Incentive Thrift Plan II

EX-99 8 thriftii.htm Incentive Thrift Plan II

THE NATIONAL GRID USA COMPANIES'
INCENTIVE THRIFT PLAN II
(Amendment and Restatement Effective January 1, 2001)

TABLE OF CONTENTS

ARTICLE 1. INTRODUCTION..........................................................................................1

1.1. In General......................................................................................1
1.2. Nantucket Plan Merger...........................................................................1
1.3. EUA Plan Merger.................................................................................2
1.4. Niagara Mohawk Plan Merger......................................................................2
1.5. Defined Terms...................................................................................2

ARTICLE 2. PARTICIPATION.........................................................................................3

2.1. Date of Participation...........................................................................3
2.2. Participation by Former Nonparticipating Employees..............................................3
2.3. Duration of Participation.......................................................................3

ARTICLE 3. CONTRIBUTIONS.........................................................................................4

3.1. Elective Contributions..........................................................................4
3.2. Form and Manner of Elections....................................................................4
3.3. Basic Matching Contributions....................................................................4
3.4. Discretionary Matching Contributions............................................................5
3.5. Qualified Nonelective Contributions.............................................................5
3.6. Rollover Contributions..........................................................................6
3.7. After-tax Contributions.........................................................................6
3.8. Transfer Contributions..........................................................................6
3.9. Catch-Up Contributions..........................................................................6
3.10. Time for Making Contributions...................................................................6
3.11. Crediting of Contributions......................................................................7
3.12. Certain Limits Apply............................................................................7
3.13. Return of Contributions.........................................................................7
3.14. Establishment of Trust..........................................................................7

ARTICLE 4. PARTICIPANT ACCOUNTS..................................................................................8

4.1. Accounts........................................................................................8
4.2. Adjustment of Accounts..........................................................................8
4.3. Investment of Accounts..........................................................................8
4.4. Appointment of Investment Manager or Named Fiduciary...........................................10
4.5. Transfers From Other Plans.....................................................................10

ARTICLE 5. VESTING OF ACCOUNTS..................................................................................11

5.1. Immediate Vesting of Accounts..................................................................11

ARTICLE 6. WITHDRAWALS PRIOR TO SEVERANCE FROM EMPLOYMENT.......................................................12

6.1. Hardship Withdrawals...........................................................................12
6.2. Withdrawals After Age 59½......................................................................13
6.3. Withdrawals Before Age 59½.....................................................................13
6.4. Required Minimum Distributions.................................................................13
6.5. Restrictions on Certain Distributions..........................................................13
6.6. Distributions Required by a Qualified Domestic Relations Order.................................14
6.7. Certain Dispositions...........................................................................14
6.8. Spousal Consent to Withdrawals by Certain Former Participants in Other Plans...................14

ARTICLE 7. LOANS TO PARTICIPANTS................................................................................16

7.1. In General.....................................................................................16
7.2. Rules and Procedures...........................................................................16
7.3. Maximum amount of loan; Maximum number of loans................................................16
7.4. Minimum amount of loan.........................................................................16
7.5. Note; security; interest.......................................................................16
7.6. Repayment......................................................................................17
7.7. Repayment upon distribution....................................................................17
7.8. Default........................................................................................17
7.9. Nondiscrimination..............................................................................18
7.10. Adjustment of Accounts.........................................................................18
7.11. Spousal Consent to Loans to Certain Former Participants in Other Plans.........................18
7.12. Loans Upon Termination of Employment During Company Restructuring..............................18

ARTICLE 8. BENEFITS UPON DEATH OR SEVERANCE FROM EMPLOYMENT.....................................................19

8.1. Severance from Employment for Reasons other than Death.........................................19
8.2. Time of Distributions..........................................................................19
8.3. Distributions After a Participant's Death or Disability........................................19
8.4. Designation of Beneficiary.....................................................................20
8.5. Optional Forms of Benefit......................................................................21
8.6. Distributions Upon Required Beginning Date.....................................................22
8.7. Direct Rollovers of Eligible Distributions.....................................................22
8.8. Special Rules for Former Participants in Merged Plans..........................................23
8.9. Distribution Restrictions for Elective Contributions...........................................25
8.10. Provisions under Article 8....................................................................25

ARTICLE 9. VOTING AND DISPOSITION OF SHARES.....................................................................26

9.1. Voting of Shares...............................................................................26
9.2. Tender or Exchange Offers......................................................................26
9.3. Cash Out Merger................................................................................26
9.4. Investment of Proceeds of Tender Offer, Shares Received in Exchange Offer......................27
9.5. Investment Following Cash Out Merger...........................................................27
9.6. Confidentiality of Instructions................................................................27
9.7. Provisions under Article 9.....................................................................27

ARTICLE 10. ADMINISTRATION......................................................................................28

10.1. Administrator..................................................................................28
10.2. Powers of Administrator........................................................................28
10.3. Action.........................................................................................28
10.4. Authority to Act...............................................................................29
10.5. Effect of Interpretation or Determination......................................................29
10.6. Reliance on Tables, etc........................................................................29
10.7. Claims and Review Procedures...................................................................29
10.8. Denied Claims..................................................................................29
10.9. Liability for Acts.............................................................................30
10.10. Indemnification of Administrator and Assistants................................................30
10.11. Examination of Records.........................................................................30
10.12. Authority to Correct Operational Defects.......................................................30

ARTICLE 11. AMENDMENT AND TERMINATION...........................................................................31

11.1. Amendment......................................................................................31
11.2. Termination....................................................................................31
11.3. Distributions upon Termination of the Plan.....................................................32
11.4. Merger or Consolidation of Plan; Transfer of Plan Assets.......................................32

ARTICLE 12. LIMITS ON CONTRIBUTIONS.............................................................................33

12.1. Code Section 404 Limits........................................................................33
12.2. Code Section 415 Limits........................................................................33
12.3. Code Section 402(g) Limits.....................................................................34
12.4. Code Section 401(k)(3) Limits..................................................................36
12.5. Code Section 401(m) Limits.....................................................................39

ARTICLE 13. SPECIAL TOP-HEAVY PROVISIONS.......................................................................43

13.1. Provisions to apply............................................................................43
13.2. Minimum Contribution...........................................................................43
13.3. Adjustment to Limitation on Benefits...........................................................44
13.4. Definitions....................................................................................44

ARTICLE 14. MISCELLANEOUS.......................................................................................47

14.1. Exclusive Benefit Rule.........................................................................47
14.2. Limitation of Rights...........................................................................47
14.3. Nonalienability of Benefits....................................................................47
14.4. Rules for Withdrawals and Distributions........................................................47
14.5. USERRA Compliance..............................................................................47
14.6. Miscellaneous Employer Contribution............................................................47
14.7. EGTRRA Provisions..............................................................................47
14.8. Applicable Law.................................................................................48
14.9. Governing Law..................................................................................48

ARTICLE 15. DEFINITIONS.........................................................................................49

15.1. "Accounts".....................................................................................49
15.2. "Administrator"................................................................................49
15.3. "Annual Base Rate".............................................................................49
15.4. "Base Compensation"............................................................................49
15.5. "Basic Matching Contribution"..................................................................49
15.6. "Beneficiary"..................................................................................49
15.7. "Benefits Appeal Committee"....................................................................49
15.8. "Benefits Committee"...........................................................................49
15.9. "Board"........................................................................................49
15.10. "Business Day".................................................................................49
15.11. "Cash Out Merger"..............................................................................50
15.12. "Code".........................................................................................50
15.13. "Compensation".................................................................................50
15.14. "Computation Period"...........................................................................50
15.15. "Contribution Agreement".......................................................................50
15.16. "Discretionary Matching Contribution"..........................................................50
15.17. "Elective Contribution"........................................................................51
15.18. "Eligible Employee"............................................................................51
15.19. "Employee".....................................................................................51
15.20. "Employer".....................................................................................51
15.21. "Employer Account".............................................................................51
15.22. "Entry Date"...................................................................................51
15.23. "ERISA"........................................................................................51
15.24. "ESOP".........................................................................................51
15.25. "ESOP Transfer Account"........................................................................52
15.26. "FAPP II"......................................................................................52
15.27. "Financial Objective"..........................................................................52
15.28. "Goals Program"................................................................................52
15.29. "Highly Compensated Employee"..................................................................52
15.30. "Highly Compensated Participant"...............................................................52
15.31. "Hour of Service"..............................................................................52
15.32. "Investment Date"..............................................................................53
15.33. "Investment Fund"..............................................................................53
15.34. "Matching Contributions".......................................................................53
15.35. "National Grid"................................................................................53
15.36. "National Grid Committee" .....................................................................53
15.37. "National Grid USA"...........................................................................53
15.38. "National Grid Share Fund".....................................................................54
15.39. "Nonparticipating Employee"....................................................................56
15.40. "Normal Retirement Age"........................................................................56
15.41. "Officer"......................................................................................56
15.42. "Participant"..................................................................................56
15.43. "Participant Account"..........................................................................56
15.44. "Plan Year"....................................................................................56
15.45. "Prior Plan"...................................................................................56
15.46. "Qualified Domestic Relations Order"...........................................................56
15.47. "Qualified Nonelective Contribution"...........................................................56
15.48. "Regulation"...................................................................................56
15.49. "Required Beginning Date"......................................................................56
15.50. "Rollover Contribution"........................................................................56
15.51. "Rollover Account".............................................................................57
15.52. "Section"......................................................................................55
15.53. "Shares".......................................................................................57
15.54. "Trust"........................................................................................57
15.55. "Trustee"......................................................................................57
15.56. "Trust Fund"...................................................................................57
15.57. "Year of Service for Participation"............................................................57

"SUPPLEMENT A"...................................................................................................58

"SUPPLEMENT B"...................................................................................................60

"SUPPLEMENT C"...................................................................................................62

ARTICLE 1. ......

ARTICLE 1. ...... INTRODUCTION.

1.1. In General. This document amends and restates the provisions of the National Grid USA Companies'
Incentive Thrift Plan II, effective as of January 1, 2001. The previous restatement amended and restated the
provisions of the New England Electric System Companies Incentive Thrift Plan II. Furthermore, that restatement
renamed the Plan the National Grid USA Companies' Incentive Thrift Plan II effective as of April 1, 2000. Except
as otherwise noted, the provisions of the Plan as set forth below will be effective as of January 1, 2001,
provided that any provision which is required by law to be effective as of an earlier date will be effective as
of such earlier date. The original effective date of the Plan is September 1, 1984. Except as specifically
provided herein, the rights to benefits with respect to Participants or former Participants who do not complete
an Hour of Service on or after January 1, 2001, shall be determined under the applicable provisions of the Plan
as in effect from time to time prior to their termination of employment. This Plan and its related Trust(s) are
intended to qualify as a Discretionary Matching plan and trust under Code section 401(a), a cash or deferred
arrangement forming part of the plan is intended to qualify under Code section 401(k), and includes an employer
stock feature consisting of an employee stock ownership plan under section 4975(e) of the Code. The portion of
the Plan that is intended to be an employee stock ownership plan under section 4975(e) of the Code is the
National Grid Share Fund as set forth in Section 15.38, as further governed by the provisions set forth in
Sections 4.3(e), 6.9, 9.1 and 12.6. Accounts that are invested at the direction of participants in investment
options other than Shares are not intended to constitute the part of the Plan that is an employee stock ownership
plan. The purpose of the Plan is to provide benefits to Participants in a manner consistent and in compliance
with such Code sections and Title I of ERISA. If at any time the Internal Revenue Service issues a determination
that the Plan, as amended, fails to be qualified under the Code, the portions of the restatement that resulted in
the adverse determination shall be of no force and effect and the Plan shall continue as in effect under the
prior provisions of those so voided. Notwithstanding the general effective date specified above, any provision
of this restatement that is intended to comply with changes in law made by the Uniform Services Employment and
Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997,
the Uruguay Round Agreements Act, or the Internal Revenue Service regulations or other guidance thereunder, or
Department of Labor guidance shall be effective as of the effective dates specified for such changes in the
applicable statute, regulation or guidance. In addition, this restatement contains certain provisions of the
Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") and is intended to contemplate the future
adoption of certain other provisions of EGTRRA. These provisions are intended as good faith compliance with the
requirements of EGTRRA and are to be construed in accordance with EGTRRA and guidance issued thereunder. Except
as otherwise provided, the EGTRRA provisions shall be effective as of the first day of the first Plan Year
beginning after December 31, 2001. The EGTRRA provisions shall supersede the provisions of the Plan to the
extent those provisions are inconsistent with the EGTRRA provisions.

1.2. Nantucket Plan Merger. Effective October 1, 1996, Supplement A as set forth in the Amendment as of
October 1, 1996 shall form a part of the Plan. Supplement A sets forth special provisions of the Plan pertaining
to the merger of that portion of the Nantucket Electric Company 401(k) Plan attributable to the "Nantucket Union
Employees" (as such term is defined in Supplement A) with and into the Plan. All capitalized terms contained in
Supplement A shall have the meanings set forth in the Plan, unless the context clearly requires otherwise.

1.3. EUA Plan Merger. Effective as of the date set forth in Supplement B, such supplement shall form a part
of the Plan. Supplement B sets forth special provisions of the Plan pertaining to the merger of the portion of
Eastern Utilities Associates Employees' Savings Plan attributable to non-union participants into the plan. All
capitalized terms contained in Supplement B shall have the meanings set forth in the Plan unless the context
clearly requires otherwise.

1.4. Niagara Mohawk Plan Merger. Effective as of the date set forth in Supplement C, such supplement shall
form a part of the Plan. Supplement C sets forth special provisions of the Plan pertaining to the merger of the
Niagara Mohawk Power Corporation Represented Employees' Savings Fund Plan with and into the Plan. All
capitalized terms contained in Supplement C shall have the meanings set forth in the Plan, unless the context
clearly requires otherwise.

1.5. Defined Terms. Capitalized terms used in the provisions of the Plan have the meanings given them under
Article 15.

ARTICLE 2.

PARTICIPATION.

