EXHIBIT 2(b).2
  NATIONAL GRID GAS plc
  NATIONAL GRID GAS FINANCE (NO 1) plc
   THE LAW DEBENTURE TRUST CORPORATION p.l.c.
  HSBC BANK plc
 AMENDED AND RESTATED TRUST DEED




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Table of Contents
 Contents
    
    Page1    Interpretation
    
    
    12    Issue of Instruments and Covenant to Pay
    
    
    63    Form of the Instruments
    
    
    84    Stamp Duties and Taxes
    
    
    94A Guarantee and Indemnity
    
    
    105    Application of Moneys Received by the Trustee
    
    
    126    Covenants
    
    
    137    Remuneration and Indemnification of the Trustee
    
    
    158    Provisions Supplemental to the Trustee Acts
    
    
    179    Trustee Liable for Negligence
    
    
    2010   Waiver and Proof of Default
    
    
    2111   Trustee not Precluded from Entering into Contracts
    
    
    2112   Modification and Substitution
    
    
    2113   Appointment, Retirement and Removal of The Trustee
    
    
    2314   Instruments Held in Clearing Systems and Couponholders
    
    
    2415   Currency Indemnity
    
    
    2516   Enforcement
    
    
    2617   Communications
    
    
    2718   Governing Law and Jurisdiction
    
    
    27Schedule 1 Part A Form of CGN Temporary Global Instrument
    
    
    28Schedule 1 Part B Form of CGN Permanent Global Instrument
    
    
    35Schedule 1 Part C Form of NGN Temporary Global Instrument
    
    
    45Schedule 1 Part D Form of NGN Permanent Global Instrument
    
    
    51Schedule 2 Part A Form of Definitive Instrument
    
    
    59Schedule 2 Part B Terms and Conditions of the Instruments
    
    
    63
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Contents
    
    PageSchedule 2 Part C Form of Coupon
    
    
    92Schedule 2 Part D Form of Talon
    
    
    94Schedule 2 Part E Form of Receipt
    
    
    96Schedule 3 Provisions for Meetings of Instrumentholders
    
    
    97
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This Trust Deed between
 (1)
    
    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);(2)
    
    NATIONAL GRID GAS plcas guarantor in respect of Instruments issued by National Grid Gas
Finance (No 1) (the Guarantor); and(3)
    
    THE LAW DEBENTURE TRUST CORPORATION p.l.c.(the Trustee, which expression, where the
meaning so admits, includes any other trustee for the time being of this Trust Deed).
 Whereas
 (A)
    
    The Issuers propose to issue from time to time bearer debt instruments (the Instruments) in
an aggregate nominal amount outstanding at any one time, including Instruments previously
issued under the Programme, not exceeding the Programme Limit in accordance with the Dealer
Agreement (the Programme) and to be constituted under this Trust Deed.(B)
    
    The Trustee has agreed to act as trustee of this Trust Deed on the following terms and
conditions.(C)
    
    For the purposes of the Programme National Grid Gas, National Grid Gas Finance (No 1) and the
Trustee entered into an amended and restated trust deed dated 24 February 2010 (the Prior
Trust Deed).
 This Trust Deed
 1
    
    Interpretation1.1
    
    DefinitionsIn this Trust Deed:Agency Agreement means the amended and restated agency agreement (as amended, supplemented
and/or restated from time to time) relating to the Programme dated 18 February 2011 between
the Issuers, the Guarantor, the Trustee, The Bank of New York Mellon as Issuing and Paying
Agent and the other agents mentioned in it.Agents has the meaning given to it in the Agency Agreement.Calculation Agent means any person named as such in the Conditions or any Successor
Calculation Agent.CGN means a temporary Global Instrument in the form set out in Part A of Schedule 1 or a
permanent Global Instrument in the form set out in Part B of Schedule 1.Clearstream, Luxembourg means Clearstream Banking, société anonyme.Common Safekeeper means, in relation to a Series, the common safekeeper for Euroclear and
Clearstream, Luxembourg appointed in respect of such Instruments.Conditions means in respect of the Instruments of each Series the terms and conditions
applicable to them which shall be substantially in the form set out in Part B of Schedule 2
(Terms and Conditions of the Instruments) as modified, with respect to any Instruments
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represented by a Global Instrument, by the provisions of such Global Instrument, and shall
incorporate any additional provisions forming part of such terms and conditions set out in
Part A of the Final Terms relating to the Instruments of that Series and shall be endorsed
on the Definitive Instruments subject to amendment and completion as referred to in the
first paragraph of Part A of Schedule 2 (Form of Definitive Instrument) and any reference to
a particularly numbered Condition shall be construed accordingly.Contractual Currency means, in relation to any payment obligation of any Instrument, the
currency in which that payment obligation is expressed and, in relation to Clause 7
(Remuneration and Indemnification of the Trustee), pounds sterling or such other currency as
may be agreed between the Issuers, the Guarantor and the Trustee from time to time.Coupons means the coupons relating to interest bearing Instruments or, as the context may
require, a specific number of them and includes any replacement Coupons issued pursuant to
the Conditions.Dealer Agreement means the amended and restated dealer agreement (as amended, supplemented
and/or restated from time to time) relating to the Programme dated 18 February 2011 between
the Issuers, the Guarantor, the Arranger, and the dealers named in it.Definitive Instrument means an Instrument in definitive form having, where appropriate,
Coupons, Receipt(s) and/or a Talon attached on issue and, unless the context requires
otherwise, includes any replacement Instrument issued pursuant to the Conditions.Euroclear means Euroclear Bank S.A./N.V.Event of Default means an event described in Condition 9 and that, if so required by that
Condition, has been certified by the Trustee to be, in its opinion, materially prejudicial
to the interests of the Instrumentholders.Extraordinary Resolution has the meaning set out in Schedule 3 (Provisions for Meetings of
Instrumentholders).Final Terms means, in relation to a Tranche, the final terms document substantially in the
form set out in the Prospectus which will be completed at or around the time of the
agreement to issue each Tranche of Instruments and which will constitute final terms for the
purposes of Article 5.4 of the Prospectus Directive.Global Instrument means a temporary Global Instrument and/or, as the context may require,
a permanent Global Instrument, a CGN or a NGN, as the context may require.Guarantee means the guarantee and indemnity of the Guarantor in Clause 4A.holder in relation to an Instrument, Receipt, Coupon or Talon, and Couponholder and
Instrumentholder have the meanings given to them in the Conditions.Instruments means the bearer debt instruments to be issued by each of the Issuers pursuant
to the Dealer Agreement, constituted by this Trust Deed and for the time being outstanding
or, as the context may require, a specific number of them.Issuing and Paying Agent means the person named as such in the Conditions or any Successor
Issuing and Paying Agent in each case at its specified office.month means a calendar month.
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NGN means a temporary Global Instrument in the form set out in Part C of Schedule 1 or a
permanent Global Instrument in the form set out in Part D of Schedule 1.outstanding means, in relation to the Instruments, all the Instruments issued except (a)
those that have been redeemed in accordance with the Conditions, (b) those in respect of
which the date for redemption has occurred and the redemption moneys (including all interest
accrued on such Instruments to the date for such redemption and any interest payable after
such date) have been duly paid to the Trustee or to the Issuing and Paying Agent as provided
in Clause 2 (Issue of Instruments and Covenant to Pay) and remain available for payment
against presentation and surrender of Instruments, Receipts and/or Coupons, as the case may
be, (c) those which have become void or in respect of which claims have become prescribed,
(d) those which have been purchased and cancelled as provided in the Conditions, (e) those
mutilated or defaced Instruments which have been surrendered in exchange for replacement
Instruments, (f) (for the purpose only of determining how many Instruments are outstanding
and without prejudice to their status for any other purpose) those Instruments alleged to
have been lost, stolen or destroyed and in respect of which replacement Instruments have
been issued, and (g) any temporary Global Instrument to the extent that it shall have been
exchanged for a permanent Global Instrument and any Global Instrument to the extent that it
shall have been exchanged for one or more Definitive Instruments, in either case pursuant to
its provisions provided that for the purposes of (i) ascertaining the right to attend and
vote at any meeting of the Instrumentholders, (ii) the determination of how many Instruments
are outstanding for the purposes of Conditions 9 and 11 and Schedule 3 (Provisions for
Meetings of Instrumentholders), (iii) the exercise of any discretion, power or authority
that the Trustee is required, expressly or impliedly, to exercise in or by reference to the
interests of the Instrumentholders and (iv) the certification (where relevant) by the
Trustee as to whether a Potential Event of Default is in its opinion materially prejudicial
to the interests of the Instrumentholders, those Instruments which are beneficially held by
or on behalf of the relevant Issuer, the Guarantor (if applicable) or any of its respective
subsidiary undertakings and not cancelled shall (unless no longer so held) be deemed not to
remain outstanding. Save for the purposes of the proviso herein, in the case of each NGN,
the Trustee shall rely on the records of Euroclear and Clearstream, Luxembourg in relation
to any determination of the nominal amount outstanding of each NGN.Paying Agents means the persons (including the Issuing and Paying Agent) referred to as
such in the Conditions or any Successor Paying Agents in each case at their respective
specified offices.permanent Global Instrument means a Global Instrument representing Instruments of one or
more Tranches of the same Series, either on issue or upon exchange of a temporary Global
Instrument, or part of it, and which shall be substantially in the form set out in Part B or
Part D of Schedule 1, as the case may be (Form of Permanent Global Instrument).Potential Event of Default means an event or circumstance that could with the giving of
notice, lapse of time, issue of a certificate and/or fulfilment of any other requirement
provided for in Condition 9 become an Event of Default.Programme Limit means the maximum aggregate nominal amount of Instruments which may be
issued and outstanding at any time under the Programme, as such limit may be increased
pursuant to the Dealer Agreement.
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Prospectus means the prospectus prepared in connection with the Programme and constituting
a base prospectus in respect of each Issuer for the purposes of Article 5.4 of the
Prospectus Directive, as revised, supplemented or amended from time to time by the Issuers
and the Guarantor (if applicable) including any documents which are from time to time
incorporated in the Prospectus by reference except that in relation to each Tranche of
Instruments only the applicable Final Terms shall be deemed to be included in the
Prospectus.Prospectus Directive means Directive 2003/71/EC of the European Parliament and of the
Council.Receipts means the receipts for the payment of instalments of principal in respect of
Instruments of which the principal is repayable in instalments or, as the context may
require, a specific number of them and includes any replacement Receipts issued pursuant to
the Conditions.Redemption Amount means the Final Redemption Amount, Early Redemption Amount or Optional
Redemption Amount, as the case may be, all as defined in the Conditions.Series means a series of Instruments comprising one or more Tranches, whether or not
issued on the same date, that (except in respect of the first payment of interest and their
issue price) have identical terms on issue and are expressed to have the same series number.specified office means, in relation to a Paying Agent, the office identified with its name
at the end of the Conditions or any other office approved by the Trustee and notified to
Instrumentholders pursuant to Clause 6.6 (Notices to Instrumentholders).Successor means, in relation to an Agent such other or further person as may from time to
time be appointed by any of the Issuers or the Guarantor (if applicable) as such Agent with
the written approval of, and on terms approved in writing by, the Trustee and notice of
whose appointment is given to Instrumentholders pursuant to Clause 6.6 (Notices to
Instrumentholders).Successor in Business means (a) an entity which acquires all or substantially all of the
undertaking and/or assets of the relevant Issuer or the Guarantor or of a Successor in
Business of such Issuer or the Guarantor; or (b) any entity into which any of the previously
referred to entity is amalgamated, merged or reconstructed and is itself not the continuing
company.Talons mean talons for further Coupons or, as the context may require, a specific number
of them and includes any replacement Talons issued pursuant to the Conditions.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
thereto.temporary Global Instrument means a Global Instrument representing Instruments of one or
more Tranches of the same Series on issue and which shall be substantially in the form set
out in Part A or Part C of Schedule 1, as the case may be (Form of Temporary Global
Instrument).Tranche means, in relation to a Series, those Instruments of that Series which are issued
on the same date at the same issue price and in respect of which the first payment of
interest is identical.
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trust corporation means a trust corporation (as defined in the Law of Property Act 1925)
or a corporation entitled to act as a trustee pursuant to applicable foreign legislation
relating to trustees.Trustee Acts means both the Trustee Act 1925 and the Trustee Act 2000 of England and
Wales.1.2
    
    Construction of Certain ReferencesUnless the context otherwise requires all references in this Trust Deed to:
 1.2.1
    
    the records of Euroclear and Clearstream, Luxembourg shall be to the
records that each of Euroclear and Clearstream, Luxembourg holds for its customers
which reflect the amount of such customers interests in the Instruments;1.2.2
    
    costs, charges, remuneration or expenses include any value added, turnover
or similar tax charged in respect of them;1.2.3
    
    an action, remedy or method of judicial proceedings for the enforcement of
creditors rights include references to the action, remedy or method of judicial
proceedings in jurisdictions other than England as shall most nearly approximate to it;1.2.4
    
    the Trustees approval or consent shall, unless expressed otherwise, be
subject to the requirement that any such approval or consent shall not be unreasonably
withheld or delayed, such reasonableness to be determined by reference to acting in the
interests of Instrumentholders as a whole; and1.2.5
    
    the appointment or employment of or delegation to any person by the Trustee
shall be deemed to include a reference to, if in the opinion of the Trustee it is
reasonably practicable, the prior notification of and consultation with the Issuers and
the Guarantor and, in any event, the notification forthwith of such appointment,
employment or delegation, as the case may be.
 1.3
    
