EXHIBIT 2(b).1
  NATIONAL GRID plc
  NATIONAL GRID ELECTRICITY TRANSMISSION plc
   THE LAW DEBENTURE TRUST CORPORATION p.l.c.
  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
    
    
    95 Application of Moneys Received by the Trustee
    
    
    96 Covenants
    
    
    107 Remuneration and Indemnification of the Trustee
    
    
    138 Provisions Supplemental to the Trustee Acts
    
    
    149 Disapplication and Trustee Liability
    
    
    1810 Waiver and Proof of Default
    
    
    1811 Trustee not Precluded from Entering into Contracts
    
    
    1812 Modification and Substitution
    
    
    1913 Appointment, Retirement and Removal of the Trustee
    
    
    2014 Instruments held in Clearing Systems and Couponholders
    
    
    2115 Currency Indemnity
    
    
    2216 Enforcement
    
    
    2317 Communications
    
    
    2318 Governing Law and Jurisdiction
    
    
    24Schedule 1 Part A Form of CGN Temporary Global Instrument
    
    
    25Schedule 1 Part B Form of CGN Permanent Global Instrument
    
    
    32Schedule 1 Part C Form of NGN Temporary Global Instrument
    
    
    42Schedule 1 Part D Form of NGN Permanent Global Instrument
    
    
    48Schedule 2 Part A Form of Definitive Instrument
    
    
    55
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Contents
    
    PageSchedule 2 Part B Terms and Conditions of the Instruments
    
    
    58Schedule 2 Part C Form of Coupon
    
    
    98Schedule 2 Part D Form of Talon
    
    
    100Schedule 2 Part E Form of Receipt
    
    
    102Schedule 3 Provisions for Meetings of Instrumentholders
    
    
    103
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This Amended and Restated Trust Deed between
 (1)
    
    NATIONAL GRID plc(National Grid) AND NATIONAL GRID ELECTRICITY TRANSMISSION plc (NGET),
(each an Issuer and together, the Issuers); and(2)
    
    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 by 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, the Issuers and the Trustee entered into an amended and
restated trust deed dated 24 July 2009 (the Original Trust Deed) and have agreed to make
certain amendments to the Original Trust Deed.
 This 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 26 July 2010, between the
Issuers, the Trustee, The Bank of New York Mellon as Issuing and Paying Agent and the other
agent(s) 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.Common Safekeeper means, in relation to a Series, the common safekeeper for Euroclear and
Clearstream, Luxembourg appointed in respect of such Instruments.Clearstream, Luxembourg means Clearstream Banking, société anonyme;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
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
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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 8
(Provisions supplemental to the Trustee Acts), pounds sterling or such other currency as may
be agreed between the relevant Issuer 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 26 July 2010 between the
Issuers, 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;Effective Date means the date on which the Arranger, has received, on behalf of the
Dealers, each of the condition precedent documents listed in Schedule 2 to the Dealer
Agreement and that each is, in form and substance, satisfactory to it;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;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;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.
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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 or any of its 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;Prospectus means the prospectus prepared in connection with the Programme and constituting
(i) a base prospectus in respect of each Issuer for the purposes of Article 5.4 of the
Prospectus Directive and (ii) listing particulars in respect of each Issuer for the
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purposes of Listing Rule 2.2.11 of the Listing Rules of the Financial Services Authority, as
revised, supplemented or amended from time to time by the Issuers 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 6.63 (Notices to Instrumentholders);Successor means, in relation to an Agent such other or further person as may from time to
time be appointed by either of the Issuers 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 either Issuer or of a successor in business of either Issuer;
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;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; and
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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, in any event, the notification forthwith of such appointment, employment or
delegation, as the case may be.
 1.3
    
    Amendment and RestatementThe Original Trust Deed shall be amended and restated on the terms of this Trust Deed,
such amendment and restatement to take effect from the Effective Date. Any Instruments
issued on or after the Effective Date shall be issued pursuant to this Trust Deed. Save for
Clause 6.5.1, this does not affect any Instruments issued prior to the Effective Date or any
Instruments issued on or after the Effective Date so as to be consolidated and form a single
Series with the Instruments of any Series issued prior to the Effective Date. Subject to
such amendment and restatement, the Original Trust Deed shall continue in full force and
effect.1.4
    
    HeadingsHeadings shall be ignored in construing this Trust Deed.1.5
    
    ContractsReferences in this Amended and Restated Trust Deed to this Trust Deed or any other
document are to this Amended and Restated 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.1.6
    
    SchedulesThe Schedules are part of this Trust Deed and have effect accordingly.
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1.7
    
    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, 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.1.8
    
    Other TermsOther terms defined in the Dealer Agreement or the Conditions have the same meaning in
this Trust Deed.1.9
    
    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.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 either 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 mutandisseparately and independently
to the Instruments of each Series and in such Clauses and Schedule the expressions
Instrumentholders, Receipts, Coupons, Couponholders and 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
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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 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 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 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:
 2.5.1
    
    by notice in writing to the relevant Issuer 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
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(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, require such Issuer 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, 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
a temporary Global Instrument shall be exchangeable for Definitive Instruments or interests
in a permanent Global Instrument as set out in each temporary Global Instrument. Interests
in a permanent Global Instrument shall be exchangeable for Definitive Instruments as set out
in such permanent Global Instrument.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
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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 Issuer 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
issued by it and the related Receipts, Coupons and Talons and the execution or delivery of
this Trust Deed. Each Issuer shall also indemnify the Trustee, the relevant
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 relevant
Instrumentholders or the Couponholders to enforce the relevant Issuers obligations under
this Trust Deed or the relevant Instruments, Receipts, Coupons or Talons.4.2
    
    Change of Taxing JurisdictionIf an Issuer 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 shall (unless
the Trustee otherwise agrees) give the Trustee an undertaking satisfactory to the Trustee in
terms corresponding to the terms of 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 has become so subject. In such event this Trust Deed and the relevant
Instruments, Receipts, Coupons and Talons shall be read accordingly.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, 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 relevant
Instruments, Receipts or Coupons pari passuand rateably; and5.1.3
    
    thirdly, in payment of any balance to such Issuer for itself.
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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).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 standard 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 issued by it is outstanding, each of the Issuers shall: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 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.
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6.4
    
    Financial Statements etc.
 6.4.1
    
    send 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 or
any parent undertaking of it generally in their capacity as such; and6.4.2
    
    National Grid shall, forthwith upon becoming aware of the occurrence of a
National Grid Restructuring Event, provide or procure that the Reporting Accountants
provide the Trustee with the Accountants Report;
 6.5
    
    Certificate of Director, etc.
 6.5.1
    
    send 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 certificate of the relevant Issuer signed by a Director that, having
made all reasonable enquiries, to the best of the knowledge, information and belief of
such Issuer 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;6.5.2
    
    National Grid shall, forthwith upon becoming aware of the occurrence of a
National Grid Restructuring Event, notify the Trustee in writing of the occurrence of
an National Grid Restructuring Event and provide the Trustee with the Directors
Report; and6.5.3
    
    in relation to Instruments issued by it, National Grid shall give to the
Trustee, as soon as reasonably practicable after the acquisition or disposal of any
company which thereby becomes a Principal Subsidiary or after any transfer is made to
any member of the National Grid Group (as defined in Condition 9(c)) which thereby
becomes a Principal Subsidiary, a certificate by the auditors of National Grid at that
time (the Auditors) addressed to the Trustee to such effect;
 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.
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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.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:
 6.11.1
    
    from Clifford Chance LLP (or such other firm of legal advisers as may be
agreed between the relevant Issuer 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 Trustee, the relevant 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 IssuerSend to the Trustee as soon as practicable after being so requested by the Trustee a
certificate of the relevant Issuer 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 its subsidiary undertakings.
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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 the relevant Issuer 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 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 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 a financial institution (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 financial institutions fee shall be shared
equally between the Trustee and the relevant Issuer. The determination of the relevant
financial institution shall be conclusive and binding on the relevant Issuer, the Trustee,
the relevant Instrumentholders and the relevant Couponholders.7.3
    
    ExpensesEach of the Issuers (in respect of itself and, where applicable, Instruments issued by
it) 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 in relation to that
Issuer 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 (in respect
of Instruments issued by it) to enforce any provision of this Trust Deed, the relevant
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:
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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 relevant Issuer 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 such
Issuer a reasonable opportunity to meet such costs, charges and expenses itself or to put
the Trustee in funds to make payment of such costs, 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 (in respect of itself and, where applicable, any Instruments issued
by it) shall indemnify the Trustee in respect of all liabilities and expenses properly
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 costs, charges and expenses
properly paid or incurred in disputing or defending any of the foregoing) which any of them
may incur in relation to the relevant Issuer 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 in relation to that Issuer.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 (including, without limitation, any report or advice received from an independent
financial adviser or from any accountant pursuant to the Conditions), whether or not (1)
such opinion, advice or information is addressed to the Trustee or any other person, and (2)
such experts liability in respect of the same is limited by reference to a monetary cap or
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otherwise 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 National Grid Restructuring Event or NGET Restructuring Event, 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 is performing all of its obligations under this Trust Deed and the relevant
Instruments, Receipts, Coupons and 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.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 Directors, 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
two Directors of the relevant Issuer 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
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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.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 or any relevant Instrumentholder
or Couponholder by reason of having accepted as valid or not having rejected any relevant
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.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 and the relevant
Instrumentholders and 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 any relevant Instruments, any exchange of relevant
Instruments or the delivery of relevant Instruments to the persons entitled to them.
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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.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)) that no Instruments are for the time being held by or on behalf of an Issuer or
its 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(b)) materially prejudicial to the interests of
relevant Instrumentholders. Any such determination shall be conclusive and binding on the
relevant Issuer and the relevant Instrumentholders.8.20
    
    Appointment of Independent Financial AdviserIn connection with the Trustees right to appoint an independent financial adviser
pursuant to Condition 5.6.2 (if applicable), the Trustee:
 8.20.1
    
    shall use its reasonable endeavours to identify and appoint the
independent financial adviser but shall have no liability to any person if, having used
its reasonable endeavours, it is unable to identify and appoint a suitable independent
financial adviser;8.20.2
    
    shall not be responsible for carrying on the role of independent financial
adviser itself during the time it is attempting to identify such independent financial
adviser or thereafter if it is unable to find such independent financial adviser; and8.20.3
    
    shall not be required to take any action to find an independent financial
adviser unless it has been previously indemnified and/or secured to its satisfaction or
expend any of its own funds in the appointment of such an independent financial
adviser.
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9
    
    Disapplication and Trustee Liability9.1
    
    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.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 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 relevant 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 either of the Issuers 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.
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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 other modification to this Trust Deed
which is in its opinion not materially prejudicial to the interests of the Instrumentholders
of the relevant Series, 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.12.2
    
    Substitution
 12.2.1
    
    The Trustee may, without the consent of the Instrumentholders or
Couponholders, agree to the substitution of any other company (the Substituted
Obligor) in place of such Issuer (or of any previous substitute under this Clause 12)
as the principal debtor under this Trust Deed and the relevant Instruments, Receipts,
Coupons and Talons provided that such substitution would not, in the opinion of the
Trustee, be materially prejudicial to the interests of the Instrumentholders, and
further 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 and the relevant Instruments, Receipts,
Coupons and Talons (with consequential amendments as the Trustee may deem
appropriate) as if the Substituted Obligor had been named in this Trust Deed
and the relevant Instruments, Receipts, Coupons and Talons as the principal
debtor in place of such Issuer;(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), 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 of
references to the Substituted Territory whereupon the Trust Deed, and the
relevant Instruments, Receipts, Coupons and 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;(iv)
    
    such Issuer and the Substituted Obligor comply with such other
requirements as the Trustee may direct in the interests of the relevant
Instrumentholders; and
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(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 in respect of the
relevant Instruments in place of such Issuer (or a previous substitute), (ii)
all necessary governmental and regulatory approvals and consents necessary for
or in connection with the assumption by the Substituted Obligor of its
obligations under the relevant Instruments and Coupons and (iii) such approvals
and consents are at the time of substitution in full force and effect.
 12.2.2
    
    Release of Substituted IssuerAn agreement by the Trustee pursuant to 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 and the relevant Instruments, Receipts,
Coupons and 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 SubstitutionOn completion of the formalities set out in Clause 12.2 (Substitution), the
Substituted Obligor shall be deemed to be named in this Trust Deed and the relevant
Instruments, Receipts, Coupons and Talons as the principal debtor in place of the
relevant Issuer (or of any previous substitute) and this Trust Deed and the relevant
Instruments, Receipts, Coupons and 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. The Trustee shall at
all times be a trust corporation and such trust corporation may be the sole Trustee. Any
appointment of a new Trustee shall be notified by each of the Issuers to its
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 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, appoint anyone to act either as a separate Trustee in respect of any Issue or as an
additional Trustee jointly with the Trustee:
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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 and that person remove that person. At the
Trustees request, each Issuer shall forthwith do all things as may be required to perfect
such appointment or removal and each of the Issuers 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 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
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 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
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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 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 either of the Issuers 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, shall only discharge such Issuer 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 the recipient 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
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.
 22




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16
    
    Enforcement16.1
    
    Trustee to enforceOnly the Trustee may enforce the rights of the Instrumentholders and Couponholders
against the relevant Issuer, 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 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 or to appoint an independent
financial advisor pursuant to the Conditions of the Instruments unless it shall be
indemnified and/or secured and/or prefunded by the relevant 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 or appointment, including the costs of its
managements 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 the relevant Issuer to
enforce any obligations under this Trust Deed:
 16.3.1
    
    proof in such proceedings that as regards any specified Instrument such
Issuer 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 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
has made default in paying any sum due to the relevant Couponholder shall (unless the
contrary be proved) be sufficient evidence that such Issuer 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.17
    
    Communications17.1
    
    MethodEach communication under this Trust Deed shall be made by fax, electronic communication
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, electronic
 23




