centre of the
country of such currency; or6.6.2
    
    (in the case of a payment in Euro), which is a TARGET Business Day.
 6.7
    
    TalonsOn or after the Interest Payment Date for the final Coupon forming part of a Coupon sheet
issued in respect of any Instrument, the Talon forming part of such Coupon sheet may be surrendered
at the specified office of the Issuing and Paying Agent in exchange for a further Coupon sheet (but
excluding any Coupons which may have become void pursuant to Condition 8).
 7
    
    TaxationAll payments of principal and interest by or on behalf of the Issuer in respect of the
Instruments, the Receipts and the Coupons will be made without withholding or deduction for or on
account of, any present or future taxes or
duties of whatever nature imposed or levied by or on behalf of the United Kingdom or any political
sub-division of the United Kingdom or any authority in or of the United Kingdom having power to
tax, unless such withholding or deduction is compelled by law. In that event, the Issuer
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will pay such additional amounts of principal and interest as will result in the payment to the
Instrumentholders, Receiptholders or, as the case may be, the Couponholders of the amounts which
would otherwise have been receivable in respect of the Instruments, Receipts or Coupons had no
withholding or deduction been made, except that no such additional amounts shall be payable in
respect of any Instrument, Receipt or Coupon presented for payment:
 (a)
    
    by or on behalf of, a person who is liable to such taxes or duties in respect of such
Instrument, Receipt or Coupon by reason of his having some connection with the United Kingdom other
than the mere holding of such Instrument, Receipt or Coupon; or(b)
    
    by or on behalf of a person who would not be liable or subject to such deduction or
withholding by making a declaration of non-residence or other claim for exemption to a tax
authority; or(c)
    
    more than 30 days after the Relevant Date except to the extent that the holder would have
been entitled to such additional amounts on presenting the same for payment on such thirtieth day;
or(d)
    
    where such withholding or deduction is imposed on a payment to an individual and is
required to be made pursuant to European Council Directive 2003/48/EC or any law implementing or
complying with, or introduced in order to conform to, such Directive; or(e)
    
    by or on behalf of a holder who would have been able to avoid such withholding or
deduction (i) by presenting the relevant Instrument, Receipt or Coupon to another Paying Agent in a
Member State of the European Union; or (ii) by satisfying any statutory or procedural requirements
(including, without limitation, the provision of information).
 As used in these Conditions, Relevant Date in respect of any Instrument, Receipt or Coupon means
the date on which payment in respect of it first becomes due or (if any amount of the money payable
is improperly withheld or refused) the date on which payment in full of the amount outstanding is
made or (if earlier) the date on which notice is duly given to the Instrumentholders in accordance
with Condition 14 that, upon further presentation of the Instrument, Receipt or Coupon being made
in accordance with the Conditions, such payment will be made, provided that payment is in fact made
upon such presentation. References in these Conditions to (i) principal shall be deemed to
include any premium payable in respect of the Instruments, all Instalment Amounts, Final Redemption
Amounts, Early Redemption Amounts, Optional Redemption Amounts, Amortised Face Amounts and all
other amounts in the nature of principal payable pursuant to Condition 5 or any amendment or
supplement to it, (ii) interest shall be deemed to include all Interest Amounts and all other
amounts payable pursuant to Condition 3 or any amendment or supplement to it and (iii) principal
and/or interest shall be deemed to include any additional amounts which may be payable under this
Condition or any undertaking given in addition to or in substitution for it under the Trust Deed.8
    
    PrescriptionInstruments, Receipts and Coupons (which, for this purpose, shall not include Talons) shall
be prescribed and become void unless presented for payment within 10 years (in the case of
principal) or five years (in the case of interest) from the appropriate Relevant Date in respect of
them.9
    
    Events of DefaultIf any of the following events (each an Event of Default) occurs and is continuing, the
Trustee at its discretion may, and if so requested by the holders of at least one-quarter in
nominal amount of the Instruments then outstanding or if so directed by an Extraordinary Resolution
shall, give notice to the Issuer at its registered office that the Instruments are, and they shall
accordingly immediately become due and repayable at their Redemption Amount together with accrued
interest (if any) to the date of payment:
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(a)
    
    Non-Payment:there is default for more than 30 days in the payment of any principal or
interest due in respect of the Instruments; or(b)
    
    Breach of Other Obligations:there is default in the performance or observance by the
Issuer of any other obligation or provision under the Trust Deed or the Instruments (other than any
obligation for the payment of any principal or interest in respect of the Instruments) which
default is incapable of remedy or, if in the opinion of the Trustee capable of remedy, is not
remedied within 90 days after notice of such default shall have been given to the Issuer by the
Trustee; or(c)
    
    Winding-up:a resolution is passed, or a final order of a court in the United Kingdom is
made and, where possible, not discharged or stayed within a period of 90 days, that the Issuer be
wound up or dissolved; or(d)
    
    Enforcement Proceedings:attachment is made of the whole or substantially the whole of
the assets or undertaking of the Issuer and such attachment is not released or cancelled within 90
days or an encumbrancer takes possession or an administrative or other receiver or similar officer
is appointed of the whole or substantially the whole of the assets or undertaking of the Issuer or
an administration or similar order is made in relation to the Issuer and such taking of possession,
appointment or order is not released, discharged or cancelled within 90 days; or(e)
    
    Insolvency:the Issuer ceases to carry on all or substantially all of its business or is
unable to pay its debts within the meaning of Section 123(1) (e) or Section 123(2) of the
Insolvency Act 1986; or(f)
    
    Bankruptcy:the Issuer is adjudged bankrupt or insolvent by a court of competent
jurisdiction in its country of incorporation,
 provided that in the case of [paragraphs (b) to (f)]1, [paragraph (b)]2 the
Trustee shall have certified that in its opinion such event is materially prejudicial to the
interests of the Instrumentholders.Any such notice by the Trustee to the Issuer shall specify the serial number(s) of the
Instrument(s) concerned.10
    
    EnforcementThe Trustee may, at its discretion and without further notice, institute such proceedings
against the Issuer as it may think fit to enforce any obligation, condition or provision binding on
the Issuer under the Instruments or under the Trust Deed, but shall not be bound to do so unless:
 (a)
    
    it has been so directed by an Extraordinary Resolution or in writing by the holders of at
least one-quarter of the principal amount of the Instruments outstanding; and(b)
    
    it has been indemnified to its satisfaction.
 No Instrumentholder, Receiptholder or Couponholder shall be entitled to institute proceedings
directly against the Issuer unless the Trustee, having become bound to proceed as specified above,
fails to do so within a reasonable time and such failure is continuing.11
    
    Meetings of Instrumentholders, Modifications and Substitution
 11.1
    
    Meetings of InstrumentholdersThe Trust Deed contains provisions for convening meetings of Instrumentholders to consider
any matter affecting their interests, including the sanctioning by Extraordinary Resolution (as
defined in the Trust Deed) of a modification of any of these Conditions or any provisions of the
Trust
 
 1
    
    Only applicable where National Grid Gas Holdings plc is the Issuer.2
    
    Only applicable where National Grid Gas plc is the Issuer. 43




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Deed. An Extraordinary Resolution duly passed at any such meeting shall be binding on
Instrumentholders (whether or not they were present at the meeting at which such resolution was
passed) and on all Couponholders, except that any Extraordinary Resolution proposed, inter alia,
(i) to amend the dates of maturity or redemption of the Instruments, any Instalment Date or any
date for payment of interest on the Instruments, (ii) to reduce or cancel the nominal amount of, or
any Instalment Amount of, or any premium payable on redemption of, the Instruments, (iii) to reduce
the rate or rates of interest in respect of the Instruments or to vary the method or basis of
calculating the rate or rates or amount of interest or the basis for calculating any Interest
Amount in respect of the Instruments, (iv) if a Minimum and/or a Maximum Rate of Interest is shown
on the face of the Instrument, to reduce any such Minimum and/or Maximum Rate of Interest, (v) to
vary any method of calculating the Final Redemption Amount, the Early Redemption Amount or the
Optional Redemption Amount, (vi) to take any steps that as specified in this Instrument may only be
taken following approval by an Extraordinary Resolution to which the special quorum provisions
apply, and (vii) to modify the provisions concerning the quorum required at any meeting of
Instrumentholders or the majority required to pass the Extraordinary Resolution will only be
binding if passed at a meeting of the Instrumentholders (or at any adjournment of that meeting) at
which a special quorum (as defined in the Trust Deed) is present. A resolution in writing signed by
the holders of not less than 95 per cent. in nominal amount of the Instruments will be binding on
all Instrumentholders and Couponholders. The Issuer may
convene a meeting of Instrumentholders jointly with the holders of all other instruments issued
pursuant to the Agency Agreement and not forming a single series with the Instruments to which
meeting the provisions referred to above apply as if all such instruments formed part of the same
series, provided that the proposals to be considered at such meeting affect the rights of the
holders of the instruments of each series attending the meeting in identical respects (save insofar
as the Conditions applicable to each such series are not identical).11.2
    