2.1. Date of Participation. Each Eligible Employee may become a Participant under the Plan, for purposes of
determining eligibility to make Elective Contributions, effective upon a payroll date following the day he or she
becomes an Eligible Employee, by enrolling in the Plan in accordance with procedures prescribed by the
Administrator. For purposes of determining eligibility to receive Matching Contributions, each Eligible Employee
shall become a Participant as of the Entry Date coinciding with or next following the day he or she completes a
Year of Service for Participation, provided that he or she is an Eligible Employee on such Entry Date.

2.2. Participation by Former Nonparticipating Employees. Any person who becomes an Eligible Employee, and
who was a Nonparticipating Employee on the day before becoming an Eligible Employee, may join the Plan
immediately upon becoming an Eligible Employee, or on the first of any month thereafter, provided he or she is an
Eligible Employee on such Entry Date.

2.3. Duration of Participation. An individual who has become a Participant under the Plan will remain a
Participant for as long as an Account is maintained under the Plan for his or her benefit, or until his or her
death, if earlier. Notwithstanding the preceding sentence and unless otherwise expressly provided for under the
Plan, no contributions shall be made with respect to a Participant who is not an Eligible Employee. A
Participant or former Participant who is reemployed as an Eligible Employee shall again become eligible to make
Elective Contributions immediately upon reemployment and receive Matching Contributions at such time provided he
or she had been previously eligible to receive Matching Contributions.

ARTICLE 3.

CONTRIBUTIONS.

3.1. Elective Contributions. Each Participant may enter into a Contribution Agreement with his or her
Employer specifying that a percentage of Compensation or Base Compensation for that portion of a Plan Year during
which he or she is a Participant will be contributed to the Trust as an Elective Contribution. By agreeing to
Elective Contributions, the Participant shall agree to a reduction in pay in the amount designated and the
Employer shall agree in consideration of such reduction to contribute an equivalent amount to the Trust to be
allocated to such Participant's Elective Contribution Account.

3.2. Form and Manner of Elections. Each Contribution Agreement shall be in the form prescribed or approved
by the Administrator (including, if approved, on-line computer or telephonic enrollment). Any establishment,
change, or revocation of a Contribution Agreement shall be made at such times, in such manner, and with such
prior notice as the Administrator may prescribe in its discretion. A Contribution Agreement shall be effective
as soon as practicable with respect to Compensation payable on and after such date as may be specified (but no
earlier than the date the Agreement is entered into). The Administrator shall determine the minimum and maximum
percentages that Participants can reduce their pay in accordance with annual addition limitations under the Code.

3.3. Basic Matching Contributions. Each Employer will make or procure the making of a Basic Matching
Contribution to the Trust for the benefit of each Participant on whose behalf it made Elective Contributions for
the period. No Basic Matching Contribution shall be based on Elective Contributions made during periods that the
Participant was not eligible to receive Matching Contributions. For the Plan Years beginning January 1, 1998 and
January 1, 1999, the amount of the Basic Matching Contribution made by an Employer for the Plan Year shall be
equal to 37.50% of the Elective Contributions made on behalf of the Participant for the Plan Year which do not
exceed the first 4% of the Participant's Base Compensation for the Plan Year. No Basic Matching Contributions
shall be made with respect to Elective Contributions which exceed the first 4% of the Participant's Base
Compensation for the Plan Year.

For Plan Years beginning on or after January 1, 2000, the amount of the Basic Matching Contribution made
by an Employer for the Plan Year shall be equal to 100% of the Elective Contributions made on behalf of the
Participant for the Plan Year which do not exceed the first 2% of the Participant's Base Compensation for the
Plan Year, and 50% of the Elective Contribution made on behalf of the Participant for the Plan Year with respect
to the next 4% of the Participant's Base Compensation for the Plan Year.

Notwithstanding any provision above to the contrary, and in lieu of any Basic Matching Contribution
otherwise provided in this Section, this paragraph shall set forth the Basic Matching Contribution to be made on
behalf of Employees who are represented by BUW Local 355 during any period of employment that they are not either
eligible to participate in FAPP II or accrue benefits under FAPP II pursuant to the terms of the collective
bargaining agreement (hereinafter referred to as "Northboro Employees"). The amount of the Basic Matching
Contribution made by an Employer for the Plan Year shall be equal to 33% of the Elective Contributions made on
behalf of the Participant for the Plan Year which do not exceed the first 6% of the Participant's Base
Compensation for the Plan Year.

For Plan Years beginning on or after January 1, 2000, the amount of the Basic Matching Contribution to
be made on behalf of Northboro Employees for the Plan Year shall be equal to 100% of the Elective Contributions
made on behalf of the Participant for the Plan Year which do not exceed the first 2% of the Participant's Base
Compensation for the Plan Year, and 67% of the Elective Contribution on behalf of the Participant for the Plan
Year with respect to the next 6% of the Participant's Base Compensation for the Plan Year.

In addition to this Basic Matching Contribution, the Employer shall contribute on a weekly basis for
each Northboro Employee an amount equal to 1.5% of Base Compensation.

3.4. Discretionary Matching Contributions. For the Plan Years beginning January 1, 1998 and January 1, 1999,
or in respect to future Plan Years as set forth in procedures adopted by the National Grid Committee, as soon as
practicable after the close of the Plan Year, each Employer will contribute a Discretionary Matching Contribution
to the Trust. If made, the amount of the Discretionary Matching Contribution shall be equal to the appropriate
percentage of the Elective Contributions made on behalf of the Participant which shall not exceed the first 4% of
the Participant's Base Compensation for the Plan Year. For purposes of the preceding sentence, the "appropriate
percentage" shall be: 0% if the middle Financial Objective is not met; 31.25% if the middle Financial Objective
is met or exceeded, provided that the third tier Financial Objective is not met; or 62.50% if the third tier
Financial Objective is met or exceeded. No Discretionary Matching Contribution shall be based upon Elective
Contributions made during periods that the Participant was not eligible to receive Matching Contributions.

Notwithstanding any provision above to the contrary, and in lieu of any Discretionary Matching
Contribution otherwise provided in this Section, this paragraph shall set forth the Discretionary Matching
Contribution to be made on behalf of Northboro Employees (as defined in Section 3.3 above), if any. If made,
the amount of the Discretionary Matching Contribution shall be equal to the appropriate percentage of the
Elective Contributions made on behalf of the Participant which shall not exceed the first 6% of the Participant's
Base Compensation for the Plan Year. For purposes of the preceding sentence, the "appropriate percentage" shall
be: 0% if the middle Financial Objective is not met; 33% if the middle Financial Objective is met or exceeded,
provided that the third tier Financial Objective is not met; or 66% if the third tier Financial Objective is met
or exceeded. No Discretionary Matching Contribution shall be based upon Elective Contributions made during
periods that the Participant was not eligible to receive Matching Contributions.

3.5. Qualified Nonelective Contributions. To the extent necessary to satisfy the Code section 401(k)(3)
limits with respect to Elective Contributions or the Code section 401(m) limits with respect to Matching
Contributions, the Board, in its discretion, may determine whether a Qualified Nonelective Contribution shall be
made to the Trust for a Plan Year and, if so, the amount to be contributed by each Employer. If the Board
determines that a Qualified Nonelective Contribution shall be made, each Employer shall contribute its designated
portion. A Qualified Nonelective Contribution for a Plan Year shall be allocated among and credited to the
Qualified Nonelective Accounts of all Participants who are eligible to receive Elective Contributions for the
Plan Year, in proportion to their relative amounts of Compensation for the Plan Year. Qualified Nonelective
Contributions shall be fully vested and subject to the same distribution rules as Elective Contributions as of
the time such Qualified Nonelective Contributions are made to the Plan.

3.6. Rollover Contributions. An Employee and, under certain limited circumstances designated by the
Administrator, retiree participants may make a Rollover Contribution to the Plan upon demonstration to the
Administrator that the contribution is eligible for transfer to the Plan pursuant to the rollover provisions of
the Code, including, with respect to the Rollover Contributions made to the Plan after December 31, 2001, amounts
from a qualified plan described in section 401(a) or 403(a) of the Code, including after-tax contributions,
amounts from an annuity contract described in section 403(b) of the Code (including after-tax contributions), and
amounts from an eligible plan under section 457(b) of the Code which is maintained by a state, political
subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state.
Rollover Contributions shall be allocated and credited to a Rollover Account for the benefit of the individual
making the Rollover Contribution. Each Employee will at all times have a fully vested and nonforfeitable
interest in the amount credited to his or her Rollover Account. An Employee who makes a Rollover Contribution to
the Plan will not become a Participant until he or she has satisfied the requirements of Article 2. However,
such an Employee shall be treated as a Participant with respect to his or her interest in his or her Rollover
Account, for purposes of Articles 4, 5, 6, 7, 8, 9, 10, 11, 13, and 14. A Participant's Rollover Account also
includes amounts transferred from the Participant's Goals Program account, if any, and all income, gains, and
losses attributable thereto. An Employee may not roll into this Plan amounts attributable to distributions from
the Employer Account which distributions occurred since the Employee's most recent date of hire.

3.7. After-tax Contributions. . Employee after-tax contributions may be made to the extent permitted, and
in accordance with, procedures adopted by the National Grid Committee. If a Participant (i) made after-tax
contributions under a plan that is merged into this Plan, or from which accounts have been transferred to this
Plan, or (ii) has a pre-existing Participant Account under the Plan, then such contributions shall be maintained,
or continued to be maintained, under the Plan in a Participant Account for such Participant.

3.8. Transfer Contributions. Any assets that were transferred from the ESOP to the Plan shall be held in the
Trust Fund as a transfer contribution for the benefit of those individuals that held an account under the ESOP
immediately prior to said transfer. After-tax contributions under the ESOP shall continue to be identified as
such under the Plan.

3.9. Catch-Up Contributions. Each Participant who has attained age 50 before the close of the Plan Year
shall be eligible to make catch-up contributions in accordance with procedures adopted by the Administrator, and
subject to the limitations of, section 414(v) of the Code. Such catch-up contributions shall not be taken into
account for purposes of determining the limits under section 402(g) and 415 of the Code. The catch-up
contributions shall be credited to the Participant's Elective Contribution Account. The Plan shall not be
treated as failing to satisfy Code sections 401(k)(3), 410(b) or 416 of the Code, as applicable, by reason of the
making of such catch-up contributions.

3.10. Time for Making Contributions. Elective Contributions will be paid in cash to the Trust as soon as such
contributions can reasonably be segregated from the general assets of the Employer, but in any event within 15
business days after the end of the month for which the Compensation to which such contributions relate is paid.
Any Basic Matching Contributions, Discretionary Matching Contributions or Qualified Nonelective Contributions for
a Plan Year will be contributed to the Trust at such time as the Employer determines, but in any event no later
than the time prescribed by law (including extensions) for filing the Employer's federal income tax return for
its taxable year in or with which the Plan Year ends. In addition, Qualified Nonelective Contributions, Basic
Matching Contributions, and Discretionary Matching Contributions for a Plan Year must be made no later that the
last day of the 12-month period immediately following the Plan Year.

3.11. Crediting of Contributions. Each type of contribution for a Plan Year shall be allocated among and
credited to the respective Accounts of Participants eligible to share in the contribution as soon as practicable
following the date the contributions are received by the Trustee (but in no event later than the last Business
Day of the Plan Year).

3.12. Certain Limits Apply. All contributions to the Plan are subject to the applicable limits set forth
under Code sections 401(k), 402(g), 401(m), 404, and 415, as further described elsewhere in the Plan. In
addition, certain minimum allocations may be required under Code sections 401(a)(26), 410(b), and 416, as also
further described elsewhere in the Plan.

3.13. Return of Contributions. If any contribution by an Employer to the Trust is

(a) made by reason of a good faith mistake of fact, or

(b) believed by the Employer in good faith to be deductible under Code section 404, but the deduction is
disallowed,

the Trustee shall, upon request by the Employer, return to the Employer the excess of the amount contributed over
the amount, if any, that would have been contributed had there not occurred a mistake of fact or a mistake in
determining the deduction. Such excess shall be reduced by the losses of the Trust attributable thereto, if and
to the extent such losses exceed the gains and income attributable thereto. In no event shall the return of a
contribution hereunder cause any Participant's Accounts to be reduced to less than they would have been had the
mistaken or nondeductible amount not been contributed. No return of a contribution hereunder shall be made more
than one year after the mistaken payment of the contribution, or disallowance of the deduction, as the case may
be.

3.14. Establishment of Trust. The Board shall establish a Trust(s) to accept and hold contributions made
under the Plan. The Trust(s) shall be governed by an agreement(s) between the Board and the Trustee(s) the terms
of which shall be consistent with the Plan provisions and intended qualification under Code sections 401(a) and
501(a). The Trust agreement(s) shall provide National Grid USA Service Company the authority to amend or
terminate the Trust agreement or to change the Trustee and to settle accounts of the Trustee on behalf of all
persons having an interest in the Trust Fund.

ARTICLE 4.

PARTICIPANT ACCOUNTS.

4.1. Accounts. The Administrator will establish and maintain (or cause the Trustee to establish and
maintain) for each Participant, as necessary, an Elective Contribution Account (also known as the "Salary
Reduction Account"), Employer Account (for Basic Matching Contributions and Discretionary Matching
Contributions), Participant Account, Rollover Account, ESOP Transfer Account, and such other accounts and
subaccounts as the Administrator or the Trustees, as the case may be, in their discretion deem appropriate.

4.2. Adjustment of Accounts. As of each Business Day, each Account will be adjusted to reflect the fair
market value of the assets allocated to the Account. In so doing,

(a) each Account balance will be increased by the amount of contributions, income and gain allocable to such
Account since the prior Business Day; and

(b) each Account balance will be decreased by the amount of distributions from the Account and expenses and
losses allocable to the Account since the prior Business Day.