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address or postal 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, electronic address, postal 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,
(if by electronic communication) when the relevant receipt of such communication being read
is given, or where no read receipt is requested by the sender, when good receipt is
confirmed by the recipient following enquiry by the sender and (if in writing) when
received, 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 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 irrevocably submits to
the jurisdiction of such courts and waives any objection to Proceedings in such courts on
the ground of venue or on the ground that the Proceedings have been brought in an
inconvenient forum. This Clause is for the benefit of each of the Trustee and the relevant
Instrumentholders and 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).
 24




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Schedule 1
Part A
Form of CGN Temporary Global Instrument
 [NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
 *
 EURO MEDIUM TERM NOTE PROGRAMME
 Series No. []
 Tranche No. []
 TEMPORARY GLOBAL INSTRUMENT
 Temporary Global Instrument No. []
 Instruments * Issuer
 1
    
    Interpretation and DefinitionsReferences in this temporary Global Instrument to the Conditions are to the Terms and
Conditions applicable to the Instruments (which are in the form set out in Part B of
Schedule 2 (Terms and Conditions of the Instruments) to the amended and restated trust deed
(as amended or supplemented as at the Issue Date, the Trust Deed) dated 26 July 2010
between inter aliosthe Issuer and The Law Debenture Trust Corporation p.l.c. as trustee, as
such form is supplemented and/or modified and/or superseded by the provisions of this
temporary Global Instrument (including the supplemental definitions and any modifications or
additions set out in the Second Schedule hereto), which in the event of any conflict shall
prevail). Other capitalised terms used in this temporary Global Instrument shall have the
meanings given to them in the Conditions or the Trust Deed. If the Second Schedule to this
temporary Global Instrument specifies that the applicable TEFRA exemption is either C
Rules or not applicable, this temporary Global Instrument is a C Rules Instrument,
otherwise this temporary Global Instrument is a D Rules Instrument.2
    
    Aggregate Nominal AmountThe aggregate nominal amount from time to time of this temporary Global Instrument
shall be an amount equal to the aggregate nominal amount of the Instruments as shall be
shown by the latest entry in the fourth column of the First Schedule to this temporary
Global Instrument, which shall be completed by or on behalf of the Issuing and Paying Agent
upon (a) the issue of Instruments represented by this temporary Global Instrument, (b) the
exchange of the whole or a part of this temporary Global Instrument for a corresponding
interest in a permanent Global Instrument or, as the case may be, for Definitive
Instruments, (c) the redemption or purchase and cancellation of Instruments represented by
this temporary Global Instrument and/or (d) in the case of Partly Paid
 
 *
    
    Delete as applicable. 25




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Instruments, the forfeiture of Instruments represented by this temporary Global Instrument
in accordance with the Conditions relating to such Partly Paid Instruments, all as described
below.3
    
    Promise to PaySubject as provided in this temporary Global Instrument, the Issuer, for value
received, by this temporary Global Instrument promises to pay to the bearer of this
temporary Global Instrument, upon presentation and (when no further payment is due in
respect of this temporary Global Instrument) surrender of this temporary Global Instrument,
on the Maturity Date (or on such earlier date or, if the Maturity Date is specified to be
perpetual, on such date as the amount payable upon redemption under the Conditions may
become repayable in accordance with the Conditions) the amount payable upon redemption under
the Conditions in respect of the aggregate nominal amount of Instruments represented by this
temporary Global Instrument and (unless this temporary Global Instrument does not bear
interest) to pay interest in respect of the Instruments from the Interest Commencement Date
in arrear at the rates, on the dates for payment, and in accordance with the methods of
calculation provided for in the Conditions, save that the calculation is made in respect of
the total aggregate amount of the Instruments, together with such other sums and additional
amounts (if any) as may be payable under the Conditions, in accordance with the Conditions.4
    
    ExchangeSubject as provided in the Conditions applicable to Partly Paid Instruments, on or
after the first day following the expiry of 40 days after the Issue Date (the Exchange
Date), this temporary Global Instrument may be exchanged (free of charge to the holder) in
whole or (in the case of a D Rules Instrument only) from time to time in part by its
presentation and, on exchange in full, surrender to or to the order of the Issuing and
Paying Agent for interests in a permanent Global Instrument or, if so specified in the
Second Schedule to this temporary Global Instrument, for Definitive Instruments in an
aggregate nominal amount equal to the nominal amount of this temporary Global Instrument
submitted for exchange provided that, in the case of any part of a D Rules Instrument
submitted for exchange for a permanent Global Instrument or Definitive Instruments, there
shall have been Certification with respect to such nominal amount submitted for such
exchange dated no earlier than the Exchange Date.Certification means the presentation to the Issuing and Paying Agent of a certificate or
certificates with respect to one or more interests in this temporary Global Instrument,
signed by Euroclear or Clearstream, Luxembourg, substantially to the effect set out in
Schedule 3 (Provisions for Meetings of Instrumentholders) to the Trust Deed to the effect
that it has received a certificate or certificates substantially to the effect set out in
Schedule 3 to the Agency Agreement with respect to it and that no contrary advice as to the
contents of the certificate has been received by Euroclear or Clearstream, Luxembourg, as
the case may be.Upon the whole or a part of this temporary Global Instrument being exchanged for a permanent
Global Instrument, such permanent Global Instrument shall be exchangeable in accordance with
its terms for Definitive Instruments.The Definitive Instruments, for which this temporary Global Instrument or a permanent Global
Instrument may be exchangeable, shall be duly executed and authenticated, shall,
 26




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in the case of Definitive Instruments, have attached to them all Coupons (and, where
appropriate, Talons) in respect of interest, and all Receipts in respect of Instalment
Amounts, which have not already been paid on this temporary Global Instrument or the
permanent Global Instrument, as the case may be, shall be security printed and shall be
substantially in the form set out in the relevant Schedules to the Trust Deed as
supplemented and/or modified and/or superseded by the terms of the Second Schedule to this
temporary Global Instrument.On any exchange of a part of this temporary Global Instrument for an equivalent interest in
a permanent Global Instrument or for Definitive Instruments, as the case may be, the portion
of the nominal amount of this temporary Global Instrument so exchanged shall be endorsed by
or on behalf of the Issuing and Paying Agent in Part 1 of the First Schedule to this
temporary Global Instrument, whereupon the nominal amount of this temporary Global
Instrument shall be reduced for all purposes by the amount so exchanged and endorsed.5
    
    Benefit of ConditionsExcept as otherwise specified in this temporary Global Instrument, this temporary
Global Instrument is subject to the Conditions and the Trust Deed and, until the whole of
this temporary Global Instrument is exchanged for equivalent interests in a permanent Global
Instrument or for Definitive Instruments, as the case may be, the holder of this temporary
Global Instrument shall in all respects be entitled to the same benefits as if it were the
holder of the permanent Global Instrument (or the relevant part of it) or the Definitive
Instruments, as the case may be, for which it may be exchanged as if such permanent Global
Instrument or Definitive Instruments had been issued on the Issue Date.6
    
    PaymentsNo person shall be entitled to receive any payment in respect of the Instruments
represented by this temporary Global Instrument which falls due on or after the Exchange
Date unless, upon due presentation of this temporary Global Instrument for exchange,
delivery of (or, in the case of a subsequent exchange, due endorsement of) a permanent
Global Instrument or delivery of Definitive Instruments, as the case may be, is improperly
withheld or refused by or on behalf of the Issuer.Payments due in respect of a D Rules Instrument before the Exchange Date shall only be made
in relation to such nominal amount of this temporary Global Instrument with respect to which
there shall have been Certification dated no earlier than such due date for payment.Any payments which are made in respect of this temporary Global Instrument shall be made to
its holder against presentation and (if no further payment falls to be made on it) surrender
of it at the specified office of the Issuing and Paying Agent or of any other Paying Agent
provided for in the Conditions. If any payment in full of principal is made in respect of
any Instrument represented by this temporary Global Instrument, the portion of this
temporary Global Instrument representing such Instrument shall be cancelled and the amount
so cancelled shall be endorsed by or on behalf of the Issuing and Paying Agent in the First
Schedule to this temporary Global Instrument (such endorsement being prima facie evidence
that the payment in question has been made) upon which the nominal amount of this temporary
Global Instrument shall be reduced for all purposes by the amount so cancelled and endorsed.
If any other payments are made in respect of the Instruments represented by this temporary
Global Instrument, a record of each such
 27




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payment shall be endorsed by or on behalf of the Issuing and Paying Agent on an additional
schedule to this temporary Global Instrument (such endorsement being prima facie evidence
that the payment in question has been made). Condition 6.4(e) and Condition 7(e)(i) will
apply to the Definitive Instruments only.For the purposes of any payments made in respect of this temporary Global Instrument, the
words in the relevant place of presentation shall not apply in the definition of business
day in Condition 6.6 (Non-Business Days).7
    
    CancellationCancellation of any Instrument represented by this temporary Global Instrument which is
required by the Conditions to be cancelled (other than upon its redemption) shall be
effected by reduction in the nominal amount of this temporary Global Instrument representing
such Instrument on its presentation to or to the order of the Issuing and Paying Agent for
endorsement in the First Schedule to this temporary Global Instrument, upon which the
nominal amount of this temporary Global Instrument shall be reduced for all purposes by the
amount so cancelled and endorsed.8
    
    NoticesNotices required to be given in respect of the Instruments represented by this
temporary Global Instrument may be given by their being delivered (so long as this temporary
Global Instrument is held on behalf of Euroclear and Clearstream, Luxembourg or any other
clearing system) to Euroclear, Clearstream, Luxembourg or such other clearing system, as the
case may be, or otherwise to the holder of this temporary Global Instrument, rather than by
publication as required by the Conditions.No provision of this temporary Global Instrument shall alter or impair the obligation of the
Issuer to pay the principal and premium of and interest on the Instruments when due in
accordance with the Conditions.This temporary Global Instrument shall not be valid or become obligatory for any purpose
until authenticated by or on behalf of the Issuing and Paying Agent.This temporary Global Instrument and all matters arising from or connected with it shall be
governed by and construed in accordance with English law.
 In witness
  [NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
  
 *
    
    Delete as applicable. 28




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CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
 
 THE BANK OF NEW YORK MELLON
    ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED
STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE
INTERNAL REVENUE CODE.
 29




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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
 30




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The Second Schedule
  31




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Schedule 1
Part B
Form of CGN Permanent Global Instrument
 [NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
 *
 EURO MEDIUM TERM NOTE PROGRAMME
 Series No. [] Tranche No. []
 PERMANENT GLOBAL INSTRUMENT
 Permanent Global Instrument No. []
 Instruments Issuer
 1
    
    Interpretation and DefinitionsReferences in this permanent Global Instrument to the Conditions are to the Terms and
Conditions applicable to the Instruments (which are in the form set out in Part B of
Schedule 2 (Terms and Conditions of the Instruments) to the amended and restated trust deed
(as amended or supplemented as at the Issue Date, the Trust Deed) dated 26 July 2010
between, inter alios, the Issuer and The Law Debenture Trust Corporation p.l.c. as trustee,
as such form is supplemented and/or modified and/or superseded by the provisions of this
permanent Global Instrument (including the supplemental definitions and any modifications or
additions set out in the Third Schedule to this permanent Global Instrument), which in the
event of any conflict shall prevail). Other capitalised terms used in this permanent Global
Instrument shall have the meanings given to them in the Conditions or the Trust Deed.2
    
    Aggregate Nominal AmountThe aggregate nominal amount from time to time of this permanent Global Instrument
shall be an amount equal to the aggregate nominal amount of the Instruments as shall be
shown by the latest entry in the fourth column of the First Schedule to this permanent
Global Instrument, which shall be completed by or on behalf of the Issuing and Paying Agent
upon (a) the exchange of the whole or a part of the temporary Global Instrument initially
representing the Instruments for a corresponding interest in this permanent Global
Instrument (in the case of Instruments represented by a temporary Global Instrument upon
issue), (b) the issue of the Instruments represented by this permanent Global Instrument (in
the case of Instruments represented by this permanent Global Instrument upon issue), (c) the
exchange of the whole or, where the limited circumstances so permit, a part of this
permanent Global Instrument for Definitive Instruments, (d) the redemption or purchase and
cancellation of Instruments represented by this permanent Global Instrument and/or (e) in
the case of Partly Paid Instruments, the forfeiture of Instruments represented by this
 
 *
    
    Delete as applicable. 32




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permanent Global Instrument in accordance with the Conditions relating to such Partly Paid
Instruments, all as described below.3
    
    Promise to PaySubject as provided in this permanent Global Instrument, the Issuer, for value
received, by this permanent Global Instrument promises to pay to the bearer of this
permanent Global Instrument, upon presentation and (when no further payment is due in
respect of this permanent Global Instrument) surrender of this permanent Global Instrument,
on the Maturity Date (or on such earlier date or, if the Maturity Date is specified to be
perpetual on such date as the amount payable upon redemption under the Conditions may become
repayable in accordance with the Conditions), the amount payable upon redemption under the
Conditions in respect of the aggregate nominal amount of Instruments represented by this
permanent Global Instrument and (unless this permanent Global Instrument does not bear
interest) to pay interest in respect of the Instruments from the Interest Commencement Date
in arrear at the rates, on the dates for payment, and in accordance with the methods of
calculation provided for in the Conditions, save that the calculation is made in respect of
the total aggregate amount of the Instruments, together with such other sums and additional
amounts (if any) as may be payable under the Conditions, in accordance with the Conditions.4
    
