EXHIBIT
2(b).13.1
  
 NATIONAL GRID GAS plc
 (incorporated with limited liability in England and Wales on 1 April 1986 under registered number 2006000)
 NATIONAL GRID GAS FINANCE (NO 1) plc
 (incorporated with limited liability in England and Wales on 3 August 2006 under registered number 5895068)
 Euro 10,000,000,000
Euro Medium Term Note Programme
 
 NATIONAL GRID GAS plc
 Programme Prospectus National Grid Gas National Grid Gas Finance (No 1) Issuer Issuers Instruments Guarantor
 UK Listing Authority FSMA Official List London Stock Exchange Market PSM listed
 temporary Global Instrument permanent Global Instrument NGN Common Safekeeper Euroclear société anonyme Clearstream, Luxembourg Classic Global Notes CGNs Common Depositary
  Prospectus Directive
  Arranger for the Programme
 HSBC
 The Dealers
 BARCLAYS CAPITAL
    
    DEUTSCHE BANKHSBC
    
    JPMORGAN CAZENOVEMIZUHO INTERNATIONAL PLC
    
    MORGAN STANLEYRBC CAPITAL MARKETS
    
    THE ROYAL BANK OF SCOTLAND




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IMPORTANT NOTICES
 National Grid Gas Group
  Relevant Member
State
    Securities Act
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 euro Japanese yen £ Sterling U.S.$ U.S. dollars Canadian dollars Australian dollars New
Zealand dollars Swedish krona Danish krone Hong Kong
dollars Swiss francs
 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, to the
extent permitted by applicable laws and directives, over-allot Instruments 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
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. Any
stabilisation action or
over-allotment must be conducted by the relevant Stabilising Manager(s) (or person(s) acting on
behalf of any Stabilising Manager(s)) in accordance with all applicable laws and rules.
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CONTENTS
 PageDOCUMENTS INCORPORATED BY REFERENCE
    
    
    5SUPPLEMENTAL PROSPECTUS
    
    
    6SUPPLEMENTARY LISTING PARTICULARS
    
    
    6OVERVIEW OF THE PROGRAMME
    
    
    7RISK FACTORS
    
    
    13TERMS AND CONDITIONS OF THE INSTRUMENTS
    
    
    21SUMMARY OF PROVISIONS RELATING TO THE INSTRUMENTS WHILE IN GLOBAL FORM
    
    
    50USE OF PROCEEDS
    
    
    55DESCRIPTION OF NATIONAL GRID GAS PLC
    
    
    56DESCRIPTION OF NATIONAL GRID GAS FINANCE (NO 1) PLC
    
    
    62DESCRIPTION OF THE GUARANTEE
    
    
    63UNITED KINGDOM TAXATION
    
    
    64PLAN OF DISTRIBUTION
    
    
    67FORM OF FINAL TERMS
    
    
    70GENERAL INFORMATION
    
    
    83
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DOCUMENTS INCORPORATED BY REFERENCE
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SUPPLEMENTAL PROSPECTUS
 Supplemental Prospectus
 SUPPLEMENTARY LISTING PARTICULARS
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OVERVIEW OF THE PROGRAMME
  Issuers
    
    National Grid Gas plc (registered number 2006000).National Grid Gas Finance (No 1) plc (registered number 5895068).Guarantor
    
    National Grid Gas plc (in respect of Instruments to be issued by National Grid Gas Finance (No 1) plc).Description
    
    Euro Medium Term Note Programme.Size
    
    Up to 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 PLCDeutsche Bank AG, London BranchHSBC Bank plcJ.P. Morgan Securities Ltd.Mizuho International plcMorgan Stanley & Co. International plcRoyal Bank of Canada Europe LimitedThe Royal Bank of Scotland plcThe Issuers and the Guarantor 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 references 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
    
    The Bank of New York MellonOther Paying Agents
    
    KBL European Private Bankers S.A.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,
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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).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 Guarantor (if applicable),
the Issuing and Paying Agent, the Trustee and the relevant
Dealer.Initial Delivery of Instruments
    
    On or before the issue date for each Tranche, if the relevant Global Instrument is a NGN, the Global Instrument will be delivered to a Common Safekeeper for Euroclear and Clearstream, Luxembourg. On or before the issue date for each Tranche, if the relevant Global Instrument is a CGN, 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 Guarantor (if applicable), 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
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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 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 2006 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
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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.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.


 The relevant
 Issuer may elect to redeem all, but not some only, of the Instruments of any Series
 at their Residual Holding Redemption Amount (as set out in the relevant Final Terms)
 at any time if the Residual Holding Percentage (as set out in the relevant Final Terms)
 or more of the aggregate nominal amount of such Instruments originally issued shall have
 been redeemed or purchased and cancelled.Status of Instruments
and the Guarantee
    
    The Instruments (and where applicable, the guarantee in
 respect of them) will constitute unsubordinated and unsecured obligations of the relevant
 Issuer (and where
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applicable, the Guarantor, respectively), all as described in Terms and Conditions of the Instruments  Status.Negative Pledge
    
    None of the Issuers or the Guarantor 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 or the Guarantor, where applicable, 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.Early Redemption
    
    Except as provided in Optional Redemption above and subject always to any 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 or the PSM 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, Public Offer
 Selling Restriction under the Prospectus Directive in respect of Instruments
 having a specified denomination of less than 50,000 or its equivalent in any
 other currency as at the date of issue of the Instruments and Japan. See Plan
 of Distribution.
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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 Guarantor (where applicable), the Trustee and the
 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 and the Guarantor believe that the following factors may affect their
ability to fulfil their obligations under Instruments issued under the Programme. All of these
factors are contingencies which may or may not occur and the relevant Issuer and the Guarantor are
not in a position to express a view on the likelihood of any such contingency occurring.
 Factors which the relevant Issuer and the Guarantor believe 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 and the Guarantor believe that the factors described below represent the
principal risks inherent in investing in Instruments issued under the Programme, but the relevant
Issuer or the Guarantor may be unable to pay interest, principal or other amounts on or in
connection with any Instruments for other reasons and such Issuer and the Guarantor do 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 plc and its business
 Changes in law or regulation could have an adverse effect on National Grid Gass results of
operations
  Breaches of or changes in environmental or health and safety laws or regulations could expose
National Grid Gas to increased costs, 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 and damage to
infrastructure may have significant adverse impacts on both National Grid Gass financial position
and its reputation
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National Grid Gass results of operations depend on a number of factors relating to business
performance including performance against regulatory targets and the delivery of anticipated costs
and efficiency savings
 Ofgem
 Changes to the regulatory treatment of commodity costs may have an adverse effect on the results of
operations
  National Grid Gass reputation may be harmed if consumers of energy suffer a disruption to their
supply
  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
  National Grid Gass overall financial position may be adversely affected by a number of factors
including restrictions on borrowing and debt arrangements, changes to credit ratings, adverse
changes and volatility in the global credit markets
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National Grid Gass results of operations could be affected by deflation
  Future funding requirements of the National Grid plc UK Pension Scheme could adversely affect
National Grid Gass results of operations
  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. Changes in law and accounting standards could
increase National Grid Gass effective rate of tax.
 IFRS
 Customers and counterparties to National Grid Gass transactions may fail to perform their
obligations or arrangements the company has may be terminated, which could harm the results of its
operations
  Risk relating to National Grid Gas Finance (No 1) plc and its business
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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
 Relevant Factor
 (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
  Risks related to Instruments generally
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Modification, waivers and substitution
   European Monetary Union
  EU Savings Directive
 EU Savings Directive Residual Entities
  if implemented in their
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current form
   Change of law
  Integral multiples of less than 50,000
  Risks related to the market generally
  The secondary market generally
  The Clearing Systems
 Euroclear société anonyme Clearstream, Luxembourg
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Exchange rate risks and exchange controls
 Investors Currency
  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. Provisions which are marked with * only apply
where National Grid Gas Finance (No 1) is the Issuer.National Grid Gas plc (National Grid Gas) and National Grid Gas Finance (No 1) plc (National
Grid Gas Finance (No 1)) (each an Issuer and together, the Issuers) and National Grid Gas plc
as guarantor of Instruments issued by National Grid Gas Finance (No 1) (the Guarantor) have
established a Euro Medium Term Note Programme (the Programme) for the issuance of up to
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 2010 between the Issuers, the Guarantor 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
2010 has been entered into in relation to the Instruments between the Issuers, the Guarantor, the
Trustee, The Bank of New York Mellon 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 2010 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 (including the Guarantee) 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.In the case of 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
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circumstances which require the publication of a prospectus under Directive 2003/71/EC (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).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.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, the Guarantor (if applicable) 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
    