    HeadingsHeadings shall be ignored in construing this Trust Deed.1.4
    
    ContractsReferences in this Trust Deed to this Trust Deed or any other document are to this
Trust Deed or those documents as amended, supplemented or replaced from time to time in
relation to the Programme and include any document that amends, supplements or replaces
them.1.5
    
    SchedulesThe Schedules are part of this Trust Deed and have effect accordingly.1.6
    
    Alternative Clearing SystemReferences in this Trust Deed to Euroclear and/or Clearstream, Luxembourg shall,
wherever the context so permits, be deemed to include reference to any additional or
alternative clearing system approved by the relevant Issuer and the Guarantor (if
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applicable), the Trustee and the Issuing and Paying Agent. In the case of NGNs, such
alternative clearing system must also be authorised to hold Instruments as eligible
collateral for Eurosystem monetary policy and intra-day credit operations.1.7
    
    Other termsOther terms defined in the Dealer Agreement or the Conditions have the same meaning in
this Trust Deed.1.8
    
    Contracts (Rights of Third Parties) Act 1999A person who is not a party to this Trust Deed has no right under the Contracts (Rights
of Third Parties) Act 1999 to enforce any term of this Trust Deed.1.9
    
    Amendment and RestatementThe Prior Trust Deed shall be amended and restated on the terms of this Trust Deed,
such amendment and restatement to take effect from the date of this Trust Deed. Any
Instruments issued on or after the date of this Trust Deed shall be constituted by, and
issued pursuant to, this Trust Deed. This does not affect any Instruments issued prior to
the date of this Trust Deed or any other Instrument issued on or after the date of this
Trust Deed to be consolidated and form a single series with the Instruments of any series
issued prior to the date of this Trust Deed. Subject to such amendment and restatement, the
Prior Trust Deed shall continue in full force and effect.2
    
    Issue of Instruments and Covenant to Pay2.1
    
    Issue of InstrumentsEach of the Issuers may from time to time issue Instruments in Tranches of one or more
Series on a continuous basis with no minimum issue size in accordance with the Dealer
Agreement. Before issuing any Tranche and not later than 3.00 p.m. (London time) on the
second business day in London which for this purpose shall be a day on which commercial
banks are open for general business in London preceding each proposed issue date, the
relevant Issuer shall give written notice or procure that it is given to the Trustee of the
proposed issue of such Tranche, specifying the details to be included in the relevant Final
Terms. Upon the issue by any of the Issuers of any Instruments expressed to be constituted
by this Trust Deed, such Instruments shall forthwith be constituted by this Trust Deed
without any further formality and irrespective of whether or not the issue of such debt
securities contravenes any covenant or other restriction in this Trust Deed or the Programme
Limit.2.2
    
    Separate SeriesThe provisions of Clauses 2.3 (Covenant to Pay), 2.4 (Discharge), 2.5 (Payment after a
Default) and 2.6 (Rate of Interest after a Default) and of Clauses 3 (Form of the
Instruments) to 15 (Currency Indemnity) and Schedule 3 (Provisions for Meetings of
Instrumentholders) (all inclusive) shall apply mutatis mutandis separately and independently
to the Instruments of each Series and in such Clauses and Schedule the expressions
Instrumentholders, Receipts, Coupons, Couponholders and
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Talons, together with all other terms that relate to Instruments or their Conditions,
shall be construed as referring to those of the particular Series in question and not of all
Series unless expressly so provided, so that each Series shall be constituted by a separate
trust pursuant to Clause 2.3 (Covenant to Pay) and that, unless expressly provided, events
affecting one Series shall not affect any other.2.3
    
    Covenant to PayThe relevant Issuer shall on any date when any Instruments become due to be redeemed,
in whole or in part, unconditionally pay to or to the order of the Trustee in the
Contractual Currency, in the case of any Contractual Currency other than euro, in the
principal financial centre for the Contractual Currency and, in the case of euro, in a city
in which banks have access to the TARGET System, in same day funds the Redemption Amount of
the Instruments becoming due for redemption on that date together with any applicable
premium and shall (subject to the Conditions and other than in respect of the Zero Coupon
Instruments) until such payment (both before and after judgment) unconditionally so pay to
or to the order of the Trustee interest in respect of the nominal amount of the Instruments
outstanding as set out in the Conditions (subject to Clause 2.6 (Rate of Interest after a
Default)) provided that (a) payment of any sum due in respect of the Instruments made to the
Issuing and Paying Agent as provided in the Agency Agreement shall, to that extent, satisfy
such obligation except to the extent that there is failure in its subsequent payment to the
relevant Instrumentholders or Couponholders under the Conditions and (b) a payment made
after the due date or as a result of the Instrument becoming repayable following an Event of
Default shall be deemed to have been made when the full amount due has been received by the
Issuing and Paying Agent or the Trustee and notice to that effect has been given to the
Instrumentholders (if required under Clause 6.8 (Notice of Late Payment)), except to the
extent that there is failure in its subsequent payment to the relevant Instrumentholders or
Couponholders under the Conditions. This covenant shall only have effect each time
Instruments are issued and outstanding, when the Trustee shall hold the benefit of this
covenant on trust for the Instrumentholders and Couponholders of the relevant Series.2.4
    
    DischargeSubject to Clause 2.5 (Payment after a Default), any payment to be made in respect of
the Instruments, Receipts or the Coupons by the relevant Issuer, the Guarantor or the
Trustee may be made as provided in the Conditions and any payment so made shall (subject to
Clause 2.5 (Payment after a Default)) to that extent be a good discharge to such Issuer, the
Guarantor or the Trustee, as the case may be (including, in the case of Instruments
represented by a NGN, whether or not the corresponding entries have been made in the records
of Euroclear and Clearstream, Luxembourg), except to the extent that there is failure in its
subsequent payment to the relevant Instrumentholders or Couponholders under the Conditions.2.5
    
    Payment after a DefaultAt any time after an Event of Default or a Potential Event of Default has occurred the
Trustee may:
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2.5.1
    
    by notice in writing to the relevant Issuer, the Guarantor (if applicable)
and the Paying Agents, require the Paying Agents, until notified by the Trustee to the
contrary, so far as permitted by applicable law:
 (i)
    
    to act as Paying Agents of the Trustee under this Trust Deed
and the Instruments on the terms of the Agency Agreement (with consequential
amendments as necessary and except that the Trustees liability for the
indemnification, remuneration and expenses of the Paying Agents shall be
limited to the amounts for the time being held by the Trustee in respect of the
Instruments on the terms of this Trust Deed) and thereafter to hold all
Instruments, Receipts, Coupons and Talons and all moneys, documents and records
held by them in respect of Instruments, Receipts, Coupons and Talons to the
order of the Trustee; or(ii)
    
    to deliver all Instruments, Receipts, Coupons and Talons and
all moneys, documents and records held by them in respect of the Instruments,
Receipts, Coupons and Talons to the Trustee or as the Trustee directs in such
notice and,
 2.5.2
    
    by notice in writing to the relevant Issuer and the Guarantor (if
applicable), require such Issuer failing whom, the Guarantor (if applicable) to make
all subsequent payments in respect of the Instruments, Receipts, Coupons and Talons to
or to the order of the Trustee and not to the Issuing and Paying Agent and with effect
from the receipt of any such notice by such Issuer and the Guarantor (if applicable),
until such notice is withdrawn, the first proviso to Clause 2.3 (Covenant to Pay) shall
cease to have effect.
 2.6
    
    Rate of Interest after a DefaultIf the Instruments bear interest at a floating or other variable rate and they become
immediately payable under the Conditions following an Event of Default, the rate of interest
payable in respect of them shall continue to be calculated by the Calculation Agent in
accordance with the Conditions (with consequential amendments as necessary) except that the
rates of interest need not be notified to Instrumentholders. The first period in respect of
which interest shall be so calculable shall commence on the expiry of the Interest Period
during which the Instruments become so repayable.3
    
    Form of the Instruments3.1
    
    The Global InstrumentsThe Instruments shall initially be represented by a temporary Global Instrument or a
permanent Global Instrument in the nominal amount of the Tranche being issued. Interests in
temporary Global Instruments shall be exchangeable for Definitive Instruments or interests
in permanent Global Instruments as set out in each temporary Global Instrument. Interests in
permanent Global Instruments shall be exchangeable for Definitive Instruments as set out in
each permanent Global Instrument.
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3.2
    
    The Definitive InstrumentsThe Definitive Instruments, Receipts, Coupons and Talons shall be security printed in
accordance with applicable legal and stock exchange requirements substantially in the forms
set out in Schedule 2. The Instruments shall be endorsed with the Conditions.3.3
    
    SignatureThe Instruments, Receipts, Coupons and Talons shall be signed manually or in facsimile
by an authorised signatory of the relevant Issuer and the Instruments shall be authenticated
by or on behalf of the Issuing and Paying Agent. The relevant Issuer may use the facsimile
signature of any person who at the date of this Trust Deed is such an authorised signatory
even if at the time of issue of any Instruments, Receipts, Coupons or Talons he no longer
holds that office. In the case of a Global Instrument which is a NGN, the Issuing and Paying
Agent shall also instruct the Common Safekeeper to effectuate the same. Instruments,
Receipts, Coupons and Talons so executed and authenticated (and effectuated, if applicable)
shall be binding and valid obligations of the relevant Issuer. Execution in facsimile of any
Instruments and any photostatic copying or other duplication of any Global Instruments (in
unauthenticated form, but executed manually on behalf of the relevant Issuer as stated
above) shall be binding upon such Issuer in the same manner as if such Instruments were
signed manually by such signatories.3.4
    
    TitleThe holder of any Instrument, Receipt, Coupon or Talon shall (save as otherwise
required by law) be treated as its absolute owner for all purposes (whether or not it is
overdue and regardless of any notice of ownership, trust or any interest in it, any writing
on it or its theft or loss) and no person will be liable for so treating the holder.4
    
    Stamp Duties and Taxes4.1
    
    Stamp DutiesEach of the Issuers shall pay any stamp, issue, documentary or other taxes and duties
payable in the United Kingdom in respect of the creation, issue and offering of the
Instruments, Receipts, Coupons and Talons by it and the execution or delivery by it of this
Trust Deed. Each Issuer shall also indemnify the Trustee, the Instrumentholders and the
Couponholders from and against all stamp, issue, documentary or other taxes paid by any of
them in any jurisdiction in connection with any action taken by or on behalf of the Trustee
or, as the case may be (where entitled to do so), the Instrumentholders or the Couponholders
to enforce the relevant Issuers or (if applicable) the Guarantors obligations under this
Trust Deed or the Instruments, Receipts, Coupons or Talons.4.2
    
    Change of Taxing JurisdictionIf an Issuer or the Guarantor becomes subject generally to the taxing jurisdiction of a
territory or a taxing authority of or in that territory with power to tax other than or in
addition to the United Kingdom or any such authority of or in such territory then such
Issuer or, as the case may be, the Guarantor shall (unless the Trustee otherwise agrees)
give the Trustee an undertaking satisfactory to the Trustee in terms corresponding to the
terms of
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Condition 7 with the substitution for, or (as the case may require) the addition to, the
references in that Condition to the United Kingdom of references to that other or additional
territory or authority to whose taxing jurisdiction such Issuer or the Guarantor has become
so subject. In such event this Trust Deed and the Instruments, Receipts, Coupons and Talons
shall be read accordingly.4A
    