    Modification of the Trust DeedThe Trustee may agree, without the consent of the Instrumentholders or Couponholders, to (i)
any modification of any of the provisions of the Trust Deed that is of a formal, minor or technical
nature or is made to correct a manifest error, and (ii) any other modification (except as mentioned
in the Trust Deed), and any waiver or authorisation of any breach or proposed breach, of any of the
provisions of the Trust Deed that is in the opinion of the Trustee not materially prejudicial to
the interests of the Instrumentholders. Any such modification, authorisation or waiver shall be
binding on the Instrumentholders and the Couponholders and, if the Trustee so requires, such
modification shall be notified to the Instrumentholders as soon as practicable.11.3
    
    SubstitutionThe Trust Deed contains provisions permitting the Trustee to agree, subject to such amendment
of the Trust Deed and such other conditions as the Trustee may require, but without the consent of
the Instrumentholders or the Couponholders, to the substitution of any other company in place of
the Issuer or of any previous substituted company, as principal debtor under the Trust Deed and the
Instruments. In the case of such a substitution the Trustee may agree, without the consent of the
Instrumentholders or the Couponholders, to a change of the law governing the Instruments, the
Receipts, the Coupons, the Talons and/or the Trust Deed provided that such change would not in the
opinion of the Trustee be materially prejudicial to the interests of the Instrumentholders.11.4
    
    Entitlement of the TrusteeIn connection with the exercise of its functions (including but not limited to those referred
to in this Condition) the Trustee shall have regard to the interests of the Instrumentholders as a
class and shall not have regard to the consequences of such exercise for individual
Instrumentholders or Couponholders and the Trustee shall not be entitled to require, nor shall any
Instrumentholder or
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Couponholder be entitled to claim, from the Issuer any indemnification or payment in respect of any
tax consequence of any such exercise upon individual Instrumentholders or Couponholders.
 12
    
    Replacement of Instruments, Receipts, Coupons and TalonsIf an Instrument, Receipt, Coupon or Talon is lost, stolen, mutilated, defaced or destroyed,
it may be replaced, subject to applicable laws, listing authority and stock exchange regulations,
at the specified office of such other Paying Agent as may from time to time be designated by the
Issuer for the purpose and notice of whose designation is given to Instrumentholders in accordance
with Condition 14 on payment by the claimant of the fees and costs incurred in connection with that
replacement and on such terms as to evidence, security and indemnity (which may provide, inter
alia, that if the allegedly lost, stolen or destroyed Instrument, Receipt, Coupon or Talon is
subsequently presented for payment or, as the case may be, for exchange for further Coupons, there
shall be paid to the Issuer on demand the amount payable by the Issuer in respect of such
Instruments, Receipts, Coupons or further Coupons) and otherwise as the Issuer may require.
Mutilated or defaced Instruments, Receipts, Coupons or Talons must be surrendered before
replacements will be issued.13
    
    Further IssuesThe Issuer may from time to time without the consent of the Instrumentholders or
Couponholders create and issue further instruments having the same terms and conditions as the
Instruments and so that such further issue shall be consolidated and form a single series with such
Instruments. References in these Conditions to the Instruments include (unless the context requires
otherwise) any other instruments issued pursuant to this Condition and forming a single series with
the Instruments. Any such further instruments forming a single series with Instruments constituted
by the Trust Deed or any deed supplemental to it shall, and any other instruments may (with the
consent of the Trustee), be constituted by the Trust Deed.The Trust Deed contains provisions for convening a single meeting of the Instrumentholders and the
holders of instruments of other series if the Trustee so decides.14
    
    NoticesAll notices to the Instrumentholders will be valid if published in a daily English language
newspaper of general circulation in the United Kingdom (which is expected to be the Financial
Times).If in the opinion of the Trustee any such publication is not practicable, notice shall be
validly given if published in another leading daily English language newspaper with general
circulation in Europe. Any such notice shall be deemed to have been given on the date of such
publication or, if published more than once or on different dates, on the first date on which
publication is made, as provided above.Couponholders shall be deemed for all purposes to have notice of the contents of any notice given
to the holders of Instruments in accordance with this Condition.15
    
    Indemnification of TrusteeThe Trust Deed contains provisions for the indemnification of the Trustee and for its relief
from responsibility, including provisions relieving it from any obligation to take proceedings to
enforce repayment unless indemnified to its satisfaction. The Trustee is entitled to enter into
business transactions with the Issuer or any of its subsidiary undertakings, parent undertakings,
joint ventures or associated undertakings without accounting for any profit resulting from these
transactions and to act as trustee for the holders of any other securities issued by the Issuer or
any of its subsidiary undertakings, parent undertakings, joint ventures or associated undertakings.
 45




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16
    
    Contracts (Rights of Third Parties) Act 1999No person shall have any right to enforce any term or condition of the Instruments under the
Contracts (Rights of Third Parties) Act 1999.17
    
    Governing Law and Jurisdiction
 (a)
    
    The Instruments and all matters arising from or connected with the Instruments are
governed by, and shall be construed in accordance with, English law.(b)
    
    The courts of England have exclusive jurisdiction to settle any dispute (a Dispute),
arising from or connected with the Instruments.(c)
    
    The Issuer agrees that the courts of England are the most appropriate and convenient
courts to settle any Dispute and, accordingly, that it will not argue to the contrary.(d)
    
    Nothing in this Condition 17 prevents the Trustee or any Instrumentholder from taking
proceedings relating to a Dispute (Proceedings) in any other courts with jurisdiction. To the
extent allowed by law, the Trustee or Instrumentholders may take concurrent Proceedings in any
number of jurisdictions.
 46




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SUMMARY OF PROVISIONS
RELATING TO THE INSTRUMENTS WHILE IN GLOBAL FORM
 Initial Issue of InstrumentsUpon the initial deposit of a Global Instrument with a common depositary for Euroclear and
Clearstream, Luxembourg (the Common Depositary), Euroclear or Clearstream, Luxembourg will credit
each subscriber with a nominal amount of Instruments equal to the nominal amount of those
Instruments for which it has subscribed and paid.Instruments which are initially deposited with the Common Depositary may also be credited to the
accounts of subscribers with (if indicated in the relevant Final Terms) other clearing systems
through direct or indirect accounts with Euroclear and Clearstream, Luxembourg held by such other
clearing systems. Conversely, Instruments that are initially deposited with another clearing system
may similarly be credited to the accounts of subscribers with Euroclear, Clearstream, Luxembourg or
other clearing systems.Relationship of Accountholders with Clearing SystemsEach of the persons shown in the records of Euroclear, Clearstream, Luxembourg or any other
clearing system as the holder of an Instrument represented by a Global Instrument must look solely
to Euroclear, Clearstream, Luxembourg or such clearing system (as the case may be) for his share of
each payment made by the relevant Issuer to the bearer of such Global Instrument and in relation to
all other rights arising under the Global Instruments, subject to and in accordance with the
respective rules and procedures of Euroclear, Clearstream, Luxembourg or such clearing systems (as
the case may be). Such persons shall have no claim directly against the relevant Issuer in respect
of payments. due on the Instruments for so long as the Instruments are represented by
such Global Instrument and such obligations of such Issuer will be discharged by payment to the
bearer of such Global Instrument in respect of each amount so paid.The Trustee may call for any certificate or other document to be issued by Euroclear, Clearstream,
Luxembourg or any other clearing system as to the principal amount of Instruments represented by a
Global Instrument standing to the account of any person. Any such certificate or other document
shall, in the absence of manifest error, be conclusive and binding for all purposes. Any such
certificate or other document may comprise any form of statement or print out of electronic records
provided by the relevant clearing system (including Euroclears EUCLID or Clearstream, Luxembourgs
Cedcom system) in accordance with its usual procedures and in which the holder of a particular
principal amount of any other clearing system is clearly identified together with the amount of
such holding. The Trustee shall not be liable to any person by reason of having accepted as valid
or not having rejected any certificate or other document to such effect purporting to be issued by
Euroclear, Clearstream, Luxembourg or any other clearing system and subsequently found to be forged
or not authentic.Exchange1
    