Income, expense, gain and loss which is generated by a particular investment option within the Trust shall be
allocated to an Account participating in such investment option in the ratio to which the portion of the Account
which is invested in the investment option bears to the entire amount of Trust assets invested in such investment
option. Any expenses relating to a specific Account or Accounts, including without limitation, commissions or
sales charges with respect to an investment in which the Account participates, but excluding brokerage
commissions for stock and costs relating to the processing of Qualified Domestic Relations Orders, may be charged
solely to the particular Account or Accounts. Accounts holding stock shall generally be maintained and expressed
in terms of the number of shares allocated to the Account. A Participant's holdings in an Account(s) shall
include all transactions completed as of the previous Business Day; provided, however, to the extent the purchase
or sale of Shares for a particular transaction takes more than one Business Day to complete, Participants'
Accounts need not reflect said transaction until all Share purchases or sales under the particular transaction,
as applicable, have been completed; provided, further, a Participant's Account(s) need not reflect dividends
declared on Shares until all Share purchases with the particular dividends have been completed.

4.3. Investment of Accounts.

(a) In general. Subject to Section 4.3(b) through (d) below, a Participant's Accounts shall be invested by
the Trustee as the Participant (or Beneficiary, in the event of such Participant's death) directs, in a
manner approved by the Administrator, from among such funds or investment alternatives as the
Administrator may make available from time to time. Any investment direction given by a Participant (or
a Beneficiary) shall be deemed to be a continuing direction until changed by such Participant (or
Beneficiary). Any changes to such directions may be made in accordance with the procedures for such
changes as may be prescribed by the Administrator. A Participant's failure to provide an initial
investment direction with respect to an Account under this paragraph (a) to the Administrator within the
time period established by the Administrator shall constitute a direction by such Participant to invest
his or her contributions in the Investment Fund with the most safety as to principal. Investment of
contributions, transfers, reallocations, and reinvestment earnings in the Investment Funds shall be made
as soon as practicable; provided, however, that investment of contributions in the National Grid Share
Fund, if such Shares are being purchased from National Grid, shall be made as of an Investment Date, but
for administrative reasons need not be effected until up to 10 Business Days after the related
Investment Date.

(b) Notwithstanding Section 4.3(a) above, a Participant's Employer Account and ESOP Transfer Account shall
be remitted to the Trustee for investment in Shares or in such other manner as set forth in procedures
adopted by the National Grid Committee; provided that after a Cash Out Merger a Participant's Employer
Account and ESOP Transfer Account may be invested in the Investment Fund or Funds selected by the
Participant until such time and to the extent that an Officer directs that future Basic Matching
Contributions be invested in another form of Shares.

(c) ERISA section 404(c) status. The Plan is intended to constitute a plan described in section 404(c) of
ERISA and the regulations thereunder except as said section relates to the investment in employer
securities. With the exception of contributions made to a Participant's Employer Account and ESOP
Transfer Account, which are required to be invested in Shares, the Plan offers Participants and
Beneficiaries the opportunity to exercise control over the assets contributed and accumulated on their
behalf under the Plan by: allowing them to choose, from a broad range of investment alternatives, the
manner in which these assets will be invested; and by providing them with information necessary to make
informed decisions with respect to the investment options under the Plan and the incidents of ownership
that arise from these investments. The fiduciaries of the Plan are obligated (with certain limited
exceptions) to comply with these instructions. As a result of the foregoing, fiduciaries of the Plan
may be relieved of liability for any losses which are the direct and necessary result of investment
instructions given by a Participant or Beneficiary.

(d) A Participant may reallocate among investment media her/his existing Employer Account or ESOP Transfer
Account any time after termination of employment, retirement, or the occurrence of a Cash Out Merger as
set forth in Section 9.3 or in such other manner as set forth in procedures adopted by the National Grid
Committee; provided, however, that following a Cash Out Merger, amounts directed to be invested in
another form of Shares in accordance with this Section 4.3 may not be reallocated except after
termination of employment or retirement.

(e) National Grid Share Dividends. Notwithstanding any provision of the Plan to the contrary, effective as
of the date and for such period set forth in procedures adopted by the National Grid Committee, but not
earlier than January 1, 2002, a Participant or Beneficiary may elect (in accordance with rules and
prescribed by the Administrator) whether dividends received with respect to Shares held on his or her
behalf under the Trust Fund(s) shall be (i) allocated to the portion of the Participant's or
Beneficiary's Account(s) invested in the National Grid Share Fund for purposes of purchasing additional
Shares, (ii) distributed to the Participant or Beneficiary, or (iii) subject to applicable law and
procedures prescribed by the Administrator, a combination of (i) and (ii). If elected, such
distribution shall be made in accordance with rules and procedures prescribed by the Administrator but
in no event later than 90 days after the close of the Plan Year in which the dividends are paid.

4.4. Appointment of Investment Manager or Named Fiduciary. The Administrator may appoint in writing one or
more investment managers or other "named fiduciaries" (within the meaning of ERISA section 402(a)(2)) to manage
the investment of all or designated portions of the assets held in the Trust. The appointment shall be effective
upon acknowledgment in writing by the investment manager or other named fiduciary that it is a fiduciary with
respect to the Plan. An investment manager must be (a) registered as an investment adviser under the Investment
Advisers Act of 1940, (b) a bank as defined in that Act, or (c) an insurance company qualified under the laws of
more than one state to manage, acquire or dispose of any assets of the Plan.

4.5. Transfers From Other Plans.

(a) Unless otherwise provided herein, in the event another plan is merged into the Plan, or accounts are
otherwise transferred to the Plan from another plan, the assets transferred to the Plan shall be
allocated as follows:

(i) Assets attributable to an individual's elective contributions and qualified nonelective contributions
(if any) shall be allocated to an Elective Contribution Account for his or her benefit under
the Plan;

(ii) Assets attributable to other employer contributions (if any) including employer matching contributions
shall be allocated to an account under the Plan with similar characteristics or placed in a
separate subaccount; and

(iii) Assets attributable to an individual's after-tax contributions (if any) shall be allocated to a
Participant Account for his or her benefit under the Plan.

The assets transferred may be separately accounted for in sub-accounts under the Plan as determined to
be necessary by the Administrator in order to administer the provisions of Articles 4, 5, 6, 7 and 8.
Unless otherwise provided in an acquisition agreement between an Employer and the employer maintaining
such transferor plan, all assets transferred under this Section shall be invested in funds designated by
the Administrator.

(b) Any individual for whom accounts have been transferred under this Section and who has not become a
Participant under Section 2.1 shall be treated as a Participant for purposes of Articles 4, 5, 8, 10, 11
and 14 and, so long as he or she is an Employee, Articles 6 and 7.

ARTICLE 5.

VESTING OF ACCOUNTS.

5.1. Immediate Vesting of Accounts. A Participant will at all times be 100% vested in his or her Elective
Contribution Account, Employer Account, Participant Account (if any), ESOP Transfer Account and Rollover Account;
except to the extent vesting rules are modified by procedures adopted by the National Grid Committee.

ARTICLE 6.

WITHDRAWALS PRIOR TO SEVERANCE FROM EMPLOYMENT.

6.1. Hardship Withdrawals.

(a) Immediate and heavy financial need. A Participant may request a hardship withdrawal from his or her
Elective Contribution Account pursuant to this Section 6.1. Upon receipt of such request, the
Administrator shall determine whether the Participant has an immediate and heavy financial need based on
all relevant facts and circumstances, including whether the need is arising from

(i) expenses for medical care described in Code section 213(d) previously incurred by the Participant, his
or her spouse or any of his or her dependents (as defined in Code section 152);

(ii) costs directly related to the purchase of a principal residence of the Participant (excluding mortgage
payments);

(iii) the payment of tuition and related expenses for the next 12 months of post-secondary education for the
Participant, his or her spouse, children or dependents (as defined in Code section 152); or

(iv) payments necessary to prevent the eviction of the Participant from his or her principal residence or
foreclosure on the mortgage on that principal residence.

The Administrator's determination of whether there is an immediate and heavy financial need as defined
above shall be made solely on the basis of written information furnished by the Participant. Such
information must also indicate the amount of such need. The amount necessary to meet the need may
include any amounts necessary to pay any federal, state, or local income taxes or penalties reasonably
anticipated to result from the distribution. Upon determination that such need exists, the
Administrator will direct the Trustees to pay such Participant the amount which the Administrator
determines is necessary to satisfy the need pursuant to Section 6.1(b) below, up to the amount of the
Participant's nonforfeitable interest in his or her Accounts (determined under Article 5), except that
no withdrawal under this Section 6.1 shall be made from any income allocable to Elective Contributions
earned after December 31, 1988.

(b) Distribution of amount necessary to meet need. As soon as practicable after the Administrator's
determination that an immediate and heavy financial need exists with respect to the Participant and that
the Participant has obtained all other distributions (other than hardship distributions) and all
nontaxable loans currently available under the Plan and all other plans maintained by the Employers, the
Administrator will direct the Trustee to pay to the Participant the amount necessary to meet the need
created by the hardship.

(c) Effect of hardship distribution. If a Participant receives a hardship distribution, then any Elective
Contribution election, or any other cash-or-deferred or employee contribution election in effect with
respect to the Participant under the Plan or any other qualified plan maintained by an Employer shall be
suspended for the 12-month period beginning near in time to the date the Participant receives the
distribution or such other period as prescribed in procedures adopted by the Administrator, and the
amount of Elective Contributions made for the benefit of the Participant, together with any elective
deferrals made on behalf of the Participant under any other plan maintained by the Employers for the
calendar year immediately following the calendar year of the hardship distribution must not exceed the
applicable limit under Code section 402(g) for such next calendar year, less the amount of such
contributions made on behalf of the Participant for the calendar year of the hardship distribution.

6.2. Withdrawals After Age 59½. A Participant who is an Employee and has attained age 59½ may make a
withdrawal from any one or more of his or her Accounts for any reason, but with such prior notice as the
Administrator may prescribe. Any such withdrawal shall be in the amount specified by the Participant, up to the
value of the Participant's vested portion of the particular Account. Distribution will be made as soon as
practicable following the Administrator's receipt of notice of the withdrawal. The timing of and amount of
benefits payable under this Section 6.2 may be modified by procedures adopted by the National Grid Committee.

6.3. Withdrawals Before Age 59½. A Participant who is an Employee and has not attained age 59½ may withdraw
the entire amount from his or her Accounts (other than his or her Elective Contribution Account), or any portion
thereof; provided that amounts withdrawn from his or her Employer Account must have been held under such account
for at least two years. The timing of and amount of benefits payable under this Section 6.3 may be modified by
procedure adopted by the National Grid Committee.

6.4. Required Minimum Distributions. In the case of a Participant who remains an Employee on or after his or
her Required Beginning Date, such Participant's Accounts will be distributed beginning on his or her Required
Beginning Date in accordance with the applicable requirements of Code section 401(a)(9) and the regulations
promulgated thereunder.

6.5. Restrictions on Certain Distributions. In the case of a Participant whose Accounts are valued in excess
of $5,000 (or such greater amount as may be provided pursuant to Code section 411(a)(11)) and who has not yet
attained age 62, no distribution may be made to the Participant under this Article unless

(a) between the 30th and 90th day prior to the date distribution is to be made, the Administrator notifies
the Participant in writing that he or she may defer distribution until age 62 and provides the
Participant with a written description of the material features and (if applicable) the relative values
of the forms of distribution available under the Plan; and

(b) the Participant consents to the distribution in writing after the information described above has been
provided to him or her.

For purposes of this Section, a Participant's Accounts will be considered to be valued in excess of $5,000 if the
value of his or her Accounts exceeds such amount at the time of the distribution in question. A Participant may
waive or reduce the 30-day period prescribed above to the extent permitted by Code section 411(a)(11) and
regulations thereunder.

6.6. Distributions Required by a Qualified Domestic Relations Order. To the extent required by a Qualified
Domestic Relations Order, the Administrator shall make distributions from the vested portion of a Participant's
Accounts to alternate payees named in such order in a single sum, or in such other form available under the Plan
as set forth in the Qualified Domestic Relations Order, regardless of whether the Participant is otherwise
entitled to a distribution at such time under the Plan. Otherwise, the assigned proceeds shall be maintained in
a separate account with all applicable withdrawal, distribution and reallocation rights. The Administrator shall
establish reasonable procedures to determine whether an order or other decree is a Qualified Domestic Relations
Order, and to administer distributions under such orders.

6.7. Certain Dispositions. In connection with the disposition by an Employer of at least 85 percent of the
assets used by the Employer in a trade or business to an unrelated corporation, or the disposition of an
Employer's interest in a subsidiary to an unrelated entity, distribution of the entire vested Account balance of
an Employee who continues employment with the acquirer may be made to the Employee in a single sum, but only if
the acquirer does not maintain the Plan after the disposition, and only if such distribution is otherwise made in
accordance with Code section 401(k)(10).

6.8. Spousal Consent to Withdrawals by Certain Former Participants in Other Plans.

(a) In addition to the rights to take withdrawals prior to severance from employment as described in
Sections 6.1 and 6.3, in the case of a Participant for whom amounts have been transferred under Section
4.5, the Participant shall be entitled to take withdrawals hereunder in the circumstances in which
withdrawals prior to severance from employment would have been permitted under the transferor plan.

(b) In the case of a married Participant for whom amounts have been transferred under Section 4.5 from
another plan which provided an annuity form of payment, no withdrawal may be made under Article 6 unless
(a) his or her spouse consents in writing to such withdrawal, such consent acknowledges the effect of
the withdrawal, and is witnessed by a Plan representative or a notary public, and such consent specifies
the form of the withdrawal (i.e., a lump sum cash payment) or (b) it is established to the satisfaction
of the Administrator that the foregoing consent may not be obtained because the spouse cannot be
located, or because of such other circumstances as the Secretary of the Treasury may prescribe.

6.9. National Grid Share Fund Diversification.

(a) Notwithstanding any provision of the Plan to the contrary, effective as of the date and for such period
set forth in procedures adopted by the National Grid Committee, but not earlier than January 1, 2002,
once each Plan Year, a "Qualified Participant" may elect, in such manner and form as prescribed by the
Administrator, to receive a distribution of up to 25% of his or her Account(s) invested in the National
Grid Share Fund (reduced in accordance with section 401(a)(28) of the Code and regulations thereunder);
provided that, in a "Qualified Participant's" last year to make an election hereunder, "50%" shall be
substituted for "25%" above.