    Guarantee and Indemnity4A.1 GuaranteeThe Guarantor unconditionally and irrevocably guarantees that if National Grid Gas
Finance (No 1) does not pay any sum payable by it under this Trust Deed, the Instruments,
the Receipts or the Coupons by the time and on the date specified for such payment (whether
on the normal due date, on acceleration or otherwise), the Guarantor shall pay that sum to
or to the order of the Trustee, in the manner provided in Clause 2.3 (Covenant to Pay) (or
if in respect of sums due under Clause 7 (Remuneration and Indemnification of the Trustee),
in pounds sterling (or such other currency as may be agreed between the Issuers, the
Guarantor and the Trustee from time to time) in London in immediately available funds)
before close of business on that date in the city to which payment is so to be made. Clauses
2.3(a) and 2.3(b) shall apply (with consequential amendments as necessary) to such payments
other than those in respect of sums due under Clause 7 (Remuneration and Indemnification of
the Trustee). All payments under the Guarantee by the Guarantor shall be made subject to
Condition 6 and Clause 4.2 (Change of Taxing Jurisdiction).4A.2 Guarantor as Principal DebtorAs between the Guarantor and the Trustee, the Instrumentholders and the Couponholders
but without affecting National Grid Gas Finance (No 1)s obligations, the Guarantor shall be
liable under this Clause as if it were the sole principal debtor and not merely a surety.
Accordingly, it shall not be discharged, nor shall its liability be affected, by anything
that would not discharge it or affect its liability if it were the sole principal debtor
(including (1) any time, indulgence, waiver or consent at any time given to National Grid
Gas Finance (No 1) or any other person, (2) any amendment to any other provisions of this
Trust Deed or to the Conditions or to any security or other guarantee or indemnity, (3) the
making or absence of any demand on National Grid Gas Finance (No 1) or any other person for
payment, (4) the enforcement or absence of enforcement of this Trust Deed, the Instruments,
the Receipts or the Coupons or of any security or other guarantee or indemnity, (5) the
taking, existence or release of any security, guarantee or indemnity, (6) the dissolution,
amalgamation, reconstruction or reorganisation of National Grid Gas Finance (No 1) or any
other person or (7) the illegality, invalidity or unenforceability of or any defect in any
provision of this Trust Deed, the Instruments, the Receipts or the Coupons or any of
National Grid Gas Finance (No 1)s obligations under any of them).4A.3 Guarantors Obligations ContinuingThe Guarantors obligations under this Trust Deed are and shall remain in full force
and effect by way of continuing security until no sum remains payable under this Trust Deed,
the Instruments, the Receipts or the Coupons. Furthermore, those obligations of the
Guarantor are additional to, and not instead of, any security or other guarantee or
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indemnity at any time existing in favour of any person, whether from the Guarantor or
otherwise and may be enforced without first taking proceedings against National Grid Gas
Finance (No 1), any other person, any security or any other guarantee or indemnity.4A.4 Exercise of Guarantors RightsSo long as any sum remains payable by National Grid Gas Finance (No 1) under this Trust
Deed, the Instruments, the Receipts or the Coupons:
 4A.4.1
    
    any right of the Guarantor, by reason of the performance of any of its obligations
under this Clause, to be indemnified by National Grid Gas Finance (No 1) or to take the
benefit of or to enforce any security or other guarantee or indemnity shall be
exercised and enforced by the Guarantor only in such manner and on such terms as the
Trustee may require or approve and4A.4.2
    
    any amount received or recovered by the Guarantor (a) as a result of any exercise of
any such right or (b) in the liquidation, dissolution, amalgamation, reconstruction,
reorganisation, insolvency, winding-up or analogous proceedings relating to National
Grid Gas Finance (No 1) shall be held in trust for the Trustee and immediately paid to
the Trustee and the Trustee shall hold it on the trusts set out in Clause 5.1
(Declaration of Trust).
 4A.5 Suspense AccountsAny amount received or recovered by the Trustee (otherwise than as a result of a
payment by National Grid Gas Finance (No 1) to the Trustee in accordance with Clause 2
(Issue of Instruments and Covenant to Pay)) in respect of any sum payable by National Grid
Gas Finance (No 1) under this Trust Deed, the Instruments, the Receipts or the Coupons may
be placed in a suspense account and kept there for so long as the Trustee thinks fit.4A.6 Avoidance of PaymentsThe Guarantor shall within 5 business days of demand indemnify the Trustee, each
Instrumentholder and each Couponholder against any cost, loss, expense or liability
sustained or incurred by it as a result of it being required for any reason (including any
bankruptcy, insolvency, winding-up, dissolution, or similar law of any jurisdiction) to
refund all or part of any amount received or recovered by it in respect of any sum payable
by National Grid Gas Finance (No 1) under this Trust Deed, any Instrument or the Receipts or
Coupons relating to that Instrument and shall in any event pay to it on demand the amount as
refunded by it.4A.7 Debts of National Grid Gas Finance (No 1)If any moneys become payable by the Guarantor under this Guarantee, National Grid Gas
Finance (No 1) shall not (except in the event of the liquidation of National Grid Gas
Finance (No 1)) so long as any such moneys remain unpaid, pay any moneys for the time being
due from National Grid Gas Finance (No 1) to the Guarantor.4A.8 IndemnityAs separate, independent and alternative stipulations, the Guarantor unconditionally
and irrevocably agrees (1) that any sum that, although expressed to be payable by National
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Grid Gas Finance (No 1) under this Trust Deed, the Instruments or the Receipts or Coupons,
is for any reason (whether or not now existing and whether or not now known or becoming
known to National Grid Gas Finance (No 1), the Guarantor, the Trustee or any
Instrumentholder or Couponholder) not recoverable from the Guarantor on the basis of a
guarantee shall nevertheless be recoverable from it as if it were the sole principal debtor
and shall be paid by it to the Trustee within 5 business days of demand and (2) as a primary
obligation to indemnify the Trustee, each Instrumentholder and each Couponholder against any
loss suffered by it as a result of any sum expressed to be payable by National Grid Gas
Finance (No 1) under this Trust Deed, the Instruments or the Receipts or Coupons not being
paid on the date and otherwise in the manner specified in this Trust Deed or any payment
obligation of National Grid Gas Finance (No 1) under this Trust Deed, the Instruments, the
Receipts or the Coupons being or becoming void, voidable or unenforceable for any reason
(whether or not now existing and whether or not now known or becoming known to the Trustee,
any Instrumentholder or any Couponholder), the amount of that loss being the amount
expressed to be payable by National Grid Gas Finance (No 1) in respect of the relevant sum.5
    
    Application of Moneys Received by the Trustee5.1
    
    Declaration of TrustAll moneys received by the Trustee in respect of the Instruments or amounts payable
under this Trust Deed shall, despite any appropriation of all or part of them by the
relevant Issuer or the Guarantor (if applicable), be held by the Trustee on trust to apply
them (subject to Clause 5.2 (Accumulation)):
 5.1.1
    
    first, in payment of all costs, charges, expenses and liabilities
reasonably incurred by the Trustee (including remuneration payable to it) in carrying
out its functions under this Trust Deed;5.1.2
    
    secondly, in payment of any amounts owing in respect of the Instruments,
Receipts or Coupons pari passuand rateably; and5.1.3
    
    thirdly, in payment of any balance to such Issuer for itself or, if any
moneys were received from the Guarantor and to the extent of such moneys, the
Guarantor.
 If the Trustee holds any moneys which represent principal, premium or interest in respect of
Instruments, Receipts or Coupons which have become void in accordance with the Conditions,
the Trustee shall hold them on these trusts.5.2
    
    AccumulationIf the amount of the moneys at any time available for payment in respect of the
Instruments under Clause 5.1 (Declaration of Trust) is less than 10 per cent. of the nominal
amount of the Instruments then outstanding, the Trustee may, at its discretion, invest such
moneys as provided in Clause 5.3 (Investment). The Trustee may retain such investments and
accumulate the resulting income until the investments and the accumulations, together with
any other funds for the time being under its control and available for such payment, amount
to at least 10 per cent. of the nominal amount of the Instruments then outstanding and then
such investments, accumulations and funds (after deduction of, or provision for, any
applicable taxes) shall be applied as specified in Clause 5.1 (Declaration of Trust).
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5.3
    
    InvestmentMoneys held by the Trustee may be invested in its name or under its control in any
investments or other assets anywhere, whether or not they produce income, or deposited in
its name or under its control at such bank or other financial institution in such currency
as the Trustee may, in its absolute discretion, think fit. If that bank or institution is
the Trustee or a subsidiary, parent or associated undertaking of the Trustee, it need only
account for an amount of interest equal to the largest amount of interest payable by it on
such a deposit to an independent customer. The Trustee may at any time vary or transpose any
such investments or assets or convert any moneys so deposited into any other currency, and
shall not be responsible for any resulting loss, whether by depreciation in value, change in
exchange rates or otherwise.6
    
    CovenantsSo long as any Instrument is outstanding, each of the Issuers (in respect of itself
only) and the Guarantor shall each:6.1
    
    Books of AccountKeep, and procure that each of its subsidiary undertakings keeps, proper books of
account and, at any time after an Event of Default has occurred or if the Trustee reasonably
believes that such an event has occurred, so far as permitted by applicable law, allow, and
procure that each such subsidiary undertaking shall allow, the Trustee and anyone appointed
by it to whom the relevant Issuer, the Guarantor (if applicable) and/or the relevant
subsidiary undertaking has no reasonable objection, access to its books of account at all
reasonable times during normal business hours.6.2
    
    Notice of Events of DefaultNotify the Trustee in writing immediately on becoming aware of the occurrence of any
Event of Default or Potential Event of Default.6.3
    
    InformationSo far as permitted by applicable law, give the Trustee such information as it
reasonably requires to perform its functions.6.4
    
    Financial Statements etcSend to the Trustee at the time of their issue and in the case of annual financial
statements in any event within 180 days of the end of each financial year three copies in
English of every balance sheet, profit and loss account, report or other notice, statement
or circular issued, or that legally or contractually should be issued, to the members or
creditors (or any class of them) of the relevant Issuer, the Guarantor (if applicable) or
any parent undertaking of it generally in their capacity as such.6.5
    
    Certificate of DirectorsSend to the Trustee, within 14 days of its annual audited financial statements being
made available to its members, and also within 21 days of any request by the Trustee a
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certificate of the relevant Issuer or, as the case may be, the Guarantor signed by a
Director or the Company Secretary that, having made all reasonable enquiries, to the best of
the knowledge, information and belief of such Issuer or, as the case may be, the Guarantor
as at a date (the Certification Date) not more than five days before the date of the
certificate no Event of Default or Potential Event of Default had occurred (and in the case
of a Potential Event of Default was continuing) since the Certification Date of the last
such certificate or (if none) the date of this Trust Deed or, if such an event had occurred
(and in the case of a Potential Event of Default was continuing), giving details of it and
certifying that it has complied with its obligations under this Trust Deed or, to the extent
that it has failed so to comply, stating such.6.6
    
    Notices to InstrumentholdersObtain the prior written approval of the Trustee to, and promptly give to the Trustee
two copies of, the form of every notice given to the Instrumentholders in accordance with
Condition 14 (such approval, unless so expressed, not to constitute approval for the
purposes of Section 21 of the Financial Services and Markets Act 2000 any such notice which
is a communication within the meaning of that section).6.7
    
    Further ActsSo far as permitted by applicable law, do such further things as may be necessary in
the reasonable opinion of the Trustee to give effect to this Trust Deed.6.8
    
    Notice of Late PaymentForthwith upon request by the Trustee (if the Trustee determines such notice is
necessary) give notice to the Instrumentholders of any unconditional payment to the Issuing
and Paying Agent or the Trustee of any sum due in respect of the Instruments, the Receipts
or Coupons made after the due date for such payment.6.9
    
    ListingIf the Instruments are so listed, use all reasonable endeavours to maintain the listing
of the Instruments but, if it is unable to do so, having used such endeavours, or if the
maintenance of such listing is agreed by the Trustee to be unduly onerous and the Trustee is
satisfied that the interests of the Instrumentholders would not by such action be materially
prejudiced, instead use all reasonable endeavours to obtain and maintain a listing of the
Instruments on another stock exchange approved in writing by the Trustee and subject to the
requirements of the Dealer Agreement.6.10
    
    Change in AgentsGive at least 14 days prior notice to the Instrumentholders in accordance with the
Conditions of any future appointment, resignation or removal of an Agent or of any change by
an Agent of its specified office.6.11
    
    Provision of Legal OpinionsProcure the delivery of legal opinions addressed to the Trustee dated the date of such
delivery, in form and content acceptable to the Trustee:
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6.11.1
    
    from Clifford Chance LLP (or such other firm of legal advisers as may be
agreed between the relevant Issuer, the Guarantor (if applicable) and the Trustee) as
to the laws of England before the first issue of Instruments occurring after each
anniversary of this Trust Deed or, if later, 12 months after the date of delivery of
the latest such legal opinion and on the date of any amendment to this Trust Deed;6.11.2
    
    unless the relevant Issuer has notified the Dealers and the Trustee in
writing that it does not intend to issue Instruments under the Programme for the time
being, from legal advisers, reasonably acceptable to the Trustee as to such law as may
reasonably be requested by the Trustee and in such form and with such content as the
Trustee may require, on such occasions as the Trustee so requests on the basis that the
Trustee considers it prudent in view of a change (or proposed change) in (or in the
interpretation or application of) any applicable law, regulation or circumstance
materially affecting the relevant Issuer, the Guarantor (if applicable), the Trustee,
the Instruments, the Certificates, the Receipts, the Coupons, the Talons, this Trust
Deed or the Agency Agreement; and6.11.3
    
    on each occasion on which a legal opinion is given to any Dealer pursuant
to the Dealer Agreement from the legal adviser giving such opinion.
 6.12
    
    Instruments Held by an Issuer or Guarantor etc.Send to the Trustee as soon as practicable after being so requested by the Trustee a
certificate of the relevant Issuer or, as the case may be, the Guarantor signed by any
Director or the Company Secretary stating the number of Instruments held at the date of such
certificate by or on behalf of such Issuer or, as the case may be, the Guarantor or their
respective subsidiary undertakings.6.13
    
    Obligations of AgentsComply with and perform all its obligations under the Agency Agreement and use all
reasonable endeavours to procure that the Agents comply with and perform all their
respective obligations thereunder and not make any amendment or modification to the Agency
Agreement without the prior written approval of the Trustee.6.14
    
    Copies of Dealer AgreementProvide the Trustee promptly with copies of all supplements and/or amendments to,
and/or restatements of, the Dealer Agreement.7
    