    Temporary Global InstrumentsEach temporary Global Instrument will be exchangeable, free of charge to the holder, on or after
its Exchange Date:
 1.1
    
    if the relevant Final Terms indicates that such Global Instrument is issued in compliance
with the C Rules or in a transaction to which TEFRA is not applicable (as to which, see Summary of
the
 47




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##### 



Programme  Selling Restrictions), in whole, but not in part, for the Definitive Instruments
defined and described below; and1.2
    
    otherwise, in whole or in part upon certification as to non-U.S. beneficial ownership in the
form set out in the Agency Agreement for interests in a permanent Global Instrument or, if so
provided in the relevant Final Terms, for Definitive Instruments.
 2
    
    Permanent Global InstrumentsEach permanent Global Instrument will be exchangeable, free of charge to the holder, on or after
its Exchange Date in whole but not, except as provided under Partial Exchange of Permanent Global
Instruments, in part for Definitive Instruments:
 2.1
    
    by the relevant Issuer giving notice to the Issuing and Paying Agent and the
Instrumentholders of its intention to effect such exchange;2.2
    
    if the relevant Final Terms provides that such Global Instrument is exchangeable at the
request of the holder, by the holder giving notice to the Issuing and Paying Agent of its election
for such exchange; and2.3
    
    otherwise, if the permanent Global Instrument is held on behalf of Euroclear or
Clearstream, Luxembourg or any other clearing system (an Alternative Clearing System) and any
such clearing system is closed for business for a continuous period of 14 days (other than by
reason of holidays, statutory or otherwise) or announces an intention permanently to cease business
or in fact does so.
 In the event that a Global Instrument is exchanged for Definitive Instruments, such Definitive
Instruments shall be issued in Specified Denomination(s) only. Instrumentholders who hold
Instruments in the relevant clearing system in amounts that are not integral multiples of a
Specified Denomination may need to purchase or sell, on or before the relevant Exchange Date, a
principal amount of Instruments such that their holding is an integral multiple of a Specified
Denomination.3
    
    Partial Exchange of Permanent Global InstrumentsFor so long as a permanent Global Instrument is held on behalf of a clearing system and the rules
of that clearing system permit, such permanent Global Instrument will be exchangeable in part on
one or more occasions for Definitive Instruments (i) if principal in respect of any Instruments is
not paid when due or (ii) if so provided in, and in accordance with, the Conditions (which will be
set out in the relevant Final Terms) relating to Partly Paid Instruments.4
    
    Delivery of InstrumentsOn or after any due date for exchange the holder of a Global Instrument may surrender such Global
Instrument or, in the case of a partial exchange, present it for endorsement to or to the order of
the Issuing and Paying Agent. In
exchange for any Global Instrument, or the part of that Global Instrument to be exchanged, the
relevant Issuer will (i) in the case of a temporary Global Instrument exchangeable for a permanent
Global Instrument, deliver, or procure the delivery of, a permanent Global Instrument in an
aggregate nominal amount equal to that of the whole or that part of a temporary Global Instrument
that is being exchanged or, in the case of a subsequent exchange, endorse, or procure the
endorsement of, a permanent Global Instrument to reflect such exchange or (ii) in the case of a
Global Instrument exchangeable for Definitive Instruments, deliver, or procure the delivery of, an
equal aggregate nominal amount of duly executed and authenticated Definitive Instruments. In this
Prospectus, Definitive Instruments means, in relation to any Global Instrument, the Definitive
Instruments for which such Global Instrument may be exchanged (if appropriate, having attached to
them all Coupons and Receipts in respect of interest or Instalment Amounts that have not already
been paid on the Global Instrument
 48




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and a Talon). Definitive Instruments will be security printed in accordance with any
applicable legal and stock exchange requirements in or substantially in the form set out in
the Schedules to the Trust Deed. On exchange in full of each permanent Global Instrument, the
relevant Issuer will, if the holder so requests, procure that it is cancelled and returned to
the holder together with the relevant Definitive Instruments.5
    
    Exchange DateExchange Date means, in relation to a temporary Global Instrument, the day falling after the
expiry of 40 days after its issue date and, in relation to a permanent Global Instrument, a day
falling not less than 60 days, or in the case of failure to pay principal in respect of any
Instruments when due 30 days, after that on which the notice requiring exchange is given and on
which banks are open for business in the city in which the specified office of the Issuing and
Paying Agent is located and in the city in which the relevant clearing system is located.Amendment to ConditionsThe temporary Global Instruments and permanent Global Instruments contain provisions that
apply to the Instruments which they represent, some of which modify the effect of the terms
and conditions of the Instruments set out in this Prospectus. The following is a summary of
certain of those provisions:1
    
    PaymentsNo payment falling due after the Exchange Date will be made on any Global Instrument unless
exchange for an interest in a permanent Global Instrument or for Definitive Instruments is
improperly withheld or refused. Payments on any temporary Global Instrument issued in
compliance with the D Rules before the Exchange Date will only be made against presentation of
certification as to non-U.S. beneficial ownership in the form set out in the Agency Agreement.
All payments in respect of Instruments represented by a Global Instrument will be made against
presentation for endorsement and, if no further payment falls to be made in respect of the
Instruments, surrender of that Global Instrument to or to the order of the Issuing and Paying
Agent or such other Paying Agent as shall have been notified to the Instrumentholders for such
purpose. A record of each payment so made will be endorsed on each Global Instrument, which
endorsement will be prima facie evidence that such payment has been made in respect of the
Instruments. Condition 6.4(v) and Condition 7(e) will apply to the Definitive Notes only.2
    
    PrescriptionClaims against the relevant Issuer in respect of Instruments which are represented by a
permanent Global Instrument will become void unless it is presented for payment within a
period of 10 years (in the case of principal) and five years (in the case of interest) from
the appropriate Relevant Date (as defined in Condition 7).3
    
    MeetingsThe holder of a permanent Global Instrument shall (unless such permanent Global Instrument
represents only one Instrument) be treated as being two persons for the purposes of any quorum
requirements of a meeting of Instrumentholders and, at any such meeting, as having one vote in
respect of each integral currency unit of the Specified Currency of the Instruments for which
it may be exchanged in accordance with its terms.4
    
    CancellationCancellation of any Instrument represented by a permanent Global Instrument which is required
by the Conditions to be cancelled (other than upon its redemption) will be effected by
reduction in the nominal amount of the relevant permanent Global Instrument.
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5
    
    PurchaseInstruments represented by a permanent Global Instrument may only be purchased by the relevant
Issuer or any of its subsidiary undertakings if they are purchased together with the rights to
receive all future payments of interest and Instalment Amounts (if any) on those Instruments.6
    
    Issuers OptionAny option of the relevant Issuer provided for in the Conditions of any Instruments while such
Instruments are represented by a permanent Global Instrument shall be exercised by such Issuer
giving notice to the Instrumentholders within the time limits set out in and containing the
information required by the Conditions, except that the notice shall not be required to
contain the serial numbers of Instruments drawn in the case of a partial exercise of an option
and accordingly no drawing of Instruments shall be required. In the event that any option of
such Issuer is exercised in respect of some but not all of the Instruments of any Series, the
rights of accountholders with a clearing system or Approved Intermediary in respect of the
Instruments will be governed by the standard procedures of Euroclear, Clearstream, Luxembourg
or any other clearing system (as the case may be).7
    
    Instrumentholders OptionsAny option of the Instrumentholders provided for in the Conditions of any Instruments while
such Instruments are represented by a permanent Global Instrument may be exercised by the
holder of the permanent Global Instrument giving notice to the Issuing and Paying Agent within
the time limits relating to the deposit of Instruments with a Paying Agent set out in the
Conditions substantially in the form of the notice available from any Paying Agent, except
that the notice shall not be required to contain the serial numbers of the Instruments in
respect of which the option has been exercised, and stating the nominal amount of Instruments
in respect of which the option is exercised and at the same time presenting the permanent
Global Instrument for notation.8
    
    Trustees PowersIn considering the interests of Instrumentholders while any Global Instrument is held on behalf
of a clearing system, the Trustee may have regard to any information provided to it by such
clearing system or its operator as to the identity (either individually or by category) of its
accountholders with entitlements to such Global Instrument and may consider such interests as
if such accountholders were the holders of the Instruments represented by such Global
Instrument.9
    