    Status [and Guarantee]*
 2.1
    
    StatusThe Instruments and the Receipts and Coupons relating to them constitute direct,
unconditional and unsecured obligations of the Issuer and rank pari passuwithout any preference or
priority among themselves. The payment obligations of the Issuer under the Instruments, Receipts
and Coupons [and of the Guarantor under the Guarantee]* 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 [and the
Guarantor respectively]*.2.2
    
    [GuaranteeThe Guarantor has unconditionally and irrevocably guaranteed the due payment of all sums
expressed to be payable by the Issuer under the Trust Deed, the Instruments, Receipts and Coupons.
Its obligations in that respect (the Guarantee) are contained in the Trust Deed.]*
 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. The amount of interest payable shall be determined
in accordance with Condition 3.2.4(f).
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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 (expressed as
a percentage) equal to the Rate of Interest, such interest being payable in arrear on each Interest
Payment Date. The amount of interest payable shall be determined in accordance with Condition
3.2.4(f). 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 in the relevant Final Terms.
 (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:
 (x)
    
    the Floating Rate Option is as specified in the relevant Final Terms;(y)
    
    the Designated Maturity is a period specified in the relevant Final Terms; and(z)
    
    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.
 23




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(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 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).
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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 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 Condition 5.4.1(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
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figures shall be rounded to seven significant figures (with halves being 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 per Calculation Amount in respect of any Instrument for any Interest
Accrual Period shall be equal to the product of the Rate of Interest, the Calculation Amount
specified thereon, and the Day Count Fraction for such Interest Accrual Period, unless an Interest
Amount (or a formula for its calculation) is applicable to such Interest Accrual Period, in which
case the amount of interest payable per Calculation Amount in respect of such Instrument for such
Interest Accrual 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 per Calculation Amount in respect of such Interest Period shall be the sum of the
Interest Amounts payable in respect of each of those Interest Accrual Periods. In respect of any
other period for which interest is required to be calculated, the provisions above shall apply save
that the Day Count Fraction shall be for the period for which interest is required to be
calculated.(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, [ the Guarantor,]* 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
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of any rate or amount, the obtaining of each quotation and the making of each 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:Benchmark means LIBOR, LIBID, LIMEAN, EURIBOR or such other Benchmark as may be specified in the
relevant Final Terms.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.
 Calculation Amount means the amount specified as such in the relevant Final Terms.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/Actual 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;
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(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, calculated on a formula basis as follows:(EQUATION)Where:Y1 is the year, expressed as a number, in which the first day of the Calculation Period falls;Y2is the year, expressed as a number, in which the day immediately
following the last day included in the Calculation Period falls;M1is the calendar month, expressed as a number, in which the first day of
the Calculation Period falls;M2is the calendar month, expressed as a number, in which the day
immediately following the last day included in the Calculation Period falls;D1 is the first calendar day, expressed as a number, of the Calculation
Period, unless such number would be 31, in which case D1 will be 30; andD2is the calendar day, expressed as a number, immediately following the
last day included in the Calculation Period, unless such number would be 31
and D1 is greater than 29, in which case D2 will be 30;(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, calculated on a formula basis as follows:(EQUATION)Where:Y1is the year, expressed as a number, in which the first day of the
Calculation Period falls;Y2is the year, expressed as a number, in which the day immediately
following the last day included in the Calculation Period falls;M1is the calendar month, expressed as a number, in which the first day of
the Calculation Period falls;M2is the calendar month, expressed as a number, in which the day
immediately following the last day included in the Calculation Period falls;D1is the first calendar day, expressed as a number, of the Calculation
Period, unless such number would be 31, in which case D1  will be 30; andD2is the calendar day, expressed as a number, immediately following the
last day included in the Calculation Period, unless such number would be 31,
in which case D2 will be 30;(vi)
    
    if 30E/360 (ISDA) is specified hereon, the number of days in the Calculation Period divided
by 360, calculated on a formula basis as follows:(EQUATION)
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where:Y1 is the year, expressed as a number, in which the first day of the
Calculation Period falls;Y2 is the year, expressed as a number, in which the day immediately
following the last day included in the Calculation Period falls;M1 is the calendar month, expressed as a number, in which the first day of
the Calculation Period falls;M2 is the calendar month, expressed as a number, in which the day
immediately following the last day included in the Calculation Period falls;D1 is the first calendar day, expressed as a number, of the Calculation
Period, unless (i) that day is the last day of February or (ii) such number
would be 31, in which case D1 will be 30; andD2 is the calendar day, expressed as a number, immediately following the
last day included in the Calculation Period, unless (i) that day is the last day of
February but not the Maturity Date or (ii) such number would be 31, in which case
D2 will be 30; and(vii)
    
    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.
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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.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:
 (i)
    
    in respect of an Interest Accrual Period, the amount of interest payable per Calculation Amount
for that Interest Accrual Period and which, in the case of Fixed Rate Instruments, and unless
otherwise specified hereon, shall mean the Fixed Coupon Amount or Broken Amount specified hereon as
being payable on the Interest Payment Date ending the Interest Period of which such Interest
Accrual Period forms part; and(ii)
    
    in respect of any other period, the amount of interest payable per Calculation Amount for that
period.
 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 2006 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)) 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.
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Rate of Interest means the rate of interest payable from time to time in respect of this
Instrument and that is either specified, 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.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
(known as TARGET2) System which was launched on 19 November 2007 or any successor to it.
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(j)
    