    Remuneration and Indemnification of the Trustee7.1
    
    Normal RemunerationSo long as any Instrument is outstanding each of the Issuers (failing whom, the
Guarantor, in the case of Instruments issued by National Grid Gas Finance (No 1)) shall pay
the Trustee as remuneration for its services as Trustee such sum on such dates in each case
as they may from time to time agree. Such remuneration shall accrue from day to day from the
date of this Trust Deed. However, if any payment to an Instrumentholder or Couponholder of
moneys due in respect of any Instrument, Receipts or Coupon is improperly withheld or
refused, such remuneration shall again accrue as from the date of
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such withholding or refusal until payment to such Instrumentholder or Couponholder is duly
made.7.2
    
    Extra RemunerationIf an Event of Default shall have occurred or if the Trustee finds it expedient or
necessary or is requested by an Issuer to undertake duties that they both agree to be of an
exceptional nature or otherwise outside the scope of the Trustees normal duties under this
Trust Deed, such Issuer (failing whom, the Guarantor, in the case of Instruments issued by
National Grid Gas Finance (No 1)) shall pay such additional remuneration as they may agree
or, failing agreement as to any of the matters in this Clause 7 (or as to such sums referred
to in Clause 7.1 (Normal Remuneration)), as determined by an investment bank (acting as an
expert) selected by the Trustee and approved by such Issuer or, failing such approval,
nominated by the President for the time being of The Law Society of England and Wales. The
expenses involved in such nomination and such investment banks fee shall be shared equally
between the Trustee and the relevant Issuer. The determination of such investment bank shall
be conclusive and binding on the relevant Issuer, the Guarantor, the Trustee, the
Instrumentholders and the Couponholders.7.3
    
    ExpensesEach of the Issuers, in respect of Instruments issued by it, (failing whom, the
Guarantor, in the case of Instruments issued by National Grid Gas Finance (No 1)) shall also
on demand by the Trustee pay or discharge all costs, charges, liabilities and expenses
reasonably incurred by the Trustee in the preparation and execution of this Trust Deed and
the performance of its functions under this Trust Deed including, but not limited to, legal
and travelling expenses and any United Kingdom stamp, documentary or other taxes or duties
paid by the Trustee in connection with any legal proceedings reasonably brought or
contemplated by the Trustee against an Issuer or the Guarantor to enforce any provision of
this Trust Deed, the Instruments, the Receipts, the Coupons or the Talons and in addition
shall pay to the Trustee (if required) an amount equal to the amount of any value added tax
or similar tax chargeable in respect of the Trustees remuneration under this Trust Deed.
Such costs, charges, liabilities and expenses shall:
 7.3.1
    
    in the case of payments made by the Trustee before such demand, carry
interest from the date of the demand at the rate of one per cent. per annum over the
base rate of The Royal Bank of Scotland plc on the date on which the Trustee made such
payments; and7.3.2
    
    in other cases, carry interest at such rate from 30 days after the date of
the demand or (where the demand specifies that payment is to be made on an earlier
date) from such earlier date provided that in such event no such interest shall accrue
unless payment is actually made on such earlier date.
 7.4
    
    Notice of CostsThe Trustee shall wherever practicable give prior notice to the Issuers and the
Guarantor of any costs, charges and expenses properly to be incurred and of payments to be
made by the Trustee in the lawful exercise of its powers under this Trust Deed so as to
afford each of the Issuers and the Guarantor a reasonable opportunity to meet such costs,
charges and expenses itself or to put the Trustee in funds to make payment of such costs,
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charges and expenses. However, failure of the Trustee to give any such prior notice shall
not prejudice its rights to reimbursement of such costs, charges and expenses under this
Clause 7.7.5
    
    IndemnityEach of the Issuers (failing whom, the Guarantor, in the case of Instruments issued by
National Grid Gas Finance (No 1)) shall indemnify the Trustee in respect of all liabilities
and expenses reasonably incurred by it or by anyone appointed by it or to whom any of its
functions may be delegated by it in the carrying out of its functions and against any loss,
liability, cost, claim, action, demand or expense (including, but not limited to, all
reasonable costs, charges and expenses paid or incurred in disputing or defending any of the
foregoing) which any of them may incur or that may be made against any of them arising out
of or in relation to or in connection with, its appointment or the exercise of its
functions.7.6
    
    Continuing EffectClauses 7.3 (Expenses) and 7.5 (Indemnity) shall continue in full force and effect as
regards the Trustee even if it no longer is Trustee.7.7
    
    Determination of SeriesThe Trustee shall be entitled in its absolute discretion to determine in respect of
which Series of Instruments any costs, charge, liabilities and expenses incurred under this
Trust Deed have been incurred or to allocate any such costs, charges, liabilities and
expenses between the Instruments of any two or more Series.8
    
    Provisions Supplemental to the Trustee Acts8.1
    
    AdviceThe Trustee may act on the opinion or advice of, or information obtained from, any
expert and shall not be responsible to anyone for any loss occasioned by so acting. Any such
opinion, advice or information may be sent or obtained by letter or fax and the Trustee
shall not be liable to anyone for acting in good faith on any opinion, advice or information
purporting to be conveyed by such means even if it contains some error or is not authentic.8.2
    
    Trustee to Assume PerformanceThe Trustee need not notify anyone of the execution of this Trust Deed or do anything
to find out if an Event of Default or Potential Event of Default has occurred. Until it has
actual knowledge or express notice to the contrary, the Trustee may assume that no such
event has occurred and that each Issuer and the Guarantor is performing all of its
obligations under this Trust Deed, the Instruments, the Receipts, the Coupons and the Talons
provided that the Trustee shall not be treated for any purposes as having any notice or
knowledge which has been obtained by it or any officer or employee of it in some capacity
other than as Trustee under this Trust Deed or in a private or confidential capacity such
that it would not be proper to disclose to third parties.
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8.3
    
    Resolutions of InstrumentholdersThe Trustee shall not be responsible for having acted in good faith on a resolution
purporting to have been passed at a meeting of Instrumentholders in respect of which minutes
have been made and signed even if it is later found that there was a defect in the
constitution of the meeting or the passing of the resolution or that the resolution was not
valid or binding on the Instrumentholders or Couponholders.8.4
    
    Certificate Signed by a Director, etc.If the Trustee, in the exercise of its functions, requires to be satisfied or to have
information as to any fact or the expediency of any act, it may call for and accept as
sufficient evidence of that fact or the expediency of that act a certificate signed by any
Director or the Company Secretary of the relevant Issuer or the Guarantor (if applicable) as
to that fact or to the effect that, in their opinion, that act is expedient and the Trustee
need not call for further evidence and shall not be responsible for any loss occasioned by
acting on such a certificate.8.5
    
    Deposit of DocumentsThe Trustee may deposit this Trust Deed and any other documents with any bank or entity
whose business includes the safe custody of documents or with any lawyer or firm of lawyers
believed by it to be of good repute and may pay all sums due in respect of them.8.6
    
    DiscretionThe Trustee shall have absolute and uncontrolled discretion as to the exercise of its
functions and shall not be responsible for any loss, liability, cost, claim, action, demand,
expense or inconvenience which may result from their exercise or non-exercise.8.7
    
    AgentsWhenever it considers it expedient in the interests of the Instrumentholders, the
Trustee may, in the conduct of its trust business, instead of acting personally, employ and
pay an agent selected by it, whether or not a lawyer or other professional person, to
transact or conduct, or concur in transacting or conducting, any business and to do or
concur in doing all acts required to be done by the Trustee (including the receipt and
payment of money). The Trustee shall not be responsible to anyone for any misconduct or
omission by any such agent so employed by it or be bound to supervise the proceedings or
acts of any such agent.8.8
    
    DelegationWhenever it considers it expedient in the interests of the Instrumentholders, the
Trustee may delegate to any person on any terms (including power to sub-delegate) all or any
of its functions. If the Trustee exercises reasonable care in selecting such delegate, it
shall not have any obligation to supervise such delegate or be responsible for any loss,
liability, cost, claim, action, demand or expense incurred by reason of any misconduct or
default by any such delegate or sub-delegate.
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8.9
    
    NomineesIn relation to any asset held by it under this Trust Deed, the Trustee may appoint any
person to act as its nominee on any terms.8.10
    
    Forged InstrumentsThe Trustee shall not be liable to the relevant Issuer, the Guarantor (if applicable)
or any Instrumentholder or Couponholder by reason of having accepted as valid or not having
rejected any Instrument, Certificate, Receipt, Coupon or Talon purporting to be such and
later found to be forged or not authentic.8.11
    
    ConfidentialityUnless ordered to do so by a court of competent jurisdiction, the Trustee shall not be
required to disclose to any Instrumentholder or Couponholder any confidential financial or
other information made available to the Trustee by the relevant Issuer or the Guarantor (if
applicable).8.12
    
    Determinations ConclusiveAs between itself and the Instrumentholders and Couponholders, the Trustee may
determine all questions and doubts arising in relation to any of the provisions of this
Trust Deed. Such determinations, whether made upon such a question actually raised or
implied in the acts or proceedings of the Trustee, shall be conclusive and shall bind the
Trustee, the Instrumentholders and the Couponholders.8.13
    
    Currency ConversionWhere it is necessary or desirable to convert any sum from one currency to another, it
shall (unless otherwise provided hereby or required by law) be converted at such rate or
rates, in accordance with such method and as at such date as may reasonably be specified by
the Trustee but having regard to current rates of exchange, if available. Any rate, method
and date so specified shall be binding on the relevant Issuer, the Guarantor (if
applicable), the Instrumentholders and the Couponholders.8.14
    
    Payment for and Delivery of InstrumentsThe Trustee shall not be responsible for the receipt or application by the relevant
Issuer of the proceeds of the issue of the Instruments, any exchange of Instruments or the
delivery of Instruments to the persons entitled to them.8.15
    
    Trustees consentAny consent given by the Trustee for the purposes of this Trust Deed may be given on
such terms as the Trustee thinks fit. In giving such consent the Trustee may require the
Issuers to agree to such modifications or additions to this Trust Deed as the Trustee may
deem expedient in the interest of the Instrumentholders.
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8.16
    
    Instruments Held by an Issuer etc.In the absence of knowledge or express notice to the contrary, the Trustee may assume
without enquiry (other than requesting a certificate under Clause 6.12 (Instruments Held by
an Issuer or Guarantor etc.)) that no Instruments are for the time being held by or on
behalf of the relevant Issuer, the Guarantor (if applicable) or their respective subsidiary
undertakings.8.17
    
    Legal OpinionsThe Trustee shall not be responsible to any person for failing to request, require or
receive any legal opinion relating to any Instruments or for checking or commenting upon the
content of any such legal opinion.8.18
    
    Programme LimitThe Trustee shall not be concerned, and need not enquire, as to whether or not any
Instruments are issued in breach of the Programme Limit.8.19
    
    Events of DefaultThe Trustee may determine whether or not an Event of Default is in its opinion capable
of remedy or (in relation to Condition 9) materially prejudicial to the interests of
Instrumentholders. Any such determination shall be conclusive and binding on the relevant
Issuer, the Guarantor (if applicable), the Instrumentholders and the Couponholders.9
    
    Trustee Liable for Negligence9.1
    
    DisapplicationSection 1 of the Trustee Act 2000 shall not apply to the duties of the Trustee in
relation to the trusts constituted by this Trust Deed. Where there are any inconsistencies
between the Trustee Acts and the provisions of this Trust Deed, the provisions of this Trust
Deed shall, to the extent allowed by law, prevail and, in the case of any such inconsistency
with the Trustee Act 2000, the provisions of this Trust Deed shall constitute a restriction
or exclusion for the purposes of that Act.9.2
    
    Trustee LiabilitySubject to Sections 750 and 751 of the Companies Act 2006 (if applicable) and
notwithstanding anything to the contrary in this Trust Deed, the Instruments or the Paying
Agency Agreement, the Trustee shall not be liable to any person for any matter or thing done
or omitted in any way in connection with or in relation to this Trust Deed, the Instruments
or the Agency Agreement save in relation to its own gross negligence, wilful default or
fraud.
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10
    
    Waiver and Proof of Default10.1
    
    WaiverThe Trustee may, without the consent of the Instrumentholders or Couponholders and
without prejudice to its rights in respect of any subsequent breach, from time to time and
at any time, if in its opinion the interests of the Instrumentholders will not be materially
prejudiced thereby, waive or authorise, on such terms as seem expedient to it, any breach or
proposed breach by an Issuer or the Guarantor of this Trust Deed or the Conditions or
determine that an Event of Default or Potential Event of Default shall not be treated as
such provided that the Trustee shall not do so in contravention of an express direction
given by an Extraordinary Resolution or a request made pursuant to Condition 9. No such
direction or request shall affect a previous waiver, authorisation or determination. Any
such waiver, authorisation or determination shall be binding on the Instrumentholders and
the Couponholders and, if the Trustee so requires, shall be notified to the
Instrumentholders as soon as practicable.10.2
    
    Proof of DefaultProof that the relevant Issuer has failed to pay a sum due to the holder of any one
Instrument, Receipt or Coupon shall (unless the contrary be proved) be sufficient evidence
that it has made the same default as regards all other Instruments, Receipts or Coupons
which are then payable.11
    
    Trustee not Precluded from Entering into ContractsThe Trustee and any other person, whether or not acting for itself, may acquire, hold
or dispose of any Instrument, Receipt, Coupon, Talon or other security (or any interest
therein) of any of the Issuers, the Guarantor or any other person, may enter into or be
interested in any contract or transaction with any such person and may act on, or as
depositary or agent for, any committee or body of holders of any securities of any such
person in each case with the same rights as it would have had if the Trustee were not acting
as Trustee and need not account for any profit.12
    