    Events of DefaultEach Global Instrument provides that the Trustee, at its discretion, may, and if so requested
by holders of at least one-quarter in nominal amount of the Instruments then outstanding or if
so directed by an Extraordinary Resolution, shall cause such Global Instrument, or a portion
of it, to become due and repayable in the circumstances described in Condition 9 by stating in
the notice to the relevant Issuer the principal amount of such Global Instrument which is
becoming due and repayable. If principal in respect of any Instrument is not paid when due,
only the Trustee may enforce the rights of the Instrumentholders against such Issuer under the
terms of the Trust Deed unless the Trustee, having become bound to proceed, fails to do so
within a reasonable time and such failure is continuing.10
    
    NoticesSo long as any Instruments are represented by a Global Instrument and such Global Instrument
is held on behalf of a clearing system, notices to the holders of Instruments of that Series
may be given by delivery of the relevant notice to that clearing system for communication by
it to entitled accountholders in substitution for publication as required by the Conditions or
by delivery of the relevant notice to the holder of the Global Instrument.
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11
    
    Partly Paid InstrumentsThe provisions relating to Partly Paid Instruments are not set out in this Prospectus, but
will be contained in the relevant Final Terms and so in the Global Instruments. While any
instalments of the subscription moneys due from the holder of Partly Paid Instruments are
overdue, no interest in a Global Instrument representing such Instruments may be exchanged for
an interest in a permanent Global Instrument or for Definitive Instruments (as the case may
be). If any Instrumentholder fails to pay any instalment due on any Partly Paid Instruments
within the time specified, the relevant Issuer may forfeit such Instruments and shall have no
further obligation to their holder in respect of them.Tradeable AmountsSo long as the Instruments are represented by a temporary Global Instrument or permanent
Global Instrument and the relevant clearing system(s) so permit, the Instruments shall be
tradeable only in principal amounts of at least the Specified Denomination (or if more than one
Specified Denomination, the lowest Specified Denomination) and integral multiples of the
Tradeable Amount in excess thereof specified in the relevant Final Terms.
 51




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USE OF PROCEEDS
  52




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##### 



DESCRIPTION OF NATIONAL GRID GAS HOLDINGS plc
 Incorporation and Businesses
    Subsidiaries
  National Grid GasHoldingsShareholding (eitherName
    
    Country of Incorporation
    
    direct or indirect)British Transco Capital Inc.
    
    U.S.A. (Delaware)
    
    100%British Transco Finance (No. 1) Limited
    
    Cayman Islands
    
    100%British Transco Finance (No. 2) Limited
    
    Cayman Islands
    
    100%British Transco Finance (No. 3) Limited
    
    England & Wales
    
    100%British Transco Finance (No. 5) Limited
    
    England & Wales
    
    100%British Transco Finance Inc.
    
    U.S.A. (Delaware)
    
    100%British Transco International Finance B.V.
    
    The Netherlands
    
    100%C4Gas SA
    
    Belgium
    
    47.5%Joint Radio Company Limited
    
    England & Wales
    
    50  %National Grid Gas plc
    
    England & Wales
    
    100%Transco Metering Services Limited
    
    England & Wales
    
    100%
 Directors
  Principal
    
    Principal Activities outsideName
    
    Occupation
    
    National Grid Gas Holdings GroupColin Buck
    
    Director
    
    Finance Director of National Grid Gas
plc and a director of Fulcrum
Connections Limited
 53




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##### 



Principal
    
    Principal Activities outsideName
    
    Occupation
    
    National Grid Gas Holdings GroupStephen Charles Burrard-Lucas
    
    Director
    
    Group Finance Director of National Grid
plc and a director of National Grid
Electricity Transmission plc, National
Grid Gas Holdings plc, National Grid
Gas plc, Lattice Group plc, National
Grid
Commercial Holdings Ltd, National Grid
USA and non executive director of
Compass Group plcMalcolm Charles Cooper
    
    Director
    
    Group Tax and Treasury Director of
National Grid plc and a director of
British Transco Capital Inc., British
Transco Finance Inc, National Grid
Commercial Holdings Ltd, Lattice Group
International Holdings Ltd, Lattice
Group
plc, National Grid Investment Co Ltd,
National Grid Insurance Company (Isle
of Man) Ltd, Telecom International
Holdings Ltd and The Association of
Corporate TreasurersMark Robert Fairbairn
    
    Director
    
    Chief Operating Officer of National
Grid
Gas plc and NGT Intellectual Property
LtdSteven John Holliday
    
    Director
    
    Group Director of National Grid plc,
Chief Executive Officer of National
Grid
Gas plc and a director of Lattice Group
plc, National Grid Electricity
Transmission plc, National Grid USA,
National Grid UK Ltd, National Grid Gas
plc, National Grid International
Limited,
NGT Intellectual Property Limited,
National Grid UK Ltd and non executive
director of Marks and Spencer Group
PLC
   Recent Developments
   54




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DESCRIPTION OF NATIONAL GRID GAS plc
 Incorporation and Businesses
    Business of National Grid Gas plc
    (i)
    
    owning and operating the high pressure gas national transmission system (NTS) in Great
Britain (i.e. excluding Northern Ireland), comprising approximately 4,300 miles of high
pressure pipe and 25 compressor stations, connecting to eight distribution networks and to
third party independent systems for onward transportation of gas to end consumers as well as
interconnectors;
 (ii)
    
    operating four retained gas distribution networks (RDNs), comprising approximately 82,000
miles of distribution pipeline, conveying gas to domestic and industrial/commercial users in
central, eastern and north west England; and
 (iii)
    
    owning and operating liquefied natural gas (LNG) storage facilities.
    55




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Subsidiaries
  Country of
    
    National Grid Gass ShareholdingName
    
    Incorporation
    
    (either direct or indirect)British Transco Capital Inc.
    
    U.S.A. (Delaware)
    
    100%British Transco Finance (No. 1) Limited
    
    Cayman Islands
    
    100%British Transco Finance (No. 2) Limited
    
    Cayman Islands
    
    100%British Transco Finance (No. 3) Limited
    
    England & Wales
    
    100%British Transco Finance (No. 5) Limited
    
    England & Wales
    
    100%British Transco Finance Inc.
    
    U.S.A. (Delaware)
    
    100%British Transco International Finance B.V.
    
    The Netherlands
    
    100%C4Gas SA
    
    Belgium
    
    47.5%Joint Radio Company Limited
    
    England & Wales
    
    50%National Grid Metering Limited
    
    England & Wales
    
    100%
 Directors
  Principal Activities outside NationalName
    
    Principal Occupation
    
    Grid Gas GroupColin Buck
    
    Finance Director
    
    Director of National Grid Gas Holdings
plc and Fulcrum Connections Limited
 56




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##### 



Principal Activities outside NationalName
    
    Principal Occupation
    
    Grid Gas GroupStephen
Charles
 Burrard-Lucas
    
    Executive Director
    
    Group Finance Director of National Grid
plc and a director of National Grid
Electricity Transmission plc, National
Grid Gas Holdings plc, Lattice Group
plc, National Grid Commercial Holdings
Ltd, National Grid USA and non
executive director of Compass Group
plcMark Robert Fairbairn
    
    Chief Operating Officer
    
    Director of National Grid Gas Holdings
plc and NGT Intellectual Property Ltd.Steven John Holliday
    
    Chief Executive
    
    Group Director of National Grid plc and
a director of Lattice Group plc, National
Grid Electricity Transmission plc,
National Grid USA, National Grid Gas
Holdings plc, National Grid UK Ltd,
National Grid Gas plc, National Grid
International Limited, NGT Intellectual
Property Limited, National Grid UK Ltd
and non executive director of Marks and
Spencer Group PLCChristopher John Murray
    
    Director, Operations
and Trading NoneRoger John Urwin
    
    Chairman
    
    Group Chief Executive of National Grid
plc, National Grid USA and a director of
National Grid Electricity Transmission
plc. Non-executive director of The
Special Utilities Investment Trust plc
and Utilico Investment Trust plcNicholas Paul Winser
    
    Executive Director
    
    Group Director of National Grid plc and
a director of National Grid Wireless Ltd,
National Grid UK Ltd, National Grid
Electricity Transmission plc and
National Grid USA
   Regulatory Framework
    (i)
    
    the NTS; and
 57




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##### 



(ii)
    
    the RDNs (taken as a whole),
     (i)
    
    prohibiting National Grid Gas from carrying on activities other than those permitted by
the Licences;
 (ii)
    
    requiring that each business has sufficient managerial and financial resources available
to it to conduct the relevant licensed activities;
 (iii)
    
    requiring National Grid Gas to maintain an investment grade issuer credit rating;
 (iv)
    
    prohibiting National Grid Gas from creating indebtedness (except in limited
circumstances) other than on an arms length basis on normal commercial terms for one of its
permitted purposes;
 (v)
    
    prohibiting the creation of cross-default obligations; and
 (vi)
    
    prohibiting either the NTS or the RDN business from giving or receiving any
cross-subsidy from any other group business.
    58