    Calculation Agent and Reference BanksThe Issuer[, failing whom the Guarantor,]* shall procure that there shall at all times be four
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 [or
the Guarantor]* 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
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 [or the Guarantor]* 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.Where the RPI (as defined below) is specified as the Index or Index Figure (each as defined below)
in the relevant Final Terms, the following Conditions 4.1 to 4.6 will apply:
 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
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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
(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 [or the
Guarantor]* (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
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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 Adviser) to have been published by the United Kingdom Debt Management
Office or the Bank of England, as the case may be, 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 Adviser)) 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 Adviser) to have been published by the United Kingdom Debt Management
Office or the Bank of England, as the case may be, 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 Adviser)) 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.
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4.5
    
    Cessation of or Fundamental Changes to the Index
 (i)
    
    If (1) the Trustee and the Issuer [and the Guarantor]* 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 the
Guarantor]* 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[, the Guarantor]* and the Trustee
(acting solely on the advice of the Indexation Adviser) 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[, the Guarantor]* 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.(ii)
    
    If the Issuer[, the Guarantor]* and the Trustee (acting solely on the advice of the Indexation
Adviser) 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[, the Guarantor]* 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 Adviser) (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[, the Guarantor]* 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[, the Guarantor]* and the Trustee in connection
with such appointment shall be borne by the Issuer[ or the Guarantor]*.(iii)
    
    The Index shall be adjusted or replaced by a substitute index as agreed by the Issuer[, the
Guarantor]* and the Trustee (acting solely on the advice of the Indexation Adviser) 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 Adviser)[, the Guarantor]* 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 Guarantor
and]* the Trustee and the Instrumentholders, and the Issuer [and the Guarantor]* 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 the Guarantor]* 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
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with interest accrued but unpaid up to and including the date of redemption (in each case adjusted
in accordance with Condition 4.2).
 Where HICP (as defined below) is specified as the Index or Index Level (each as defined below) in
the relevant Final Terms, the following Conditions 4.7 to 4.10 will apply:
 4.7
    
    DefinitionsBase Index Level means the base index level as specified in the relevant Final Terms;Index or Index Level means (subject as provided in Condition 4.9) the Non-revised Index of
Consumer Prices excluding tobacco or relevant Successor Index (as defined in Condition 4.9(i)),
measuring the rate of inflation in the European Monetary Union excluding tobacco, expressed as an
index and published by Eurostat (the HICP). The first publication or announcement of a level of
such index for a calculation month (as defined in Condition 4.9(i)) shall be final and conclusive
and later revisions to the level for such calculation month will not be used in any calculations.
Any reference to the Index Level which is specified in these Conditions as applicable to any day
(d) in any month (m) shall, subject as provided in Condition 4.9, be calculated as follows:(EQUATION)where:Id is the Index Level for the day d HICPm-2 is HICP for month m-2HICPm-3 is HICP for month m-3nbdis the actual number of days from and excluding the first day of month m to but including day
d; andqm is the actual number of days in month m, provided that if Condition 4.9
applies, the Index Level shall be the Substitute Index Level determined in accordance with such
Condition.If the Index is replaced, the Issuer will describe the replacement Index in a supplement to the
Prospectus;Index Business Day means a day on which the TARGET System is operating;Index Determination Date means in respect of any date for which the Index Level is required to be
determined, the fifth Index Business Day prior to such date;Index Ratio applicable to any date means the Index Level applicable to the relevant Index
Determination Date divided by the Base Index Level and rounded to the nearest fifth decimal place,
0.000005 being rounded upwards; andRelated Instrument means an inflation-linked bond selected by the Calculation Agent that is a
debt obligation of one of the governments (but not any government agency) of France, Italy, Germany
or Spain and which pays a coupon or redemption amount which is calculated by reference to the level
of inflation in the European Monetary Union with a maturity date which falls on (a) the same day as
the Maturity Date, (b) the next longest maturity date after the Maturity Date if there is no such
bond maturing on the Maturity Date, or (c) the next shortest maturity before the Maturity Date if
no bond defined in (a) or (b) is selected by the Calculation Agent. The Calculation Agent will
select the Related Instrument from such of those inflation-linked bonds issued on or before the
relevant Issue Date and, if there is more than one such inflation-linked bond maturing on the same
date, the Related Instrument shall be selected by the Calculation Agent from such of
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those bonds. If the Related Instrument is redeemed, the Calculation Agent will select a new Related
Instrument on the same basis, but selected from all eligible bonds in issue at the time the
originally selected Related Instrument is redeemed (including any bond for which the redeemed
originally selected Related Instrument is exchanged).4.8
    
    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
applicable to the date on which such payment falls to be made and rounded in accordance with
Condition 3.2.4(e).4.9
    
    Changes in Circumstances Affecting the Index
 (i)
    
    Delay in publication of Index:
 (a)
    
    If the Index Level relating to any month (the calculation month) which is required to be
taken into account for the purposes of the determination of the Index Level for any date (the
Relevant Level) has not been published or announced by the day that is five Business Days before
the date on which such payment is due (the Affected Payment Date), the Calculation Agent shall
determine a Substitute Index Level (as defined below) (in place of such Relevant Level) by using
the following methodology:
 (1)
    
    if applicable, the Calculation Agent will take the same action to determine the Substitute
Index Level for the Affected Payment Date as that taken by the calculation agent (or any other
party performing the function of a calculation agent (whatever such partys title)) pursuant to the
terms and conditions of the Related Instrument;(2)
    
    if (1) above does not result in a Substitute Index Level for the Affected Payment Date for any
reason, then the Calculation Agent shall determine the Substitute Index Level as follows:Substitute Index Level = Base Level x (Latest Level / Reference Level)where:Base Level means the level of the Index (excluding any flash estimates) published or announced by
Eurostat (or any successor entity which publishes such index) in respect of the month which is 12
calendar months prior to the month for which the Substitute Index Level is being determined;Latest Level means the latest level of the Index (excluding any flash estimates) published or
announced by Eurostat (or any successor entity which publishes such index) prior to the month in
respect of which the Substitute Index Level is being calculated; andReference Level means the level of the Index (excluding any flash estimates) published or
announced by Eurostat (or any successor entity which publishes such index) in respect of the month
that is 12 calendar months prior to the month referred to in Latest Level above.
 (b)
    
    If a Relevant Level is published or announced at any time after the day that is five Business
Days prior to the next Interest Payment Date, such Relevant Level will not be used in any
calculations. The Substitute Index Level so determined pursuant to this Condition 4.9(i) will be
the definitive level for that calculation month.
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(ii)
    