    Modification and Substitution12.1
    
    ModificationThe Trustee may agree without the consent of the Instrumentholders or Couponholders to
any modification to this Trust Deed of a formal, minor or technical nature or to correct a
manifest error. The Trustee may also so agree to any modification to this Trust Deed which
is in its opinion not materially prejudicial to the interests of the Instrumentholders, but
such power does not extend to any such modification as is mentioned in the proviso to
paragraph 2 of Schedule 3 (Provisions for Meetings of Instrumentholders). Any such
modification, authorisation or waiver shall be binding on the relevant Instrumentholders and
Couponholders and if the Trustee so requires, such modification shall be notified to the
relevant Instrumentholders as soon as practicable.
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12.2
    
    Substitution
 12.2.1
    
    The Trustee may, without the consent of the Instrumentholders or
Couponholders, agree to (a) the substitution of National Grid Gass Successor in
Business or any subsidiary of National Grid Gas (the Substituted Obligor) in place of
National Grid Gas, as the case may be (or of any previous substitute under this Clause
12) as the principal debtor under this Trust Deed, the Instruments, the Receipts, the
Coupons and the Talons; (b) the substitution of any other company (the Substituted
Obligor) in place of National Grid Finance (No 1) (or of any previous substitute under
this Clause 12) as the principal debtor under this Trust Deed, the Instruments, the
Receipts, the Coupons and the Talons; and (c) the substitution of the Guarantors
Successor in Business or any subsidiary of the Guarantor (also a Substituted Obligor)
in place of the Guarantor as the guarantor of Instruments issued by National Grid Gas
Finance (No 1), provided that:
 (i)
    
    a deed is executed or undertaking given by the Substituted
Obligor to the Trustee, in form and manner satisfactory to the Trustee,
agreeing to be bound by this Trust Deed, the Instruments, the Receipts, the
Coupons and the Talons (with consequential amendments as the Trustee may deem
appropriate) as if the Substituted Obligor had been named in this Trust Deed,
the Instruments, the Receipts, the Coupons and the Talons as the principal
debtor in place of such Issuer or as the guarantor in place of the Guarantor,
as the case may be;(ii)
    
    if the Substituted Obligor is subject generally to the taxing
jurisdiction of a territory or any authority of or in that territory with power
to tax (the Substituted Territory) other than the territory to the taxing
jurisdiction of which (or to any such authority of or in which) such Issuer is
subject generally (the Issuers Territory) or to which the Guarantor is
subject generally (the Guarantors Territory), the Substituted Obligor shall
(unless the Trustee otherwise agrees) give to the Trustee an undertaking
satisfactory to the Trustee in terms corresponding to Condition 7 with the
substitution for the references in that Condition to such Issuers Territory or
the Guarantors Territory, as the case may be, of references to the Substituted
Territory whereupon the Trust Deed, the Instruments, the Receipts, the Coupons
and the Talons shall be read accordingly;(iii)
    
    if any two Directors of the Substituted Obligor certify that
it will be solvent immediately after such substitution, the Trustee need not
have regard to the Substituted Obligors financial condition, profits or
prospects or compare them with those of such Issuer or the Guarantor;(iv)
    
    such Issuer, the Guarantor and the Substituted Obligor comply
with such other requirements as the Trustee may direct in the interests of the
Instrumentholders;(v)
    
    the Trustee is satisfied that (i) the Substituted Obligor has
obtained all necessary governmental and regulatory approvals and consents
necessary for its assumption of liability as principal debtor or guarantor, as
the case may be, in respect of the Instruments in place of such Issuer or the
Guarantor, as the case may be (or a previous substitute), (ii) all necessary
governmental and regulatory approvals and consents necessary for or in
 22




---



##### 



connection with the assumption by the Substituted Obligor of its obligations
under the Instruments and the Coupons and (iii) such approvals and consents
are at the time of substitution in full force and effect; and(vi)
    
    a guarantee is provided in respect of the Instruments, the
Receipts, the Coupons and the Talons by the relevant Issuer or the Guarantor,
as the case may be (or the Successor in Business) unless the Substituted
Obligor is the Successor in Business.
 12.2.2
    
    Release of Substituted Issuer: An agreement by the Trustee pursuant to
this Clause 12.2 (Substitution) shall, if so expressed, release the relevant Issuer (or
a previous substitute) from any or all of its obligations under this Trust Deed, the
Instruments, the Receipts, the Coupons and the Talons. Notice of the substitution shall
be given to the Instrumentholders within 14 days of the execution of such documents and
compliance with such requirements.12.2.3
    
    Completion of Substitution: On completion of the formalities set out in
this Clause 12.2 (Substitution), the Substituted Obligor shall be deemed to be named in
this Trust Deed, the Instruments, the Receipts, the Coupons and the Talons as the
principal debtor in place of the relevant Issuer (or of any previous substitute) and
this Trust Deed, the Instruments, the Receipts, the Coupons and the Talons shall be
deemed to be amended as necessary to give effect to the substitution.
 13
    
    Appointment, Retirement and Removal of The Trustee13.1
    
    AppointmentEach of the Issuers has the power of appointing new trustees but no one may be so
appointed unless previously approved by an Extraordinary Resolution. A trust corporation
shall at all times be a Trustee and may be the sole Trustee. Any appointment of a new
Trustee shall be notified by the relevant Issuer to the Instrumentholders in accordance with
Condition 14 as soon as practicable.13.2
    
    Retirement and RemovalAny Trustee may retire at any time on giving at least three months written notice to
each of the Issuers and the Guarantor without giving any reason or being responsible for any
costs occasioned by such retirement and the Instrumentholders may by Extraordinary
Resolution remove any Trustee provided that the retirement or removal of a sole trust
corporation shall not be effective until a trust corporation is appointed as successor
Trustee. If a sole trust corporation gives notice of retirement or an Extraordinary
Resolution is passed for its removal, it shall use all reasonable endeavours to procure that
another trust corporation is appointed as Trustee.13.3
    
    Co-TrusteesThe Trustee may, despite Clause 13.1 (Appointment), by written notice to each of the
Issuers and the Guarantor appoint anyone to act either as a separate Trustee in respect of
any Issue or as an additional Trustee jointly with the Trustee:
 23




---



##### 



13.3.1
    
    if the Trustee considers the appointment to be in the interests of the
Instrumentholders and/or the Couponholders;13.3.2
    
    to conform with a legal requirement, restriction or condition in a
jurisdiction in which a particular act is to be performed; or13.3.3
    
    to obtain a judgment or to enforce a judgment or any provision of this
Trust Deed in any jurisdiction.
 Subject to the provisions of this Trust Deed the Trustee may, in the instrument of
appointment, confer on any person so appointed such functions as it thinks fit. The Trustee
may by written notice to each of the Issuers, the Guarantor and that person remove that
person. At the Trustees request, each Issuer and the Guarantor shall forthwith do all
things as may be required to perfect such appointment or removal and it irrevocably appoints
the Trustee as its attorney in its name and on its behalf to do so.Before appointing such person to act as separate Trustee or additional Trustee the Trustee
shall (unless it is not, in the opinion of the Trustee, reasonably practicable to do so)
give notice to each of the Issuers and the Guarantor of its intention to make such
appointment (and the reason for that) and shall give due consideration to representations
made by each of the Issuers and the Guarantor concerning such appointment. Where, as a
result of this provision, not all the Instruments have the same Trustee, the provisions of
this Trust Deed shall apply in respect of each such Trustee as if each were named as a party
to this Trust Deed.13.4
    
    Competence of a Majority of TrusteesIf there are more than two Trustees the majority of them shall be competent to perform
the Trustees functions provided the majority includes a trust corporation.14
    
    Instruments Held in Clearing Systems and Couponholders14.1
    
    Instruments Held in Clearing SystemsSo long as any Global Instrument is held on behalf of a clearing system, in considering
the interests of Instrumentholders, 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 or participants with entitlements to any such Global
Instrument and may consider such interests on the basis that such accountholders or
participants were the holder(s) of such Global Instrument.14.2
    
    Reliance on Instruments Held in Clearing SystemsThe Trustee and any Issuer may call for and, except in the case of manifest error,
shall be at liberty to accept and place full reliance on as sufficient evidence thereof any
certificate, letter of confirmation or other document issued on behalf of Euroclear or
Clearstream, Luxembourg or any form of record made by any of them or such other evidence
and/or information and/or certification as it shall, in its absolute discretion, think fit
to the effect that at any particular time or throughout any particular period any
particular person is, was, or will be, shown in its records as the holder of a particular
nominal amount of Instruments represented by a Global Instrument and if the Trustee or any
Issuer does so rely, such letter of confirmation, form of record, evidence, information or
certification shall be
 24




---



##### 



conclusive and binding on all concerned for all purposes. Any such
certificate may comprise any form of statement or print out of electronic records provided
by the relevant clearing system (including Euroclears EUCLID or Clearstream, Luxembourgs Creation Online
system) in accordance with its usual procedures and in which the holder of a particular
nominal amount of Instruments is clearly identified together with the amount of such
holding. Neither an Issuer nor the Trustee shall be liable to any person by reason of
having accepted as valid or not having rejected any certificate or other document to such
effect purporting to be issued by Euroclear or Clearstream, Luxembourg and subsequently
found to be forged or not authentic.14.3
    
    CouponholdersNo notices need be given to Couponholders. They shall be deemed to have notice of the
contents of any notice given to Instrumentholders. Even if it has express notice to the
contrary, in exercising any of its functions by reference to the interests of the
Instrumentholders, the Trustee shall assume that the holder of each Instrument is the holder
of all Receipts, Coupons and Talons relating to it.15
    
    Currency Indemnity15.1
    
    Currency of Account and PaymentThe Contractual Currency is the sole currency of account and payment for all sums
payable by each of the Issuers or the Guarantor under or in connection with this Trust Deed,
the Instruments, the Receipts and the Coupons, including damages.15.2
    
    Extent of DischargeAn amount received or recovered in a currency other than the Contractual Currency
(whether as a result of, or of the enforcement of, a judgment or order of a court of any
jurisdiction, in the insolvency, winding-up or dissolution of any of the Issuers or the
Guarantor or otherwise), by the Trustee or any Instrumentholder or Couponholder in respect
of any sum expressed to be due to it from the relevant Issuer or the Guarantor, shall only
discharge such Issuer or the Guarantor to the extent of the Contractual Currency amount
which the recipient is able to purchase with the amount so received or recovered in that
other currency on the date of that receipt or recovery (or, if it is not practicable to make
that purchase on that date, on the first date on which it is practicable to do so).15.3
    
    IndemnityIf that Contractual Currency amount is less than the Contractual Currency amount
expressed to be due to the recipient under this Trust Deed, the Instruments, the Receipts or
the Coupons, the relevant Issuer shall indemnify it against any loss sustained by it as a
result. In any event, the relevant Issuer shall indemnify the recipient against the cost of
making any such purchase.15.4
    
    Indemnity SeparateThe indemnities in this Clause 15 and in Clause 7.5 (Indemnity) constitute separate and
independent obligations from the other obligations in this Trust Deed, shall give rise to a
separate and independent course of action, shall apply irrespective of any indulgence
 25




---



##### 



granted by the Trustee and/or any Instrumentholder or Couponholder and shall continue in
full force and effect despite any judgment, order, claim or proof for a liquidated amount in
respect of any sum due under this Trust Deed, the Instruments, the Receipts and/or the
Coupons or any other judgment or order.16
    
    Enforcement16.1
    
    Trustee to enforceOnly the Trustee may enforce the rights of the Instrumentholders and Couponholders
against the relevant Issuer or the Guarantor, whether the same arise under the general law,
this Trust Deed, the Instruments, the Coupons or otherwise, and no Instrumentholder or
Couponholder shall be entitled to proceed directly against the relevant Issuer or the
Guarantor unless the Trustee, having become bound to proceed, fails to do so within a
reasonable time and such failure is continuing.16.2
    
    Trustees IndemnityThe Trustee shall not be bound to take any steps to enforce the performance of any
provisions of this Trust Deed, the Instruments or the Coupons unless it shall be indemnified
and/or secured and/or prefunded by the Instrumentholders and/or Couponholders to its
satisfaction against all proceedings, claims and demands to which it may be liable and
against all costs, charges, liabilities and expenses which may be incurred by it in
connection with such enforcement, including the cost of its managements time and/or other
internal resources, calculated using its normal hourly rates in force from time to time.16.3
    
    Legal proceedingsIf the Trustee (or any Instrumentholder or Couponholder where entitled in accordance
with this Trust Deed so to do) institutes legal proceedings against any of the Issuers or
the Guarantor to enforce any obligations under this Trust Deed:
 16.3.1
    
    proof in such proceedings that as regards any specified Instrument such
Issuer or the Guarantor, as the case may be, has made default in paying any principal
or interest due to the relevant Instrumentholder shall (unless the contrary be proved)
be sufficient evidence that such Issuer or the Guarantor, as the case may be, has made
the same default as regards all other Instruments which are then repayable or, as the
case may be, in respect of which interest is then payable; and16.3.2
    
    proof in such proceedings that as regards any specified Coupon such Issuer
or the Guarantor, as the case may be, has made default in paying any sum due to the
relevant Couponholder shall (unless the contrary be proved) be sufficient evidence that
such Issuer or the Guarantor, as the case may be, has made the same default as regards
all other Coupons which are then payable.
 16.4
    