(b) Any distribution elected under this Section shall be made in a single sum payment in cash or in Shares,
as elected by the Participant, within 90 days following his or her election.

(c) For purposes of this Section, the term "Qualified Participant" means any Employee who is age 55 or older
and has completed at least 10 years of participation under the ESOP component of the Plan (such
participation commencing not earlier than September 9, 1988).

(d) In the event that at the time of distribution Shares are either not publicly traded or are subject to a
trading limitation within the meaning of the regulations under section 4975 of the Code, the Participant
shall be provided a put option in accordance with procedures established by the Administrator, which
shall comport with the regulations under section 4975 of the Code.

ARTICLE 7. LOANS TO PARTICIPANTS

7.1. In General. Upon the request of an Eligible Borrower in the form approved or prescribed by the
Administrator (including, if applicable, by means of telephone, computer or other paperless media), and subject
to the conditions of this Article 7, the Administrator shall direct the Trustees to make a loan from the Trust to
such Eligible Borrower. For purposes of this Article 7, an "Eligible Borrower" shall mean (i) a Participant in
the Plan who is an Employee, or (ii) a former Employee, or a Beneficiary of a deceased former Employee, for whom
an Account is maintained under the Plan who is a "party in interest" with respect to the Plan within the meaning
of ERISA Section 3(14).

7.2. Rules and Procedures. The Administrator shall promulgate such rules and procedures as it deems
necessary to carry out the purposes of this Article and/or to effectuate modifications to the loan program. All
such rules and procedures shall be deemed a part of the Plan for purposes of the Department of Labor's
Regulations Section 2550.408b-1(d).

7.3. Maximum amount of loan; Maximum number of loans. The following legal limitations shall apply in
determining the amount of any loan to an Eligible Borrower hereunder:

(a) The amount of the loan, together with all loans (if any) outstanding under this or any other qualified
retirement plan of the Administrator or any Employer, shall not exceed $50,000 reduced by the excess of
(1) the highest outstanding loan balance(s) of the Eligible Borrower from such plans during the one-year
period ending on the day prior to the date on which the loan is made, over (2) the Eligible Borrower's
outstanding loan balance from such plans immediately prior to the loan.

(b) The amount of the loan shall not exceed 50% of the Eligible Borrower's vested interest in his or her
Accounts, determined as of the Business Day immediately preceding the date of the loan.

The Administrator shall establish the maximum number of loans an Eligible Borrower may have outstanding at any
one time. The Administrator may also establish a maximum loan amount for the Plan that is less than (a) and (b)
above.

7.4. Minimum amount of loan. The Administrator shall establish the minimum amount of any single loan under
this Plan in a manner consistent with regulations promulgated by the Department of Labor and the Internal Revenue
Service.

7.5. Note; security; interest. Each loan shall be evidenced by a note signed by the Eligible Borrower. The
note evidencing a loan to an Eligible Borrower under this Article shall be an asset of the Trust which is
allocated to the Accounts of such Eligible Borrower, and shall for purposes of the Plan be deemed to have a value
at any given time equal to the unpaid principal balance of the note plus the amount of any accrued but unpaid
interest. Each loan shall be secured by that portion of the Eligible Borrower's Accounts represented by the
note, not to exceed 50% of his or her vested interest in his or her Accounts (determined as of the date of the
loan). The loan shall bear interest at an annual percentage interest rate to be determined by the
Administrator. In determining the interest rate, the Administrator shall take into consideration interest rates
currently being charged by persons in the business of lending money with respect to loans made in similar
circumstances.

7.6. Repayment. Each loan made to an Eligible Borrower who is receiving regular payments of compensation
from an Employer shall be repayable by payroll deduction. Loans made to other Eligible Borrowers (and, in all
events, where payroll deduction is no longer practicable) shall be repayable in such manner as the Administrator
may from time to time determine. In each case payments shall be made not less frequently than quarterly, over a
specified term (as determined by the Administrator) not to exceed five years (or twenty-five years where the loan
proceeds are to be used to purchase the Eligible Borrower's principal residence at the discretion of the
Administrator), with substantially level amortization (as that term is used in Code section 72(p)(2)(C)). An
Eligible Borrower may prepay all, but not less than all, of his or her loan at any time, without penalty, by
paying the loan principal then outstanding together with interest accrued and unpaid to the date of payment. The
Administrator may provide special procedures for loan repayments by Participants affected by leaves of absences,
long-term disability, workers compensation, work stoppages, or similar circumstances, in accordance with Code
section 72(p) and the applicable regulations.

7.7. Repayment upon distribution. If, at the time benefits are to be distributed to an Eligible Borrower or
his or her Beneficiary with respect to a termination of employment, there remains any unpaid balance of a loan
hereunder, such unpaid balance shall, to the extent consistent with Department of Labor regulations, become
immediately due and payable in full, which balance must be repaid within 60 days of termination. Such unpaid
balance, together with any accrued but unpaid interest on the loan, shall be deducted from the Eligible
Borrower's Accounts, subject to the default provisions below, before any distribution of benefits is made. Except
as may be required in order to comply (in a manner consistent with continued qualification of the Plan under Code
section 401(a)) with Department of Labor regulations, no loan shall be made to an Eligible Borrower under this
Article after the time distributions to the Eligible Borrower with respect to a termination of employment are to
be paid or commence.

7.8. Default. In the event of a default in making any payment of principal or interest when due under the
note evidencing any loan under this Article, if such default continues for more than 90 days, the unpaid
principal balance of the note shall immediately become due and payable in full. Such unpaid principal, together
with any accrued but unpaid interest, shall thereupon be deducted from the Participant's Accounts, starting with
the individual's Participant Account, subject to the further provisions of this Section. The amount so deducted
shall be treated as distributed to the Eligible Borrower and applied by the Eligible Borrower as a payment of the
unpaid interest and principal (in that order) under the note evidencing such loan; provided that the loan amount
shall continue to be treated as outstanding and accruing interest for purposes of applying the limitations set
forth under Section 7.3 with respect to subsequent loans. In no event shall the Administrator apply the Eligible
Borrower's Accounts to satisfy the Participant's repayment obligation, whether or not the Participant is in
default, unless the amount so applied otherwise could be distributed in accordance with this Plan and Code
section 401(k)(2)(B)(i). Notwithstanding any other provisions of this Plan to the contrary, upon a default, all
Elective Contributions to this Plan shall be suspended until twelve months following the default.

7.9. Nondiscrimination. Loans shall be made available under this Article to all Eligible Borrowers on a
reasonably equivalent basis, except that the Administrator may make reasonable distinctions based on
creditworthiness.

7.10. Adjustment of Accounts. Loans shall be made in order against the following Accounts: Elective
Contribution; Rollover; Participant; ESOP Transfer; and Employer. If said Accounts are invested in more than one
Investment Fund, the proceeds for the loan shall be taken from the Investment Funds in accordance with procedures
established by the Administrator.

The amount of the loan shall be transferred to a special sub-account for the Participant. Interest due
will be added to this account as accrued. Loan repayments shall be credited to this account and, as provided
below, to the Account(s) of the Participant equal to the principal and interest paid.

Loan repayments shall be credited on a pro-rata basis to the Account(s) from which the loan proceeds
were taken with interest allocated proportionately. Repayment proceeds shall be invested in the Investment Fund
or Funds in accordance with the Participant's regular investment election at the time of repayment; provided,
however, proceeds credited to the Employer Account or ESOP Transfer Account shall be invested in Shares; further
provided, in the event of a Cash Out Merger, proceeds credited to a Participant's Employer Account and ESOP
Transfer Account shall be invested in accordance with the Participant's regular investment election.

7.11. Spousal Consent to Loans to Certain Former Participants in Other Plans. In the case of a married
Participant for whom amounts have been transferred under Section 4.5 from a transferor plan which provided for an
annuity form of payment under Section 8.8 or under the transferor plan, no loan for which transferred proceeds
are used to fund the loan shall be made unless (a) the Participant's spouse consents in writing to such loan and
to the use of the Participant's Accounts as security for the loan, and such consent acknowledges the use of the
Accounts as security, is witnessed by a Plan representative or a notary public, and is provided no more than 90
days before the date on which the Loan is to be secured by the Accounts, or (b) it is established to the
satisfaction of the Administrator that the foregoing consent may not be obtained because the spouse cannot be
located, or because of such other circumstances as the Secretary of the Treasury may prescribe.

7.12. Loans Upon Termination of Employment During Company Restructuring. Notwithstanding Section 7.7, a
Participant who, upon termination of employment, either receives severance benefits under the New England
Electric System Companies Special Severance Plan for Union Employees dated March 1, 1998, or is employed by U.S.
Generating Company, may continue to re-pay her/his outstanding loan for up to one year following termination of
employment. In addition to the default provisions of 7.8, a default will occur by a Participant who is eligible
to make a loan repayments under this Section 7.12 but fails to make a scheduled payment after her/his last day of
employment. Upon such a default, the total outstanding balance of the loan shall become a deemed distribution
and no further installment payments will be accepted.

ARTICLE 8.

BENEFITS UPON DEATH OR SEVERANCE FROM EMPLOYMENT

8.1. Severance from Employment for Reasons other than Death. Following a Participant's severance from the
employment of the Employers for any reason other than death, the Participant may at any time elect to receive his
or her Accounts in a single sum in cash or in whole shares if available, and in cash in lieu of fractional
shares. Withdrawals from the National Grid Share Fund will be made in full shares and in cash in lieu of
fractional shares; provided however, a Participant may elect to receive a withdrawal from the National Grid Share
Fund entirely in cash; further provided, upon the occurrence of a Cash Out Merger, payments from the National
Grid Share Fund shall be made consistent with the operation of Section 9.3. If the Participant had not yet
attained age 55 as of his or her severance from employment, in lieu of a single sum payment, and in accordance
with procedures adopted by the Administrator, the Participant may from time to time elect to receive partial
payments from his or her Accounts other than his or her Elective Contribution Account in an amount determined by
the Participant. Partial payments from the Elective Contribution Account shall only be available due to hardship
as set forth in Section 6.1. If the Participant attained at least age 55 as of his or her severance from
employment, the Participant may elect one of the optional forms of benefit payments described in Section 8.5
below. In no event may distributions be deferred by a Participant beyond his or her Required Beginning Date as
set forth in Section 8.6. The proceeds of any distribution to be made all or in part in cash shall consist of
the value obtained by the Trustee from the Participant's Account(s) in carrying out the transactions necessary to
process the distribution.

Notwithstanding the foregoing, if the value of a Participant's Accounts does not exceed $5,000 (or such
greater amount as may be provided pursuant to Code Section 411(a)(11)), then the balance of the Accounts shall be
distributed in a single lump sum. For purposes of this Section, a Participant's Account will be considered to be
valued in excess of $5,000 if the value of his or her Accounts exceeds such amount at the time of the
distribution in question.

If a Participant is entitled to an additional Employer contribution which has not yet been paid on the
date of the distribution, the amount of the additional Employer contribution shall be (i) distributed as soon as
practicable thereafter, if at the time of the distribution the Participant no longer has an Account under Plan,
or (ii) credited to the Participant's Employer Account and, if the distribution is made pursuant to Section
8.5(a) or (b), included in the next recalculation of installments.

8.2. Time of Distributions. Distributions after a Participant's severance from employment normally will be
made as soon as practicable after the Participant's election (including without limitation receipt of all
required election and withdrawal forms).

8.3. Distributions After a Participant's Death or Disability.

(a) Death Prior to Severance from Employment. If a Participant dies prior to his or her severance from the
employment of the Employers, the Participant's Beneficiary will receive the Participant's Accounts not
later than the fifth anniversary of the Participant's death.

(b) Death After Severance from Employment. If a Participant dies after severance from employment but before
the complete distribution of his or her Accounts has been made, the Participant's Beneficiary will
receive the vested portion of the Participant's Accounts. Distribution will be made in accordance with
the provisions of Section 8.1 not later than the fifth anniversary of the Participant's death; provided,
however, that if distribution to the Participant had begun following his or her severance from
employment in another form elected by the Participant, distribution will continue to be made to the
Beneficiary at least as rapidly in such form unless the Beneficiary elects to receive distribution in
cash in a single sum as soon as practicable following the Participant's death. Any such election must
be on a form approved by the Administrator and must be received by the Administrator within such period
following the Participant's death as the Administrator may prescribe. Any distribution to a Beneficiary
under this Section in the form of a single sum shall consist of the value obtained by the Trustee from
the Participant's Account(s) in carrying out the transactions necessary to process the distribution.

(c) Distributions Upon Participant's Death After August 31, 2001. Notwithstanding the foregoing, with
respect to the distributions under the Plan made on or after September 1, 2001, upon the death of a
Participant, the Participant's interest under the Plan shall be distributed in a manner that satisfies
the minimum distribution requirements of section 401(a)(9) of the Internal Revenue Code in accordance
with the regulations under section 401(a)(9) that were proposed on January 17, 2001, notwithstanding any
provision of the Plan to the contrary. The provisions of this subsection shall continue in effect until
the end of the last calendar year beginning before the effective date of final regulations under section
401(a)(9) or such other date as may be specified in guidance published by the Internal Revenue Service.

(d) Distributions on Becoming Disabled. A Participant who is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be expected to
result in death or to be of long-continued and indefinite duration may elect in writing, at any time
prior to retirement, to receive a lump sum distribution as soon as practicable, but not later than 60
days after the end of the Plan Year in which such election is made. A Participant shall not be
considered disabled unless he or she furnishes proof of the disability in such form and manner as the
Administrator requires, in accordance with the Code and the applicable regulations.