    Cessation of publication: If the Index Level has not been published or announced for two
consecutive months or Eurostat announces that it will no longer continue to publish or announce the
Index, then the Calculation Agent shall determine a successor index in lieu of any previously
applicable Index (the Successor Index) by using the following methodology:
 (a)
    
    if at any time (other than after an Early Termination Event (as defined below) has been
designated by the Calculation Agent pursuant to paragraph (e) below) a successor index has been
designated by the calculation agent (or any other party performing the function of a calculation
agent (whatever such partys title)) pursuant to the terms and conditions of the Related
Instrument, such successor index shall be designated the Successor Index for the purposes of all
subsequent Interest Payment Dates, notwithstanding that any other Successor Index may previously
have been determined under paragraphs (b), (c) or (d) below; or(b)
    
    if a Successor Index has not been determined under paragraph (a) above (and there has been no
designation of an Early Termination Event pursuant to paragraph (e) below), and a notice has been
given or an announcement has been made by Eurostat (or any successor entity which publishes such
index) specifying that the Index will be superseded by a replacement index specified by Eurostat
(or any such successor), and the Calculation Agent determines that such replacement index is
calculated using the same or substantially similar formula or method of calculation as used in the
calculation of the previously applicable Index, such replacement index shall be the Index from the
date that such replacement index comes into effect; or(c)
    
    if a Successor Index has not been determined under paragraphs (a) or (b) above (and there has
been no designation of an Early Termination Event pursuant to paragraph (e) below), the Calculation
Agent shall ask five leading independent dealers to state what the replacement index for the Index
should be. If between four and five responses are received, and of those four or five responses,
three or more leading independent dealers state the same index, this index will be deemed the
Successor Index. If three responses are received, and two or more leading independent dealers
state the same index, this index will be deemed the Successor Index. If fewer than three
responses are received, the Calculation Agent will proceed to paragraph (d) below;(d)
    
    if no Successor Index has been determined under paragraphs (a), (b) or (c) above on or before
the fifth Index Business Day prior to the next Affected Payment Date the Calculation Agent will
determine an appropriate alternative index for such Affected Payment Date, and such index will be
deemed the Successor Index;(e)
    
    if the Calculation Agent determines that there is no appropriate alternative index, the Issuer
and the Instrumentholders shall, in conjunction with the Calculation Agent, determine an
appropriate alternative index. If the Issuer and the Instrumentholders, in conjunction with the
Calculation Agent, do not reach agreement on an appropriate alternative index within a period of
ten Business Days, then an Early Termination Event will be deemed to have occurred and the Issuer
will redeem the Instruments pursuant to Condition 4.10.
 (iii)
    
    Rebasing of the Index: If the Calculation Agent determines that the Index has been or will be
rebased at any time, the Index as so rebased (the Rebased Index) will be used for the purposes of
determining each relevant Index Level from the date of such rebasing; provided, however, that the
Calculation Agent shall make such adjustments as are made by the calculation agent (or any other
party performing the function of a calculation agent (whatever such partys title)) pursuant to the
terms and conditions of the Related Instrument to the levels of the Rebased Index so that the
Rebased Index levels reflect the same rate of
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inflation as the Index before it was rebased. Any such rebasing shall not affect any prior payments
made.(iv)
    
    Material Modification Prior to Interest Payment Date: If, on or prior to the day that is five
Business Days before an Interest Payment Date, Eurostat announces that it will make a material
change to the Index then the Calculation Agent shall make any such adjustments to the Index
consistent with adjustments made to the Related Instrument.(v)
    
    Manifest Error in Publication: If, within thirty days of publication, the Calculation Agent
determines that Eurostat (or any successor entity which publishes such index) has corrected the
level of the Index to remedy a manifest error in its original publication, the Calculation Agent
will notify the parties of (A) that correction, (B) the amount that is payable as a result of that
correction and (C) take such other action as it may deem necessary to give effect to such
correction.
 4.10
    
    Redemption for Index ReasonsIf an Early Termination Event as described under Condition 4.9(ii)(e) is deemed to have
occurred, the Issuer will, 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 4.8).
 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 5.5.2
    
    Redemption for Taxation ReasonsIf, on the occasion of the next payment in respect of the Instruments, the Issuer [(or, if
the Guarantee were called, the Guarantor)]* 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 official 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
[(or the Guarantor, as the case may be)]* taking reasonable measures (such measures not involving
any material additional payments by, or expense for, the Issuer [(or the Guarantor, as the case may
be)]*), 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 [(or the Guarantor, as the case may be)]* 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 [(or the Guarantee, as the case may be)]* then due. Prior to
the publication of any notice of redemption pursuant to this Condition 5.2, the
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Issuer shall deliver to the Trustee a certificate signed by two Directors of the Issuer [(or the
Guarantor, as the case may be)]* stating that the requirement referred to above cannot be avoided
by the Issuer [(or the Guarantor, as the case may be)]* 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[, the Guarantor]* and any of [its/their] 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 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
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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 Options
 5.5.1
    
    Residual Holding Call OptionIf (i) Residual Holding Call Option is specified in the relevant Final Terms as applicable,
and (ii) if at any time the Residual Holding Percentage or more of the aggregate nominal amount of
Instruments originally issued shall have been redeemed or purchased and cancelled, the Issuer shall
have the option to redeem such outstanding Instruments in whole, but not in part, at their Residual
Holding Redemption Amount. Unless otherwise specified in the relevant Final Terms, the Residual
Holding Redemption Amount will be calculated by the Calculation Agent by discounting the
outstanding nominal amount of the Instruments and the remaining interest payments (if applicable)
to the Maturity Date by a rate per annum (expressed as a percentage to the nearest one hundred
thousandth of a percentage point (with halves being rounded up)) equal to the Benchmark Yield,
being the yield on the Benchmark Security at the close of business on the third Business Day prior
to the date fixed for such redemption, plus the Benchmark Spread. Where the specified calculation
is to be made for a period of less than one year, it shall be calculated using the Benchmark Day
Count Fraction. The Issuer will give not less than 15 nor more than 30 days irrevocable notice to
the Instrumentholders and the Trustee of any such redemption pursuant to this Condition 5.5.1.5.5.2
    
    Call OptionIf Call Option is specified in the relevant Final Terms as applicable, 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 as applicable, 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.
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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
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 [, the Guarantor]* or any of
[its/their] 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 [, the
Guarantor]* or any of [its/their] respective subsidiary undertakings 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.
 42




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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 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 the Guarantor]* 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 the Guarantor]* and do not assume any obligation or relationship of agency or trust for
or with any holder. The Issuer [and the Guarantor]* reserve[s] 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 other Directive implementing the conclusions of the ECOFIN
Council meeting of 26-27 November 2000 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 [and the Guarantor]* 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
 43




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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).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:
 (i)
    
    (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; or(ii)
    