    ExchangeThis permanent Global Instrument is exchangeable (free of charge to the holder) on or
after the Exchange Date in whole but not, except as provided in the next paragraph, in part
for the Definitive Instruments if this permanent Global Instrument is held on behalf of
Euroclear or Clearstream, Luxembourg or any other clearing system (an Alternative Clearing
System) and any such clearing system is closed for business for a continuous period of 14
days (other than by reason of holidays, statutory or otherwise) or announces an intention
permanently to cease business or does in fact do so.This permanent Global Instrument is exchangeable in part (provided, however, that if this
permanent Global Instrument is held by or on behalf of Euroclear and/or Clearstream,
Luxembourg and/or any Alternative Clearing System, the rules of Euroclear and/or
Clearstream, Luxembourg and/or such Alternative Clearing System as the case may be, so
permit) if so provided, and in accordance with, the Conditions relating to Partly Paid
Instruments.Exchange Date means a day falling not less than 60 days, or in the case of failure to pay
principal when due 30 days, after that on which the notice requiring exchange is given and
on which banks are open for business in the city in which the specified office of the
Issuing and Paying Agent is located and, except in the case of exchange pursuant to the
first paragraph of this section above, in the cities in which Euroclear and Clearstream,
Luxembourg or, if relevant, the Alternative Clearing System, are located.Subject as provided in the Conditions applicable to Partly Paid Instruments, any such
exchange may be effected on or after an Exchange Date by the holder of this permanent Global
Instrument surrendering this permanent Global Instrument or, in the case of a partial
exchange, presenting it for endorsement to or to the order of the Issuing and Paying Agent.
In exchange for this permanent Global Instrument, or part of this permanent Global
Instrument to be exchanged, the Issuer shall deliver, or procure the delivery of, duly
executed and authenticated Definitive Instruments in an aggregate nominal amount equal
 33




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to the nominal amount of this permanent Global Instrument submitted for exchange (if
appropriate, having attached to them all Coupons (and, where appropriate, Talons) in respect
of interest, and all Receipts in respect of Instalment Amounts, which have not already been
paid on this permanent Global Instrument), security printed and substantially in the form
set out in Schedule 2 to the Trust Deed as supplemented and/or modified and/or superseded by
the terms of the Third Schedule to this permanent Global Instrument.On any exchange of a part of this permanent Global Instrument the portion of the nominal
amount of this permanent Global Instrument so exchanged shall be endorsed by or on behalf of
the Issuing and Paying Agent in the First Schedule to this permanent Global Instrument,
whereupon the nominal amount of this permanent Global Instrument shall be reduced for all
purposes by the amount so exchanged and endorsed.5
    
    Benefit of ConditionsExcept as otherwise specified in this permanent Global Instrument, this permanent
Global Instrument is subject to the Conditions and the Trust Deed and, until the whole of
this permanent Global Instrument is exchanged for Definitive Instruments, the holder of this
permanent Global Instrument shall in all respects be entitled to the same benefits as if it
were the holder of the Definitive Instruments for which it may be exchanged and as if such
Definitive Instruments had been issued on the Issue Date.6
    
    PaymentsNo person shall be entitled to receive any payment in respect of the Instruments
represented by this permanent Global Instrument that falls due after an Exchange Date for
such Instruments, unless upon due presentation of this permanent Global Instrument for
exchange, delivery of Definitive Instruments is improperly withheld or refused by or on
behalf of the Issuer or the Issuer does not perform or comply with any one or more of what
are expressed to be its obligations under any Definitive Instruments.Payments in respect of this permanent Global Instrument shall be made to its holder against
presentation and (if no further payment falls to be made on it) surrender of it at the
specified office of the Issuing and Paying Agent or of any other Paying Agent provided for
in the Conditions. A record of each such payment shall be endorsed on the First or Second
Schedule to this permanent Global Instrument, as appropriate, by the Issuing and Paying
Agent or by the relevant Paying Agent, for and on behalf of the Issuing and Paying Agent,
which endorsement shall (until the contrary is proved) be prima facieevidence that the
payment in question has been made. Condition 6.4(e) and Condition 7(e)(i) will apply to the
Definitive Instruments only.For the purposes of any payments made in respect of this permanent Global Instrument, the
words in the relevant place of presentation shall not apply in the definition of business
day in Condition 6.6 (Non-Business Days).7
    
    PrescriptionClaims in respect of principal and interest (as each such term is defined in the
Conditions) in respect of this permanent Global Instrument shall become void unless it is
presented for payment within a period of 10 years (in the case of principal) and five years
(in the case of interest) from the appropriate Relevant Date.
 34




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8
    
    MeetingsFor the purposes of any meeting of Instrumentholders, the holder of this permanent
Global Instrument shall (unless this permanent Global Instrument represents only one
Instrument) be treated as two persons for the purposes of any quorum requirements of a
meeting of Instrumentholders and, at any such meeting, as having one vote in respect of each
integral currency unit of the Specified Currency of the Instruments.9
    
    CancellationCancellation of any Instrument represented by this permanent Global Instrument which is
required by the Conditions to be cancelled (other than upon its redemption) shall be
effected by reduction in the nominal amount of this permanent Global Instrument representing
such Instrument on its presentation to or to the order of the Issuing and Paying Agent for
endorsement in the First Schedule to this permanent Global Instrument, upon which the
nominal amount of this permanent Global Instrument shall be reduced for all purposes by the
amount so cancelled and endorsed.10
    
    PurchaseInstruments may only be purchased by the Issuer, or any of its subsidiary undertakings
if they are purchased together with the right to receive all future payments of interest and
Instalment Amounts (if any) on the Instruments being purchased.11
    
    Issuers OptionsAny option of the Issuer provided for in the Conditions shall be exercised by the
Issuer giving notice to the Instrumentholders within the time limits set out in and
containing the information required by the Conditions, except that the notice shall not be
required to contain the serial numbers of Instruments drawn in the case of a partial
exercise of an option and accordingly no drawing of Instruments shall be required.12
    
    Instrumentholders Redemption Option [and
Restructuring Redemption Option]*Any option of the Instrumentholders provided for in the Conditions may be exercised by
the holder of this permanent Global Instrument giving notice to the Issuing and Paying Agent
within the time limits relating to the deposit of Instruments with a Paying Agent set out in
the Conditions substantially in the form of the relevant notice available from any Paying
Agent and stating the nominal amount of Instruments in respect of which the option is
exercised and at the same time presenting this permanent Global Instrument to the Issuing
and Paying Agent, or to a Paying Agent acting on behalf of the Issuing and Paying Agent, for
notation accordingly in the Fourth Schedule to this permanent Global Instrument.13
    
    NoticesNotices required to be given in respect of the Instruments represented by this
permanent Global Instrument may be given by their being delivered (so long as this permanent
Global Instrument is held on behalf of Euroclear, Clearstream, Luxembourg or any Alternative
Clearing System) to Euroclear, Clearstream, Luxembourg or such Alternative Clearing
 
 *
    
    If applicable. 35




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System, as the case may be, or otherwise to the holder of this permanent Global Instrument,
rather than by publication as required by the Conditions.14
    
    NegotiabilityThis permanent Global Instrument is a bearer document and negotiable and accordingly:
 (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.
 No provisions of this permanent Global Instrument shall alter or impair the obligation of
the Issuer to pay the principal and premium of and interest on the Instruments when due in
accordance with the Conditions.This permanent Global Instrument shall not be valid or become obligatory for any purpose
until authenticated by or on behalf of the Issuing and Paying Agent.This permanent Global Instrument and all matters arising from or connected with it shall be
governed by, and construed in accordance with, English law.
 In witness
  [NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
  CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
 
 THE BANK OF NEW YORK MELLON
 
 *
    
    Delete as applicable. 36




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ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED
STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE
INTERNAL REVENUE CODE.
 37




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##### 



The First Schedule
 Nominal amount of Instruments
 represented by this permanent Global Instrument
  Reason forincrease/decreasein nominal amountof this permanentGlobal Instrument(initial issue,Amount of
    
    exchange,
    
    Nominal amountincrease/decrease
    
    cancellation,
    
    of this permanent
    
    Notation madein nominal
    
    forfeiture or
    
    Global Instrument
    
    by or on behalfamount of this
    
    payment, stating
    
    on issue or
    
    of the Issuingpermanent Global
    
    amount of payment
    
    following such
    
    and PayingDate
    
    Instrument
    
    made)
    
    increase/decrease
    
    Agent
 38




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##### 



The Second Schedule
 Payments of Interest
  Notation made by or onbehalf of the Issuing andDue date of payment
    
    Date of payment
    
    Amount of interest
    
    Paying Agent
 39




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##### 



The Third Schedule
  40




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##### 



The Fourth Schedule
Exercise of Instrumentholders Redemption Option
[and Restructuring Redemption 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
 
 *
    
    If applicable. 41




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##### 



Schedule 1
Part C
Form of NGN Temporary Global Instrument
 [NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
 
 EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
 TEMPORARY GLOBAL INSTRUMENT
Temporary Global Instrument No. []
 Instruments Issuer
 1 Interpretation and Definitions
 Conditions (Terms and Conditions of the Instruments) Trust Deed
 2 Aggregate Nominal Amount
 relevant Clearing Systems
  
 *
    
    Delete as applicable. 42




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##### 



3 Promise to Pay
  4 Exchange
 Exchange Date
 Certification (Provisions
for Meetings of Instrumentholders)
   43




---



##### 



pro rata
 5 Benefit of Conditions
  6 Payments
    44




---



##### 



business day
 7 Cancellation
  8 Notices
     45




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##### 



In witness
  NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc 
   CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
  THE BANK OF NEW YORK MELLON
   
 Effectuation
   COMMON SAFEKEEPER
   
 ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED
STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE
INTERNAL REVENUE CODE.
 
 
    
    Delete as applicable. 46




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##### 



The Schedule
  47




---



##### 



Schedule 1
Part D
Form of NGN Permanent Global Instrument
 [NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
 
 EURO MEDIUM TERM NOTE PROGRAMME
Series No. []
Tranche No. []
 PERMANENT GLOBAL INSTRUMENT
Permanent Global Instrument No. []
 Instruments Issuer
 1 Interpretation and Definitions
 (Terms and Conditions of the Instruments) Trust Deed
 2 Aggregate Nominal Amount
 relevant Clearing Systems
 
 *
    
    Delete as applicable. 48




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##### 



3 Promise to Pay
  4 Exchange
 Alternative Clearing System
  Exchange Date
  49




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##### 



5 Benefit of Conditions
  6 Payments
   business day
 50




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##### 



7 Prescription
  8 Meetings
  9 Cancellation
 pro rata
 10 Purchase
  11 Issuers Options
  12
    
    Instrumentholders Options Option [and Restructuring Redemption Option]
  
 
    
    If applicable. 51




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##### 



13 Notices
  14 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.
    52




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##### 



In witness
  NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc *
   CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
 
 THE BANK OF NEW YORK MELLON
   
 Effectuation
   COMMON SAFEKEEPER
     ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED
STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE
INTERNAL REVENUE CODE.
 
 *
    
    Delete as applicable. 53




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The Schedule
  54




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##### 



Schedule 2
Part A
Form of Definitive Instrument
  [Denomination]
    
    [ISIN]
    
    [Series]
    
    [Certif. No.]
  [NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
 *
 EURO MEDIUM TERM NOTE PROGRAMME
 Series No. []
 Tranche No. []
 [Title of issue]
 Instruments * Issuer Conditions
   
 *
    
    Delete as applicable. 55




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##### 



In witness
  [NATIONAL GRID plc/NATIONAL GRID ELECTRICITY TRANSMISSION plc]
  CERTIFICATE OF AUTHENTICATION OF THE ISSUING AND PAYING AGENT
 
 THE BANK OF NEW YORK MELLON
   
 ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED
STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE
INTERNAL REVENUE CODE.
 56




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##### 



Terms and Conditions of the Instruments
  ISSUING AND PAYING AGENT
 The Bank of New York Mellon
 
 PAYING AGENT
 KBL European Private Bankers S.A.
 57




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##### 



Schedule 2
Part B
Terms and Conditions of the Instruments
 References in these terms and conditions to Instruments (as defined below) are to the
Instruments of one Series only of the relevant Issuer (as defined below), not to all
Instruments that may be issued under the Programme.National Grid plc (National Grid) and National Grid Electricity Transmission plc (NGET)
(each an Issuer and together, the Issuers) have established a Euro Medium Term Note
Programme (the Programme) for the issuance of up to Euro 15,000,000,000 in aggregate
principal amount of debt instruments (the Instruments). The Instruments are constituted by a
Trust Deed (as amended or supplemented from time to time, the Trust Deed) dated 26 July 2010
between the Issuers and The Law Debenture Trust Corporation p.l.c. (the Trustee, which
expression shall include all persons for the time being the trustee or trustees under the Trust
Deed) as trustee for the Instrumentholders (as defined below). These terms and conditions
include summaries of, and are subject to, the detailed provisions of the Trust Deed, which
includes the form of the Definitive Instruments, Receipts, Coupons and Talons referred to
below. An Agency Agreement (as amended or supplemented from time to time, the Agency
Agreement) dated 26 July 2010 has been entered into in relation to the Instruments between the
Issuers, 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 26 July 2010 at Fifth Floor, 100 Wood Street, London EC2V 7EX) and at the
specified offices of the Paying Agents.The Instrumentholders, the holders of the interest coupons (the Coupons) appertaining to
interest bearing Instruments and, where applicable in the case of such Instruments, talons for
further Coupons (the Talons) (the Couponholders) and the holders of the receipts for the
payment of instalments of principal (the Receipts) relating to Instruments of which the
principal is payable in instalments are entitled to the benefit of, are bound by, and are
deemed to have notice of, all the provisions of the Trust Deed 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 provided that in the
case of any
 58