    Powers additional to general powersThe powers conferred on the Trustee by this Clause 16 shall be in addition to any
powers which may from time to time be vested in the Trustee by general law or as the holder
of any Instruments or Coupons.
 26




---



##### 



17
    
    Communications17.1
    
    MethodEach communication under this Trust Deed shall be made by fax or otherwise in writing.
Each communication or document to be delivered to any party under this Trust Deed shall be
sent to that party at the fax number or address, and marked for the attention of the person
(if any), from time to time designated by that party to each other party for the purpose of
this Trust Deed. The initial telephone number, fax number, address and person so designated
by the parties under this Trust Deed are set out in the Procedures Memorandum.17.2
    
    Deemed ReceiptAny communication from any party to any other under this Trust Deed shall be effective,
(if by fax) when good receipt is confirmed by the recipient following enquiry by the sender
and (if in writing) when delivered, except that a communication received outside normal
business hours shall be deemed to be received on the next business day in the city in which
the recipient is located.18
    
    Governing Law and Jurisdiction18.1
    
    Governing LawThis Trust Deed and any non-contractual obligations arising out of or in connection
with it shall be governed by, and construed in accordance with, English law.18.2
    
    JurisdictionThe courts of England are to have jurisdiction to settle any disputes that may arise
out of or in connection with this Trust Deed, the Instruments, the Receipts, the Coupons or
the Talons and accordingly any legal action or proceedings arising out of or in connection
with this Trust Deed, the Instruments, the Receipts, the Coupons or the Talons
(Proceedings) may be brought in such courts. Each of the Issuers and the Guarantor
irrevocably submits to the jurisdiction of such courts and waives any objections to
Proceedings in such courts on the ground of venue or on the ground that the Proceedings have
been brought in an inconvenient forum. Each such submission is for the benefit of each of
the Trustee, the Instrumentholders and the Couponholders and shall not limit the right of
any of them to take Proceedings in any other court of competent jurisdiction nor shall the
taking of Proceedings in any one or more jurisdictions preclude the taking of Proceedings in
any other jurisdiction (whether concurrently or not).
 27




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##### 



Schedule 1
 Part A
 Form of CGN Temporary Global Instrument
 NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc
   EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
 [unconditionally and irrevocably guaranteed by
NATIONAL GRID GAS plc]*
TEMPORARY GLOBAL INSTRUMENT
Temporary Global Instrument No. []
 Instruments * Issuer Guarantor **
 Interpretation and Definitions
 Conditions Terms and Conditions of the Instruments Trust Deed inter alios
 Aggregate Nominal Amount
  
 *
    
    Delete as applicable**
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 28




---



##### 



Promise to Pay
  Exchange
 Exchange Date
 Certification Provisions
for Meetings of Instrumentholders
   29




---



##### 



Benefit of Conditions
  Payments
    30




---



##### 



business day
 Cancellation
  Notices
  + +
   
 +
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 31




---



##### 



In witness
  NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc *
   CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
  THE BANK OF NEW YORK MELLON
   
  
 *
    
    Delete as applicable 32




---



##### 



The First Schedule
Nominal amount of Instruments represented by this
temporary Global Instrument
  Reason fordecrease innominal amount
    
    Nominal amountAmount of
    
    of this
    
    of thisdecrease in
    
    temporary
    
    temporarynominal amount
    
    Global
    
    Global
    
    Notation madeof this
    
    Instrument
    
    Instrument on
    
    by or on behalftemporary
    
    (exchange,
    
    issue or
    
    of the IssuingGlobal
    
    cancellation or
    
    following such
    
    and PayingDate
    
    Instrument
    
    forfeiture)
    
    decrease
    
    AgentIssue Date
    
    not applicable
    
    not applicable
 33




---



##### 



The Second Schedule
  34




---



##### 



Schedule 1
Part B
Form of CGN Permanent Global Instrument
 NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc *
 
 EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
[unconditionally and irrevocably guaranteed by
NATIONAL GRID GAS plc]*
 PERMANENT GLOBAL INSTRUMENT
Permanent Global Instrument No. []
 Instruments Issuer Guarantor **
 Interpretation and Definitions
 Conditions Terms and Conditions of the Instruments Trust Deed inter alios
 Aggregate Nominal Amount
  
 *
    
    Delete as applicable**
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 35




---



##### 



Promise to Pay
  Exchange
 Alternative Clearing System
  Exchange Date
  36




---



##### 



Benefit of Conditions
  Payments
   business day
 Prescription
  37




---



##### 



Meetings
  Cancellation
  Purchase
 +
 Issuers Options
  Instrumentholders Options
  Notices
  
 +
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 38




---



##### 



Negotiability
  (a)
    
    is freely transferable by delivery and such transfer shall operate to confer upon the
transferee all rights and benefits appertaining to this permanent Global Instrument and to
bind the transferee with all obligations appertaining to this permanent Global Instrument
pursuant to the Conditions;
 (b)
    
    the holder of this permanent Global Instrument is and shall be absolutely entitled as against
all previous holders to receive all amounts by way of amounts payable upon redemption,
interest or otherwise payable in respect of this permanent Global Instrument and the Issuer
has waived against such holder and any previous holder of this permanent Global Instrument all
rights of set-off or counterclaim which would or might otherwise be available to it in respect
of the obligations evidenced by this permanent Global Instrument; and
 (c)
    
    payment upon due presentation of this permanent Global Instrument as provided in this
permanent Global Instrument shall operate as a good discharge against such holder and all
previous holders of this permanent Global Instrument.
 + +
   
 +
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 39




---



##### 



In witness
  NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc *
   CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
 
 THE BANK OF NEW YORK MELLON
   
  
 *
    
    Delete as applicable 40




---



##### 



The First Schedule
Nominal amount of Instruments represented by
this permanent Global Instrument
  Reason forincrease/decreasein nominalamount of thispermanent GlobalInstrument (initialAmount of
    
    issue, exchange,
    
    Nominal amount
    
    Notationincrease/decrease
    
    cancellation,
    
    of this permanent
    
    made by orin nominal
    
    forfeiture or
    
    Global Instrument
    
    on behalf ofamount of this
    
    payment, stating
    
    on issue or
    
    the Issuingpermanent Global
    
    amount of
    
    following such
    
    and PayingDate
    
    Instrument
    
    payment made)
    
    increase/decrease
    
    Agent
 41




---



##### 



The Second Schedule
Payments of Interest
  Notation made by oron behalf of theIssuing and PayingDue date of payment
    
    Date of payment
    
    Amount of interest
    
    Agent
 42




---



##### 



The Third Schedule
  43




---



##### 



The Fourth Schedule
Exercise of Instrumentholders Option
  Nominal amount ofthis permanent
    
    
    
    Notation made by orGlobal Instrument in
    
    Date on which
    
    on behalf of therespect of which
    
    exercise of such
    
    Issuing and PayingDate of exercise
    
    exercise is made
    
    option is effective
    
    Agent
 44




---



##### 



Schedule 1
 Part C
 Form of NGN Temporary Global Instrument
 NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc
 
 EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
[unconditionally and irrevocably guaranteed by
NATIONAL GRID GAS plc]*
TEMPORARY GLOBAL INSTRUMENT
Temporary Global Instrument No. []
 Instruments * Issuer Guarantor **
 Interpretation and Definitions
 Conditions Terms and Conditions of the Instruments Trust Deed inter alios
 Aggregate Nominal Amount
 relevant Clearing Systems
 
 *
    
    Delete as applicable**
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 45




---



##### 



Promise to Pay
  Exchange
 Exchange Date
 Certification Provisions
for Meetings of Instrumentholders
 46




---



##### 



pro rata
 Benefit of Conditions
  Payments
    47




---



##### 



pro rata pro
rata
 business day
 Cancellation
 pro rata
 Notices
  + +
   In witness
  NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc *
 
 +
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 48




---



##### 



CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
  THE BANK OF NEW YORK MELLON
   
 Effectuation
   COMMON SAFEKEEPER
   
  
 *
    
    Delete as applicable 49




---



##### 



The Schedule
  50




---



##### 



Schedule 1
Part D
Form of NGN Permanent Global Instrument
 NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc *
 
 EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
[unconditionally and irrevocably guaranteed by
NATIONAL GRID GAS plc]*
 PERMANENT GLOBAL INSTRUMENT
Permanent Global Instrument No. []
 Instruments Issuer Guarantor + +
 Interpretation and Definitions
 Conditions Terms and Conditions of the Instruments Trust Deed inter alios
 Aggregate Nominal Amount
 relevant Clearing Systems
 
 *
    
    Delete as applicable++
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 51




---



##### 



Promise to Pay
  Exchange
 Alternative Clearing System
  52




---



##### 



Exchange Date
  pro
rata
 Benefit of Conditions
  Payments
  pro rata
 53




---



##### 



business day
 Prescription
  Meetings
  Cancellation
 pro rata
 Purchase
 +
 Issuers Options
  
 +
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 54




---



##### 



Instrumentholders Options
  Notices
  Negotiability
  (a)
    
    is freely transferable by delivery and such transfer shall operate to confer upon the
transferee all rights and benefits appertaining to this permanent Global Instrument and to
bind the transferee with all obligations appertaining to this permanent Global Instrument
pursuant to the Conditions;
 (b)
    
    the holder of this permanent Global Instrument is and shall be absolutely entitled as against
all previous holders to receive all amounts by way of amounts payable upon redemption,
interest or otherwise payable in respect of this permanent Global Instrument and the Issuer
has waived against such holder and any previous holder of this permanent Global Instrument all
rights of set-off or counterclaim which would or might otherwise be available to it in respect
of the obligations evidenced by this permanent Global Instrument; and
 (c)
    
    payment upon due presentation of this permanent Global Instrument as provided in this
permanent Global Instrument shall operate as a good discharge against such holder and all
previous holders of this permanent Global Instrument.
 + +
 
 +
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 55




---



##### 



In witness
  NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc *
   CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
 
 THE BANK OF NEW YORK MELLON
   
 Effectuation
   COMMON SAFEKEEPER
     
 *
    
    Delete as applicable 56




---



##### 



57




---



##### 



The Schedule
  58




---



##### 



Schedule 2
Part A
Form of Definitive Instrument
  [Denomination]
    
    [ISIN]
    
    [Series]
    
    [Certif. No.]
  NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc *
 
 EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
[Title of issue]
[unconditionally and irrevocably guaranteed by
NATIONAL GRID GAS plc]*
 Instruments Issuer Guarantor + Conditions
   
 *
    
    Delete as applicable+
    
    Only applicable where National Grid Gas
Finance (No 1) is the Issuer. 59




---



##### 



In witness
  NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc
   CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
 
 THE BANK OF NEW YORK MELLON
   
  60




---



##### 



Terms and Conditions of the Instruments
 Terms and Conditions of the
Instruments
 61




---



##### 



ISSUING AND PAYING AGENT
 THE BANK OF NEW YORK MELLON
 
 PAYING AGENT
 KBL EUROPEAN PRIVATE BANKERS S.A.
 
 62




---



##### 



Schedule 2 
Part B 
Terms and Conditions of the Instruments
 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 18 February 2011 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 18 February 2011 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 18 February 2011 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 circumstances which require the publication of a prospectus under Directive 2003/71/EC (the
Prospectus Directive), the minimum Specified Denomination shall be 100,000 (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.
 63




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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).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
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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.(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:
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(a)
    
    the Relevant Rate (where such
Relevant Rate on such Page is a composite quotation or is
customarily supplied by one entity); or(b)
    
    the arithmetic mean of the Relevant
Rates of the persons whose Relevant Rates appear on that Page,
in each case appearing on such Page at the Relevant Time on the
Interest Determination Date;
 (y)
    
    if the Primary Source for the Floating Rate is
Reference Banks or if sub-paragraph (x) (a) applies and no Relevant Rate
appears on the Page at the Relevant Time on the Interest Determination
Date or if sub-paragraph (x) (b) above applies and fewer than two
Relevant Rates appear on the Page at the Relevant Time on the Interest
Determination Date, subject as provided below, the Rate of Interest
shall be the arithmetic mean of the Relevant Rates that each of the
Reference Banks is quoting to leading banks in the Relevant Financial
Centre at the Relevant Time on the Interest Determination Date, as
determined by the Calculation Agent; and(z)
    
    if paragraph (y) above applies and the
Calculation Agent determines that fewer than two Reference Banks are so
quoting Relevant Rates, subject as provided below, the Rate of Interest
shall be the arithmetic mean of the rates per annum (expressed as a
percentage) that the Calculation Agent determines to be the rates (being
the nearest equivalent to the Benchmark) in respect of a Representative
Amount of the Specified Currency that at least two out of five leading
banks selected by the Calculation Agent in the principal financial
centre of the country of the Specified Currency or, if the Specified
Currency is euro in those Member States of the European Union which are
participating in European economic and monetary union as selected by the
Calculation Agent (the Principal Financial Centre) are quoting at or
about the Relevant Time on the date on which such banks would
customarily quote such rates for a period commencing on the Effective
Date for a period equivalent to the Specified Duration (I) to leading
banks carrying on business in Europe, or (if the Calculation Agent
determines that fewer than two of such banks are so quoting to leading
banks in Europe) (II) to leading banks carrying on business in the
Principal Financial Centre; except that, if fewer than two of such banks
are so quoting to leading banks in the Principal Financial Centre, the
Rate of Interest shall be the Rate of Interest determined on the
previous Interest Determination Date (after readjustment for any
difference between any Margin, Rate Multiplier or Maximum or Minimum
Rate of Interest applicable to the preceding Interest Accrual Period and
to the relevant Interest Accrual Period).
 3.2.4
    