8.4. Designation of Beneficiary. Subject to the provisions of this Section, a Participant's Beneficiary
shall be the person or persons and entity or entities, if any, designated by the Participant from time to time in
a manner approved by the Administrator. In the absence of an effective beneficiary designation, a Participant's
Beneficiary shall be his or her surviving spouse, if any, or if none, the Beneficiary named in the Participant's
group life insurance enrollment for insurance provided, in whole or in part, by the Employer, or if none, the
Participant's estate. A nonspouse beneficiary designation by a Participant who is married at the time of his or
her death shall not be effective unless,

(a) prior to the Participant's death, the Participant's surviving spouse consented to and acknowledged the
effect of the Participant's designation of a specific non-spouse Beneficiary (including any class of
Beneficiaries or any contingent Beneficiaries) on a written form approved by the Administrator and
witnessed by a notary public or a duly authorized Plan representative; or

(b) it is established to the satisfaction of the Administrator that spousal consent may not be obtained
because there is no spouse, because the spouse has died (evidenced by a certificate of death), because
the spouse cannot be located (based on information supplied by a government agency or independent
investigator), because of a legal separation (as determined under applicable law), or because of such
other circumstances as the Secretary of the Treasury may prescribe; or

(c) the spouse had earlier executed a general consent form permitting the Participant (i) to select from
among certain specified beneficiaries without any requirement of further consent by the spouse (and the
Participant designates a Beneficiary from the specified list), or (ii) to change his or her beneficiary
without any requirement of further consent by the spouse. Any such general consent shall be on a form
approved by the Administrator, witnessed in accordance with subparagraph (a) above, and must acknowledge
that the spouse has the right to limit consent to a specific beneficiary and that the spouse voluntarily
elects to relinquish such right.

In the event a spouse is legally incompetent to give consent, the spouse's legal guardian, even if the guardian
is the Participant, may give consent on behalf of the spouse. Any consent and acknowledgment by (or on behalf
of) a spouse, or the establishment that the consent and acknowledgment cannot be obtained, shall be effective
only with respect to such spouse, but shall be irrevocable once made.

8.5. Optional Forms of Benefit. Following a Participant's severance from the employment of the Employers for
any reason after attaining at least age 55, if the value of the Participant's Accounts exceeds $5,000 (or such
greater amount as may be prescribed pursuant to Code section 411(a)(11)), such Participant may elect to receive
his or her Accounts in one of the following payment forms in lieu of a lump sum cash payment, provided that such
election is made in accordance with procedures adopted by the Administrator:

(a) in a series of annual installments, commencing in the calendar year of retirement or the next following
calendar year and continuing over a period not to exceed ten years (or, if less, the Participant's life
expectancy on the earlier of the date distribution commences and the date of attaining age 70 1/2), the
amount of each such installment to be equal to the lesser of (i) the balance of the Participant's
Accounts, or (ii) the balance of the Participant's Account at the beginning of each Plan Year in which
an annual installment is due divided by the selected installment period (such period to be reduced by
the number of the Participant's taxable years which have commenced since the taxable year of the
Participant in which occurred the earlier of the date distribution commenced or the date of attaining
age 70 1/2);

(b) monthly installment payments in an amount determined by the Participant from time to time; or

Except as set forth in Supplement A for certain Nantucket Electric Company employees, a distribution in
the form of a joint and survivor annuity is not currently available under the Plan.

8.6. Distributions Upon Required Beginning Date. If a Participant reaches his or her Required Beginning Date
and has failed to elect to receive any or sufficient benefit payments (as determined in accordance with section
401(a)(9) of the Code), the Participant shall receive a series of annual installments commencing on his or her
Required Beginning Date and continuing for the life expectancy of the Participant (or, if otherwise elected, and
subject to the limitations set forth in the Code and regulations promulgated thereunder, the joint life and last
survivor expectancy of the Participant and her/his spouse or the joint life and last survivor expectancy of
participant and beneficiary (other than the spouse)). Life expectancies (except for beneficiaries) shall be
recalculated annually. The amount of each installment shall be equal to the lesser of (i) the balance of the
Participant's Account, or (ii) the balance of the Participant's Account at the beginning of each Plan Year in
which an annual installment is due divided by the remaining number of years (life expectancy less the number of
years elapsed since his or her Required Beginning Date).

Notwithstanding the foregoing, with respect to distributions under the Plan made on or after September
1, 2001 for calendar years beginning on or after January 1, 2001, the Plan shall apply the minimum distribution
requirements of section 401(a)(9) of the Internal Revenue Code in accordance with the regulations under section
401(a)(9) that were proposed on January 17, 2001 (the 2001 Proposed Regulations), notwithstanding any provision
of the plan to the contrary. If the total amount of required minimum distributions made to a Participant for
2001 prior to September 1, 2001 are equal to or greater than the amount of required minimum distributions
determined under the 2001 Proposed Regulations, then no additional distributions are required for such
Participant for 2001 on or after such date. If the total amount of required minimum distributions made to a
Participant for 2001 prior to September 1, 2001 are less than the amount determined under the 2001 Proposed
Regulations, then the amount of required minimum distributions for 2001 on or after such date will be determined
so that the total amount of required minimum distributions for 2001 is the amount determined under the 2001
Proposed Regulations. This amendment shall continue in effect until the end of the last calendar year beginning
before the effective date of the final regulations under section 401(a)(9) or such other date as may be published
by the Internal Revenue Service.

8.7. Direct Rollovers of Eligible Distributions.

(a) In General. Notwithstanding any provision of the Plan to the contrary that may otherwise limit a
distributee's election under this Section, a distributee may elect, at the time and in the manner
prescribed by the Administrator, to have any portion of an eligible rollover distribution paid directly
to an eligible retirement plan specified by the distributee in a direct rollover. The Administrator
shall give a distributee notice of his or her right to elect a direct rollover and an explanation of the
withholding consequence of not making the election. To the extent required by law, such notice shall be
given no earlier than 90 days and no less than 30 days before the date of distribution. The
distributee, in his or her sole discretion, may waive or reduce, in writing, the right to 30 days'
notice to the extent permitted by Code Section 411(a)(11).

(b) Definitions. For purposes of this Section, the following definitions shall apply:

(i) An "eligible rollover distribution" is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the distributee or the
joint lives of the distributee and the distributee's Beneficiary, or for a specified period of
ten years or more; any distribution to the extent such distribution is required under Code
section 401(a)(9); for distributions on or after January 1, 1999, hardship distributions
described in Code Section 401(k)(2)(B)(i)(IV), in accordance with Code section 402(c)(4)(C);
and the portion of any distribution that is not includable in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer securities).
Notwithstanding the foregoing, with respect to distributions made after December 31, 2001, a
portion of a distribution shall not fail to be an eligible rollover distribution merely because
the portion consists of After-tax Contributions which are not includible in gross income.
However, such portion may be transferred only to an individual retirement account or annuity
described in section 408(a) or (b) of the Code, or to a qualified defined contribution plan
described in section 401(a) or 403(a) of the Code that agrees to account separately for amounts
so transferred, including separately accounting for the portion of such distribution which is
includible in gross income and the portion of such distribution which is not so includible.

(ii) With respect to a distributee, an "eligible retirement plan" is an individual retirement account
described in Code section 408(a), an individual retirement annuity described in Code section
408(b), an annuity plan described in Code section 403(a), or a qualified trust described in
Code section 401(a). With respect to distributions made after December 31, 2001, an "eligible
retirement plan" shall also mean an annuity contract described in Code section 403(b) and an
eligible plan under section 457(b) of the Code which is maintained by a state, political
subdivision of a state or any agency or instrumentality of a state or political subdivision of
a state and which agrees to account separately for amounts transferred into such plan from this
Plan. Notwithstanding the foregoing, for distributions prior to January 1, 2002, with respect
to a distributee who is a Participant's surviving spouse, an eligible retirement plan is an
individual retirement account or an individual retirement annuity.

(iii) A "distributee" includes an employee or former employee. In addition, the employee's or former
employee's surviving spouse and the employee's or former employee's spouse or former spouse, who
is an alternate payee under a qualified domestic relations order, are distributed with regard
to the interest of the spouse or former spouse.

(iv) A "direct rollover" is a payment by the Plan to the eligible retirement plan specified by the
distributee.

8.8. Special Rules for Former Participants in Merged Plans.

(a) Transferor plans subject to Code section 401(a)(11). If the vested portion of the Account of a
Participant for whom accounts have been transferred under Section 4.5 from a transferor plan to which
the requirements of Code section 401(a)(11) were applicable at the time of the transfer becomes payable
under Section 8.1 and if the Participant elects during the 90-day period preceding his or her annuity
starting date (or has elected at any time under the transferor plan) the payment of benefits in the form
of a life annuity, the Participant's vested portion of his or her Accounts shall be applied to the
purchase from an insurance company of a single premium nontransferable annuity contract providing (a) if
the Participant is married on his or her annuity starting date, an annuity for the life of the
Participant, and upon the death of the Participant providing a further annuity for the life of the
spouse (to whom the Participant was married on his or her annuity starting date) in an amount equal to
50 percent of the amount of the annuity payable during the joint lives of the Participant and his or her
spouse, and (b) if the Participant is not married on his or her annuity starting date, an annuity for
the life of the Participant. Any Participant subject to the provisions of this Section 8.8 may elect,
during the 90-day period preceding his or her annuity starting date, not to have his or her vested
Account balance applied to purchase the annuity described above and either (1) to have his or her vested
Account balance distributed in one of the forms described under Section 8.5 or (2) any optional form of
payment provided under the transferor plan.

If the Participant is married on his or her annuity starting date, any election pursuant to the
preceding sentence shall be effective only if:

(i) his or her spouse consents in writing to such election and, if applicable, to distribution of the
Participant's vested Account balance before age 65, such consent acknowledges the effect of the
election and is witnessed by a Plan representative or a notary public, and such consent either
(1) specifies the form of distribution to the Participant and, if distribution is to be made in
installments, any nonspouse Beneficiary (including any class of Beneficiaries or any contingent
Beneficiaries), or (2) authorizes the Participant to change the form of distribution or the
Beneficiary without further consent, or

(ii) it is established to the satisfaction of the Committee that the foregoing consent may not be obtained
because the spouse cannot be located, or because of such other circumstances as the Secretary
of the Treasury may prescribe, or

(iii) the Participant elects a joint and survivor annuity naming his or her surviving spouse as beneficiary
which provides a survivor annuity greater than 50 percent of the annuity payable during the
joint lives of the Participant and his or her spouse.

Any consent by a spouse under (i) above, or a determination by the Committee under (ii) above
with respect to such spouse, shall be effective only with respect to such spouse and shall be
obtained within 90 days prior to the annuity starting date. Any such consent shall be
irrevocable. Any such consent that authorizes the Participant to change the form of
distribution of the Beneficiary without further consent must acknowledge the spouse's right to
limit consent to specific forms of distribution and Beneficiary and the spouse's voluntary
election to relinquish such right. For purposes of this Section 8.8, the term "annuity
starting date" means the first day of the first period for which an annuity is payable under
the annuity contract described above.

(b) Transferor plans not subject to Code section 401(a)(11). If the vested portion of the Account of a
Participant for whom accounts have been transferred under Section 4.5 from a transferor plan to which
the requirements of code section 401(a)(11) were not applicable at the time of the transfer becomes
payable under Section 8.1, the Participant may elect either (i) to have his or her vested Account
balance distributed in a form described in Section 8.1 or 8.5, or (ii) to have his or her vested Account
balance distributed in any optional form of benefit provided under the transferor plan.

8.9. Distribution Restrictions for Elective Contributions. Notwithstanding anything in the Plan to the
contrary, a Participant's Elective Contribution Account shall be distributable only in accordance with Code
section 401(k).

8.10. Provisions under Article 8. The timing, form, manner and amount of benefits payable under the
provisions of this Article 8 may be modified by procedures adopted by the National Grid Committee.

ARTICLE 9.

VOTING AND DISPOSITION OF SHARES.

9.1. Voting of Shares. Before each annual or special meeting of shareholders of National Grid there shall be
sent to each Participant and Beneficiary a copy of the proxy solicitation material for the meeting, together with
a form requesting instructions to the Trustee on how to vote the Shares credited to such participant's Account,
which may, for purposes of such instructions only, be combined with other Shares in such participant's Accounts
in other plans maintained by the Employers. Upon receipt of such instructions, the Trustee shall vote the Shares
as instructed. The Trustee shall vote Shares for which it does not receive voting instructions in the same
proportions as it votes the Shares held by it under the Plan for which it does receive such instructions. For
the purposes of this Section, the Trustee may use the latest allocation information available to it on the record
date.

9.2. Tender or Exchange Offers. In the event of a tender offer or exchange offer for the Shares,
Participants and Beneficiary shall be advised in writing as to the terms of the tender or exchange offer, and
provided with a form requesting instructions to the Trustee on whether a Participant's and Beneficiary's Shares
shall be tendered or exchanged. Upon receipt of such instruction, the Trustee shall then tender or exchange the
Shares as instructed. A Participant's and Beneficiary's Shares for which the Trustee receives no instructions
shall be deemed an affirmative instruction by the Participant and Beneficiary not to tender or exchange the
Shares. Each Participant and Beneficiary who holds Shares in an Account(s) shall be named fiduciary for purposes
of tendering and exchanging those Shares.

A statement from the management of National Grid setting forth its position with respect to the tender
or exchange offer may be included with the request for instructions sent to Participants and Beneficiaries . The
giving of permission to the Trustee to tender or exchange shares shall not be deemed to constitute withdrawal or
suspension from the Plan or forfeiture of any portion of the Participant's or Beneficiary's interest in the Plan.

For purposes of this Section 9.2, the number of Shares held by a Participant or Beneficiary shall be
determined as of the close of business on the day immediately preceding the date on which the offer commences.