    (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).
 44




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7
    
    TaxationAll payments of principal and interest by or on behalf of the Issuer [or the Guarantor]*
in respect of the Instruments, the Receipts and the Coupons [or under the Guarantee]* 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 [or, as the case may be, the Guarantor]* 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 other
Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November
2000 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).
 Relevant Date principal interest principal interest
 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.
 45




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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:
 (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 [or the Guarantor]* 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 [or the Guarantor]* 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 [or the Guarantor]* 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 [or the Guarantor]* 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 the Guarantor]* or
an administration or similar order is made in relation to the Issuer [or the Guarantor]*
and such taking of possession, appointment or order is not released, discharged or
cancelled within 90 days; or(e)
    
    Insolvency:the Issuer [or the Guarantor]* 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 [or the Guarantor]* is adjudged bankrupt or insolvent by a
court of competent jurisdiction in its country of incorporation,
   10
    
    Enforcement
  (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.
  46




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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 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 [,or] (vii) to
modify the provisions concerning the quorum required at any meeting of Instrumentholders
or the majority required to pass the Extraordinary Resolution [or (viii) to modify or
cancel the Guarantee]* 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 [a Successor in Business (as defined in the Trust Deed) or any subsidiary/any other
company]± in place of the Issuer or of any previous substituted company, as principal
debtor under the Trust Deed and the Instruments [and the substitution of the Guarantors
Successor in Business (as defined in the Trust Deed) or any
 
 ±
    
    Where National Grid Gas plc is the Issuer, delete the text any other company.
Where National Grid Gas Finance (No 1) is the Issuer, delete the text a Successor in Business
(as defined in the Trust Deed) or any subsidiary. 47




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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 Couponholder be entitled to
claim, from the Issuer  [or the Guarantor]* 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 lssuer [or the Guarantor]* 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
lssuer [or the Guarantor]* on demand the amount payable by the lssuer [or the Guarantor]* in
respect of such Instruments, Receipts, Coupons or further Coupons) and otherwise as the
lssuer [or the Guarantor]* 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.
 48




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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 lssuer [, the Guarantor]* or any of
[its/their] 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.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 any non-contractual obligations arising out of or in connection
with them shall be governed by, and 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)
    
    [Each of the]* /[The] lssuer [, and the Guarantor]* 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.
 49




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SUMMARY OF PROVISIONS
RELATING TO THE INSTRUMENTS WHILE IN GLOBAL FORM
 Initial Issue of Instruments
 Common Depositary),
   Common Depositary),
  Relationship of Accountholders with Clearing Systems
   50




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Exchange
 1
    
    Temporary Global InstrumentsEach temporary Global Instrument will be exchangeable, free of charge to the holder, on or
after its Exchange Date:
 (i)
    
    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 Programme  Selling Restrictions), in whole, but not in part,
for the Definitive Instruments defined and described below; and(ii)
    
    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 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. An Instrumentholder who holds a
principal amount of less than the minimum Specified Denomination will not receive a Definitive
Instrument in respect of such holding and would need to purchase a principal amount of
Instruments such that it holds an amount equal to one or more Specified Denominations.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 InstrumentsIf the Global Instrument is a CGN, on 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
 51




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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 in CGN form 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. If the Global Instrument is a CGN, 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 Instruments only. If the Global Instrument is
an NGN, the relevant Issuer shall procure that details of each such payment shall be entered
pro rata in the records of the relevant clearing system and in the case of payments of
principal, the nominal amount of the Instruments recorded in the records of the relevant
clearing system and represented by the Global Instrument will be reduced accordingly. Payments
under the NGN will be made to its holder. Each payment so made will discharge the relevant
Issuers obligations in respect thereof. Any failure to make the entries in the records of the
relevant clearing system shall not affect such discharge.The records of the relevant clearing systems which reflect the amount of the
Instrumentholders interests in the instruments shall be conclusive evidence of the nominal
amount of Instruments represented by the Global Instruments.
 52




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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.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
(to be reflected in the records of Euroclear and Clearstream, Luxembourg either as a pool
factor or as a reduction in nominal amount, at their discretion) 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, where the permanent Global
Instrument is a CGN, presenting the permanent Global Instrument for notation. Where the Global
Instrument is an NGN, the relevant Issuer shall procure that details of such exercise shall be
entered pro ratain the records of the relevant clearing system and the nominal amount of the
Instruments recorded in those records will be reduced accordingly.
 53




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8
    
    NGN nominal amountWhere the Global Instrument is an NGN, the relevant Issuer shall procure that any
exchange, payment, cancellation, exercise of any option or any right under the Instruments, as
the case may be, in addition to the circumstances set out above shall be entered in the
records of the relevant clearing systems and upon any such entry being made, in respect of
payments of principal, the nominal amount of the Instruments represented by such Global
Instrument shall be adjusted accordingly.9
    
    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.10
    
    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.11
    
    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.12
    
    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.
 54




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##### 



USE OF PROCEEDS
  55




---



##### 



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, comprising approximately 4,722 miles (7,600 km) of high pressure pipe and 26
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 gas distribution networks (DNs), comprising approximately 82,021 miles
(132,000 km) of distribution pipeline, conveying gas on behalf of approximately 25 active gas
shippers to around 10.8 million customers, domestic and industrial/commercial users in
central, eastern and north west England, as well as a large part of London and the northern
Home Counties;(iii)
    
    providing regulated gas metering and meter reading services in Great Britain; and(iv)
    
    owning and operating liquefied natural gas (LNG) storage facilities.
 Licences).
  GB system).
   56




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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%National Grid Gas Finance (No 1) plc
    
    England & Wales
    
    100%National Grid Metering Limited
    
    England & Wales
    
    100%Xoserve Limited
    
    England & Wales
    
    56.57%
 57




---



##### 



Directors
  Principal
    
    Principal Activities outside NationalName
    
    Occupation
    
    Grid Gas Group
    
    Business AddressMark Fairbairn
    
    Director
    
    Executive Director of National Grid plc
and a director of National Grid Gas
Holdings Limited, National Grid
Electricity Transmission plc and National
Grid UK Limited.
    
    1-3 Strand
London
WC2N 5EHNick Winser
    
    Director
    
    Executive Director of National Grid plc
and a director of National Grid Electricity
Transmission plc, National Grid UK
Limited, NGET/SPT Upgrades Limited,
National Grid Grain LNG Limited, non-executive director of Kier Group plc and
co-chair of the Energy Research
Partnership.
    
    1-3 Strand
London
WC2N 5EHStuart Humphreys
    
    Director
    
    Director of National Grid Electricity
Transmission plc, National Grid
Interconnectors Limited and NGET/SPT
Upgrades Limited, Britned Development
Ltd and National Grid Grain LNG
Limited.
    