    Rate of Interest for Index Linked Interest InstrumentsThe Rate of Interest in respect of Index Linked Interest Instruments for each
Interest Accrual Period shall be determined in the manner specified in the relevant
Final Terms and 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
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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 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,
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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 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
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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;(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:
 Day Count Fraction =
    
    [360 x (Y2 -Y1)] + [30 x (M2 -M1)]+ (D2 -D1)360
 where:Y1 is the year, expressed as a number, in which the first
day of the Calculation Period falls;
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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:
 Day Count Fraction =
    
    [360 x (Y2 -Y1)] + [30 x (M2 -M1)]+ (D2 -D1)360
 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:
 Day Count Fraction =
    
    [360 x (Y2 -Y1)] + [30 x (M2 -M1)]+ (D2 -D1)360
 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;
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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.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.
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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.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.
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Reference Banks means the institutions specified as such in the relevant
Final Terms or, if none, five leading banks selected by the Calculation Agent
in the interbank market (or, if appropriate, money, swap or over-the-counter
index options market) that is most closely connected with the Benchmark
(which, if EURIBOR is the relevant Benchmark, shall be Europe).Relevant Financial Centre means, with respect to any Floating Rate to be
determined in accordance with a Screen Rate Determination on an Interest
Determination Date, the financial centre as may be specified as such in the
relevant Final Terms or, if none is so specified, the financial centre with
which the relevant Benchmark is most closely connected (which, in the case of
EURIBOR, shall be Europe) or, if none is so connected, London.Relevant Rate means the Benchmark for a Representative Amount of the
Specified Currency for a period (if applicable or appropriate to the
Benchmark) equal to the Specified Duration commencing on the Effective Date.Relevant Time means, with respect to any Interest Determination Date, the
local time in the Relevant Financial Centre specified in the relevant Final
Terms or, if no time is specified, the local time in the Relevant Financial
Centre at which it is customary to determine bid and offered rates in respect
of deposits in the Specified Currency in the interbank market in the Relevant
Financial Centre or, if no such customary local time exists, 11.00 hours in
the Relevant Financial Centre and, for the purpose of this definition local
time means, with respect to Europe as a Relevant Financial Centre, Brussels
time.Representative Amount means, with respect to any Floating Rate to be
determined in accordance with a Screen Rate Determination on an Interest
Determination Date, the amount specified as such in the relevant Final Terms
or, if none is specified, an amount that is representative for a single
transaction in the relevant market at the time.Specified Currency means the currency specified as such in the relevant
Final Terms or, if none is specified, the currency in which the Instruments
are denominated.Specified Duration means, with respect to any Floating Rate to be
determined in accordance with a Screen Rate Determination on an Interest
Determination Date, the duration specified in the relevant Final Terms or, if
none is specified, a period of time equal to the relevant Interest Accrual
Period, ignoring any adjustment pursuant to Condition 3.2.2.TARGET System means the Trans-European Automated Real-Time Gross Settlement
Express Transfer (known as TARGET2) System which was launched on 19 November
2007 or any successor to it.(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
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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 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
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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 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
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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.
 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
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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 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)),
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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:
 I d = HICP m-3 +
    nbdqm
    x (HICPm-2 HICPm-3)
 where:Id is the Index Level for the day dHICPm-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 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).
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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.
 (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
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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 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
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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 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
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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
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
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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.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.
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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.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.
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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 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.
 85




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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).
 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
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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).
 As used in these Conditions, Relevant Date in respect of any Instrument, Receipt or Coupon
means the date on which payment in respect of it first becomes due or (if any amount of the
money payable is improperly withheld or refused) the date on which payment in full of the
amount outstanding is made or (if earlier) the date on which notice is duly given to the
Instrumentholders in accordance with Condition 14 that, upon further presentation of the
Instrument, Receipt or Coupon being made in accordance with the Conditions, such payment will
be made, provided that payment is in fact made upon such presentation. References in these
Conditions to (i) principal shall be deemed to include any premium payable in respect of the
Instruments, all Instalment Amounts, Final Redemption Amounts, Early Redemption Amounts,
Optional Redemption Amounts, Amortised Face Amounts and all other amounts in the nature of
principal payable pursuant to Condition 5 or any amendment or supplement to it, (ii) interest
shall be deemed to include all Interest Amounts and all other amounts payable pursuant to
Condition 3 or any amendment or supplement to it or pursuant to Condition 6 or any amendment or
supplement to it and (iii) principal and/or interest shall be deemed to include any
additional amounts which may be payable under this Condition or any undertaking given in
addition to or in substitution for it under the Trust Deed.8
    
    PrescriptionInstruments, Receipts and Coupons (which, for this purpose, shall not include Talons)
shall be prescribed and become void unless presented for payment within 10 years (in the case
of principal) or five years (in the case of interest) from the appropriate Relevant Date in
respect of them.9
    
    Events of DefaultIf any of the following events (each an Event of Default) occurs and is continuing, the
Trustee at its discretion may, and if so requested by the holders of at least one-quarter in
nominal amount of the Instruments then outstanding or if so directed by an Extraordinary
Resolution shall, give notice to the Issuer at its registered office that the Instruments are,
and they shall accordingly immediately become due and repayable at their Redemption Amount
together with accrued interest (if any) to the date of payment:
 (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
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(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,
 provided that in the case of paragraph (b) the Trustee shall have certified that in its opinion
such event is materially prejudicial to the interests of the Instrumentholders.Any such notice by the Trustee to the Issuer shall specify the serial number(s) of the
Instrument(s) concerned.10
    
    EnforcementThe Trustee may, at its discretion and without further notice, institute such proceedings
against the Issuer as it may think fit to enforce any obligation, condition or provision
binding on the Issuer under the Instruments or under the Trust Deed, but shall not be bound to
do so unless:
 (a)
    
    it has been so directed by an Extraordinary Resolution or in writing by the holders
of at least one-quarter of the principal amount of the Instruments outstanding; and(b)
    
    it has been indemnified to its satisfaction.
 No Instrumentholder, Receiptholder or Couponholder shall be entitled to institute proceedings
directly against the Issuer unless the Trustee, having become bound to proceed as specified
above, fails to do so within a reasonable time and such failure is continuing.
 11
    
    Meetings of Instrumentholders, Modifications and Substitution
 11.1
    
    Meetings of InstrumentholdersThe Trust Deed contains provisions for convening meetings of Instrumentholders to
consider any matter affecting their interests, including the sanctioning by Extraordinary
Resolution (as defined in the Trust Deed) of a modification of any of these Conditions or
any provisions of the Trust 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
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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 subsidiary of the
Guarantor in place of the Guarantor]*. In the case of such a substitution the Trustee may
agree, without the consent of the Instrumentholders or the Couponholders, to a change of
the law governing the Instruments, the Receipts, the Coupons, the Talons and/or the Trust
Deed provided that such change would not in the opinion of the Trustee be materially
prejudicial to the interests of the Instrumentholders.11.4
    
    Entitlement of the TrusteeIn connection with the exercise of its functions (including but not limited to
those referred to in this Condition) the Trustee shall have regard to the interests of
the Instrumentholders as a class and shall not have regard to the consequences of such
exercise for individual Instrumentholders or
 
 ±
    
    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. 89




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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 Issuer[ 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 Issuer[ or the Guarantor]* on demand
the amount payable by the Issuer[ or the Guarantor]* in respect of such Instruments, Receipts,
Coupons or further Coupons) and otherwise as the Issuer[ 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.Couponholders shall be deemed for all purposes to have notice of the contents of any notice
given to the holders of Instruments in accordance with this Condition.15
    
    Indemnification of TrusteeThe Trust Deed contains provisions for the indemnification of the Trustee and for its
relief from responsibility, including provisions relieving it from any obligation to take
proceedings to enforce repayment unless indemnified to its satisfaction. The Trustee is
entitled to enter into business transactions with the Issuer[, 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.
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16
    
    Contracts (Rights of Third Parties) Act 1999No person shall have any right to enforce any term or condition of the Instruments under
the Contracts (Rights of Third Parties) Act 1999.17
    
    Governing Law and Jurisdiction
 (a)
    
    The Instruments and 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] Issuer[, 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.
 91




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Schedule 2
Part C
Form of Coupon
  [NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc]*
Euro Medium Term Note Programme
Series No. []
[Title of issue]
[unconditionally and irrevocably guaranteed by
NATIONAL GRID GAS plc]*
 **  
  ***
  ****
  NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc
   [Cp. No.]
    
    [Denomination]
    
    [ISIN]
    
    [Series]
    
    [Certif. No.]
 
 *
    
    Delete as applicable**
    
    [Only necessary where Interest Payment Dates
are subject to adjustment in accordance with a Business Day Convention,
otherwise the particular Interest Payment Date should be specified.]***
    
    [Only required for Coupons relating to
Floating Rate or Index Linked Interest Instruments that are issued in more than
one denomination.]****
    
    [Delete if Coupons are not to become void
upon early redemption of Instrument.] 92




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ISSUING AND PAYING AGENT
 
 PAYING AGENT
 
 93




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Schedule 2
Part D
Form of Talon
  [NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc] *  Euro Medium Term Note Programme
Series No. []
[Title of issue]
[unconditionally and irrevocably guaranteed by
NATIONAL GRID GAS plc]*
 **  
  ***
    NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc
   [Talon No.]
    
    [ISIN]
    
    [Series]
    
    [Certif. No.]
 
 *
    
    Delete as applicable**
    
    [The maturity dates of the relevant Coupons
should be set out if known, otherwise reference should be made to the months
and years in which the Interest Payment Dates fall due.]***
    
    [Only required where the Series comprises
Instruments of more than one denomination.] 94




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ISSUING AND PAYING AGENT
 
 PAYING AGENT
 
 95




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Schedule 2
Part E
Form of Receipt
 NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc *  Euro Medium Term Note Programme
Series No. []
[Title of issue]
[unconditionally and irrevocably guaranteed by
NATIONAL GRID GAS plc]*
  Conditions 
    NATIONAL GRID GAS plc/NATIONAL GRID GAS FINANCE (NO 1) plc
   
 *
    
    Delete as applicable 96




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Schedule 3
Provisions for Meetings of Instrumentholders
 Interpretation
 1
    
    In this Schedule:1.1
    
    references to a meeting are to a meeting of Instrumentholders of a single series of
Instruments and include, unless the context otherwise requires, any adjournment;1.2
    
    references to Instruments and Instrumentholders are only to the Instruments of
the Series in respect of which a meeting has been, or is to be, called, and to the holders of
these Instruments, respectively;1.3
    
    agent means a holder of a voting certificate or a proxy for, or representative
of, an Instrumentholder;1.4
    
    block voting instruction means an instruction issued in accordance with
paragraphs 8 to 14;1.5
    
    Extraordinary Resolution means a resolution passed at a meeting duly convened and
held in accordance with this Trust Deed by a majority of at least 75 per cent. of the votes
cast;1.6
    
    voting certificate means a certificate issued in accordance with paragraphs 5, 6,
7 and 14; and1.7
    
    references to persons representing a proportion of the Instruments are to
Instrumentholders or agents holding or representing in the aggregate at least that proportion
in nominal amount of the Instruments for the time being outstanding.
 Powers of meetings
 2
    
    A meeting shall, subject to the Conditions and without prejudice to any powers
conferred on other persons by this Trust Deed, have power by Extraordinary Resolution:2.1
    
    to sanction any proposal by the relevant Issuer, the Guarantor (if applicable) or
the Trustee for any modification, abrogation, variation or compromise of, or arrangement in
respect of, the rights of the Instrumentholders and/or the Couponholders against such Issuer
or the Guarantor, as the case may be, whether or not those rights arise under this Trust Deed;2.2
    
    to sanction the exchange or substitution for the Instruments of, or the conversion
of the Instruments into, shares, bonds or other obligations or securities of the relevant
Issuer or the Guarantor (if applicable) or any other entity;2.3
    
    to assent to any modification of this Trust Deed, the Instruments, the Receipts,
the Talons or the Coupons proposed by the relevant Issuer, the Guarantor (if applicable) or
the Trustee;2.4
    
    to authorise anyone to concur in and do anything necessary to carry out and give
effect to an Extraordinary Resolution;2.5
    
    to give any authority, direction or sanction required to be given by Extraordinary
Resolution;
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2.6
    
    to appoint any persons (whether Instrumentholders or not) as a committee or
committees to represent the Instrumentholders interests and to confer on them any powers or
discretions which the Instrumentholders could themselves exercise by Extraordinary Resolution;2.7
    
    to approve a proposed new Trustee and to remove a Trustee;2.8
    
    to approve the substitution of any entity for the relevant Issuer or the Guarantor
(or any previous substitute) as principal debtor or guarantor under this Trust Deed; and2.9
    
    to discharge or exonerate the Trustee from any liability in respect of any act or
omission for which it may become responsible under this Trust Deed, the Instruments, the
Receipts, the Talons or the Coupons,provided that the special quorum provisions in paragraph 19 shall apply to any Extraordinary
Resolution (a special quorum resolution) for the purpose of sub-paragraph 2.2 or 2.7, any
of the proposals listed in Condition 11.1 or any amendment to this proviso.
 Convening a meeting
 3
    