9.3. Cash Out Merger. Upon consummation of a Cash Out Merger, each Participant and Beneficiary shall be
advised in writing thereof and provided with a form requesting instructions to the Trustee on whether the
Participant's and Beneficiary's right to receive cash shall be executed or whether the Participant or Beneficiary
wishes to exercise the rights, if any, of a dissenting shareholder. Upon receipt of such instructions, the
Trustee shall exercise such right or submit a request for appraisal. As to a Participant's or Beneficiary's
rights to which the Trustee receives no instructions within 30 days after mailing of the aforesaid advice in
writing, the Participant or Beneficiary shall be deemed to have given an affirmative instruction to exercise the
right to receive cash. Each Participant or Beneficiary who was the holder of Shares in an Account(s) shall be
named fiduciary for the purpose of exercising the right to receive cash or to seek appraisal.

A statement from the management of National Grid setting forth its position with respect to the Cash Out
Merger may be included with the request for instructions sent to Participants and Beneficiaries. The exercise of
an option to receive cash or to exercise the rights of a dissenting shareholder shall not be deemed to constitute
withdrawal or suspension of the Plan or forfeiture of the Plan or the Participant's or Beneficiary's interest in
the Plan.

9.4. Investment of Proceeds of Tender Offer, Shares Received in Exchange Offer. Following a tender or
exchange offer, if, pursuant to Section 9.2, a Participant or Beneficiary has tendered his or her shares or if
the Trustee tenders Shares for which it receives no instructions, any cash proceeds received shall be invested
for the account of such Participant or Beneficiary in the Investment Fund providing the most security as to
principal.

Any securities received by the Trustee in exchange for Shares shall be held in the Investment Fund in
which the Shares were held.

9.5. Investment Following Cash Out Merger. Following a Cash Out Merger, any cash proceeds received from the
exercise of the rights or as a result of any exercise of the rights of a dissenting shareholder by a Participant,
a Beneficiary or by the Trustee for Shares for which it received no instruction, any cash proceeds received shall
be invested for the account of such Participant or Beneficiary in the Investment Fund providing the most security
to its principal.

9.6. Confidentiality of Instructions. All instructions to the Trustee by Participants and Beneficiaries
relating to proxies, tender offers, or exchange offers shall be held in strict confidence.

9.7. Provisions under Article 9. The timing, form, manner and amount of benefits payable under this Article
9 may be modified by procedures adopted by the National Grid Committee.

ARTICLE 10.

ADMINISTRATION.

10.1. Administrator. The Plan will be administered by the Benefits Committee. Except as may be directed by
the Board, no person serving as Administrator will receive any compensation for his or her services as
Administrator. The Administrator will be a "named fiduciary" for purposes of section 402(a)(1) of ERISA with
authority to control and manage the operation and administration of the Plan, and will be responsible for
complying with all of the reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA. The
Administrator will not, however, have any authority over the investment of assets of the Trust in its capacity as
Administrator.

10.2. Powers of Administrator. The Administrator will have full discretionary power to administer the Plan in
all of its details, subject, however, to the requirements of ERISA. For this purpose the Administrator's
discretionary power will include, but will not be limited to, the following authority:

(a) to make and enforce such rules and regulations as it deems necessary or proper for the efficient
administration of the Plan or required to comply with applicable law;

(b) to interpret the Plan;

(d) to compute the amounts to be distributed under the Plan, and to determine the person or persons to whom
such amounts will be distributed;

(e) to authorize the payment of distributions;

(f) to keep such records and submit such filings, elections, applications, returns or other documents or
forms as may be required under the Code and applicable regulations, or under other federal, state or
local law and regulations;

(g) to allocate and delegate its ministerial duties and responsibilities and to appoint such agents,
counsel, accountants and consultants as may be required or desired to assist in administering the Plan;
and

(h) by written instrument, to allocate and delegate its fiduciary responsibilities in accordance with ERISA
section 405.

10.3. Action. The Benefits Committee and the Benefits Appeal Committee shall hold meetings upon such notice,
at such place or places, and at such times as its members may from time to time determine. The Benefits
Committee and the Benefits Appeal Committee each may hold said meetings by telephone at its own discretion. A
majority of the respective Committee's members at the time in office shall constitute a quorum for the
transaction of business. All action taken at any meeting shall be by vote of the majority of the members present
at such meeting, except that the Benefits Committee and the Benefits Appeal Committee may each also act without a
meeting by a consent signed by a majority of its members. Any member of the Benefits Committee who is a
Participant in the Plan shall not vote on any question relating to herself/himself exclusively.

10.4. Authority to Act. The Benefits Committee and the Benefits Appeal Committee may authorize one or more of
their respective members (including any former member), the officers, or agents to sign on their respective
behalves any instructions, directions, notifications, or communications and the receiving person(s) may
conclusively rely thereon and the information contained therein.

10.5. Effect of Interpretation or Determination. Any interpretation of the Plan or other determination with
respect to the Plan by the Administrator shall be binding and conclusive on all persons in the absence of clear
and convincing evidence that the Administrator acted arbitrarily and capriciously.

10.6. Reliance on Tables, etc. In administering the Plan, the Administrator will be entitled, to the extent
permitted by law, to rely conclusively on all tables, valuations, certificates, opinions and reports which are
furnished by any accountant, trustee, counsel or other expert who is employed or engaged by the Administrator.

10.7. Claims and Review Procedures. The Administrator shall adopt procedures for the filing and review of
claims in accordance with ERISA section 503.

10.8. Denied Claims.

(a) If any claim under the Plan shall be denied, the Benefits Committee shall:

(i) Notify the claimant within a reasonable time of such denial, setting forth the specific reasons
therefore; and

(ii) Afford such claimant a reasonable opportunity for a full and fair review of the decision denying the
claim.

(b) The notice of such denial shall set forth, in addition to the specific reasons for the denial, the
following:

(i) Identification of pertinent provisions of the Plan;

(ii) Such addition information as may be relevant to denial of claim; and

(iii) An explanation of the claims review procedure including a statement of the claimant's right to bring a
civil action under Section 502 of ERISA following an adverse benefit determination on review;
and advice that such claimant may request the opportunity to review pertinent plan documents
and submit a statement of issues and comments.

(c) Within sixty days following advice of denial of the claim, upon request made by any claimant for a
review of such denial, the Benefits appeal Committee shall take appropriate steps to review its decision
in light of any further information or comments submitted by such claimant. The Benefits Appeal
Committee shall be empowered to hold a hearing at which such claimant shall be entitled to present in
writing the basis of any claim for review.

(d) The Benefits Appeal Committee shall render a decision within sixty days after the claimant's request for
review (which may be extended to 120 days if the Benefits Appeal Committee determines it to be
necessary) and shall advise the claimant in writing of its decision on such review, specifying its
reasons and identifying appropriate provisions of the Plan.

10.9. Liability for Acts. To the extent permitted by applicable law, no member of the Benefits Committee or
the Benefits Appeal Committee shall be personally liable for any error of omission or commission unless such
error results from her/his own gross negligence, willful misconduct, or lack of good faith; nor shall any member
of the Benefits Committee or the Benefits Appeal Committee be personally liable for any act of gross negligence,
willful misconduct, or lack of good faith of any other member or members of such Benefits Committee or the
Benefits Appeal Committee.

10.10. Indemnification of Administrator and Assistants. Each Employer agrees, jointly and severally, to
indemnify and defend to the fullest extent of the law any Employee or former Employee (a) who serves or has
served as Administrator or on the Committee, (b) who has been appointed to assist the Administrator in
administering the Plan or who so assists the Administrator in connection with his or her employment duties, or
(c) to whom the Administrator has delegated any of its duties or responsibilities, against any liabilities,
damages, costs and expenses (including attorneys' fees and amounts paid in settlement of any claims approved by
the Administrator) occasioned by any act or omission to act in connection with the Plan, if such act or omission
to act is in good faith.

10.11. Examination of Records. The Administrator will make available to each Participant such of its records
as pertain to him or her, for examination at reasonable times during normal business hours.

10.12. Authority to Correct Operational Defects. The Administrator shall have full discretionary power and
authority to correct any "operational defect" of the Plan in any manner or by any method it deems appropriate in
its sole discretion in order to cause the Plan (i) to operate in accordance with its terms or (ii) to maintain
its tax-qualified status under the Code. For purposes of this Section, an "operational defect" is any
operational or administrative action (or inaction) in connection with the Plan which, in the judgment of the
Administrator, fails to conform with the terms of the Plan or causes or could cause the Plan to lose its
tax-qualified status under the Code.

ARTICLE 11.

AMENDMENT AND TERMINATION.

11.1. Amendment. The National Grid Committee reserves the power at any time or times to amend the provisions
of the Plan to any extent and in any manner that it may deem advisable by a written instrument signed by an
authorized member of National Grid Committee providing for such amendment. The Board reserves the power at any
time or times to amend the provisions of the Trust(s) to any extent and in any manner that it may deem advisable
by a written instrument signed by an authorized officer of National Grid USA Service Company. However, neither
the National Grid Committee or the Board will have the power:

(a) to amend the Plan or Trust in such manner as would cause or permit any part of the assets of the Trust
to be diverted to purposes other than for the exclusive benefit of each Participant and his or her
Beneficiary (except as permitted by the Plan with respect to Qualified Domestic Relations Orders or the
return of contributions upon nondeductibility, mistake of fact, or the failure to qualify initially),
unless such amendment is required or permitted by law, governmental regulation or ruling;

(b) to amend the Plan or Trust retroactively in such a manner as would reduce the accrued benefit of any
Participant, except as otherwise permitted or required by law. For purposes of this paragraph, an
amendment which has the effect of decreasing a Participant's Account balance or eliminating any optional
form of benefit, with respect to benefits attributable to service before the amendment, shall be treated
as reducing an accrued benefit. Furthermore, if the vesting schedule of the Plan is amended, in the
case of an Employee who is a Participant as of the later of the date such amendment is adopted or the
date it becomes effective, the nonforfeitable percentage (determined as of such date) of such Employee's
Account balance will not be less than the percentage computed under the Plan without regard to such
amendment;

(c) to amend the Plan in such manner as would increase the duties or liabilities of the Trustee(s), unless
the Trustee(s) consents thereto in writing; or

(d) on or after January 1, 2002, without the prior approval by ordinary resolution of the shareholders of
National Grid in general meeting, to amend the Plan to the advantage of Participants in respect of
eligibility, limits on participation, the overall limit on the issue of Shares, terms of participation,
withdrawals, or adjustment of contributions (except for minor amendments to benefit the administration
of the Plan, to take account of a change in legislation or to obtain or maintain favorable tax, exchange
control or regulatory treatment for the Participants, any Employer, the Administrator, the Benefits
Committee, the Board, National Grid, the National Grid Committee, or the Trustee).

11.2. Termination. The Plan has been established and the Trust(s) authorized with the bona fide intention and
expectation that contributions will be continued indefinitely, but neither the National Grid Committee, the Board
nor the Administrator will have an obligation or liability whatsoever to maintain the Plan for a given length of
time and contributions to the Plan may be discontinued and/or the plan terminated at any time by written notice
delivered to the Trustee without liability whatsoever for any such discontinuance or termination. In addition,
the Employers will have no obligation or liability whatsoever to maintain the Plan for any given length of time
and may cease to be Employers in a manner acceptable to the Board.

11.3. Distributions upon Termination of the Plan. Upon termination of the Plan by the Administrator, the
Trustee will distribute to each Participant (or other person entitled to distribution) the value of the
Participant's Accounts in a single sum as soon as practicable following such termination. The amount of such
distribution shall be determined as of the Business Day immediately preceding or coinciding with the date
distribution is to be made. Notwithstanding the preceding sentence, if any Employer maintains or establishes a
defined contribution plan (other than an employee stock ownership plan or a simplified employee pension) that
benefits at least 2 percent of the employees in the terminated Plan, Accounts shall be distributed to
Participants and their Beneficiaries only in a manner consistent with Code sections 401(k)(2)(B)(i)(I), (III) and
(IV), and 401(k)(10)(A)(ii) and (iii). In such case, a Participant's Accounts will be transferred, without the
Participant's consent, to the other plan pending distribution.

11.4. Merger or Consolidation of Plan; Transfer of Plan Assets. In case of any merger or consolidation of the
Plan with, or transfer of assets and liabilities of the Plan to, any other plan, provision must be made so that
each Participant would, if the Plan then terminated, receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit he or she would have been entitled to
receive immediately before the merger, consolidation or transfer if the Plan had then terminated. The foregoing
notwithstanding, any merger, consolidation, or transfer shall require the approval of the Board; provided,
however that transfers may be made between the Plan and the National Grid USA Companies' Incentive Thrift Plan I
without such approval; provided further, that Participants may elect to have their entire account balances
transferred to or from an affiliated company's defined contribution plan provided at the time of the transfer (i)
the other plan's trustee/recordkeeper is the same as the Plan's trustee/recordkeeper, (ii) the Participant is an
employee of said affiliated company, and (iii) the other plan permits the transfer. Transfers made pursuant to
the above shall be made in accordance with section 414(l) of the Code, section 208 of ERISA, and regulations
promulgated thereunder and in accordance with procedures established by the Administrator.

ARTICLE 12.

LIMITS ON CONTRIBUTIONS.

12.1. Code Section 404 Limits. The sum of the contributions made by each Employer under the Plan for any Plan
Year shall not exceed the maximum amount deductible under the applicable provisions of the Code. All
contributions under the Plan made by an Employer are expressly conditioned on their deductibility under Code
section 404 for the taxable year when paid (or treated as paid under Code section 404(a)(6)).

12.2. Code Section 415 Limits.

(a) Incorporation by reference. Code section 415 is hereby incorporated by reference into the Plan.

(b) Annual addition. The Administrator shall determine an "annual addition" for each Participant for each
limitation year, which shall consist of the following amounts allocated to the Participant's Accounts
for the year:

(i) Elective Contributions,

(ii) Qualified Nonelective Contributions,

(iii) Basic Matching Contributions,

(iv) Discretionary Matching Contributions, and

(v) Amounts allocated to an individual medical account (as defined in Code section 415(l)(2)) which is part
of a pension or annuity plan maintained by an Employer.