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Instruments which are to be admitted to trading on a regulated market within the
European Economic Area or offered to the public in a Member State of the European Economic Area
in circumstances which require the publication of a prospectus under the Prospectus Directive,
the minimum Specified Denomination shall be 50,000 (or its equivalent in any other currency as
at the date of issue of the relevant Instruments).This Instrument is a Fixed Rate Instrument, a Floating Rate Instrument, a Zero Coupon
Instrument, a Perpetual Instrument, an Index Linked Interest Instrument, an Index Linked
Redemption Instrument, an Instalment Instrument, a Dual Currency Instrument or a Partly Paid
Instrument, a combination of any of the preceding or any other kind of Instrument, depending
upon the Interest and Redemption/Payment Basis specified in the relevant Final Terms.Instruments are issued with Coupons (and, where appropriate, a Talon) attached, save in the
case of Zero Coupon Instruments in which case references to interest (other than in relation to
interest due after the Maturity Date), Coupons and Talons in these Conditions are not
applicable.Instalment Instruments are issued with one or more Receipts attached. Title to the Instruments
and the Receipts, Coupons and Talons shall pass by delivery and except as ordered by a court of
competent jurisdiction or as required by law, the Issuer 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 the Instruments.2
    
    Status and Negative Pledge
 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 shall, subject to such exceptions as are from time to
time applicable under the laws of England and, in relation to Instruments issued by
National Grid, as provided in Condition 2.2, rank equally with all other present and
future unsecured obligations (other than subordinated obligations, if any) of the Issuer.2.2
    
    Negative PledgeSo long as any Instrument, Receipt or Coupon of National Grid remains outstanding
(as defined in the Trust Deed) National Grid will not create or permit to subsist any
mortgage, charge, pledge, lien or other form of encumbrance or security interest
(Security) upon the whole or any part of its undertaking, assets or revenues present or
future to secure any Relevant Indebtedness, or any guarantee of or indemnity in respect
of any Relevant Indebtedness unless, at the same time or prior thereto, National Grids
obligations under the Instruments, the Receipts, the Coupons and the Trust Deed (a) are
secured equally and rateably therewith or benefit from a guarantee or indemnity in
substantially identical terms thereto, as the case may be, in each case to the
satisfaction of the Trustee, or (b) have the
 59




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##### 



benefit of such other security, guarantee,
indemnity or other arrangement as the Trustee in its absolute discretion shall deem to be
not materially less beneficial to the Instrumentholders or as shall be approved by an
Extraordinary Resolution (as defined in the Trust Deed) of the Instrumentholders.For the purposes of these Conditions, Relevant Indebtedness means any present or future
indebtedness in the form of, or represented by, bonds, notes, debentures, loan stock or
other securities which are for the time being, or are intended, with the agreement of the
Issuer, to be quoted, listed or ordinarily dealt in on any stock exchange.
 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).If a Fixed Coupon Amount or a Broken Amount is specified in the relevant Final Terms, the
amount of interest payable on each Interest Payment Date will amount to the Fixed Coupon
Amount, or, if applicable, the Broken Amount so specified and in the case of a Broken
Amount will be payable on the particular Interest Payment Date(s) specified in the
relevant Final Terms.
 3.2
    
    Interest on Floating Rate Instruments and Index Linked Interest Instruments
 3.2.1
    
    Interest Payment DatesEach Floating Rate Instrument and Index Linked Interest Instrument bears interest
on its outstanding nominal amount from the Interest Commencement Date at the rate
per annum (expressed as a percentage) equal to the Rate of Interest, such interest
being payable in arrear on each Interest Payment Date. The amount of Interest
payable shall be determined in accordance with Condition 3.2.4(f). Such Interest
Payment Date(s) is/are either specified in the relevant Final Terms as Specified
Interest Payment Dates or, if no Specified Interest Payment Date(s) is/are
specified in the relevant Final Terms, Interest Payment Date shall mean each date
which falls the number of months or other period shown on this Instrument as the
Interest Period after the preceding Interest Payment Date or, in the case of the
first Interest Payment Date, after the Interest Commencement Date.3.2.2
    
    Business Day ConventionIf any date which is specified to be subject to adjustment in accordance with a
Business Day Convention would otherwise fall on a day which is not a Business Day,
then, if the Business Day Convention specified is (a) the Floating Rate Convention,
such date shall be postponed to the next day which is a Business Day unless it
would then fall into the next calendar month, in which event (x) such date shall be
brought forward to the immediately preceding Business Day and (y) each subsequent
such date shall be the last Business Day of the month in which such date would have
fallen had it not been subject to adjustment, (b) the Following Business Day
Convention, such date shall be postponed to the next day which is a Business Day,
(c) the Modified Following Business Day Convention, such date shall be postponed to
the next day
 60




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##### 



which is a Business Day unless it would then fall into the next
calendar month, in that event such date shall be brought forward to the immediately
preceding Business Day or (d) the Preceding Business Day Convention, such date
shall be brought forward to the immediately preceding Business Day.3.2.3
    
    Rate of Interest for Floating Rate InstrumentsThe Rate of Interest in respect of Floating Rate Instruments for each Interest
Accrual Period shall be determined in the manner specified in the relevant Final
Terms and the provisions below relating to either ISDA Determination or Screen Rate
Determination shall apply, depending upon which is specified on this Instrument.
 (a)
    
    ISDA Determination for Floating Rate Instruments: Where ISDA
Determination is specified in the relevant Final Terms as the manner in which
the Rate of Interest is to be determined, the Rate of Interest for each
Interest Accrual Period shall be determined by the Calculation Agent as a rate
equal to the relevant ISDA Rate.
For the purposes of this sub-paragraph (a), ISDA Rate for an Interest
Accrual Period means a rate equal to the Floating Rate which would be
determined by the Calculation Agent under a Swap Transaction under the terms
of an agreement incorporating the ISDA Definitions and under which:
 (i)
    
    the Floating Rate Option is as specified in the
relevant Final Terms;(ii)
    
    the Designated Maturity is a period specified in
the relevant Final Terms; and(iii)
    
    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:
 (i)
    
    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
will, subject as provided below, be either:
 (x)
    
    the offered quotation; or(y)
    
    the arithmetic mean of the offered
quotations,
 (expressed as a percentage rate per annum) for the Reference Rate
which appears or appear, as the case may be, on the Relevant Screen
Page as at either 11.00 a.m. (London time in the case of LIBOR or
Brussels time in the case of EURIBOR) on the Interest Determination
Date in question as determined by the Calculation Agent. If five or
more of such offered quotations are available on the Relevant Screen
Page, the highest (or, if there is more than one such highest
quotation, one only of such quotations) and the lowest (or, if there
is more than one such lowest quotation, one only of such quotations)
shall be disregarded by the
 61




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##### 



Calculation Agent for the purpose of
determining the arithmetic mean of such offered quotations.If the Reference Rate from time to time in respect of Floating Rate
Instruments is specified hereon as being other than LIBOR or EURIBOR,
the Rate of Interest in respect of such Instruments will be determined
as provided hereon.(ii)
    
    if the Relevant Screen Page is not available or
if, sub-paragraph (i)(x) applies and no such offered quotation appears
on the Relevant Screen Page or if sub-paragraph (i)(y) above applies and
fewer than three such offered quotations appear on the Relevant Screen
Page in each case as at the time specified above, subject as provided
below, the Calculation Agent shall request, if the Reference Rate is
LIBOR, the principal London office of each of the Reference Banks or, if
the Reference Rate is EURIBOR, the principal Euro-zone office of each of
the Reference Banks,
to provide the Calculation Agent with its offered quotation (expressed
as a percentage rate per annum) for the Reference Rate if the
Reference Rate is LIBOR, at approximately 11.00 a.m. (London time), or
if the Reference Rate is EURIBOR, at approximately 11.00 a.m.
(Brussels time) on the Interest Determination Date in question. If two
or more of the Reference Banks provide the Calculation Agent with such
offered quotations, the Rate of Interest for such Interest Period
shall be the arithmetic mean of such offered quotations as determined
by the Calculation Agent; and(iii)
    
    if paragraph (ii) above applies and the
Calculation Agent determines that fewer than two Reference Banks are
providing offered quotations, subject as provided below, the Rate of
Interest shall be the arithmetic mean of the rates per annum (expressed
as a percentage) as communicated to (and at the request of) the
Calculation Agent by the Reference Banks or any two or more of them, at
which such banks were offered, if the Reference Rate is LIBOR, at
approximately 11.00 a.m. (London time) or, if the Reference Rate is
EURIBOR, at approximately 11.00 a.m. (Brussels time) on the relevant
Interest Determination Date, deposits in the Specified Currency for a
period equal to that which would have been used for the Reference Rate
by leading banks in, if the Reference Rate is LIBOR, the London
inter-bank market or, if the Reference Rate is EURIBOR, the Euro-zone
inter-bank market, as the case may be, or, if fewer than two of the
Reference Banks provide the Calculation Agent with such offered rates,
the offered rate for deposits in the Specified Currency for a period
equal to that which would have been used for the Reference Rate, or the
arithmetic mean of the offered rates for deposits in the Specified
Currency for a period equal to that which would have been used for the
Reference Rate, at which, if the Reference Rate is LIBOR, at
approximately 11.00 a.m. (London time) or, if the Reference Rate is
EURIBOR, at approximately 11.00 a.m. (Brussels time), on the relevant
Interest Determination Date, any one or more banks (which bank or banks
is or are in the opinion of the Trustee and the Issuer suitable for such
purpose) informs the Calculation Agent it is quoting to leading banks
in, if the Reference Rate is LIBOR, the London inter-bank market or, if
the
 62




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Reference Rate is EURIBOR, the Euro-zone inter-bank market, as the
case may be, provided that, if the Rate of Interest cannot be determined
in accordance with the foregoing provisions of this paragraph, the Rate
of Interest shall be determined as at the last preceding Interest
Determination Date (though substituting, where a different Margin or
Maximum or Minimum Rate of Interest is to be applied to the relevant
Interest Accrual Period from that which applied to the last preceding
Interest Accrual Period, the Margin or Maximum or Minimum Rate of
Interest relating to the relevant Interest Accrual Period, in place of
the Margin or Maximum or Minimum Rate of Interest relating to that last
preceding 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 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).
 63




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(e)
    
    Margin, Maximum/Minimum Rates of Interest, Instalment Amounts
and Redemption Amounts and Rounding
 (i)
    
    If any Margin 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 3.2.3(b) above, by adding (if a positive number) or
subtracting (if a negative number) the absolute value of such Margin,
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, the Calculation Amount as specified in the relevant
Final Terms, 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 AmountsThe Calculation Agent shall as soon as practicable 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
 64




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any determination or calculation, determine such rate and calculate the
Interest Amounts 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 Accrual Period and the
relevant Interest Payment Date and, if required to be calculated, the Final
Redemption Amount, Early Redemption Amount, Optional Redemption Amount or any
Instalment Amount to be notified to the Trustee, the Issuer, each of the
Paying Agents, the Instrumentholders, any other Calculation Agent appointed
in respect of the Instruments that is to make a further calculation upon
receipt of such information and, if the Instruments are listed on a stock
exchange and the rules of such exchange so require, such exchange as soon as
possible after their determination but in no event later than (i) the
commencement of the relevant Interest Period, if determined prior to such
time, in the case of notification to such exchange of a Rate of Interest and
Interest Amount, or (ii) in all other cases, the fourth Business Day after
such determination. Where any Interest Payment Date or Interest Period Date
is subject to adjustment pursuant to Condition 3.2.3(b)(ii), 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 Accrual Period or any Interest
Amount, Instalment Amount, Final Redemption Amount, Early Redemption Amount
or Optional Redemption Amount the Trustee shall do so (or shall appoint an
agent on its behalf to do so) and such determination or calculation shall be
deemed to have been made by the Calculation Agent. In doing so, the Trustee
shall apply the preceding provisions of this Condition, with any necessary
consequential amendments, to the extent that, in its opinion, it can do so,
and, in all other respects it shall do so in such manner as it shall deem
fair and reasonable in all the circumstances.
 3.2.5
    
    DefinitionsIn these Conditions, unless the context otherwise requires, the following defined
terms shall have the meanings set out below:Business Day means:
 65




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(a)
    
    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(b)
    
    in the case of Euro, a day on which the TARGET System is
operating (a TARGET Business Day); and/or(c)
    
    in the case of a currency and/or one or more Business Centres
as specified in the relevant Final Terms, a day (other than a Saturday or a
Sunday) on which commercial banks and foreign exchange markets settle payments
in such currency or, if no currency is indicated, generally in each of the
Business Centres.
 Day Count Fraction means, in respect of the calculation of an amount of interest
on any Instrument for any period of time (from and including the first day of such
period to but excluding the last) (whether or not constituting an Interest Period
or Interest Accrual Period, the Calculation Period):
 (a)
    
    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);(b)
    
    if Actual/365 (Fixed) is specified in the relevant Final
Terms, the actual number of days in the Calculation Period divided by 365;(c)
    
    if Actual/360 is specified in the relevant Final Terms, the
actual number of days in the Calculation Period divided by 360;(d)
    
    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;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
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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;(e)
    
    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;(f)
    
    if 30E/360 (ISDA) 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;
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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(g)
    
    if Actual/Actual-ICMA is specified in the relevant Final
Terms:
 (i)
    