    The relevant Issuer, the Guarantor (if applicable), or the Trustee may at any time
convene a meeting. If it receives a written request by Instrumentholders holding at least 10
per cent. in nominal amount of the Instruments of any Series for the time being outstanding
and is indemnified to its satisfaction against all costs and expenses, the Trustee shall
convene a meeting of the Instrumentholders of that Series. Every meeting shall be held at a
time and place approved by the Trustee.4
    
    At least 21 days notice (exclusive of the day on which the notice is given and of the
day of the meeting) shall be given to the Instrumentholders. A copy of the notice shall be
given by the party convening the meeting to the other parties. The notice shall specify the
day, time and place of meeting and, unless the Trustee otherwise agrees, the nature of the
resolutions to be proposed and shall explain how Instrumentholders may appoint proxies or
representatives, obtain voting certificates and use block voting instructions and the details
of the time limits applicable.
 Arrangements for voting
 5
    
    If a holder of an Instrument wishes to obtain a voting certificate in respect of it for
a meeting, he must deposit it for that purpose at least 48 hours before the time fixed for the
meeting with a Paying Agent or to the order of a Paying Agent with a bank or other depositary
nominated by the Paying Agent for the purpose. The Paying Agent shall then issue a voting
certificate in respect of it.6
    
    A voting certificate shall:6.1
    
    be a document in the English language;6.2
    
    be dated;6.3
    
    specify the meeting concerned and the serial numbers of the Instruments deposited; and6.4
    
    entitle, and state that it entitles, its bearer to attend and vote at that meeting
in respect of those Instruments.
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7
    
    Once a Paying Agent has issued a voting certificate for a meeting in respect of an
Instrument, it shall not release the Instrument until either:7.1
    
    the meeting has been concluded; or7.2
    
    the voting certificate has been surrendered to the Paying Agent.8
    
    If a holder of an Instrument wishes the votes attributable to it to be included in a
block voting instruction for a meeting, then, at least 48 hours before the time fixed for the
meeting, (i) he must deposit the Instrument for that purpose with a Paying Agent or to the
order of a Paying Agent with a bank or other depositary nominated by the Paying Agent for the
purpose and (ii) he or a duly authorised person on his behalf must direct the Paying Agent how
those votes are to be cast. The Paying Agent shall issue a block voting instruction in respect
of the votes attributable to all Instruments so deposited.9
    
    A block voting instruction shall:9.1
    
    be a document in the English language;9.2
    
    be dated;9.3
    
    specify the meeting concerned;9.4
    
    list the total number and serial numbers of the Instruments deposited,
distinguishing with regard to each resolution between those voting for and those voting
against it;9.5
    
    certify that such list is in accordance with Instruments deposited and directions
received as provided in paragraphs 8, 11 and 14; and9.6
    
    appoint a named person (a proxy) to vote at that meeting in respect of those
Instruments and in accordance with that list.A proxy need not be an Instrumentholder.10
    
    Once a Paying Agent has issued a block voting instruction for a meeting in respect of
the votes attributable to any Instruments:10.1
    
    it shall not release the Instruments, except as provided in paragraph 11, until
the meeting has been concluded; and10.2
    
    the directions to which it gives effect may not be revoked or altered during the
48 hours before the time fixed for the meeting.11
    
    If the receipt for an Instrument deposited with a Paying Agent in accordance with
paragraph 8 is surrendered to the Paying Agent at least 48 hours before the time fixed for the
meeting, the Paying Agent shall release the Instrument and exclude the votes attributable to
it from the block voting instruction.12
    
    Each block voting instruction shall be deposited at least 24 hours before the time
fixed for the meeting at such place as the Trustee shall designate or approve, and in default
it shall not be valid unless the chairman of the meeting decides otherwise before the meeting
proceeds to business. If the Trustee requires, a notarially certified copy of each block
voting instruction shall be produced by the proxy at the meeting but the Trustee need not
investigate or be concerned with the validity of the proxys appointment.13
    
    A vote cast in accordance with a block voting instruction shall be valid even if it or
any of the Instrumentholders instructions pursuant to which it was executed has previously
been
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revoked or amended, unless written intimation of such revocation or amendment is received from the
relevant Paying Agent by the relevant Issuer or the Trustee at its registered office or by the
chairman of the meeting in each case at least 24 hours before the time fixed for the meeting.14
    
    No Instrument may be deposited with or to the order of a Paying Agent at the same time
for the purposes of both paragraph 5 and paragraph 8 for the same meeting.
 Chairman
 15
    
    The chairman of a meeting shall be such person as the Trustee may nominate in writing,
but if no such nomination is made or if the person nominated is not present within 15 minutes
after the time fixed for the meeting the Instrumentholders or agents present shall choose one
of their number to be chairman, failing which the relevant Issuer may appoint a chairman. The
chairman need not be an Instrumentholder or agent. The chairman of an adjourned meeting need
not be the same person as the chairman of the original meeting.
 Attendance
 16
    
    The following may attend and speak at a meeting:16.1
    
    Instrumentholders and agents;16.2
    
    the chairman;16.3
    
    the relevant Issuer, the Guarantor (if applicable) and the Trustee (through their
respective representatives) and their respective financial and legal advisers; and16.4
    
    the Dealers and their advisers.No one else may attend or speak.
 Quorum and Adjournment
 17
    
    No business (except choosing a chairman) shall be transacted at a meeting unless a
quorum is present at the commencement of business. If a quorum is not present within 15
minutes from the time initially fixed for the meeting, it shall, if convened on the
requisition of Instrumentholders or if the relevant Issuer and the Trustee agree, be
dissolved. In any other case it shall be adjourned until such date, not less than 14 nor more
than 42 days later, and time and place as the chairman may decide. If a quorum is not present
within 15 minutes from the time fixed for a meeting so adjourned, the meeting shall be
dissolved.18
    
    Two or more Instrumentholders or agents present in person shall be a quorum:18.1
    
    in the cases marked No minimum proportion in the table below, whatever the
proportion of the Instruments which they represent;18.2
    
    in any other case, only if they represent the proportion of the Instruments shown
by the table below.
 COLUMN 1
    
    COLUMN 2
    
    COLUMN 3Purpose of meeting
    
    Any meeting except
one referred to in
column 3
    
    Meeting previously
adjourned through want
of a quorumRequired proportion
    
    Required proportion
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COLUMN 1
    
    COLUMN 2
    
    COLUMN 3To pass a special
quorum resolution
    
    Two thirds
    
    One thirdTo pass any other
Extraordinary
Resolution
    
    A clear majority
    
    No minimum proportionAny other purpose
    
    10 per cent.
    
    No minimum proportion
 19
    
    The chairman, may with the consent of (and shall if directed by) a meeting, adjourn
the meeting from time to time and from place to place. Only business which could have been
transacted at the original meeting may be transacted at a meeting adjourned in accordance with
this paragraph or paragraph 18.20
    
    At least 10 days notice of a meeting adjourned through want of a quorum shall be
given in the same manner as for an original meeting and that notice shall state the quorum
required at the adjourned meeting. However, no notice need otherwise be given of an adjourned
meeting.
 Voting
 21
    
    Each question submitted to a meeting shall be decided by a show of hands unless a poll
is (before, or on the declaration of the result of, the show of hands) demanded by the
chairman, the relevant Issuer, the Guarantor (if applicable) the Trustee or one or more
persons holding one or more Instruments or voting certificates, in each case, representing two
per cent. of the Instruments.22
    
    Unless a poll is demanded a declaration by the chairman that a resolution has or has
not been passed shall be conclusive evidence of the fact without proof of the number or
proportion of the votes cast in favour of or against it.23
    
    If a poll is demanded, it shall be taken in such manner and (subject as provided
below) either at once or after such adjournment as the chairman directs. The result of the
poll shall be deemed to be the resolution of the meeting at which it was demanded as at the
date it was taken. A demand for a poll shall not prevent the meeting continuing for the
transaction of business other than the question on which it has been demanded.24
    
    A poll demanded on the election of a chairman or on a question of adjournment shall be
taken at once.25
    
    On a show of hands every person who is present in person and who produces an
Instrument or a voting certificate or is a proxy or representative has one vote. On a poll
every such person has one vote in respect of each nominal amount integral currency unit of the
specified currency of such Series of Instruments so produced or represented by the voting
certificate so produced or for which he is a proxy or representative. Without prejudice to the
obligations of proxies, a person entitled to more than one vote need not use them all or cast
them all in the same way.26
    
    In case of equality of votes the chairman shall both on a show of hands and on a poll
have a casting vote in addition to any other votes which he may have.
 Effect and Publication of an Extraordinary Resolution
 27
    
    An Extraordinary Resolution shall be binding on all the Instrumentholders, whether or
not present at the meeting, and on all the Couponholders and each of them shall be bound to
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give effect to it accordingly. The passing of such a resolution shall be conclusive evidence
that the circumstances justify its being passed. The relevant Issuer shall give notice of
the passing of an Extraordinary Resolution to Instrumentholders within 14 days but failure
to do so shall not invalidate the resolution.28
    
    A resolution in writing signed by or on behalf of the holders of not less than 95 per
cent. in nominal amount of the Instruments who for the time being are entitled to receive
notice of a meeting in accordance with the provisions of this Schedule shall for all purposes
be as valid and effectual as an Extraordinary Resolution passed at a meeting of such
Instrumentholders duly convened and held in accordance with the provisions of this Schedule.
Such resolution in writing may be contained in one document or several documents in similar
form each signed by or on behalf of one or more of the Instrumentholders.
 Minutes
 29
    
    Minutes shall be made of all resolutions and proceedings at every meeting and, if
purporting to be signed by the chairman of that meeting or of the next succeeding meeting,
shall be conclusive evidence of the matters in them. Until the contrary is proved every
meeting for which minutes have been so made and signed shall be deemed to have been duly
convened and held and all resolutions passed or proceedings transacted at it to have been duly
passed and transacted.
 Trustees Power to Prescribe Regulations
 30
    
    Subject to all other provisions in this Trust Deed the Trustee may without the consent
of the Instrumentholders prescribe such further regulations regarding the holding of meetings
and attendance and voting at them as it in its sole discretion determines including (without
limitation) such requirements as the Trustee thinks reasonable to satisfy itself that the
persons who purport to make any requisition in accordance with this Trust Deed are entitled to
do so and as to the form of voting certificates or block voting instructions so as to satisfy
itself that persons who purport to attend or vote at a meeting are entitled to do so.31
    
    The holder of a Global Instrument shall (unless such Global Instrument represents only
one Instrument) be treated as two persons for the purposes of any quorum requirements of a
meeting of Instrumentholders.32
    
    The above provisions of this Schedule shall have effect subject to the following
provisions:32.1
    
    Meetings of Instrumentholders of separate Series will normally be held separately.
However, the Trustee may from time to time determine that meetings of Instrumentholders of
separate Series shall be held together.32.2
    
    A resolution that in the opinion of the Trustee affects one Series alone shall be
deemed to have been duly passed if passed at a separate meeting of the Instrumentholders of
the Series concerned.32.3
    
    A resolution that in the opinion of the Trustee affects the Instrumentholders of
more than one Series but does not give rise to a conflict of interest between the
Instrumentholders of the different Series concerned shall be deemed to have been duly passed
if passed at a single meeting of the Instrumentholders of the relevant Series provided that
for the purposes of determining the votes an Instrumentholder is entitled to cast pursuant to
paragraph 25, each Instrumentholder shall have one vote in respect of each euro 1.00
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nominal amount of Instruments held, converted, if such Instruments are not denominated in
euro, in accordance with Clause 8.13 (Currency Conversion).32.4
    
    A resolution that in the opinion of the Trustee affects the Instrumentholders of
more than one Series and gives or may give rise to a conflict of interest between the
Instrumentholders of the different Series concerned shall be deemed to have been duly
passed only if it shall be duly passed at separate meetings of the Instrumentholders of the
relevant Series.32.5
    
    To all such meetings as previously set out all the preceding provisions of this
Schedule shall mutatis mutandis apply as though references therein to Instruments and to
Instrumentholders were references to the Instruments and Instrumentholders of the Series
concerned.
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EXECUTED AS A DEED BY AFFIXING 
THE COMMON SEAL ofNATIONAL GRID GAS plc
AS ISSUER AND GUARANTOR
    
    üýþin the presence of:EXECUTED AS A DEED BY AFFIXING 
THE COMMON SEAL ofNATIONAL GRID GAS FINANCE 
(NO 1) plc
AS ISSUER
    
    üýþin the presence of:EXECUTED AS A DEED BY AFFIXING 
THE COMMON SEAL ofTHE LAW DEBENTURE TRUST 
CORPORATION p.l.c.
AS TRUSTEE
    
    üýþin the presence of:
 104