    National Grid House
Warwick Technology Park
Gallows Hill
Warwick
CV34 6DAMalcolm Cooper
    
    Director
    
    Director of National Grid Gas Holdings
Limited, National Grid Electricity
Transmission plc, National Grid
Commercial Holdings Limited, National
Grid Holdings Limited, National Grid
Holdings One plc, National Grid (US)
Holdings Ltd, National Grid International
Limited, Lattice Group plc, Lattice Group
Trustees Limited, National Grid
Insurance Company (Isle of Man) Ltd,
National Grid Insurance Company
(Ireland) Ltd, Melmar Limited, NGG
Finance plc, NGG Finance (No1)
Limited and CLS Holdings plc,
    
    1-3 Strand
London
WC2N 5EHPaul Whittaker
    
    Director
    
    Director of National Grid Electricity
Transmission plc, Fulcrum Gas Services
Ltd. Fulcrum Infrastructure Services Ltd,
Fulcrum Pipelines Ltd and Fulcrum
Group Holdings Ltd.
    
    National Grid House
Warwick Technology Park
Gallows Hill
Warwick
CV34 6DAAdam Wiltshire
    
    Director
    
    Director of National Grid Gas Holdings
Limited, Beegas Limited and National
Grid UK Pension Scheme Trustee
Limited.
    
    National Grid House
Warwick Technology Park
Gallows Hill
Warwick 
CV34 6DA
  Regulatory Framework
 Gas Act GEMA
 58




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##### 



(Ofgem)
   (i)
    
    the NTS; and(ii)
    
    the DNs (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 or entering into any other
obligations (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 DN business from giving or receiving any cross-subsidy
from any other group business.
  59




---



##### 



Recent Developments
   60




---



##### 



61




---



##### 



DESCRIPTION OF NATIONAL GRID GAS FINANCE (NO 1) PLC
 Incorporation and Businesses
    Subsidiaries
  Directors
  Principal Activities outside National Grid GasName
    
    Principal Occupation
    
    Finance (No 1)Malcolm Cooper
    
    Director
    
    Director of National Grid Holdings One plc
(NGH1)and certain other wholly owned
subsidiaries of National Grid plc, and
Director of ACT (Administration) Limited and
director of CLS Holdings plc.Mark Flawn
    
    Director
    
    Director of NGH1 and certain other wholly
owned subsidiaries of National Grid plc.Alexandra Lewis
    
    Director
    
    Director of NGH1 and certain other wholly
owned subsidiaries of National Grid plc.Christopher Waters
    
    Director
    
    Director of NGH1 and certain other wholly
owned subsidiaries of National Grid plc.
   62




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##### 



DESCRIPTION OF THE GUARANTEE
 Guarantee)
   63




---



##### 



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. It is based on
current law and the practice of HM Revenue and Customs, which may be subject to change, sometimes
with retrospective effect. 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 for information purposes which is not intended to be exhaustive and should be
treated with appropriate caution. It is not intended as tax advice and it does not purport to
describe all of the tax considerations that may be relevant to a prospective purchaser.
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 1005 of the Income Tax Act 2007. The London Stock Exchange is a
recognised stock exchange for these purposes. Instruments will be treated as listed on the
London Stock Exchange if they are included in the Official List by the United Kingdom Listing
Authority and are admitted to trading on the Regulated Market of the London Stock Exchange or
the Professional Securities Market of the London Stock Exchange. Instruments to be traded on
a recognised stock exchange outside the United Kingdom will be treated as listed on a
recognised stock exchange if (and only if) they are admitted to trading on that exchange and
they are officially listed, in accordance with provisions corresponding to those generally
applicable in European Economic Area Member States, in a country outside the United Kingdom
in which there is a recognised stock exchange. Whilst the Instruments are and continue to be
quoted Eurobonds, payments of interest by the Issuer 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 will
generally fall to be paid under deduction of United Kingdom income tax at the basic rate
(currently 20 per cent.) subject to such relief as may be available following a direction
from HM Revenue and Customs under the provisions of any applicable double taxation treaty, or
to any other exemption which may apply. However, the obligation to withhold 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.
 64




---



##### 



(B) Provision of Information
 paying agent), collecting agent),
   (C) Payments under the Guarantee
  (D) 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.
 65




---



##### 



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. Instrumentholders should
seek their own professional advice, as regards the withholding tax treatment of any payment
on the Instruments which does not constitute interest or principal as those terms are
understood in United Kingdom tax law.5.
    
    Where a payment on an Instrument does not constitute (or is not treated as) interest for
United Kingdom tax purposes, and the payment has a United Kingdom source, it would
potentially be subject to United Kingdom withholding tax if, for example, it constitutes (or
is treated as) an annual payment or a manufactured payment for United Kingdom tax purposes
(which will be determined by, amongst other things, the terms and conditions specified by the
Final Terms of the Instrument). In such a case, the payment may fall to be made under
deduction of United Kingdom tax (the rate of withholding depending on the nature of the
payment), subject to such relief as may be available following a direction from HMRC pursuant
to the provisions of any applicable double taxation treaty, or to any other exemption which
may apply.6.
    
    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 or otherwise
and does not consider the tax consequences of any such substitution.
 (E) EU Savings Directive
    66




---



##### 



PLAN OF DISTRIBUTION
 Summary of Agreement
 Dealer Agreement),
 Selling Restrictions
 United States
 Securities Act)
    Public Offer Selling Restriction Under the Prospectus Directive
 Relevant Member State), Relevant Implementation Date)
 67




---



##### 



(a)
    
    if the final terms in relation to the Instruments specify that an offer of those
Instruments may be made other than pursuant to Article 3(2) of the Prospectus Directive in
that Relevant Member State (a Non-exempt Offer),following the date of publication of a
prospectus in relation to such 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, provided that
any such prospectus has subsequently been completed by the final terms contemplating such
Non-exempt Offer, in accordance with the Prospectus Directive, in the period beginning and
ending on the dates specified in such prospectus or final terms, as applicable;(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;(d)
    
    at any time to fewer than 100 natural or legal persons (other than qualified investors as
defined in the Prospectus Directive) subject to obtaining the prior consent of the relevant
Dealer or Dealers nominated by the Issuer for any such offer; or(e)
    
    at any time if the denomination per Instrument being offered amounts to at least 50,000; or(f)
    
    at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive,
  offer of Instruments to the public 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 relevant Issuer or the Guarantor (if
applicable);(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
relevant Issuer or the Guarantor (if applicable); and
 68




---



##### 



(c)
    
    it has complied and will comply with all applicable provisions of the FSMA (and all
rules and regulations made pursuant to the FSMA) with respect to anything done by it in
relation to any Instruments in, from or otherwise involving the United Kingdom.
 Japan
 Financial Instruments and Exchange Act). resident
of Japan
 General
    69




---



##### 



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 PLC/NATIONAL GRID GAS FINANCE (NO 1) PLC] +
 
 PART A  CONTRACTUAL TERMS
  Prospectus Directive Listing Rules 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.
 Conditions original date original date  current date Prospectus Directive Listing Rules current date  Listing Rules original date  original date current date  
 