    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(ii)
    
    if the Calculation Period is longer than one
Determination Period, the sum of:
 (1)
    
    the actual number of days in such
Calculation Period falling in the Determination Period in which
it begins divided by the product of (a)
the actual number of days in such Determination Period and (b)
the number of Determination Periods in any year; and(2)
    
    the actual number of days in such
Calculation Period falling in the next Determination Period
divided by the product of (a) the actual number of days in such
Determination Period and (b) 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.
 Euro-zone means the region comprising of member states of the European Union that
adopt the single currency in accordance with the Treaty establishing the European
Community as amended.Interest Accrual Period means the period beginning on (and including) the
Interest Commencement Date and ending on (but excluding) the first Interest Period
Date and each successive period beginning on (and including) an Interest Period
Date and ending on (but excluding) the next succeeding Interest Period Date.Interest Amount means:
 (i)
    
    in respect of an Interest Accrual Period, the amount of
interest payable per Calculation Amount for that Interest Accrual Period and
which, in the case of Fixed Rate Instruments, and unless otherwise specified
in the relevant Final Terms, shall mean the Fixed Coupon Amount or Broken
Amount specified in the
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relevant Final Terms 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, (a) the first day of such Interest Accrual Period if the
Specified Currency is Sterling or (b) 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 (c) 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.Rate of Interest means the rate of interest payable from time to time in respect
of this Instrument and that is either specified on, or calculated in accordance
with the provisions of, the relevant Final Terms.Redemption Amount means, as appropriate, the Final Redemption Amount, the Early
Redemption Amount (Tax), the Optional Redemption Amount (Call), the Optional
Redemption Amount (Put), the Early Termination Amount or such other amount in the
nature of a redemption amount as may be specified in, or determined in accordance
with the provisions of the relevant Final Terms.Reference Banks means, in the case of a determination of LIBOR, the principal
London office of four major banks in the London inter-bank market and, in the case
of a determination of EURIBOR, the principal Euro-zone office of four major banks
in the Euro-zone inter-bank market, in each case selected by the Calculation Agent
or as specified in the relevant Final Terms.Reference Rate means the rate specified as such in the relevant Final Terms.Relevant Screen Page means such page, section, caption, column or other part of a
particular information service as may be specified in the relevant Final Terms.
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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.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.3.2.6
    
    Calculation AgentThe Issuer shall procure that there shall at all times be 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. Where more than one Calculation Agent is appointed
in respect of the Instruments, references in these Conditions to the Calculation
Agent shall be construed as each Calculation Agent performing its respective duties
under these Conditions. If the Calculation Agent is unable or unwilling to act as
such or if the Calculation Agent fails duly to establish the Rate of Interest for
an Interest Period or Interest Accrual Period or to calculate any Interest Amount,
Instalment Amount, Final Redemption Amount, Early Redemption Amount or Optional
Redemption Amount, as the case may be, or to comply with any other requirement, the
Issuer shall (with the prior approval of the Trustee) appoint a leading bank or
investment banking firm engaged in the interbank market (or, if appropriate, money,
swap or over-the-counter
index options market) which is most closely connected with the calculation or
determination to be made by the Calculation Agent (acting through its principal
London office or any other office actively involved in such market) to act as such
in its place. The Calculation Agent may not resign its duties without a successor
having been appointed as specified in this paragraph.
 4
    
    IndexationThis Condition 4 is applicable only if the relevant Final Terms specifies the Instruments as
Index Linked Instruments.
 4.1
    
    DefinitionsBase Index Figure means (subject to Condition 4.3(i)) the base index figure as
specified in the relevant Final Terms;Index or Index Figure means, subject as provided in Condition 4.3(i), the U.K. 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 U.K. Retail Price
Index 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
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the first calendar day of the month in which the day falls,
calculated as specified in sub-paragraph (ii) above and (y) the Index Figure
applicable to the first calendar day of the month following, calculated as specified
in sub-paragraph (ii) above and rounded to the nearest fifth decimal place.
 If the Index is replaced, the Issuer will describe the replacement Index in a supplement
to the Prospectus;Index Ratio applicable to any month or date, as the case may be, means the Index Figure
applicable to such month or date, as the case may be, divided by the Base Index Figure
and rounded to the nearest fifth decimal place;Limited Index Ratio means (a) in respect of any month or date, as the case may be,
prior to the relevant Issue Date, the Index Ratio for that month or date, as the case may
be, (b) in respect of any Limited Indexation Date after the relevant Issue Date, the
product of the Limited Indexation Factor for that month or date, as the case may be, and
the Limited Index Ratio as previously calculated in respect of the month or date, as the
case may be, twelve months prior thereto; and (c) in respect of any other month, the
Limited Index Ratio as previously calculated in respect of the most recent Limited
Indexation Month;Limited Indexation Date means any date falling during the period specified in the
relevant Final Terms for which a Limited Indexation Factor is to be calculated;
Limited Indexation Factor means, in respect of a Limited Indexation Month or Limited
Indexation Date, as the case may be, the ratio of the Index Figure applicable to that
month or date, as the case may be, divided by the Index Figure applicable to the month or
date, as the case may be, twelve months prior thereto, provided that (a) if such ratio is
greater than the Maximum Indexation Factor specified in the relevant Final Terms, it
shall be deemed to be equal to such Maximum Indexation Factor and (b) if such ratio is
less than the Minimum Indexation Factor specified in the relevant Final Terms, it shall
be deemed to be equal to such Minimum Indexation Factor;Limited Indexation Month means any month specified in the relevant Final Terms for
which a Limited Indexation Factor is to be calculated;Limited Index Linked Instruments means Index Linked Instruments to which a Maximum
Indexation Factor and/or a Minimum Indexation Factor (as specified in the relevant Final
Terms) applies; andReference Gilt means the Treasury Stock specified as such in the relevant Final Terms
for so long as such stock is in issue, and thereafter such issue of index-linked Treasury
Stock determined to be appropriate by a gilt-edged market maker or other adviser selected
by the Issuer (an Indexation Adviser).4.2
    
    Application of the Index RatioEach payment of interest and principal in respect of the Instruments shall be the
amount provided in, or determined in accordance with, these Conditions, multiplied by the
Index Ratio or Limited Index Ratio in the case of Limited Index Linked Instruments
applicable to the month or date, as the case may be, on which such payment falls to be
made and rounded in accordance with Condition 3.2.4(e).4.3
    
    Changes in Circumstances Affecting the Index
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(i)
    
    Change in base: If at any time and from time to time the
Index is changed by the substitution of a new base therefor, then with effect from the month from and including
that in which such substitution takes effect or the first date from and including
that on which such substitution takes effect, as the case may be, (1) the definition
of Index and Index Figure in Condition 4.1 shall be deemed to refer to the new
date or month in substitution for January 1987 (or, as the case may be, to such
other date or month as may have been substituted therefor), and (2) the new Base
Index Figure shall be the product of the existing Base Index Figure and the Index
Figure for the date on which such substitution takes effect, divided by the Index
Figure for the date immediately preceding the date on which such substitution takes
effect.(ii)
    
    Delay in publication of Index if sub-paragraph (i) of the definition of
Index Figure is applicable: If the Index Figure which is normally published in the
seventh month and which relates to the eighth month (the relevant month) before
the month in which a payment is due to be made is not published on or before the
fourteenth business day before the date on which such payment is due (the date for
payment), the Index Figure applicable to the month in which the date for payment
falls shall be (1) such substitute index figure (if any) as the Trustee considers
(acting solely on the advice of the Indexation 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:
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(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 has been notified by the Calculation Agent that the Index has
ceased to be published or (2) any change is made to the coverage or the basic
calculation of the Index which constitutes a fundamental change which would, in the
opinion of (A) the Issuer be materially prejudicial to the interests of the Issuer,
or (B) the Trustee (acting solely on the advice of the Indexation Adviser), be
materially prejudicial to the interests of the Instrumentholders, the Trustee will
give written notice of such occurrence to the Issuer in the case of (B), and the
Issuer and the Trustee (acting
solely on the advice of the Indexation Adviser) together shall seek to agree for
the purpose of the Instruments one or more adjustments to the Index or a substitute
index (with or without adjustments) with the intention that the same should leave
the Issuer 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 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 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 and
the Instrumentholders in no better and no worse position than they would have been
had the Index not ceased to be published or the relevant fundamental change not been
made. Any Expert so appointed shall act as an expert and not as an arbitrator and
all fees, costs and expenses of the Expert and of any Indexation Adviser and of any
of the Issuer and the Trustee in connection with such appointment shall be borne by
the Issuer.(iii)
    
    The Index shall be adjusted or replaced by a substitute index as agreed
by the Issuer and the Trustee (acting solely on the advice of the Indexation
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) and the Issuer agree are appropriate to give effect to
such
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adjustment or replacement. Such amendments shall be effective from the date of
such notification and binding upon the Issuer, the Trustee and the
Instrumentholders, and the Issuer shall give notice to the Instrumentholders in
accordance with Condition 14 of such amendments as promptly as practicable following
such notification.
 4.6
    
    Redemption for Index ReasonsIf either (i) the Index Figure for three consecutive months is required to be
determined on the basis of an Index Figure previously published as provided in Condition
4.3(ii)(2) and the Trustee has been notified by the Calculation Agent that publication of
the Index has ceased or (ii) notice is published by Her Majestys Treasury, or on its
behalf, following a change in relation to the Index, offering a right of redemption to
the holders of the Reference Gilt, and (in either case) no amendment or substitution of
the Index shall have been advised by the Indexation Adviser to the Issuer and such
circumstances are continuing, the Issuer may, upon giving not more than 60 nor less than
30 days notice to the Instrumentholders in accordance with Condition 14, redeem all, but
not some only, of the Instruments at their principal amount together with interest
accrued but unpaid up to and including the date of redemption (in each case adjusted in
accordance with Condition 4.2).
 Where HICP (as defined below) is specified as the Index or Index Level (each as defined below)
in the relevant Final Terms, the following Conditions 4.7 to 4.10 will apply:
 4.7
    
    DefinitionsBase Index Level means the base index level as specified in the relevant Final
Terms;Index or Index Level means (subject as provided in Condition 4.9) the Non-revised
Index of Consumer Prices excluding tobacco or relevant Successor Index (as defined in
Condition 4.9 (i)), measuring the rate of inflation in the European Monetary Union
excluding tobacco, expressed as an index and published by Eurostat (the HICP). The
first publication or announcement of a level of such index for a calculation month (as
defined in Condition 4.9 (i)) shall be final and conclusive and later revisions to the
level for such calculation month will not be used in any calculations. Any reference to
the Index Level which is specified in these Conditions as applicable to any day (d) in
any month (m) shall, subject as provided in Condition 4.9, be calculated as follows:
 I d = HICP m-3 +
    nbdqm
    x (HICPm-2 HICPm-3)
 where:Id is the Index Level for the day dHICPm-2 is the level of HICP for month m-2HICPm-3 is the level of 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.
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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;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).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;
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(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 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
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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 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 Reasons
 77




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If 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
satisfies the Trustee immediately before the giving of the notice referred to below that
it would be unable to make such payment without having to pay additional amounts as
described in Condition 7, and such requirement to pay such additional amounts arises by
reason of a change in the laws of the United Kingdom or any political sub-division of the
United Kingdom or taxing authority in the United Kingdom or any political sub-division of
the United Kingdom or in the interpretation or application of the laws of the United
Kingdom or any political sub-division of
the United Kingdom or in any applicable double taxation treaty or convention, which
change becomes effective on or after the date on which agreement is reached to issue the
first Tranche of the Instruments, and such requirement cannot be avoided by the Issuer
taking reasonable measures (such measures not involving any material additional payments
by, or expense for, the Issuer), the Issuer may, at its option, at any time, having given
not less than 30 nor more than 45 days notice to the Instrumentholders in accordance
with Condition 14, redeem all, but not some only, of the Instruments at their Early
Redemption Amount together with interest accrued to the date of redemption provided that
the date fixed for redemption shall not be earlier than 90 days prior to the earliest
date on which the Issuer would be obliged to pay such additional amounts or make such
withholding or deduction, as the case may be, were a payment in respect of the
Instruments then due. Prior to the publication of any notice of redemption pursuant to
this Condition 5.2, the Issuer shall deliver to the Trustee a certificate signed by two
Directors of the Issuer stating that the requirement referred to above cannot be avoided
by the Issuer taking reasonable measures available to it and the Trustee shall be
entitled to accept such certificate as sufficient evidence of the satisfaction of the
condition precedent set out above in which event it shall be conclusive and binding on
Instrumentholders and Couponholders.5.3
    
    PurchasesThe Issuer and any of its subsidiary undertakings may at any time purchase
Instruments (provided that all unmatured Receipts and Coupons and unexchanged Talons
appertaining to them are attached or surrendered with them) in the open market or
otherwise at any price.5.4
    
    Early Redemption
 5.4.1
    
    Zero Coupon Instruments
 78




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(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 (both before and
after 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), 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
    
    If (i) Residual Holding Call Option is specified in the relevant Final
Terms, and (ii) if at any time the Residual Holding Percentage or more of the
aggregate nominal amount of Instruments originally issued shall have been redeemed
or purchased and cancelled, the Issuer shall have the option to redeem such
outstanding Instruments in whole, but not in part, at their Residual Holding
Redemption Amount. Unless otherwise specified in the relevant Final Terms, the
Residual Holding Redemption Amount will be calculated by the Calculation Agent by
discounting the outstanding nominal amount of the Instruments and the remaining
interest payments (if applicable) to the Maturity Date by a rate per annum
(expressed as a percentage to the nearest one hundred
 79




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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
    
    If Call Option is specified in the relevant Final Terms, the Issuer may,
on giving not less than 15 nor more than 30 days irrevocable notice to the
Instrumentholders (or such other notice period as may be specified in the relevant
Final Terms), redeem, or exercise any Issuers option in relation to, all or, if so
provided, some of such Instruments on any Optional Redemption Date or Option
Exercise Date, as the case may be. Any such redemption of Instruments shall be at
their Optional Redemption Amount together with interest accrued to the date fixed
for redemption. Any such redemption or exercise must relate to Instruments of a
nominal amount at least equal to the minimum nominal amount (if any) permitted to be
redeemed specified hereon and no greater than the maximum nominal amount (if any)
permitted 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 following a Restructuring Event
 5.6.1
    
    *[Redemption of Instruments issued by National Grid at the option of InstrumentholdersIf at any time whilst any of the Instruments issued by National Grid remains
outstanding, there occurs the National Grid Restructuring Event, a Public
Announcement shall be made and if, within the National Grid Restructuring Period,
either:
 (a)
    
    (if at the time that the National Grid Restructuring Event
occurs there are Rated Securities) a Rating Downgrade in respect of the
National Grid Restructuring Event occurs; or(b)
    