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Recent Developments
     59




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UNITED KINGDOM TAXATION
 The following is a summary of the United Kingdom withholding taxation treatment at the date hereof
in relation to payments of principal and interest in respect of the Instruments. The comments do
not deal with other United Kingdom tax aspects of acquiring, holding or disposing of Instruments.
The comments relate only to the position of persons who are absolute beneficial owners of the
Instruments. Prospective Instrumentholders should be aware that the particular terms of issue of
any series of Instruments as specified in the relevant Final Terms may affect the tax treatment of
that and other series of Instruments. The following is a general guide and should be treated with
appropriate caution. Instrumentholders who are in any doubt as to their tax position should consult
their professional advisers. Instrumentholders who may be liable to taxation in jurisdictions other
than the United Kingdom in respect of their acquisition, holding or disposal of the Instruments are
particularly advised to consult their professional advisers as to whether they are so liable (and
if so under the laws of which jurisdictions), since the following comments relate only to certain
United Kingdom taxation aspects of payments in respect of the Instruments. In particular,
Instrumentholders should be aware that they may be liable to taxation under the laws of other
jurisdictions in relation to payments in respect of the Instruments even if such payments may be
made without withholding or deduction for or on account of taxation under the laws of the United
Kingdom.
 (A)
    
    UK Withholding Tax on UK Source Interest
 1.
    
    The Instruments issued by an Issuer which carry a right to interest will constitute
quoted
Eurobonds provided they are and continue to be listed on a recognised stock exchange within
the
meaning of section 841 of the Income and Corporation Taxes Act 1988. On the basis of HM
Revenue and Customs published interpretation of the relevant legislation, securities which
are to
be listed on a stock exchange in a country which is a Member State of the European Union or
which is part of the European Economic Area will satisfy this requirement if they are listed
by a
competent authority in that country and are admitted to trading on a recognised stock
exchange in
that country; securities which are to be listed on a stock exchange in any other country will
satisfy
this requirement if they are admitted to trading on a recognised stock exchange in that
country.
The London Stock Exchange is a recognised stock exchange for these purposes. Whilst the
Instruments are and continue to be quoted Eurobonds, payments of interest of on the
Instruments
may be made without withholding or deduction for or on account of United Kingdom income tax.2.
    
    In all cases falling outside the exemption described above, interest on the Instruments may
fall to
be paid under deduction of United Kingdom income tax at the lower rate (currently 20%)
subject to
such relief as may be available under the provisions of any applicable double taxation treaty
or to
any other exemption which may apply. However, this withholding will not apply if the relevant
interest is paid on Instruments with a maturity date of less than one year from the date of
issue
and which are not issued under arrangements the effect of which is to render such Instruments
part of a borrowing with a total term of a year or more.
 (B)
    
    Provision of Information
 
 60




---



##### 



(C)
    
    Other Rules Relating to United Kingdom Withholding Tax
 1.
    
    Instruments may be issued at an issue price of less than 100 per cent, of their principal
amount.
Any discount element on any such Instruments should not generally be subject to any United
Kingdom withholding tax pursuant to the provisions mentioned in A above, but may be subject
to
reporting requirements as outlined in B above.2.
    
    Where Instruments are to be, or may fall to be, redeemed at a premium, as opposed to being
issued at a discount, then any such element of premium may constitute a payment of interest.
Payments of interest are subject to United Kingdom withholding tax and reporting requirements
as
outlined above.3.
    
    Where interest has been paid under deduction of United Kingdom income tax, Instrumentholders
who are not resident in the United Kingdom may be able to recover all or part of the tax
deducted
if there is an appropriate provision in any applicable double taxation treaty.4.
    
    The references to interest above mean interest as understood in United Kingdom tax law.
The
statements above do not take any account of any different definitions of interest or
principal
which may prevail under any other law or which may be created by the terms and conditions of
the
Instruments or any related documentation.5.
    
    The above description of the United Kingdom withholding tax position assumes that there will
be
no substitution of an Issuer pursuant to Condition 11.3 of the Instruments and does not
consider
the tax consequences of any such substitution.
 (D)
    
    EU Savings Directive
   61




---



##### 



PLAN OF DISTRIBUTION
 Summary of Agreement
  Selling Restrictions
 United States
     European Economic Area
 
 62




---



##### 



(a)
    
    in (or in Germany, where the offer starts within) the period beginning on the date
of publication of
a prospectus in relation to those Instruments which has been approved by the competent
authority
in that Relevant Member State or, where appropriate, approved in another Relevant Member
State and notified to the competent authority in that Relevant Member State, all in
accordance
with the Prospectus Directive and ending on the date which is 12 months after the date of
such
publication;
 (b)
    
    at any time to legal entities which are authorised or regulated to operate in the financial
markets
or, if not so authorised or regulated, whose corporate purpose is solely to invest in
securities;
 (c)
    
    at any time to any legal entity which has two or more of (1) an average of at least 250
employees during the last financial year; (2) a total balance sheet of more than
43,000,000 and
(3) an annual net turnover of more than
50,000,000, as shown in its
last annual or consolidated accounts; or
 (d)
    
    at any time in any other circumstances which do not require the publication by the Issuer of
a
prospectus pursuant to Article 3 of the Prospectus Directive.
  United Kingdom
  (a)
    
    in relation to any Instruments which have a maturity of less than one year, (i) it is a
person whose
ordinary activities involve it in acquiring, holding, managing or disposing of investments
(as
principal or agent) for the purposes of its business and (ii) it has not offered or sold and
will not
offer or sell any Instruments other than to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or as agent) for the
purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or
dispose of investments (as principal or agent) for the purposes of their businesses where the
issue of the Instruments would otherwise constitute a contravention of Section 19 of the FSMA
by
the Issuer;
 (b)
    
    it has only communicated or caused to be communicated and will only communicate or cause to
be communicated an invitation or inducement to engage in investment activity (within the
meaning
of Section 21 of the FSMA) received by it in connection with the issue or sale of any
Instruments
in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and
 (c)
    
    it has complied and will comply with all applicable provisions of the FSMA with respect to
anything
done by it in relation to any Instruments in, from or otherwise involving the United Kingdom.
 Japan
  63




---



##### 



General
    64




---



##### 



FORM OF FINAL TERMS
 The Final Terms in respect of each Tranche of Instruments will be substantially in the
following form, duly supplemented (if necessary), amended (if necessary) and completed to
reflect the particular terms of the relevant Instruments and their issue. Text in this section
appearing in italics does not form part of the form of the Final Terms but denotes directions
for completing the Final Terms.
 Final Terms dated []
 [NATIONAL GRID GAS HOLDINGS PLC/NATIONAL GRID GAS PLC]*
 
 PART A  CONTRACTUAL TERMS
  www. londonstockexchange. com/en-gb/pricesnews/marketnews.
 The following alternative language applies if the first Tranche of an issue which is being
increased was issued under a Prospectus with an earlier date.
      www. londonstockexchange.
com/en-gb/pricesnews/marketnews.
 
 *
    
    Delete as applicable 65




---



##### 



[Include whichever of the following apply or specify not Applicable (N/A).
Instrument that the numbering should remain as set out below, even if Not Applicable is
indicated for individual paragraphs or sub-paragraphs.]
 [When completing final terms or adding any other final terms or information consideration
should be given as to whether such terms or information constitute significant new factors
and consequently trigger the need for a supplement to the Prospectus under Article 16 of the
Prospectus Directive.]
 1
    
    (i)
    
    Issuer:
    
    [National Grid Gas Holdings pic/National Grid Gas plc]12
    
    (i)
    
    Series Number:
    
    [][(ii)
    
    Tranche Number:
    
    [](If fungible with an existing Series,
details of that Series, including the
date on which the Instruments become
fungible).]3
    
    Specified Currency or Currencies:
    
    []4
    
    Aggregate Nominal Amount:
    
    [][(i)]
    
    Series:
    
    [][(ii)
    
    Tranche:
    
    []]5
    
    Issue Price:
    
    [] per cent of the Aggregate Nominal Amount [plus
accrued interest from [insert date] (if applicable)]6
    
    Specified Denominations:
    
    []2[]7
    
    [(i)]
    
    Issue Date:
    
    [][(ii)]
    
    Interest Commencement Date:
    