 +
    
    Delete as applicable.*
    
    Only applicable where National Grid Gas Finance (No 1) is the Issuer. 70




---



##### 



www.londonstockexchange.com/en-gb/pricesnews/marketnews/
 [Include whichever of the following apply or specify as Not Applicable (N/A). Note 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 (i) (in the case of an
application for the Instruments to trade on the London Stock Exchange plcs Regulated Market)
significant new factors and consequently trigger the need for a supplement to the Prospectus
under Article 16 of the Prospectus Directive or Section 87(G) of the Financial Services and
Markets Act 2000 (the  FSMA ) or (ii) (in the case of an application for the Instruments to
trade on the London Stock Exchange plcs Professional Securities Market) a significant
change and consequently trigger the need for a supplement to the Prospectus under Section 81
of the FSMA.]
 1
    
    (i)    Issuer:
    
    [National Grid Gas plc/National Grid Gas Finance (No 1)]+[(ii)  Guarantor:
    
    National Grid Gas plc]*2
    
    (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:
    
    []1[Note  where multiple denominations above 50,000 (or
equivalent) are being used the following sample wording should be
followed:[50,000] and integral multiples of [1,000] in excess thereof
[up to and including [99,000]. No Instruments in definitive form
will be issued with a denomination above [99,000]].]Calculation Amount:
    
    [If only one Specified Denomination, insert the
 
 +
    
    Delete as applicable.*
    
    Only applicable where National Grid Gas Finance (No 1) is the Issuer.1
    
    Instruments which have a maturity of less than one year must have a minimum
denomination of £100,000 (or it equivalent in other currencies). 71




---



##### 



Specified Denomination. If more than one
Specified Denomination, insert the highest common
factor] [Note: There must be a common factor in the
case of two or more Specified Denominations]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)]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)    Status of the Guarantee:
    
    Senior]*[(iii)]    Date [Board] approval for
issuance of Instruments [and the Guarantee]*
obtained:
    
    []
(N.B Only relevant where Board (or similar)
authorisation is required for the particular
tranche of Instruments[or related Guarantee])]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 commencing on [] and ending on[](iii)    Fixed Coupon Amount[(s)]:
    
    [] per Calculation Amount(iv)    Broken Amount(s):
    
    [] per Calculation Amount, payable on the Interest
 
 *
    
    Only applicable where National Grid Gas Finance (No 1) is the Issuer. 72




---



##### 



Payment Date falling [in/on] [](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:
    
    [](iii)    First Interest Payment Date:
    
    [](iv)    Business Day Convention:
    
    [Floating Rate Convention/Following
Business Day Convention/Modified
Following Business Day Convention/Preceding
Business Day Convention/other
(give details)](v)    Business Centre(s)
(Condition 3.2.4(i)):
    
    [](vi)    Manner in which the Rate(s) of
Interest is/are to be
determined:
    
    [Screen Rate Determination/ISDA
Determination/other(give details)](vii)    Interest Period Date(s):
    
    [Not Applicable/specify dates](viii)    Party responsible for calculating
the Rate(s) of Interest and Interest
Amount(s) (if not the Calculation
Agent):
    
    [](ix)    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]
 73




---



##### 



    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](x)    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):
    
    [](xi)    Margin(s):
    
    [+/-][] per cent. per annum(xii)   Minimum Rate of Interest:
    
    [] per cent. per annum(xiii)  Maximum Rate of Interest:
    
    [] per cent. per annum(xiv)  Day Count Fraction (Condition 3.2.4(i)):
    
    [](xv)   Rate Multiplier:
    
    [](xvi)   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:
    
    []
 74




---



##### 



(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](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
    
    Residual Holding Call Option
    
    [Applicable/Not Applicable] (If not
applicable, delete the remaining
sub-paragraphs of this paragraph)(i)    Residual Holding Percentage:
    
    [] per cent.(ii)    Party responsible for calculating
the Residual Holding Redemption
Amount (if not the
Calculation Agent):
    
    []
 75




---



##### 



(iii)   Benchmark Security:
    
    [Specify Government
Security/swap benchmark](iv)   Benchmark Spread:
    
    [] per cent. per annum(v)    Benchmark Day Count Fraction:
    
    [](vi)    [Other relevant provisions:
    
    []]21
    
    Call 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 Calculation Amount(iii)    If redeemable in part:(a)    Minimum nominal amount
to be redeemed:
    
    [] per Calculation Amount(b)    Maximum nominal amount
to be redeemed:
    
    [] per Calculation Amount(iv)    Option Exercise Date(s):
    
    [](v)    Notice period (if other than
as set out in the
Conditions):
    
    []22
    
    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 Calculation Amount(iii)   Option Exercise Date(s):
    
    [](iv)   Notice period (if other than
as set out in the
Conditions):
    
    [](v)   Option Period:
    
    []23
    
    Final Redemption Amount of each
Instrument
    
    [[] per Calculation
Amount/other/see
Appendix]In cases where the Final Redemption
Amount is Index-Linked:(i)    Index/Formula:
    
    [give or annex details](ii)   Party responsible for
calculating the Final
Redemption Amount (if not
the Calculation Agent):
    
    [](iii)   Provisions for determining
Final Redemption Amount
where calculated by
reference to Index
and/or Formula
and/or other variable:
    
    []
 
 *
    
    [This does not include the tax call in Condition 5.2]. 76




---



##### 



(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:
    
    [](vii)  Minimum Final
Redemption Amount:
    
    [] per Calculation Amount(viii)  Maximum Final Redemption Amount:
    
    [] per Calculation Amount24
    
    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 INSTRUMENTS25
    
    Form of Instruments:
    
    Bearer Instruments:[Temporary Global
Instrument exchangeable for
a permanent Global
Instrument which is
exchangeable for Definitive
Instruments 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 in
the limited circumstances
specified in the permanent
Global Instrument](The exchange upon
notice/at any time option
should not be expressed to
be applicable if the
Specified Denomination of
the Instruments in
paragraph 6 includes
language substantially to
the following effect
 77




---



##### 



"[50,000] and integral
multiples of [1,000] in
excess thereof up to and
including [99,000].)New Global Note intended to be held in a
manner which would allow Eurosystem
eligibility:
    
    [No2/Yes]
[Note that the designation
Yes simply means that the
Instruments are intended upon
issue to be deposited with
Euroclear or Clearstream,
Luxembourg as common
safekeeper and does not
necessarily mean that the
Instruments will be
recognised as eligible
collateral for Eurosystem
monetary policy and intra-day
credit operations by the
Eurosystem either upon issue
or at any or all times during
their life. Such recognition
will depend upon satisfaction
of the Eurosystem eligibility
criteria.] [Include this text
if Yes selected in which
case the Instruments must be
issued in NGN form]26
    
    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]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
consequences (if any) of failure to pay,
including any right of the Issuer[ or the
Guarantor] to forfeit the Instruments and
interest due on late payment:
    
    [Not Applicable/give details]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
    
    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.)]
 