(c) General limitation on annual additions. The annual addition to a Participant's Accounts under the Plan
for any limitation year, when added to the annual additions to his or her accounts for such Year under
all other defined contribution plans maintained by the Employers, shall not exceed the lesser of
(i) $30,000 (or, if greater, one-fourth of the limitation in effect for the limitation year under Code
section 415(b)(1)(A)), or (ii) twenty-five percent of the Participant's Compensation for such limitation
year. For Plan Years beginning on or after January 1, 2002, the amount in (i) above shall be $40,000
(increased from time to time in accordance with Code section 415(d) and the amount in (ii) above shall
be 100% of the Participant's Compensation for such limitation year (or such other percentage as provided
by Code section 415)). With respect to limitation years beginning before January 1, 2000, in the case
of a Participant who also participates in FAPP I, the annual addition for a limitation year will, if
necessary, be further limited so that the sum of the Participant's "defined contribution plan fraction"
(as determined under Code section 415(e) and the regulations thereunder) and his or her "defined benefit
plan fraction" (as determined under Code section 415(e) and the regulations thereunder) for such
limitation year does not exceed 1.0; provided that the benefit under FAPP I shall be limited, if
appropriate, before any reductions in annual additions under this Plan.

(d) Limitation Year. For purposes of determining the Code section 415 limits under the Plan, the
"limitation year" shall be the Plan Year.

(e) Corrections. If, as a result of the allocation of forfeitures, a reasonable error in estimating a
Participant's compensation for a Plan Year or limitation year, a reasonable error in determining the
amount of elective deferrals (within the meaning of Code section 402(g)(3)) that may be made with
respect to any individual under the limits of Code section 415, or under such other facts and
circumstances as may be permitted under regulation or by the Internal Revenue Service, the annual
addition under the Plan for a Participant would cause the Code section 415 limitations for a limitation
year to be exceeded, any Elective Contributions made pursuant to a Contribution Agreement together with
earnings thereon made by or on behalf of the Participant for the Limitation Year, to the extent
necessary, will be reduced. If the remaining annual addition for the Participant still exceeds the Code
section 415 limits for the limitation year, Employer contributions (including Qualified Nonelective
Contributions and Matching Contributions) together with earnings thereon, will be reduced to the extent
necessary for the limitation year. Where limitation of the Participant's annual addition under this
Plan is required by reducing the Participant's Elective Contributions and amounts previously credited to
a Participant's Accounts cause her/his annual addition to exceed such limitation, the Trustee will, in
accordance with the instructions of the Administrator, charge against the Participants' Accounts an
amount (adjusted to reflect income, expenses, gain, or loss of the Trust properly attributed to the
excessive credit) sufficient to permit the remaining credits to satisfy such limitation for such Plan
Year. Such excess amount will then be treated in accordance with the method selected by the
Administrator from among those methods permitted under the Treasury Regulations promulgated under
section 415 of the Code. The above limitations are intended to comply with the provisions of section
415 of the Code so that, if the limitations become applicable, the maximum benefits provided by plans of
the Employers shall be exactly equal to the maximum amounts allowed under section 415 of the Code and
regulations thereunder. If there is any discrepancy between the provisions of this Section 12.2 and the
provisions of section 415 of the Code and Treasury Regulations promulgated thereunder, the discrepancy
shall be resolved in such a way as to give full effect to the provisions of section 415 of the Code.

12.3. Code Section 402(g) Limits.

(a) In general. The maximum amount of Elective Contributions made on behalf of any Participant for any
calendar year, when added to the amount of elective deferrals under all other plans, contracts and
arrangements of an Employer with respect to the Participant for the calendar year), shall in no event
exceed the maximum applicable limit in effect for the calendar year under Regulation section
1.402(g)-1(d), except to the extent permitted under Section 3.5 of the Plan and section 414(v) of the
Code. For purposes of the Plan, an individual's elective deferrals for a taxable year are the sum of
the following:

(i) Any elective contribution under a qualified cash or deferred arrangement (as defined in Code section
401(k)) to the extent not includable in the individual's gross income for the taxable year on
account of Code section 402(a)(8) (before applying the limits of Code section 402(g) or this
section);

(ii) Any employer contribution to a simplified employee pension (as defined in code section 408(k) to the
extent not includable in the individual's gross income for the taxable year on account of Code
section 402(h)(1)(B) (before applying the limits of Code section 402(g));

(iii) Any employer contribution to a custodial account or annuity contract under section 403(b) under a salary
reduction agreement (within the meaning of Code section 3121(a)(5)(D)), and any elective
contribution pursuant to an eligible deferred compensation plan under Code section 457, to the
extent not includable in the individual's gross income for the taxable year on account of Code
section 403(b) or 457 before applying the limits of Code section 402(g); and

(iv) Any employee contribution designated as deductible under a trust described in Code section 501(c)(19)
(before applying the limits of Code section 402(g)).

A Participant will be considered to have made "excess deferrals" for a taxable year to the extent that
the Participant's elective deferrals for the taxable year exceed the applicable limit described above
for the year.

(b) Distribution of excess deferrals. In the event that an amount is included in a Participant's gross
income for a taxable year as a result of an excess deferral under Code section 402(g), and the
Participant notifies the Administrator on or before the March 1 following the taxable year that all or a
specified part of an Elective Contribution made for his or her benefit represents an excess deferral,
the Administrator shall make every reasonable effort to cause such excess deferral, adjusted for
allocable income, to be distributed to the Participant no later than the April 15 following the calendar
year in which such excess deferral was made. The income allocable to excess deferrals is equal to the
allocable gain or loss for the taxable year of the individual, but not the allocable gain or loss for
the period between the end of the taxable year and the date of distribution (the "gap period"). Income
allocable to excess deferrals for the taxable year shall be determined by multiplying the gain or loss
attributable to the Participant's Elective Contribution Account for the taxable year by a fraction, the
numerator of which is the Participant's excess deferrals for the taxable year, and the denominator of
which is the sum of the Participant's Elective Contribution Account balance as of the beginning of the
taxable year plus the Participant's Elective Contributions for the taxable year. No distribution of an
excess deferral shall be made during the taxable year of a Participant in which the excess deferral was
made unless the correcting distribution is made after the date on which the Plan received the excess
deferral and both the Participant and the Plan designates the distribution as a distribution of an
excess deferral. The amount of any excess deferrals that may be distributed to a Participant for a
taxable year shall be reduced by the amount of Elective Contributions that were excess contributions and
were previously distributed to the Participant for the Plan Year beginning with or within such taxable
year.

(c) Treatment of excess deferrals. For other purposes of the Code, including Code sections 401(a)(4),
401(k)(3), 404, 409, 411, 412, and 416), excess deferrals must be treated as employer contributions even
if they are distributed in accordance with paragraph (b) above. However, excess deferrals of a
non-Highly Compensated Employee are not to be taken into account for purposes of Code section 401(k)(3)
(the actual deferral percentage test) to the extent the excess deferrals are prohibited under Code
section 401(a)(30). Excess deferrals are also to be treated as employer contributions for purposes of
Code section 415 unless distributed under paragraph (b) above.

12.4. Code Section 401(k)(3) Limits.

(a) In General. Elective Contributions made under the Plan are subject to the limits of Code section
401(k)(3), as more fully described below. The Plan provisions relating to the 401(k)(3) limits are to
be interpreted and applied in accordance with Code sections 401(k)(3) and 401(a)(4), which are hereby
incorporated by reference, and in such manner as to satisfy such other requirements relating to Code
section 401(k) as may be prescribed by the Secretary of the Treasury from time to time.

(b) Actual deferral ratios. For each Plan Year, the Administrator will determine the "actual deferral
ratio" for each Participant who is eligible for Elective Contributions. The actual deferral ratio shall
be the ratio, calculated to the nearest one-hundredth of one percent, of the Elective Contributions
(plus any Qualified Nonelective Contributions treated as Elective Contributions) made on behalf of the
Participant for the Plan Year to the Participant's Compensation for the applicable period. For purposes
of determining a Participant's actual deferral ratio,

(i) Elective Contributions will be taken into account only if each of the following requirements are
satisfied:

(A) the Elective Contribution is allocated to the Participant's Elective Contribution Account as of a date
within the Plan Year, is not contingent upon participation in the Plan or performance
of services on any date subsequent to that date, and is actually paid to the Trust no
later than the end of the 12-month period immediately following the Plan Year to which
the contribution relates; and

(B) the Elective Contribution relates to Compensation that either would have been received by the
Participant in the Plan Year but for the Participant's election to defer under the
Plan or is attributable for services performed in the Plan Year and, but for the
Participant's election to defer, would have been received by the Participant within 2½
months after the close of the Plan Year.

To the extent Elective Contributions which meet the requirements of (A) and (B) above
constitute excess deferrals, they will be taken into account for each Highly Compensated
Employee, but will not be taken into account for any non-Highly Compensated Employee;

(ii) in the case of a Participant who is a Highly Compensated Employee for the Plan Year and is eligible to
have elective deferrals (and qualified nonelective or qualified matching contributions, to the
extent treated as elective deferrals) allocated to his or her accounts under two or more cash
or deferred arrangements described in Code section 401(k) maintained by an Employer, the
Participant's actual deferral ratio shall be determined as if such elective deferrals (as well
as qualified nonelective or qualified matching contributions) are made under a single
arrangement, and if two or more of the cash or deferred arrangements have different Plan Years,
all cash or deferred arrangements ending with or within the same calendar year shall be treated
as a single arrangement;

(iii) the applicable period for determining Compensation for each Participant for a Plan Year shall be the
12-month period ending on the last day of such Plan Year; provided, that to the extent
permitted under Regulations, the Administrator may choose, on a uniform basis, to treat as the
applicable period only that portion of the Plan Year during which the individual was a
Participant;

(iv) Qualified Nonelective Contributions made on behalf of Participants who are eligible to receive Elective
Contributions shall be treated as Elective Contributions to the extent permitted by Regulation
section 1.401(k)-1(b)(5);

(v) in the event that the Plan satisfies the requirements of Code sections 401(k), 410(a)(4), or 410(b) only
if aggregated with one or more other plans with the same plan year, or if one or more other
plans with the same Plan Year satisfy such Code sections only if aggregated with this Plan,
then this section shall be applied by determining the actual deferral ratios as if all such
plans were a single plan;

(vi) an employee who would be a Participant but for the failure to make Elective Contributions shall be
treated as a Participant on whose behalf no Elective Contributions are made; and

(vii) Elective Contributions which are made on behalf of non-Highly Compensated Employees which could be used
to satisfy the Code section 401(k)(3) limits but are not necessary to be taken into account in
order to satisfy such limits, may instead be taken into account for purposes of the Code
section 401(m) limits to the extent permitted by Regulation section 1.401(m)-1(b)(5).
(c) Actual deferral percentages. The actual deferral ratios for all Highly Compensated Employees who are
eligible for Elective Contributions for a Plan Year shall be averaged to determine the actual deferral
percentage for the highly compensated group for the Plan Year, and the actual deferral ratios for all
Employees who are not Highly Compensated Employees but are eligible for Elective Contributions for the
Plan Year shall be averaged to determine the actual deferral percentage for the nonhighly compensated
group for the Plan Year. The actual deferral percentages for any Plan Year must satisfy at least one of
the following tests:

(i) the actual deferral percentage of the highly compensated group for the Plan Year does not exceed 125% of
the prior year actual deferral percentage for the nonhighly compensated group; or

(ii) the excess of the actual deferral percentage of the highly compensated group for the Plan Year over the
prior year actual deferral percentage for the nonhighly compensated group does not exceed two
percentage points, and the actual deferral percentage of the highly compensated group for the
Plan Year does not exceed twice the prior year actual deferral percentage of the nonhighly
compensated group.

For purposes of this Section, "prior year actual deferral percentage" for the nonhighly
compensated group refers to the actual deferral percentage determined for the immediately preceding Plan
Year for the nonhighly compensated group existing during such preceding Plan Year. Notwithstanding the
foregoing, in satisfying the above tests, the Administrator may elect in accordance with Code Section
401(k)((3), applicable regulations and Internal Revenue Service guidance, to use the actual deferral
percentage for the nonhighly compensated group for the current Plan Year or such other methods of
applying the nondiscrimination rules as may be permitted by the Code or Regulation.

(d) Adjustments by Administrator. If, prior to the time all Elective Contributions for a Plan Year have
been contributed to the Trust, the Administrator determines that Elective Contributions are being made
at a rate which will cause the Code section 401(k)(3) limits to be exceeded for the Plan Year, the
Administrator may, in its sole discretion, limit the amount of Elective Contributions to be made with
respect to one or more Highly Compensated Employees for the balance of the Plan Year by suspending or
reducing Elective Contribution elections to the extent the Administrator deems appropriate. Any
Elective Contributions which would otherwise be made to the Trust shall instead be paid to the affected
Participant in cash. Any decrease in the Elective Contribution for a Participant will also be effective
for purposes of determining the amount of the Matching Contribution to be made for the Participant's
benefit.

(e) Excess contributions. If the Code section 401(k)(3) limits have not been met for a Plan Year after all
contributions for the Plan Year have been made, the Administrator will determine the amount of excess
contributions with respect to Participants who are Highly Compensated Employees in accordance with Code
section 401(k)(3) and Regulations thereunder. Any excess contributions will be distributed as provided
below. In no event will excess contributions remain unallocated or be allocated to a suspense account
for allocation in a future Plan Year.

(f) Distribution of excess contributions. The excess contributions of a Highly Compensated Employee who is
a Participant, as adjusted for income, will be designated by the Employer as a distribution of excess
contributions and distributed to the Participant. The income allocable to excess contributions is equal
to the allocable gain or loss for the Plan Year, but not the allocable gain or loss for the period
between the end of the Plan Year and the date of distribution (the "gap period"). Income allocable to
excess contributions for the Plan Year shall be determined by multiplying the gain or loss attributable
to the Participant's Elective Contribution Account and Qualified Nonelective Contribution Account
balances by a fraction, the numerator of which is the excess contributions for the Participant for the
Plan Year, and the denominator of which is the sum of the Participant's Elective Contribution Account
and Qualified Nonelective Contribution Account balances as of the beginning of the Plan Year plus the
Participant's Elective Contributions and Qualified Nonelective Contributions for the Plan Year.
Distribution of excess contributions will be made after the close of the Plan Year to which the
contributions relate, but within 12 months after the close of such Plan Year. Excess contributions
shall be treated as annual additions under the Plan, even if distributed under this paragraph.