    []8
    
    Maturity Date:
    
    [specify date or (for Floating Rate Instruments)
Interest Payment Date falling in or nearest
to the relevant month and year]9
    
    Interest Basis:
    
    [[] per cent. Fixed Rate][[specify reference rate]+/- [] per cent. Floating Rate][Zero Coupon][Index Linked Interest][Other (specify)](further particulars specified below)10
    
    Redemption/Payment Basis:
    
    [Redemption at par][Index Linked Redemption][Dual Currency][Partly Paid][Instalment][Other (specify)][N.B. If the Final Redemption Amount is less than
 
 1
    
    Delete as applicable2
    
    Instruments which have a maturity of less than one year must have a minimum denomination of £100,000 (or it equivalent in
other currencies) 66




---



##### 



100% of the nominal value, the Notes will
constitute derivative securities for the purposes
of the Prospectus Directive and the requirements of
Annex XII to the Prospectus Directive Regulation
No. 809/2004 will apply and the Issuer will prepare
and publish a supplement to the Prospectus.]11
    
    Change of Interest or
Redemption/Payment Basis:
    
    [Specify details of any provision for convertibility of
Instruments into another interest or redemption/
payment basis]12
    
    Put/Call Options:
    
    [Investor Put][Issuer Call][(further particulars specified below)]13
    
    (i)
    
    Status of the Instruments:
    
    Senior(ii)
    
    Date [Board] approval for
    
    []issuance
    
    of Instruments obtained:
    
    (N.B Only relevant where Board (or similar)
authorisation is required for the particular
tranche of Instruments)]14
    
    Method of distribution:
    
    [Syndicated/Non-syndicated]PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE15
    
    Fixed Rate Instrument Provisions
    
    Applicable/Not Applicable](If not applicable, delete the
remaining sub-paragraphs of this paragraph)(i)
    
    Rate[(s)] of Interest:
    
    [] per cent. per annum [payable [annually/semi-
annually/quarterly/monthly] in arrear](ii)
    
    Interest Payment Date(s):
    
    [] in each year(iii)
    
    Fixed Coupon Amount[(s)]:
    
    [] per [] in Nominal Amount(iv)
    
    Broken Amount(s):
    
    [Insert particulars of any initial or final broken
interest amounts which do not correspond with the
Fixed Coupon Amount[(s)]](v)
    
    Day Count Fraction (Condition
3.2.4(i)):
    
    [30/360 / Actual/Actual ([ICMA]/ISDA)/other](vi)
    
    Determination Dates (Condition
3.2.4(i)):
    
    [] in each year (insert regular interest
payment dates, ignoring issue date or maturity date in the
case of a long or short first or last coupon. N.B.
only relevant where Day Count Fraction is
Actual/Actual ([ICMA]))(vii)
    
    Other terms relating to the
method of calculating interest
for Fixed Rate Instruments:
    
    [Not Applicable/give details]16
    
    Floating Rate Instrument Provisions
    
    [Applicable/Not Applicable](If not applicable, delete the
remaining sub-paragraphs of this paragraph)(i)
    
    Interest Period(s):
    
    [](ii)
    
    Specified Interest Payment Dates:
    
    []
 67




---



##### 



(iii)
    
    Business Day Convention:
    
    [Floating Rate Convention/ Following Business Day Convention/ Modified Following Business Day Convention/ Preceding Business Day Convention/ other (give details)](iv)
    
    Business Centre(s) (Condition 3.2.4(i)):
    
    [](v)
    
    Manner in which the Rate(s) of
Interest is/are to be determined:
    
    [Screen Rate Determination/ISDA Determination/other (give details)](vi)
    
    Interest Period Date(s):
    
    [Not Applicable/specify dates](vii)
    
    Party responsible for calculating
the Rate(s) of Interest and Interest
Amount(s) (if not the Calculation Agent):
    
    [](viii)
    
    Screen Rate
Determination (Condition 3.2.3(B)):-
    
    Relevant Time:
    
    []-
    
    Interest Determination Date(s):
    
    [[] [TARGET] Business Days in [specify
city] for
[specify currency] prior to [the first day
in each Interest Accrual Period/each
Interest Payment Date]]-
    
    Primary Source for Floating
Rate:
    
    [Specify relevant screen page or Reference
Banks"]-
    
    Reference Banks (if Primary
Source is Reference Banks):
    
    [Specify five]-
    
    Relevant Financial Centre:
    
    [The financial centre most closely connected to
the Benchmark  specify if not London]-
    
    Benchmark:
    
    [LIBOR, LIBID, LIMEAN, EURIBOR or other
benchmark]-
    
    Representative Amount:
    
    [Specify if screen or Reference Bank quotations
are to be given in respect of a transaction of a
specified notional amount]-
    
    Effective Date:
    
    [Specify if quotations are not be obtained with
effect from commencement of Interest Accrual Period]-
    
    Specified Duration:
    
    [Specify period for quotation if not duration of
Interest Accrual Period](ix)
    
    ISDA Determination
(Condition 3.2.3(A)):-
    
    Floating Rate Option:
    
    []-
    
    Designated Maturity:
    
    []-
    
    Reset Date:
    
    []-
    
    ISDA Definitions: (if different
from those set out in the
Conditions)
    
    [](x)
    
    Margin(s):
    
    [+/-][] Per cent. Per annum
 68




---



##### 



(xi)
    
    Minimum Rate of Interest:
    
    [] per cent. per annum(xii)
    
    Maximum Rate of Interest:
    
    [] per cent. per annum(xiii)
    
    Day Count Fraction (Condition
3.2.4(i)):
    
    [](xvi)
    
    Rate Multiplier:
    
    [](xv)
    
    Fall back provisions, rounding
provisions, denominator and any other
terms relating to the method of
calculating interest on Floating Rate
Instruments, if different from those
set out in the Conditions:
    
    []17
    
    Zero Coupon Instrument Provisions
    
    [Applicable/Not Applicable](If not applicable, delete the remaining
sub-paragraphs of this paragraph)(i)
    
    Amortisation Yield (Condition 5.4):
    
    [] per cent. per annum(ii)
    
    Day Count Fraction (Condition
3.2.4(i)):
    
    [](iii)
    
    Any other formula/basis of
determining amount payable:
    
    []18
    
    Index-Linked Interest Instrument
    
    [Applicable/Not Applicable](If not applicable, delete the remaining
sub-paragraphs of this paragraph)(i)
    
    Index/Formula:
    
    [give or annex details](ii)
    
    Interest Rate:
    
    [](iii)
    
    Party responsible for calculating
the Rate(s) of Interest, Interest
Amount and Redemption Amount(s) (if not
the Calculation Agent):
    
    [](iv)
    
    Provisions for determining Coupon
where calculation by reference to Index
and/or Formula is impossible or
impracticable:
    
    [](v)
    
    Specified Interest Payment Dates:
    
    [](vi)
    
    First Interest Payment Date:
    
    [](vii)
    
    Interest Period(s):
    
    [](viii)
    
    Business Day Convention:
    
    [Following Business Day Convention/Modified
Following Business Day Convention/Preceding
Business Day Convention/other (give details)](ix)
    
    Minimum Indexation Factor:
    
    [Not Applicable/specify](x)
    
    Business Centre(s) (Condition
3.2.4(i)):
    
    [](xi)
    
    Maximum Indexation Factor:
    
    [Not Applicable/specify]
 69




---



##### 



(xii)
    
    Limited Indexation Month(s) or
Period for calculation
of Limited Indexation
Factor:
    
    [] per cent per annum(xiii)
    
    Base Index Figure (Condition 4.1):
    
    [](xiv)
    
    Day Count Fraction
(Condition 3.2.4(i)):
    
    [](xv)
    
    Index or Index Figure (Condition
4.1):
    
    Sub-paragraph [(i)/(ii) (iii)]
of the definition of Index
or Index Figure as set out in
Condition 4.1 shall apply(xvi)
    
    Reference Gilt:
    
    []19
    
    Dual Currency Instrument Provisions
    
    [Applicable/Not Applicable](If not applicable, delete the
remaining sub-paragraphs of this
paragraph)(i)
    
    Rate of Exchange/method
of calculating Rate of
Exchange:
    
    [give details](ii)
    
    Calculation Agent,
if any, responsible for calculating
the principal and/or interest due:
    
    [](iii)
    
    Provisions
applicable where calculation by
reference to Rate of Exchange
impossible or impracticable:
    
    [](iv)
    
    Person at whose option
Specified Currency(ies)
is/are payable:
    
    [](v)
    