 2
    
    Specify No if the Instruments being issued are Classic Global Notes/CGNs. 78




---



##### 



DISTRIBUTION32
    
    (i)    If syndicated, names of Managers:
    
    [Not Applicable/give names](ii)    Stabilising Manager(s) (if any):
    
    [Not Applicable/give name(s)]33
    
    If non-syndicated, name of Dealer:
    
    [Not Applicable/give name]34
    
    U.S Selling Restrictions
    
    Reg. S Compliance Category
2; [TEFRA C] / [TEFRA D] /
[TEFRA not applicable]35
    
    Additional selling restrictions:
    
    [Not Applicable/give details]
 [PURPOSE OF FINAL TERMS
 specify relevant market]
 RESPONSIBILITY
   
  By:Duly authorised
  By:Duly authorised]*
 
 *
    
    Only applicable where National Grid Gas Finance (No 1) is the Issuer. 79




---



##### 



PART B  OTHER INFORMATION*
 1
    
    LISTING
 (i)
    
    Listing:
    
    [London/other(specify)/None](ii)
    
    Admission to trading:
    
    [Application has been made by the
Issuer (or on its behalf) for the
Instruments to be admitted to
trading on [] with effect from
[].] [Application is expected to
be made by the Issuer (or on its
behalf) for the Instruments to be
admitted to trading on [] with
effect from [].] [Not
Applicable.] (Where documenting a
fungible issue need to indicate
that original Instruments are
already admitted to trading.)(iii)
    
    Estimate of total
expenses related to
admission to trading:
    
    []
 2
    
    RATINGS
 Ratings:
    
    The Instruments to be issued have been rated:[S & P: []]
[Moodys: []]
[[Fitch: []]
[[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
    
    [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:
  [(When adding any other description, consideration should be given as to whether such matters
described constitute significant new factors and consequently trigger the need for a
supplement to the Prospectus under Article 16 of the Prospectus Directive.)]
 
 *
    
    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. 80




---



##### 



4
    
    [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.](Only necessary to include disclosure
of net proceeds and total expenses at
(ii) and (iii) above where disclosure
is included at (i) above.)]
 5
    
    [Fixed Rate Instruments only  YIELD
 Indication 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.]
 6
    
    [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.][The Issuer [does not] intend to provide post issuance information]7
    
    [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.]8
    
    OPERATIONAL INFORMATION
 ISIN Code:
    
    []Common Code:
    
    []Any clearing system(s) other than Euroclear
Bank S.A./N.V. and Clearstream Banking, société
anonymeand the identification number(s):
    
    [Not Applicable/give name(s) and
number(s)]Delivery:
    
    Delivery [against/free of] paymentNames and addresses of initial Paying Agent(s):
    
    []Names and addresses of additional Paying Agent(s) (if any):
    
    []
 81




---



##### 



9
    
    GENERALThe 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]
 82




---



##### 



GENERAL INFORMATION
 (1)
    
    The admission of the Programme to listing on the Official List and to trading on the
Market and the
PSM is expected to take effect on or about 1 March 2010. 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 or the PSM 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 or the PSM,
as the
case may be, in accordance with their respective 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, the PSM 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 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 Finance (No 1) has obtained all necessary consents, approvals and
authorisations in the United Kingdom in connection with the issue and performance of the
Instruments.(4)
    
    The Programme in its current form was established on 31 July 2006. 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 26 January 2010. The guarantee of the Instruments issued by
National Grid Gas Finance (No 1) was authorised by a resolution of the Finance Committee of
the Board of Directors of National Grid Gas passed on 31 July 2006.(5)
    
    The Programme in its current form was authorised by a resolution of the Board of Directors
of National Grid Gas Finance (No 1) on 18 August 2006, and the update of the Programme was
authorised by a resolution of the Board of Directors of National Grid Gas Finance (No 1)
passed on 9 February 2010.(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)
    
    Save as disclosed in the first paragraph under the heading Description of National Grid Gas
plc  Recent Developments starting on page 61, 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 recent past a significant effect on
the financial position or profitability of National Grid Gas or of the National Grid Gas
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
Finance (No 1) is aware) during the 12 months preceding the date of this Prospectus which may
have, or have
 
 83




---



##### 



had in the recent past a significant effect on the financial position or profitability of
National Grid Gas Finance (No 1).(9)
    
    There has been no significant change in the financial or trading position of the National
Grid Gas Group since 31 March 2009.(10)
    
    There has been no material adverse change in the prospects of National Grid Gas or the
National Grid Gas Group since 31 March 2009.(11)
    
    There has been no significant change in the financial or trading position and no material
adverse change in the prospects of National Grid Gas Finance (No 1) since its incorporation
on 3 August 2006.(12)
    
    PricewaterhouseCoopers LLP (chartered accountants and registered auditors authorised and
regulated by the Financial Services Authority) has audited the financial statements of the
National Grid Gas Group for the years ended 31 March 2008 and 31 March 2009, 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 The Bank of New York Mellon, One
Canada Square, London E14 5AL:
 (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;(iii)
    
    the Memorandum and Articles of Association of National Grid Gas Finance (No 1);(iv)
    
    the audited consolidated financial statements of National Grid Gas for the
years ended 31 March 2008 and 31 March 2009, together with the audit report thereon; and(v)
    
    the amended and restated Trust Deed dated 24 February 2010 which
incorporates the Guarantee.
 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 or the PSM, 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.(15)
    
    The Issuers do not intend to provide any post-issuance information.
 84




---



##### 



REGISTERED OFFICE OF THE ISSUERS AND THE GUARANTOR
 
 THE TRUSTEE
 The Law Debenture Trust Corporation p.l.c.
 THE ARRANGER
 HSBC Bank plc
 THE DEALERS
 Barclays Bank PLC
    
    Deutsche Bank AG, London Branch5 The North Colonnade
    
    Winchester HouseCanary Wharf
    
    1 Great Winchester StreetLondon E14 4BB
    
    London EC2N 2DBHSBC Bank plc
    
    J.P. Morgan Securities Ltd.8 Canada Square
    
    125 London WallLondon E14 5HQ
    
    London EC2Y 5AJMizuho International plc
    
    Morgan Stanley & Co. International plcBracken House
    
    25 Cabot SquareOne Friday Street
    
    Canary WharfLondon EC4M 9JA
    
    London E14 4QARoyal Bank of Canada Europe Limited
    
    The Royal Bank of Scotland plc71 Queen Victoria Street
    
    135 BishopsgateLondon EC4V 4DE
    
    London EC2M 3UR
 LEGAL ADVISERS
 To the Issuers
 Linklaters LLP
 85




---



##### 



To the Dealers and to the Trustee
 Clifford Chance LLP
 ISSUING AND PAYING AGENT
 The Bank of New York Mellon
 PAYING AGENTS
 KBL European Private Bankers S.A.
 REGISTERED AUDITORS TO NATIONAL GRID GAS PLC
 PricewaterhouseCoopers LLP
 86