    (if at the time that the National Grid Restructuring Event
occurs there are no Rated Securities) a Negative Rating Event in respect of
the National Grid Restructuring Event occurs,
 (the National Grid Restructuring Event and Rating Downgrade or the National Grid
Restructuring Event and Negative Rating Event, as the case may be, occurring within
the National Grid Restructuring Period, together called a Put Event),
 
 *
    
    Only applicable where National Grid is the Issuer. 80




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##### 



then the holder of each Instrument issued by National Grid will have the option
upon the giving of a Put Notice (as defined in Condition 5.6.4) to require National
Grid to redeem or, at the option of National Grid, purchase (or procure the
purchase of) such Instrument on the Put Date (as defined in Condition 5.6.4) at its
principal amount together with accrued interest to the Put Date.Promptly upon National Grid becoming aware that a Put Event has occurred, National
Grid shall, or at any time upon the Trustee becoming similarly so aware the Trustee
may, and if so requested in writing by the holders of at least one-quarter in
principal amount of the Instruments then outstanding or if so directed by an
Extraordinary Resolution of the Instrumentholders, the Trustee shall, give notice
(a Put Event Notice) to the Instrumentholders in accordance with Condition 14
specifying the nature of the Put Event and the procedure (as set out in Condition
5.6.4) for exercising the option contained in this Condition 5.6.1.National Grid shall, forthwith upon becoming aware of the occurrence of the
National Grid Restructuring Event (a) provide the Trustee with the relevant
Directors Report and (b) provide or procure that the Reporting Accountants provide
the Trustee with the Accountants Report. The Directors Report and the
Accountants Report shall, in the absence of manifest error, be conclusive and
binding on all concerned, including the Trustee and the Instrumentholders. The
Trustee shall be entitled to act, or not act, and rely on without being expected to
verify the accuracy of the same (and shall have no liability to Instrumentholders
for doing so) any Directors Report and/or any Accountants Report (whether or not
addressed to it).5.6.2
    
    For the purposes of this ConditionAccountants Report means a report of the Reporting Accountants stating whether
the amounts included in the calculation of the Operating Profit and the amount for
Consolidated Operating Profit as included in the Directors Report have been
accurately extracted from the accounting records of National Grid and its
Subsidiaries and whether the Disposal Percentage included in the Directors Report
has been correctly calculated which will be prepared pursuant to an engagement
letter to be entered into by the Reporting Accountants, National Grid and the
Trustee.National Grid shall use reasonable endeavours to procure that there shall at the
relevant time be Reporting Accountants who have (a) entered into an engagement
letter with National Grid and the Trustee which shall (i) not limit the liability
of the Reporting Accountants to the Trustee by reference to a monetary cap and (ii)
be available for inspection by Instrumentholders at the principal office of the
Trustee or (b) agreed to provide Accountants Reports on such other terms as
National Grid and the Trustee shall approve. If National Grid, having used
reasonable endeavours, is unable to procure that there shall at the relevant time
be Reporting Accountants who have entered into an engagement letter complying with
(i) above, the Trustee may rely on an Accountants Report which contains a limit on
the liability of the Reporting Accountants by reference to a monetary cap or
otherwise.Investors should be aware that the engagement letter may contain a limit on the
liability of the Reporting Accountants which may impact on the interests of
Instrumentholders.
 81




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National Grid shall give notice to the Trustee of the identity of the Reporting
Accountants;Consolidated Operating Profit means the consolidated operating profit on ordinary
activities before tax and interest and before taking account of depreciation and
amortisation of goodwill and regulatory assets (for the avoidance of doubt,
exceptional items, as reflected in the Relevant Accounts shall not be included) of
National Grid and its subsidiaries (including any share of operating profit of
associates and joint ventures) determined in accordance with International
Financial Reporting Standards (IFRS) by reference to the Relevant Accounts;Directors Report means a report prepared and signed by two directors of National
Grid addressed to the Trustee setting out the Operating Profit, the Consolidated
Operating Profit and the Disposal Percentage and stating any assumptions which the
Directors of National Grid have employed in determining the Operating Profit;Disposal Percentage means, in relation to a sale, transfer, lease or other
disposal or dispossession of any Disposed Assets, the ratio of (a) the aggregate
Operating Profit to (b) the Consolidated Operating Profit, expressed as a
percentage;Disposed Assets means, where National Grid and/or any of its Subsidiaries sells,
transfers, leases or otherwise disposes of or is dispossessed by any means (but
excluding sales, transfers, leases, disposals or dispossessions which, when taken
together with any related lease back or similar arrangements entered into in the
ordinary course of business, have the result that Operating Profit directly
attributable to any such undertaking, property or assets continues to accrue to
National Grid or, as the case may be, such Subsidiary), otherwise than to a
wholly-owned Subsidiary of
National Grid or to National Grid, of the whole or any part (whether by a single
transaction or by a number of transactions whether related or not) of its
undertaking or (except in the ordinary course of business of National Grid or any
such Subsidiary) property or assets, the undertaking, property or assets sold,
transferred, leased or otherwise disposed of or of which it is so dispossessed;Negative Rating Event shall be deemed to have occurred if either (a) National
Grid does not, either prior to or not later than 21 days after the relevant
National Grid Restructuring Event, seek, and thereupon use all reasonable
endeavours to obtain, a rating of the Instruments or any other unsecured and
unsubordinated debt of National Grid having an initial maturity of five years or
more (Rateable Debt) from a Rating Agency or (b) if National Grid does so seek
and use such endeavours, it is unable, as a result of such National Grid
Restructuring Event, to obtain such a rating of at least investment grade (BBB- or
Baa3 or their respective equivalents for the time being), provided that a Negative
Rating Event shall not be deemed to have occurred in respect of a particular
National Grid Restructuring Event if the Rating Agency declining to assign a rating
of at least investment grade (as described above) does not announce or publicly
confirm that its declining to assign a rating of at least investment grade was the
result, in whole or in part, of any event or circumstance comprised in or arising
as a result of, or in respect of, the applicable National Grid Restructuring Event
(whether or not the National Grid Restructuring Event shall have occurred at the
time such investment grade rating is declined);National Grid Restructuring Event shall be deemed to have occurred at any time
(whether or not approved by the Board of Directors of National Grid) that the sum
of
 82




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Disposal Percentages for National Grid within any period of 36 months commencing
on or after the issue date of the first Tranche of the Instruments is greater than
50 per cent.;National Grid Restructuring Period means the period ending 90 days after a Public
Announcement (or such longer period in which the Rated Securities or Rateable Debt,
as the case may be, is or are under consideration (announced publicly within the
first mentioned period) for rating review or, as the case may be, rating by a
Rating Agency);Operating Profit, in relation to any Disposed Assets, means the operating profits
on ordinary activities before tax and interest and before taking account of
depreciation and amortisation of goodwill and regulatory assets (for the avoidance
of doubt, exceptional items, as reflected in the Relevant Accounts, shall not be
included) of National Grid and its Subsidiaries directly attributable to such
Disposed Assets as determined in accordance with IFRS by reference to the Relevant
Accounts and, if Relevant Accounts do not yet exist, determined in a manner
consistent with the assumptions upon which the Directors Report is to be based.
Where the Directors of National Grid have employed assumptions in determining the
Operating Profit, those assumptions should be clearly stated in the Directors
Report;Public Announcement means an announcement by National Grid or the Trustee, of the
occurrence of the National Grid Restructuring Event published in a leading national
newspaper having general circulation in the United Kingdom (which is expected to be
the Financial Times);Rated Securities means the Instruments, if and for so long as they shall have an
effective rating from a Rating Agency and otherwise any Rateable Debt which is
rated
by a Rating Agency; provided thatif there shall be no such Rateable Debt
outstanding prior to the maturity of the Instruments, the holders of not less than
one-quarter in principal amount of outstanding Instruments may require National
Grid to obtain and thereafter update on an annual basis a rating of the Instruments
from a Rating Agency. In addition, National Grid may at any time obtain and
thereafter update on an annual basis a rating of the Instruments from a Rating
Agency, provided that, except as provided above, National Grid shall not have any
obligation to obtain such a rating of the Instruments;Rating Agency means Standard & Poors Ratings Services, a division of The
McGraw-Hill Companies, Inc. and its successors or Moodys Investors Service, Inc.
and its successors or any rating agency substituted for either of them (or any
permitted substitute of them) by National Grid from time to time with the prior
written approval of the Trustee;Rating Downgrade shall be deemed to have occurred in respect of the National Grid
Restructuring Event if the then current rating whether provided by a Rating Agency
at the invitation of National Grid or by its own volition assigned to the Rated
Securities by any Rating Agency is withdrawn or reduced from an investment grade
rating (BBB- or Baa3 or their respective equivalents for the time being or better)
to a non-investment grade rating (BB+ or Ba1 or their respective equivalents for
the time being or worse) or, if a Rating Agency shall already have rated the Rated
Securities below investment grade (as described above), the rating is lowered one
full rating category; provided that a Rating Downgrade otherwise arising by virtue
of a particular reduction in rating shall not be deemed to have occurred in respect
of a particular National Grid Restructuring
 83




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##### 



Event if the Rating Agency making the
reduction in rating to which this definition would otherwise apply does not
announce or publicly confirm that the reduction was the result, in whole or part,
of any event or circumstance comprised in or arising as a result of, or in respect
of, the applicable National Grid Restructuring Event (whether or not the applicable
National Grid Restructuring Event shall have occurred at the time of the Rating
Downgrade);Relevant Accounts means the most recent annual audited consolidated financial
accounts of National Grid and its Subsidiaries preceding the relevant sale,
transfer, lease or other disposal or dispossession of any Disposed Asset;Reporting Accountants means the auditors of National Grid (but not acting in
their capacity as auditors) or such other firm of accountants as may be nominated
by National Grid and approved in writing by the Trustee for the purpose or, failing
which, as may be selected by the Trustee for the purpose; andSubsidiary means a subsidiary within the meaning of Section 1159 of the Companies
Act 2006 and Subsidiaries shall be construed accordingly.5.6.3
    
    The Trustee shall not be responsible for ascertaining or monitoring
whether or not the National Grid Restructuring Event, a Negative Rating Event or a
Rating Downgrade in relation to National Grid has occurred and, unless and until it
has actual knowledge to the contrary, shall be entitled to assume that no such event
has occurred.5.6.4
    
    To exercise the option of redemption of an Instrument under Condition
5.6.1 the Instrumentholder must deliver each Instrument to be redeemed accompanied
by a duly signed and completed notice of exercise in the form (for the time being
current)
obtainable from the specified office of any Paying Agent (a Put Notice) and, in
which the Instrumentholder may specify an account to which payment is to be made
under this Condition 5.6 to the specified office of any Paying Agent on any
business day falling within the period (the Put Period) of 45 days after a Put
Event Notice is given. The Instrument should be delivered together with all
Receipts and Coupons (and Talons) appertaining thereto maturing after the date (the
Put Date) falling seven days after the expiry of the Put Period, failing which
(unless Condition 6.5.2 applies) the Paying Agent will require payment of an amount
equal to the face value of any such missing Receipt, Coupon and/or Talon. Any
amount so paid will be reimbursed in the manner provided in Condition 6 against
presentation and surrender of the relevant missing Receipt, Coupon and/or Talon,
subject to Condition 8. The Paying Agent to which such Instrument and Put Notice
are delivered will issue to the Instrumentholder concerned a non-transferable
receipt in respect of the Instrument so delivered. Payment in respect of any
Instrument so delivered will be made, if the Instrumentholder duly specified a bank
account in the Put Notice to which payment is to be made, on the Put Date by
transfer to that bank account and, in every other case, on or after the Put Date in
the manner provided in Condition 6 against presentation and surrender (or, in the
case of part payment, endorsement) of such receipt at the specified office of any
Paying Agent. A Put Notice, once given, shall be irrevocable. For the purposes of
the Conditions and the Trust Deed, receipts issued pursuant to this Condition 5.6
shall be treated as if they were Instruments. National Grid shall redeem the
relevant Instruments on the Put Date unless previously redeemed or purchased.]
 84




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5.6.1
    
    *[Redemption of Instruments issued by NGET at the option of
InstrumentholdersIf NGET Restructuring Put Option is specified in the relevant Final Terms and at
any time whilst any of the Instruments issued by NGET remains outstanding there
occurs an NGET Restructuring Event and in relation to that NGET Restructuring
Event, a Negative Certification is made and, within the NGET Restructuring Period
either:
 (a)
    
    (if at the time that an NGET Restructuring Event occurs there
are Rated Securities) a Rating Downgrade in respect of the relevant NGET
Restructuring Event occurs; or(b)
    
    (if at the time that an NGET Restructuring Event occurs there
are no Rated Securities) a Negative Rating Event in respect of the relevant
NGET Restructuring Event occurs,
 (the NGET Restructuring Event and Rating Downgrade or the NGET Restructuring Event
and Negative Rating Event, as the case may be, occurring within the NGET
Restructuring Period, together with a Negative Certification, shall be called a
Put Event),then the holder of each Instrument of NGET will have the option upon the giving of
a Put Notice (as defined in Condition 5.6.4) to require NGET to redeem or, at the
option of NGET, purchase (or procure the purchase of) such Instrument on the Put
Date (as defined in Condition 5.6.4) at its principal amount together with accrued
interest to the Put Date.Promptly upon NGET becoming aware that a Put Event has occurred, and in any event
no later than 14 days after the occurrence of a Put Event, NGET shall, or at any
time upon the Trustee becoming similarly so aware the Trustee may, and if so
requested in writing by the holders of at least one-quarter in principal amount of
the Instruments then outstanding or if so directed by an Extraordinary Resolution
of the Instrumentholders, the Trustee shall, give notice (a Put Event Notice) to
the Instrumentholders in accordance with Condition 14 specifying the nature of the
Put Event and the procedure (as set out in Condition 5.6.4) for exercising the
option contained in this Condition 5.6.1.5.6.2
    