    Day Count Fraction
(Condition 3.2.4(i)):
    
    []PROVISIONS RELATING TO REDEMPTION20
    
    Call Option1
    
    [Applicable/Not Applicable](If not applicable, delete the
remaining sub-paragraphs of this
paragraph)(i)
    
    Optional Redemption Date(s):
    
    [](ii)
    
    Optional Redemption Amount(s) of
each Instrument and method, if
any, of calculation of such
amount(s):
    
    [] per Instrument of []
specified denomination(iii)
    
    If redeemable in part:(a)
    
    Minimum nominal amount to
be redeemed:
    
    [](b)
    
    Maximum nominal amount
to be redeemed:
    
    [](iv)
    
    Option Exercise Date(s):
    
    [](v)
    
    Notice period (if other than as set
    
    []
 
 1
    
    [This does not include the tax call in Condition 5.2] 70




---



##### 



out in the Conditions)21
    
    Put Option
    
    [Applicable/Not Applicable](If not applicable, delete the
remaining sub-paragraphs of this
paragraph)(i)
    
    Optional Redemption Date(s):
    
    [](ii)
    
    Optional Redemption Amount(s) of
each Instrument and
method, if any, of calculation
of such amount(s):
    
    [] per Instrument of [] specified denomination(iii)
    
    Option Exercise Date(s):
    
    [](iii)
    
    Notice period (if other than
as set out in the Conditions)
    
    [](iv)
    
    Option Period
    
    []22
    
    Final Redemption Amount of each
Instrument
    
    [[] per Instrument of [] specified denomination
/other/see Appendix][If the Final Redemption Amount is linked to
an underlying reference or security, the
Notes will constitute derivative securities
for the purposes of the Prospectus Directive
and the requirements of Annex XII to the
Prospectus Directive Regulation No. 809/2004
will apply and the Issuer will prepare and
publish a supplement to the Prospectus which
shall constitute a supplementary prospectus
pursuant to Prospectus Rule 3-4 and Section
876 of the FSMA.]In cases where the Final Redemption
Amount is Index-Linked:(i)
    
    Index/Formula:
    
    [give or annex details](ii)
    
    Calculation Agent responsible
for calculating the Final
Redemption Amount:
    
    [](iii)
    
    Provisions for determining
Final Redemption
Amount where calculated by
reference to Index and/or
Formula and/or other
variable:
    
    [](iv)
    
    Determination Date(s):
    
    [](v)
    
    Provisions for determining Final
Redemption Amount where
calculation by reference to Index
and/or Formula and/or other
variable is impossible or
impracticable or otherwise
disrupted:
    
    [](vi)
    
    Payment Date:
    
    []
 71




---



##### 



(vii)
    
    Minimum Final
Redemption Amount:
    
    [](viii)
    
    Maximum Final Redemption
Amount:
    
    []23
    
    Early Redemption Amount(i)
    
    Early Redemption Amount(s) of
each Instrument payable on redemption
for taxation reasons (Condition 5.2) or
on Event of Default (Condition 9) or
other early redemption and/or the method
of calculating the same (if required or
if different from that set out in the
Conditions):
    
    [](ii)
    
    Redemption for taxation reasons
permitted on days other than
Interest Payment Dates (Condition 5.2)
    
    [Yes/No](iii)
    
    Unmatured Coupons to become void
upon early redemption (Condition 6.5)
    
    [Yes/No/Not Applicable]GENERAL PROVISIONS APPLICABLE TO THE INSTRUMENTS24
    
    Form of Instruments:
    
    Bearer Instruments:[Temporary Global Instrument exchangeable for a
permanent Global Instrument which is exchangeable
for Definitive Instruments on 60 [] days
notice/at any time/in the limited circumstances
specified in the Permanent Global Instrument][Temporary Global Instrument exchangeable for
Definitive Instruments on 40 [] days notice][Permanent Global Instrument exchangeable for
Definitive Instruments on 60 [] days notice/at
any time/in the limited circumstances specified in
the permanent Global Instrument]25
    
    Financial Centre(s) or other special
provisions relating to Payment Dates
(Condition 6.6):
    
    [Not Applicable/give details. Note that this item
relates to the date and place of payment, and not
interest period end dates, to which items 16(iv) and 18(x) relate]26
    
    Applicable TEFRA exemption:
    
    [C Rules/D Rules/Not Applicable]27
    
    Talons for future Coupons or Receipts to
be attached to Definitive Instruments (and
dates on which such Talons mature):
    
    [Yes/No. If yes, give details]28
    
    Details relating to Partly Paid Instruments:
amount of each payment comprising the
Issue Price and date on which each
payment is to be made and
    
    [Not Applicable/give details]
 72




---



##### 



consequences (if any) of failure to pay,
including any right of the Issuer to
forfeit the Instruments and interest due
on late payment:29
    
    Details relating to Instalment Instruments:
    
    [Not Applicable/give details]-
    
    Amount of each instalment:
    
    []-
    
    Date on which each payment is to
be made:
    
    []-
    
    Maximum Instalment Amount:
    
    []-
    
    Minimum Instalment Amount:
    
    []30
    
    Redenomination, renominalisation and
reconventioning provisions:
    
    [Not Applicable/give details]31
    
    Consolidation provisions:
    
    [Not Applicable/give details]32
    
    Other final terms:
    
    [Not Applicable/give details](When adding any other final terms consideration
should be given as to whether such terms constitute
a significant new factor and consequently trigger
the need for a supplement to the Prospectus under
Article 16 of the Prospectus Directive.)DISTRIBUTION33
    
    (i)
    
    If syndicated, names of Managers:
    
    [Not Applicable/give names](ii)
    
    Stabilising Manager(s) (if any):
    
    [Not Applicable/give name]34
    
    If non-syndicated, name of Dealer:
    
    [Not Applicable/give name]35
    
    Additional selling restrictions:
    
    [Not Applicable/give details]
 [LISTING AND ADMISSION TO TRADING APPLICATION
  RESPONSIBILITY
   
  By:Duly authorised
 73




---



##### 



PART B  OTHER INFORMATION*
 1
    
    LISTING(i)
    
    Listing:
    
    [London/other (specify)/None](ii)
    
    Admission to trading:
    
    [Application has been made for the Instruments to be
admitted to trading on [] with effect from [].]
[Not Applicable.](iii)
    
    Estimate of total expenses
related to admission to trading:
    
    []2
    
    RATINGSRatings:
    
    
    
    The Instruments to be issued have been rated:[S&P: [  ]][Moodys: []][[Other]: []](The above disclosure should reflect the rating
allocated to Instruments of the type being issued
under the Programme generally or, where the issue has
been specifically rated, that rating.)
 3
    
    NOTIFICATIONThe Financial Services Authority [has been requested to provide/has provided  include
first alternative for an issue which is contemporaneous with the update of the Programme and
the second alternative for subsequent issues] the [include names of competent authorities of
host Member States] with a certificate of approval attesting that the Prospectus has been
drawn up in accordance with the Prospectus Directive.4
    
    [INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUENeed to include a description of any interest, including conflicting ones, that is
material to the issue/offer, detailing the persons involved and the nature of the interest.
May be satisfied by the inclusion of the following statement:
  5
    
    [REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES[(i)]
    
    Reasons for the offer
    
    [][(ii)]
    
    Estimated net proceeds:
    
    [](If proceeds are intended for more than one use
will need to split out and present in order of
priority. If proceeds insufficient to fund all
proposed uses state amount and sources of other
funding.)[(iii)]
    
    Estimated total expenses:
    
    [] [Include breakdown of expenses.]
 