    For the purposes of this ConditionElectricity Act means the Electricity Act 1989 as amended or re-enacted from time
to time and all subordinate legislation made pursuant thereto;Electricity Transmission Licence means the transmission licence, as subsequently
amended from time to time, originally granted by the Secretary of State for Energy
to NGET under the Electricity Act;Negative Certification means, on the occurrence of an NGET Restructuring Event,
such event or events being certified in writing by an independent financial adviser
appointed by NGET and approved by the Trustee (or, if NGET shall not have appointed
such an adviser within 21 days after becoming aware of the occurrence of such NGET
Restructuring Event, appointed by the Trustee (following consultation with NGET))
as
 
 *
    
    Only applicable where NGET is the Issuer. 85




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being in its opinion materially prejudicial to the interests of the
Instrumentholders. Any Negative Certification by an independent financial adviser
as to whether or not, in its opinion, any event defined as an NGET Restructuring
Event is materially prejudicial to the interests of the Instrumentholders shall, in
the absence of manifest error, be conclusive and binding upon NGET, the Trustee,
the Instrumentholders and the Couponholders;Negative Rating Event shall be deemed to have occurred if NGET is unable as a
result of an NGET Restructuring Event to obtain a rating of the Instruments or of
any other comparable unsecured and unsubordinated debt of NGET (or of any
Subsidiary of NGET and which is guaranteed on an unsecured and unsubordinated basis
by NGET) having an initial maturity of five years or more (Rateable Debt) from a
Rating Agency of at least investment grade (BBB-/Baa3, or their respective
equivalents for the time being), which rating NGET shall use all reasonable
endeavours to obtain, provided that a Negative Rating Event shall not be deemed to
have occurred in respect of a particular NGET Restructuring Event if the Rating
Agency making the relevant reduction or declining to assign a rating of at least
investment grade (as described above) does not announce or publicly confirm or
otherwise inform the Trustee that the reduction or its declining to assign a rating
of at least investment grade was the result, in whole or in part, of any event or
circumstance comprised in or arising as a result of, or in respect of, the
applicable NGET Restructuring Event;NGET Restructuring Event means the occurrence of any one or more of the following
events:
 (a)
    
    the Secretary of State for Trade and Industry or any official
succeeding to his functions gives NGET written notice of revocation of the
Electricity Transmission
Licence in accordance with the terms as to revocation set out in Schedule 2
of the Electricity Transmission Licence, such revocation to become effective
not later than the Maturity Date of the Instruments or NGET agrees in writing
with the Secretary of State for Trade and Industry or any official succeeding
to his functions to any revocation or surrender of the Electricity
Transmission Licence or any legislation (whether primary or subordinate) is
enacted terminating or revoking the Electricity Transmission Licence; or(b)
    
    any modification is made to the terms and conditions of the
Electricity Transmission Licence other than such a modification which the
Trustee, in its opinion, considers to be not materially prejudicial to the
interests of the Instrumentholders and has so confirmed in writing to NGET; or(c)
    
    any legislation (whether primary or subordinate) is enacted
removing, reducing or qualifying the duties or powers of the Secretary of
State for Trade and Industry or any official succeeding to his functions
and/or the Gas and Electricity Markets Authority under Section 3A of the
Electricity Act as compared with those in effect on the issue date of the
first Tranche of the Instruments other than such legislation which the
Trustee, in its opinion, considers to be not materially prejudicial to the
interests of the Instrumentholders and has so confirmed in writing to NGET;
 NGET Restructuring Period means:
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(a)
    
    if at the time at which the NGET Restructuring Event occurs
there are Rated Securities, the period of 90 days starting from and including
the day on which an NGET Restructuring Event occurs or such longer period in
which the Rated Securities are under consideration (announced publicly within
such 90 day period) for rating review by a Rating Agency; or(b)
    
    if at the time at which an NGET Restructuring Event occurs
there are no Rated Securities, the period starting from and including the day
on which an NGET Restructuring Event occurs and ending on the day 90 days
following the date on which a Negative Certification shall have been given to
NGET in respect of that NGET Restructuring Event;
 Rated Securities means (a) the Instruments or (b) such other comparable unsecured
and unsubordinated debt of NGET (or of any Subsidiary of NGET and which is
guaranteed on an unsecured and unsubordinated basis by NGET) having an initial
maturity of five years or more selected by NGET from time to time for the purpose
of this definition with the approval of the Trustee and which possesses an
investment grade rating (BBB-/Baa3, or their respective equivalents for the time
being, or better) by any Rating Agency (whether at the invitation of NGET or by its
own volition);Rating Agency means Standard & Poors Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any of its Subsidiaries and their successors or
Moodys Investors Service, Inc., or any of its Subsidiaries and their successors or
any rating agency substituted for either of them (or any permitted substitute of
them) by NGET from time to time with the prior written approval of the Trustee;Rating Downgrade shall be deemed to have occurred in respect of an NGET
Restructuring Event if the rating assigned to the Rated Securities by any Rating
Agency which is current immediately prior to the occurrence of an NGET
Restructuring
Event (whether provided by a Rating Agency at the invitation of NGET or by its own
volition) is withdrawn or reduced from an investment grade rating (BBB-/Baa3, or
their respective equivalents for the time being, or better) to a non-investment
grade rating (BB+/Ba1, or their respective equivalents for the time being, or
worse) or, if the Rating Agency shall have already rated the Rated Securities below
investment grade (as described above), the rating is lowered one full rating
category (from BB+/Ba1 to BB/Ba2 or such similar lowering) provided that a Rating
Downgrade shall not be deemed to have occurred in respect of or as a result of a
particular NGET Restructuring Event if the Rating Agency making the relevant
reduction in rating or declining to assign a rating of at least investment grade as
provided in these Conditions does not announce or publicly confirm, or otherwise
inform the Trustee, that the reduction or declining was the result, in whole or
part, of any event or circumstance comprised in or arising as a result of, or in
respect of, the applicable NGET Restructuring Event;Subsidiary means a subsidiary within the meaning of Section 1156 of the Companies
Act 2006 and Subsidiaries shall be construed accordingly.5.6.3
    
    The Trustee shall not be responsible for ascertaining whether or not an
NGET Restructuring Event, a Negative Rating Event or a Rating Downgrade in relation
to NGET has occurred and, unless and until it has actual knowledge to the contrary,
shall be entitled to assume that no such event has occurred.
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5.6.4
    
    To exercise the option of redemption of an Instrument under Condition
5.6.1 the Instrumentholder must deliver each Instrument to be redeemed accompanied
by a duly signed and completed notice of exercise in the form (for the time being
current) obtainable from the specified office of any Paying Agent (a Put Notice)
and, in which the Instrumentholder may specify an account to which payment is to be
made under this Condition 5.6 to the specified office of any Paying Agent on any
business day falling within the period (the Put Period) of 45 days after a Put
Event Notice is given. The Instrument should be delivered together with all Receipts
and Coupons (and Talons) appertaining thereto maturing after the date (the Put
Date) falling seven days after the expiry of the Put Period, failing which (unless
Condition 6.5.2 applies) the Paying Agent will require payment of an amount equal to
the face value of any such missing Receipt, Coupon and/or Talon.Any amount so paid will be reimbursed in the manner provided in Condition 6 against
presentation and surrender of the relevant missing Receipt, Coupon and/or Talon,
subject to Condition 8. The Paying Agent to which such Instrument and Put Notice
are delivered will issue to the Instrumentholder concerned a non-transferable
receipt in respect of the Instrument so delivered.Payment in respect of any Instrument so delivered will be made, if the
Instrumentholder duly specified a bank account in the Put Notice to which payment
is to be made, on the Put Date by transfer to that bank account and, in every other
case, on or after the Put Date in the manner provided in Condition 6 against
presentation and surrender (or, in the case of part payment, endorsement) of such
receipt at the specified office of any Paying Agent. A Put Notice, once given,
shall be irrevocable. For the purposes of the Conditions and the Trust Deed,
receipts issued pursuant to this Condition 5.6 shall be treated as if they were
Instruments. NGET shall redeem the relevant Instruments on the Put Date unless
previously redeemed or purchased.]
 5.7
    
    Redemption at the Option of InstrumentholdersIf Put Option is specified in the relevant Final Terms, the Issuer shall, at the
option of any Instrumentholder, upon such Instrumentholder 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) (as
specified in the Final Terms) at its Optional Redemption Amount (as specified in the
Final Terms) together with interest accrued to the date fixed for redemption.To exercise such option (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 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.5.8
    
    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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5.9
    
    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.5.10
    
    CancellationAll Instruments redeemed pursuant to any of the foregoing provisions will be
cancelled forthwith together with all unmatured Receipts and Coupons and unexchanged
Talons attached thereto. All Instruments purchased by or on behalf of the Issuer or any
of its Subsidiaries may, at the option of the Issuer be held by or may be surrendered
together with all unmatured Receipts and Coupons and all unexchanged Talons attached to
them to a Paying Agent for cancellation, but may not be resold and when held by the
Issuer or any of its respective Subsidiaries shall not entitle the holder to vote at any
meeting of Instrumentholders and shall not be deemed to be outstanding for the purposes
of calculating quorums at meetings of Instrumentholders or for the purposes of Condition
11.
 6
    
    Payments and Talons
 6.1
    
    PaymentsPayments of principal and interest in respect of Instruments will, subject as
mentioned below, be made against presentation and surrender of the relevant Receipts (in
the case of payments of Instalment Amounts other than on the due date for redemption and
provided that
the Receipt is presented for payment together with its relative Instrument), Instruments
(in the case of all other payments of principal and, in the case of interest, as
specified in Condition 6.5.6) or Coupons (in the case of interest, save as specified in
Condition 6.5.6), as the case may be, at the specified office of any Paying Agent outside
the United States by a cheque payable in the currency in which such payment is due drawn
on, or, at the option of the holder, by transfer to an account denominated in that
currency with, a bank in the principal financial centre for that currency; provided that
in the case of Euro, the transfer shall be in a city in which banks have access to the
TARGET System.6.2
    
    Payments in the United StatesNotwithstanding the above, if any Instruments are denominated in U.S. dollars,
payments in respect of them may be made at the specified office of any Paying Agent in
New York City in the same manner as specified above if (a) the Issuer shall have
appointed Paying Agents with specified offices outside the United States with the
reasonable expectation that such Paying 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 their respective specified offices are listed below. The
Issuing and Paying Agent, the Paying Agents and the Calculation Agent act solely as
agents of the Issuer and do not assume any obligation or relationship of agency or trust
for or with any holder. The Issuer reserves the right at any time with the approval of
the Trustee to vary or terminate the appointment of the Issuing and Paying Agent, any
other Paying Agent or the Calculation Agent and to appoint additional or other Paying
Agents, provided that the Issuer shall at all times maintain (a) an Issuing and Paying
Agent, (b) a Paying Agent having its specified office in a major European city, which
shall be London so long as the Instruments are admitted to the Official List of the
Financial Services Authority in its capacity as competent authority under the Financial
Services and Markets Act 2000 and admitted to trading on the London Stock Exchanges Gilt
Edged and Fixed Interest Market, (c) a Calculation Agent where the Conditions so require
one, (d) 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 any other relevant stock
exchange or other relevant authority and (e) 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 any law implementing European Council Directive
2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council
meeting of 26-27 November 2000. As used in these Conditions, the terms Issuing and
Paying Agent, Calculation Agent, and Paying Agent include any additional or
replacement Issuing and Paying Agent, Calculation Agent or Paying Agent appointed under
this Condition.In addition, the Issuer shall forthwith appoint a Paying Agent in New York City in
respect of any Instruments denominated in U.S. dollars in the circumstances described in
Condition 6.2.Notice of any such change or any change of any specified office shall promptly be given
to the Instrumentholders in accordance with Condition 14.6.5
    
    Unmatured Coupons and Receipts and unexchanged Talons
 6.5.1
    
    Unless the Instrument provides that the relevant Coupons are to become
void upon the due date for redemption of those Instruments, Instruments should be
surrendered for payment together with all unmatured Coupons (if any) appertaining to
them, failing which an amount equal to the face value of each missing unmatured
Coupon (or, in the case of payment not being made in full, that proportion of the
amount of such missing unmatured Coupon that the sum of principal so paid bears to
the total principal due) will be deducted from the Final Redemption Amount, Early
Redemption Amount or Optional Redemption Amount, as the case may be, due for
payment. Any amount so deducted shall be paid in the manner mentioned above against
surrender of such missing Coupon within a period of 10 years from the Relevant Date
for the payment of such principal (whether or not such Coupon has become void
pursuant to Condition 8).
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6.5.2
    
    If the relevant Instrument so provides, upon the due date for redemption
of any Instrument, unmatured Coupons relating to such Instrument (whether or not
attached) shall become void and no payment shall be made in respect of them.6.5.3
    
    If the relevant Instrument so provides, upon the due date for redemption
of any Instrument, any unexchanged Talon relating to such Instrument (whether or not
attached) shall become void and no Coupon shall be delivered in respect of such
Talon.6.5.4
    
    Upon the due date for redemption of any Instrument which is redeemable
in instalments, all Receipts relating to such Instrument having an Instalment Date
falling on or after such due date (whether or not attached) shall become void and no
payment shall be made in respect of them.6.5.5
    
    Where any Instrument which provides that the relevant Coupons are to
become void upon the due date for redemption of those Instruments is presented for
redemption without all unmatured Coupons and any unexchanged Talon relating to it,
and where any Instrument is presented for redemption without any unexchanged Talon
relating to it, redemption shall be made only against the provision of such
indemnity as the Issuer may require.6.5.6
    
    If the due date for redemption of any Instrument is not a due date for
payment of interest, interest accrued from the preceding due date for payment of
interest or the Interest Commencement Date, as the case may be, shall only be
payable against presentation (and surrender if appropriate) of the relevant
Instrument. Interest accrued on an Instrument that only bears interest after its
Maturity Date shall be payable on redemption of that Instrument against presentation
of that Instrument.
 6.6
    
    Non-business DaysIf any date for payment in respect of any Instrument, Receipt or Coupon is not a
business day, the holder shall not be entitled to payment until the next following
business day nor to any interest or other sum in respect of such postponed payment. In
this paragraph, business day means a day (other than a Saturday or a Sunday) on which
banks and foreign exchange markets are open for business in the relevant place of
presentation, in such jurisdictions as shall be specified as Financial Centres in the
relevant Final Terms and:
 6.6.1
    
    (in the case of a payment in a currency other than Euro) where payment
is to be made by transfer to an account maintained with a bank in the relevant
currency, on which foreign exchange transactions may be carried on in the relevant
currency in the principal financial centre of the country of such currency; or6.6.2
    
    (in the case of a payment in Euro) which is a TARGET Business Day.
 6.7
    
    TalonsOn or after the Interest Payment Date for the final Coupon forming part of a Coupon
sheet issued in respect of any Instrument, the Talon forming part of such Coupon sheet
may be surrendered at the specified office of the Issuing and Paying Agent in exchange
for a further Coupon sheet (but excluding any Coupons which may have become void pursuant
to Condition 8).
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7
    
    TaxationAll payments of principal and interest by or on behalf of the Issuer in respect of the
Instruments, the Receipts and the Coupons will be made without withholding or deduction for or
on account of, any present or future taxes or duties of whatever nature imposed or levied by or
on behalf of the United Kingdom or any political sub-division of the United Kingdom or any
authority in or of the United Kingdom having power to tax, unless such withholding or deduction
is compelled by law. In that event, the Issuer will pay such additional amounts of principal
and interest as will result in the payment to the Instrumentholders, Receiptholders or, as the
case may be, the Couponholders of the amounts which would otherwise have been receivable in
respect of the Instruments, Receipts or Coupons had no withholding or deduction been made,
except that no such additional amounts shall be payable in respect of any Instrument, Receipt
or Coupon presented for payment:
 (a)
    
    by or on behalf of, a person who is liable to such taxes or duties in respect of such
Instrument, Receipt or Coupon by reason of his having some connection with the United
Kingdom other than the mere holding of such Instrument, Receipt or Coupon; or(b)
    
    by or on behalf of a person who would not be liable or subject to such deduction or
withholding by making a declaration of non-residence or other claim for exemption to a tax
authority; or(c)
    
    more than 30 days after the Relevant Date except to the extent that the holder would
have been entitled to such additional amounts on presenting the same for payment on such
30th day; or(d)
    
    where such withholding or deduction is imposed on a payment to an individual and is
required to be made pursuant to any law implementing European Council Directive 2003/48/EC
or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27
November 2000; 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 (a) 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, (b) interest
shall be deemed to include all Interest Amounts and all other amounts payable pursuant to
Condition 3 or any amendment or supplement to it and (c) 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.
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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(b)
    
    Breach of Other Obligations:there is default in the performance or observance by the
Issuer of any other obligation or provision under the Trust Deed or the Instruments (other
than any obligation for the payment of any principal or interest in respect of the
Instruments) which default is incapable of remedy or, if in the opinion of the Trustee
capable of remedy, is not remedied within 90 days after notice of such default shall have
been given to the Issuer by the Trustee; or(c)
    
    Cross-Acceleration:if (i) any other present or future Relevant Indebtedness of the
Issuer [(or a Principal Subsidiary)]* becomes due and payable prior to its
stated maturity by reason of any actual event of default or (ii) any amount in respect of
such Relevant Indebtedness is
not paid when due or, as the case may be, within any applicable grace period, provided
that the aggregate amount of the Relevant Indebtedness in respect of which one or more of
the events mentioned above in this paragraph (c) have occurred equals or exceeds
£50,000,000, for the period up to 31 March 2017, and thereafter, £100,000,000.[For the purposes of this Condition 9, Principal Subsidiary means National Grid Gas
plc, NGET and National Grid USA, and includes any successor entity thereto or any member
of the group of companies comprising National Grid and each of its subsidiary
undertakings (the National Grid Group) which the Auditors have certified to the Trustee
as being a company to which all or substantially all of the assets of a Principal
Subsidiary are transferred. In the event that all or substantially all of the assets of a
Principal Subsidiary are transferred to a member of the National Grid Group as described
above, the transferor of such assets shall cease to be deemed to be a Principal
Subsidiary for the purposes of this Condition.]*; or(d)
    
    Winding-up:a resolution is passed, or a final order of a court in the United Kingdom
is made and, where possible, not discharged or stayed within a period of 90 days, that the
Issuer be wound up or dissolved; or(e)
    
    Enforcement Proceedings:attachment is made of the whole or substantially the whole
of the assets or undertakings of the Issuer and such attachment is not released or
cancelled within 90 days or an encumbrancer takes possession or an administrative or other
receiver or similar officer is appointed of the whole or substantially the whole of the
assets or undertaking
 
 *
    
    Only applicable where National Grid is the Issuer. 93




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(f)
    
    Insolvency:the Issuer ceases to carry on all or substantially all of its business or
is unable to pay its debts within the meaning of Section 123(1)(e) or Section 123(2) of
the Insolvency Act 1986; or(g)
    
    Bankruptcy:the Issuer is adjudged bankrupt or insolvent by a court of competent
jurisdiction in its country of incorporation,provided that in the case of paragraph (b) the Trustee shall have certified that in its opinion
such event is materially prejudicial to the interests of the Instrumentholders.
 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, (a) to amend the dates of maturity or
redemption of the Instruments, any Instalment Date or any date for payment of interest on
the Instruments, (b) to reduce or cancel the nominal amount of, or any Instalment Amount
of, or any premium payable on redemption of, the Instruments, (c) 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, (d) 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, (e) to vary any method of calculating the Final Redemption
Amount, the Early Redemption Amount or the Optional Redemption Amount, (f) to take any
steps that as specified in this Instrument may only be taken following approval by an
Extraordinary Resolution to which the special quorum provisions apply, and (g) to modify
the provisions concerning the quorum required at any meeting of Instrumentholders or the
majority required to pass the Extraordinary Resolution will only be binding if passed at
a meeting of the Instrumentholders (or at any adjournment of
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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 (a) 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 (b)
any other modification (except as mentioned in the Trust Deed), and any waiver or
authorisation of any breach or proposed breach, of any of the provisions of the Trust
Deed that is in the opinion of the Trustee not materially prejudicial to the interests of
the Instrumentholders. Any such modification, authorisation or waiver shall be binding on
the Instrumentholders and the Couponholders and, if the Trustee so requires, such
modification shall be notified to the Instrumentholders as soon as practicable.11.3
    
    SubstitutionThe Trust Deed contains provisions permitting the Trustee to agree, subject to such
amendment of the Trust Deed and such other conditions as the Trustee may require, but
without the consent of the Instrumentholders or the Couponholders, to the substitution of
any other company in place of the Issuer or of any previous substituted company, as
principal debtor under the Trust Deed and the Instruments. In the case of such a
substitution the Trustee may agree, without the consent of the Instrumentholders or the
Couponholders, to a change of the law governing the Instruments, the Receipts, the
Coupons, the Talons and/or the Trust Deed provided that such change would not in the
opinion of the Trustee be materially prejudicial to the interests of the
Instrumentholders.11.4
    
    Entitlement of the TrusteeIn connection with the exercise of its functions (including but not limited to those
referred to in this Condition) the Trustee shall have regard to the interests of the
Instrumentholders as a class and shall not have regard to the consequences of such
exercise for individual Instrumentholders or Couponholders and the Trustee shall not be
entitled to require, nor shall any Instrumentholder or Couponholder be entitled to claim,
from the Issuer any indemnification or payment in respect of any tax consequence of any
such exercise upon individual Instrumentholders or Couponholders.
 12
    
    Replacement of Instruments, Receipts, Coupons and TalonsIf an Instrument, Receipt, Coupon or Talon is lost, stolen, mutilated, defaced or
destroyed, it may be replaced, subject to applicable laws, listing authority and stock exchange
regulations, at the specified office of such other Paying Agent as may from time to time be
designated by the Issuer for the purpose and notice of whose designation is given to
Instrumentholders in accordance with
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Condition 14 on payment by the claimant of the fees and
costs incurred in connection with that replacement and on such terms as to evidence, security
and indemnity (which may provide, inter alia, that if the allegedly lost, stolen or destroyed
Instrument, Receipt, Coupon or Talon is subsequently presented for payment or, as the case may
be, for exchange for further Coupons, there shall be paid to the Issuer on demand the amount
payable by the Issuer in respect of such Instruments, Receipts, Coupons or further Coupons) and
otherwise as the Issuer may require. Mutilated or defaced Instruments, Receipts, Coupons or
Talons must be surrendered before replacements will be issued.13
    
    Further IssuesThe Issuer may from time to time without the consent of the Instrumentholders or
Couponholders create and issue further instruments having the same terms and conditions as the
Instruments and so that such further issue shall be consolidated and form a single series with
such Instruments.References in these Conditions to the Instruments include (unless the context requires
otherwise) any other instruments issued pursuant to this Condition and forming a single series
with the Instruments. Any such further instruments forming a single series with Instruments
constituted by the Trust Deed or any deed supplemental to it shall, and any other instruments
may (with the consent of the Trustee), be constituted by the Trust Deed.The Trust Deed contains provisions for convening a single meeting of the Instrumentholders and
the holders of instruments of other series if the Trustee so decides.14
    
    NoticesAll notices to the Instrumentholders will be valid if published in a daily English
language newspaper of general circulation in the United Kingdom (which is expected to be the
Financial Times). If in the
opinion of the Trustee any such publication is not practicable, notice shall be validly given
if published in another leading daily English language newspaper with general circulation in
Europe. Any such notice shall be deemed to have been given on the date of such publication or,
if published more than once or on different dates, on the first date on which publication is
made, as provided above.Couponholders shall be deemed for all purposes to have notice of the contents of any notice
given to the holders of Instruments in accordance with this Condition.15
    
    Indemnification of TrusteeThe Trust Deed contains provisions for the indemnification of the Trustee and for its
relief from responsibility, including but not limited to provisions relieving it from any
obligation to (a) appoint an independent financial adviser and (b) take proceedings to enforce
repayment unless indemnified to its satisfaction. The Trustee is entitled to enter into
business transactions with the Issuer or any of its subsidiary undertakings, parent
undertakings, joint ventures or associated undertakings without accounting for any profit
resulting from these transactions and to act as trustee for the holders of any other securities
issued by the Issuer or any of its subsidiary undertakings, parent undertakings, joint ventures
or associated undertakings.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.
 96




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##### 



17
    
    Governing Law and Jurisdiction
 17.1
    
    The Instruments and any non-contractual obligations arising out of or
connected with them are governed by, and shall be construed in accordance with, English
law.17.2
    
    The courts of England have exclusive jurisdiction to settle any dispute (a
Dispute), arising from or connected with the Instruments.17.3
    
    The Issuer agrees that the courts of England are the most appropriate and
convenient courts to settle any Dispute and, accordingly, that it will not argue to the
contrary.17.4
    
    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.
 97




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##### 



Schedule 2
Part C
Form of Coupon
  [NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
 EURO MEDIUM TERM NOTE PROGRAMME
 Series No. []
 Tranche No. []
 [Title of issue]
 **  
  ***
  ****
  [NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION 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.] 98




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##### 



ISSUING AND PAYING AGENT
 The Bank of New York Mellon
 PAYING AGENT
 KBL European Private Bankers S.A.
 99




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##### 



Schedule 2
Part D
Form of Talon
  [NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
 EURO MEDIUM TERM NOTE PROGRAMME
 Series No. []
 Tranche No. []
 [Title of issue]
 **  
  ***
  ****
  [NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION 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.]***
    
    [Only when required were the Series
comprises Instruments of more than one denomination.]****
    
    [Delete if Talon is not to become void upon
early redemption of the Instrument.] 100




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##### 



ISSUING AND PAYING AGENT
 The Bank of New York Mellon
 PAYING AGENT
 KBL European Private Bankers S.A.
 101




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##### 



Schedule 2
Part E
Form of Receipt
 [NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc] *
 EURO MEDIUM TERM NOTE PROGRAMME
 Series No. []
 Tranche No. []
 [Title of issue]
  Conditions 
    [NATIONAL GRID plc/
NATIONAL GRID ELECTRICITY TRANSMISSION plc]*
 
 *
    
    Delete as applicable. 102




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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 issued by the relevant Issuer 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 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 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 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 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;
 103




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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 any previous
substitute) as principal debtor under this Trust Deed; and
 2.9
    
    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 thatthe 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 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.
 104




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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; or
 7.2
    
    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; and
 10.2
    
    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
 105




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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 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; and
 106




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##### 



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 proportionTo 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 Trustee or one or more persons holding one or more
Instruments or voting certificates or representing 2 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 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
 107




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##### 



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
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.
 108




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##### 



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 26, each Instrumentholder shall have one vote in respect of each whole Euro 1.00
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 mutandisapply as though references therein to Instruments and to
Instrumentholders were references to the Instruments and Instrumentholders of the Series
concerned.
 109




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##### 



In witness
 EXECUTED BY AFFIXING
THE COMMON SEAL of
NATIONAL GRID plc
    
    üýþin the presence of:
    
    
    
    DAVID CHARLES FORWARDEXECUTED BY AFFIXING
THE COMMON SEAL of
NATIONAL GRID ELECTRICITY TRANSMISSION plc
    
    üýþin the presence of:
    
    
    
    HARRIET HILLEXECUTED AS A DEED BY AFFIXING
THE COMMON SEAL of
THE LAW DEBENTURE TRUST CORPORATION p.l.c.
    
    üýþin the presence of:
    
    
    
    RICHARD RANCE CAROL MORRIS
 110