 *
    
    If an issue of Instruments is (i) NOT admitted to trading on a regulated market within the
European Economic Area and (ii) only offered in the European Economic Area in circumstances
where a prospectus is not required to be published under the Prospectus Directive the Issuer
may elect to amend and/or delete certain of the above paragraphs of Part B. 74




---



##### 



(Only necessary to include disclosure of net
proceeds and total expenses at (ii) and (iii) above
where disclosure is included at (i) above.)]6
    
    [Fixed Rate Instruments only  YIELDIndication of yield:
    
    [] The yield is calculated at the Issue Date on the basis of
the Issue Price. It is not an indication of future
yield.]
 7
    
    [Index-Linked Instruments only  PERFORMANCE OF INDEX/FORMULA/OTHER VARIABLE AND OTHER
INFORMATION CONCERNING THE UNDERLYINGNeed to include details of where past and future performance and volatility of the
index/formula/other variable can be obtained. Where the underlying is an index need to include
the name of the index and a description if composed by the Issuer and if the index is not
composed by the Issuer need to include details of where the information about the index can be
obtained. Where the underlying is not an index need to include equivalent information.]8
    
    [Dual Currency Instruments only  PERFORMANCE OF RATE[S] OF EXCHANGENeed to include details of where past and future performance and volatility of the relevant
rate[s] can be obtained.]
 9
    
    OPERATIONAL INFORMATIONISIN Code:
    
    []Common Code:
    
    []Any clearing system(s) other than
Euroclear Bank S.A./N.V. and
Clearstream Banking société anonyme and
the relevant address(es) and
identification number(s):
    
    [Not Applicable/give name(s) and number(s) [and
address(es)]]Delivery:
    
    Delivery [against/free of] paymentNames and addresses of additional
Paying Agent(s) (if any):
    
    []10
    
    GENERALTradeable Amount:
    
    So long as the Instruments are represented by a GlobalInstrument and [specify relevant clearing system(s)]
so permit, the Instruments shall be tradeable in
minimum principal amounts of [50,000]/[] and
integral multiples of [] (the Tradeable Amount) in
addition thereto.The aggregate principal amount of
Instruments issued has been translated
into Euro at the rate of [], producing
a sum of (for Instruments
not denominated in Euro):
    
    [Not Applicable/[[Euro]][]]Additional steps that may only be taken
following approval by an Extraordinary
Resolution in
accordance with Condition 11.1:
    
    [Not Applicable/give details]
 75




---



##### 



GENERAL INFORMATION
 (1)
    
    The admission of the Programme to listing on the Official List and to trading on the Market
is expected to take effect on or about 1 March 2006. The listing of the Instruments on the
Official List will be expressed as a percentage of their nominal amount (exclusive of accrued
interest). Any Tranche of Instruments intended to be admitted to listing on the Official List
and admitted to trading on the Market will be so admitted to listing and trading upon
submission to the UK Listing Authority and the London Stock Exchange (in accordance with their
rules and procedures) of the relevant Final Terms and any other information required by the UK
Listing Authority and the London Stock Exchange, subject in each case to the issue of the
relevant Instruments. Prior to official listing, dealings will be permitted by the Market in
accordance with its rules. Transactions will normally be effected for delivery on the third
working day in London after the day of the transaction.However, Instruments may be issued pursuant to the Programme which will not be admitted to
listing, trading and/or quotation by the UK Listing Authority or the Market or any other
listing authority, stock exchange and/or quotation system or which will be admitted to
listing, trading and/or quotation by such listing authority, stock exchange and/or quotation
system as the relevant Issuer and the relevant Dealer(s) may agree.(2)
    
    National Grid Gas Holdings has obtained all necessary consents, approvals and authorisations
in the United Kingdom in connection with the issue and performance of the Instruments.(3)
    
    National Grid Gas has obtained all necessary consents, approvals and authorisations in the
United Kingdom in connection with the issue and performance of the Instruments.(4)
    
    The establishment of the Programme was authorised by a resolution of the Finance Committee of
the Board of Directors of National Grid Gas Holdings passed on 17 July 2003. The update of the
Programme was authorised by a resolution of the Finance Committee of the Board of Directors of
National Grid Gas Holdings passed on 25 April 2005.(5)
    
    The establishment of the Programme was authorised by a resolution of the Finance Committee of
the Board of Directors of National Grid Gas passed on 17 July 2003. The update of the
Programme was authorised by a resolution of the Finance Committee of the Board of Directors of
National Grid Gas passed on 25 April 2005.(6)
    
    Instruments have been accepted for clearance through the Euroclear and Clearstream,
Luxembourg. The appropriate common code and the International Securities Identification Number
in relation to the Instruments of each Series will be specified in the relevant Final Terms
relating thereto. The relevant Final Terms shall specify any other clearing system(s) as shall
have accepted the relevant Instruments for clearance together with any further appropriate
information. The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels,
Belgium and the address of Clearstream, Luxembourg is 42 Avenue JF Kennedy, L-1855 Luxembourg.(7)
    
    There are no, nor have there been any, governmental, legal or arbitration proceedings
(including any such proceedings which are pending or threatened of which National Grid Gas
Holdings is aware) during the 12 months preceding the date of this Prospectus which may have,
or have had in the recent past a significant effect on the financial position or profitability
of National Grid Gas Holdings or of the National Grid Gas Holdings Group.(8)
    
    There are no, nor have there been any, governmental, legal or arbitration proceedings
(including any such proceedings which are pending or threatened of which National Grid Gas is
aware) during the 12 months preceding the date of this Prospectus which may have, or have had
in the
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recent past a significant effect on the financial position or profitability of National Grid
Gas or of the National Grid Gas Group.(9)
    
    Save as disclosed in the section entitiled Description of National Grid Gas Holdings plc -
Recent Developments on page 54, there has been no significant change in the financial or
trading position of the National Grid Gas Holdings Group since 31 March 2005 and no material
adverse change in the prospects of National Grid Gas Holdings or the National Grid Gas
Holdings Group since 31 March 2005.(10)
    
    Save as disclosed in the section entitiled Description of National Grid Gas plc - Recent
Developments on page 59, there has been no significant change in the financial or trading
position of the National Grid Gas Group since 31 March 2005 and no material adverse change in
the prospects of National Grid Gas or the National Grid Gas Group since 31 March 2005.(11)
    
    PricewaterhouseCoopers LLP (chartered accountants and registered auditors authorised and
regulated by the Financial Services Authority) has audited the accounts of the National Grid
Gas Holdings Group for the years ended 31 March 2004 and 31 March 2005, in accordance with
United Kingdom generally accepted auditing standards and reported thereon, respectively,
without qualification.(12)
    
    PricewaterhouseCoopers LLP (chartered accountants and registered auditors authorised and
regulated by the Financial Services Authority) has audited the accounts of the National Grid
Gas Group for the years ended 31 March 2004 and 31 March 2005, in accordance with United
Kingdom generally accepted auditing standards and reported thereon, respectively, without
qualification.(13)
    
    Each Instrument, Receipt, Coupon and Talon will bear the following legend: Any United States
person who holds this obligation will be subject to limitations under the United States income
tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal
Revenue Code.(14)
    
    For a period of 12 months following the date of this Prospectus, copies of the following
documents may be inspected during usual business hours on any weekday (Saturdays, Sundays and
public holidays excepted), for inspection at the offices of JPMorgan Chase Bank at Trinity
Tower, 9 Thomas More Street, London E1 W 1 YT:
 (i)
    
    a copy of this Prospectus with any supplement to this Prospectus or further
Prospectus;(ii)
    
    the Memorandum and Articles of Association of National Grid Gas
Holdings;(iii)
    
    the Memorandum and Articles of Association of National Grid Gas;(iv)
    
    the audited consolidated accounts of National Grid Gas Holdings for the years
ended 31 March 2004 and 31 March 2005, together with the audit report thereon;(v)
    
    the audited consolidated accounts of National Grid Gas for the years ended
31 March 2004 and 31 March 2005, together with the audit report thereon; and
 In addition, this Prospectus is and, in the case of Instruments to be admitted to the
Official List and admitted to trading on the Market, the relevant Final Terms will be,
available on the website of the Regulatory News Service operated by the London Stock Exchange
at www.londonstockexchange.com/en-gb/pricesnews/marketnews.
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REGISTERED OFFICE OF THE ISSUERS
 
 THE TRUSTEE
 The Law Debenture Trust Corporation p.l.c.
 THE ARRANGER
 HSBC Bank plc
 THE DEALERS
 Barclays Bank PLC
    
    Credit Suisse Securities (Europe) Limited5 The North Colonnade
Canary Wharf
London E14 4BB
    
    One Cabot Square
London E14 4QJDeutsche Bank AG, London Branch
Winchester House
1 Great Winchester Street
London EC2N 2DB
    
    HSBC Bank plc
8 Canada Square
London E14 5HQJ.P. Morgan Securities Ltd.
125 London Wall
London EC2Y 5AJ
    
    Mizuho International plc
Bracken House
One Friday Street
London EC4M 9JA
 The Royal Bank of Scotland plc
 LEGAL ADVISERS
 To the Issuers
 Linklaters
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To the Dealers and to the Trustee
 Clifford Chance Limited Liability Partnership
 ISSUING AND PAYING AGENT
 JPMorgan Chase Bank, N.A.
 PAYING AGENTS
 Kredietbank S. A. Luxembourgeoise
 REGISTERED AUDITORS TO EACH OF THE ISSUERS
 PricewaterhouseCoopers LLP
 79