(g) Special rules. For purposes of distributing excess contributions, the amount of excess contributions
that may be distributed with respect to a Highly Compensated Employee for a Plan Year shall be reduced
by the amount of excess deferrals previously distributed to the Highly Compensated Employee for his or
her taxable year ending with or within such Plan Year.

(i) Effect on Matching Contributions. A Participant's Elective Contributions which are returned as a result
of the Code section 401(k)(3) limits for a Plan Year shall not be taken into account in determining the
amount of Matching Contributions to be made for the Participant's benefit for the Year. To the extent
Matching Contributions have already been made with respect to the Elective Contributions at the time the
Elective Contributions are determined to be excess contributions, such Matching Contributions shall be
forfeited.

(j) Excise tax where failure to correct. If the excess contributions are not corrected within 2½ months
after the close of the Plan Year to which they relate, the Employers will be liable for a 10 percent
excise tax on the amount of excess contributions attributable to them, to the extent provided by Code
section 4979. Qualified Nonelective Contributions properly taken into account under this Section for
the Plan Year may enable the Plan to avoid having excess contributions, even if the contributions are
made after the close of the 2½ month period.

12.5. Code Section 401(m) Limits.

(a) In General. Matching Contributions made under the Plan are subject to the limits of Code section
401(m), as more fully described below. The Plan provisions relating to the 401(m) limits are to be
interpreted and applied in accordance with Code sections 401(m) and 401(a)(4), which are hereby
incorporated by reference, and in such manner as to satisfy such other requirements relating to Code
section 401(m) as may be prescribed by the Secretary of the Treasury from time to time.

(b) Actual contribution ratios. For each Plan Year, the Administrator will determine the "actual
contribution ratio" for each Participant who is eligible for Matching Contributions. The actual
contribution ratio shall be the ratio, calculated to the nearest one-hundredth of one percent, of the
sum of the Matching Contributions and Qualified Nonelective Contributions which are not treated as
Elective Contributions made on behalf of the Participant for the Plan Year, to the Participant's
Compensation for the Plan Year. For purposes of determining a Participant's actual contribution ratio,

(i) A Matching Contribution will be taken into account only if the Contribution is allocated to a
Participant's Account as of a date within the Plan Year, is actually paid to the Trust no later
than 12 months after the close of the Plan Year, and is made on behalf of a Participant on
account of the Participant's Elective Contributions for the Plan Year;

(ii) in the case of a Participant who is a Highly Compensated Employee for the Plan Year and is eligible to
have Matching Contributions or employee contributions (including amount treated as Matching
Contributions) allocated to his or her accounts under two or more plans maintained by an
Employer which may be aggregated for purposes of Code sections 410(b) and 401(a)(4), the
Participant's actual contribution ratio shall be determined as if such contributions are made
under a single plan, and if two or more of the plans have different Plan Years, all plans
ending with or within the same calendar year shall be treated as a single plan;

(iv) Elective Contributions not applied to satisfy the Code section 401(k)(3) limits and Qualified
Nonelective Contributions not treated as Elective Contributions may be treated as Matching
Contributions to the extent permitted by Regulation section 1.401(m)-1(b)(5);

(c) Actual contribution percentages. The actual contribution ratios for all Highly Compensated Employees
who are eligible for Matching Contributions for a Plan Year shall be averaged to determine the actual
contribution percentage for the highly compensated group for the Plan Year, and the actual contribution
ratios for all Employees who are not Highly Compensated Employees but are eligible for Matching
Contributions for the Plan Year shall be averaged to determine the actual contribution percentage for
the nonhighly compensated group for the Plan Year. The actual contribution percentages for any Plan
Year must satisfy at least one of the following tests:

(i) The actual contribution percentage of the highly compensated group for the Plan Year does not exceed
125% of the prior year actual contribution percentage for the nonhighly compensated group; or

(ii) The excess of the actual contribution percentage of the highly compensated group for the Plan Year over
the prior year actual contribution percentage for the nonhighly compensated group does not
exceed two percentage points, and the actual contribution percentage of the highly compensated
group for the Plan Year does not exceed twice the prior year actual contribution percentage of
the nonhighly compensated group.

For purposes of this Section, "prior year actual contribution percentage" for the nonhighly
compensated group refers to the actual contribution percentage determined for the immediately preceding
Plan Year for the nonhighly compensated group existing during such preceding Plan Year. Notwithstanding
the foregoing, in satisfying the above tests, the Administrator may elect in accordance with Code
Section 401(m), applicable regulations and Internal Revenue Service guidance, to use the actual
contribution percentage for the nonhighly compensated group for the current Plan Year or such other
methods of applying the nondiscrimination rules as may be permitted by the Code or Regulation.

(d) Multiple use test. In the event that (i) the actual deferral percentage and actual contribution
percentage for the highly compensated group each exceed 125% of the respective actual deferral and
actual contribution percentages for the nonhighly compensated group, and (ii) the sum of the actual
deferral percentage and the actual contribution percentage for the highly compensated group exceeds the
"aggregate limit" within the meaning of Regulation section 1.401(m)-2(b)(3), the Administrator shall
reduce the actual contribution ratios of Highly Compensated Employees who had both an actual deferral
ratio and an actual contribution ratio for the Plan Year to the extent required by such section and in
the same manner as described in paragraph (f) below. The multiple use test described in Treasury
Regulation section 1.401(m)-2 and this Section shall not apply for Plan Years beginning after December
31, 2001.

(e) Adjustments by Administrator. If, prior to the time all Matching Contributions for a Plan Year have
been contributed to the Trust, the Administrator determines that such Contributions are being made at a
rate which will cause the Code section 401(m) limits to be exceeded for the Plan Year, the Administrator
may, in its sole discretion, limit the amount of such Contributions to be made with respect to one or
more Highly Compensated Employees for the balance of the Plan Year by limiting the amount of such
Contributions to the extent the Administrator deems appropriate.

(f) Excess aggregate contributions. If the Code section 401(m) limits have not been satisfied for a Plan
Year after all contributions for the Plan Year have been made, the excess of the aggregate amount of the
Matching Contributions (and any Qualified Nonelective Contribution or elective deferral taken into
account in computing the actual contribution percentages) actually made on behalf of Highly Compensated
Employees for the Plan Year over the maximum amount of such contributions permitted under Code section
401(m)(2)(A) shall be considered to be "excess aggregate contributions". The Administrator shall
determine the amount of excess aggregate contributions made with respect to each Participant who is a
Highly Compensated Employee in accordance with Code section 401(m) and the regulations thereunder. Any
excess aggregate contributions will be distributed as provided below to the Highly Compensated Employee
to which they are attributable. In no event will excess aggregate contributions remain unallocated or
be allocated to a suspense account for allocation in a future Plan Year.

(g) Distribution of excess aggregate contributions. A Participant's excess aggregate contributions,
adjusted for income will be designated by the Employer as a distribution of excess aggregate
contributions, and distributed to the Participant. The income allocable to excess aggregate
contributions is equal to the allocable gain or loss for the taxable year of the individual, but not the
allocable gain or loss for the period between the end of the taxable year and the date of distribution
(the "gap period"). Income allocable to excess aggregate contributions for the taxable year shall be
determined by multiplying the gain or loss attributable to the Participant's Matching Contribution
account balances by a fraction, the numerator of which is the excess aggregate contributions for the
Participant for the Plan Year, and the denominator of which is the sum of the Participant's Matching
Contribution account balances as of the beginning of the Plan Year plus the Participant's Matching
Contributions for the Plan Year. Distribution of excess aggregate contributions will be made after the
close of the Plan Year to which the contributions relate, but within 12 months after the close of such
Plan Year. Excess aggregate contributions shall be treated as employer contributions for purposes of
Code sections 401(a)(4), 404, and 415 even if distributed from the Plan.

(h) Recordkeeping requirement. The Administrator, on behalf of the Employers, shall maintain such records
as are necessary to demonstrate compliance with the Code section 401(m) limits, including the extent to
which Elective Contributions and Qualified Nonelective Contributions are taken into account in
determining the actual contribution ratios.
(i) Excise tax where failure to correct. If the excess aggregate contributions are not corrected within 2½
months after the close of the Plan Year to which they relate, the Employers will be liable for a 10
percent excise tax on the amount of excess aggregate contributions attributable to them, to the extent
provided by Code section 4979. Qualified Nonelective Contributions properly taken into account under
this section for the Plan Year may enable the Plan to avoid having excess aggregate contributions, even
if the contributions are made after the close of the 2½ month period.

12.6. Code Section 4975(e) Limits. Notwithstanding the above sections in this Article 12, to the extent
required by the Code and the regulations thereunder, the portion of the Plan that is intended to be an employee
stock ownership plan under Code section 4975(e) shall be considered separately from the portion of the Plan that
is not intended to be an employee stock ownership plan under Code section 4975(e) for purposes of applying Code
sections 401(a)(4) and (5), 401(k) and 401(m).

ARTICLE 13.

SPECIAL TOP-HEAVY PROVISIONS.

13.1. Provisions to apply. The provisions of this Article shall apply for any top-heavy Plan Year
notwithstanding anything to the contrary in the Plan.

13.2. Minimum Contribution. For any Plan Year which is a top-heavy plan year, the Employers shall contribute
to the Trust a minimum contribution on behalf of each Participant who is not a key employee for such year and who
has not separated from service from the Employers by the end of the Plan Year, regardless of whether or not the
Participant has elected to make Elective Contributions for the Year. The minimum contribution shall, in general,
equal 3% of each such Participant's Compensation, but shall be subject to the following special rules:

(a) If the largest contribution on behalf of a key employee for such year, taking into account only Elective
Contributions, Qualified Nonelective Contributions, Basic Matching Contributions, and Discretionary
Matching Contributions (including forfeitures applied against any such Employer Contributions), is equal
to less than 3% of the key employee's Compensation, such lesser percentage shall be the minimum
contribution percentage for Participants who are not key employees. This special rule shall not apply,
however, if the Plan is required to be included in an aggregation group and enables a defined benefit
plan to meet the requirements of Code section 401(a)(4) or 410.

(b) No minimum contribution will be required with respect to a Participant who is also covered by another
top-heavy defined contribution plan of an Employer which meets the vesting requirements of Code section
416(b) and under which the Participant receives the top-heavy minimum contribution.

(c) If a Participant is also covered by a top-heavy defined benefit plan of an Employer, "5%" shall be
substituted for "3%" above in determining the minimum contribution.

(d) The minimum contribution with respect to any Participant who is not a key employee for the particular
year will be offset by any Discretionary Matching Contributions and any Qualified Nonelective
Contributions (including forfeitures applied against Discretionary Matching Contributions), but not any
other type of contribution, otherwise made for the Participant's benefit for such year. Notwithstanding
the foregoing, for Plan Years beginning after December 31, 2001, the minimum contribution described
above will be offset also by any Basic Matching Contributions made for the Participant's benefit for
such year.

(e) If additional minimum contributions are required under this Section, the Administrator will establish
(or cause the Trustee to establish) a special Account to which such contributions will be allocated.
Distributions from such Account will be made in accordance with the rules applicable to Employer
Accounts.

(f) A minimum contribution required under this Section shall be made even though, under other Plan
provisions, the Participant would not otherwise be entitled to receive an allocation for the year
because of (i) the Participant's failure to complete 1,000 hours of service (or any equivalent provided
in the Plan), or (ii) the Participant's failure to make mandatory contributions or Elective
Contributions to the Plan, or (iii) compensation less than a stated amount.

13.3. Adjustment to Limitation on Benefits. With respect to Plan Years prior to January 1, 2001, for purposes
of the Code section 415 limits, the definitions of "defined contribution plan fraction" and "defined benefit plan
fraction" contained therein shall be modified, for any Plan Year which is a top-heavy plan year, by substituting
"1.0" for "1.25" in Code sections 415(e)(2)(B) and 415(e)(3)(B).

13.4. Definitions. For purposes of these top-heavy provisions, the following terms have the following
meanings:

(a) "key employee" means a key employee described in Code section 416(i)(l), and "non-key employee" means
any employee who is not a key employee (including employees who are former key employees);

(b) "top-heavy plan year" means a Plan Year if any of the following conditions exist:

(i) the top-heavy ratio for the Plan exceeds 60 percent and the Plan is not part of any required aggregation
group or permissive aggregation group of plans;

(ii) this Plan is a part of a required aggregation group of plans but not part of a permissive aggregation
group and the top-heavy ratio for the group of plans exceeds 60 percent; or

(iii) the Plan is part of a required aggregation group and part of a permissive aggregation group of plans and
the top-heavy ratio for the permissive aggregation group exceeds 60 percent.

(i) If employer maintains one or more defined contribution plans (including any simplified employee pension
plan) and the employer has not maintained any defined benefit plan which during the 5-year
period ending on the determination date(s) has or has had accrued benefits, the top-heavy ratio
for the Plan alone or for the required or permissive aggregation group of plans as appropriate
is a fraction, the numerator of which is the sum of the account balances of all key employees
on the determination date(s) (including any part of any account balance distributed in the
1-year period ending on the determination date(s)), and the denominator of which is the sum of
all account balances (including any part of an account balance distributed in the 1-year period
ending on the determination date(s)) (and for both the numerator and denominator in the case of
a distribution made for a reason other than separation from service, death or disability,
including any such amount distributed in the 5-year period ending on the determination
date(s)), both computed in accordance with Code section 416. Both the numerator and the
denominator of the top-heavy ratio are increased to reflect any contribution not actually made
as of the determination date, but which is required to be taken into account on that date under
Code section 416.

(ii) If the employer maintains one or more defined contribution plans (including any simplified employee
pension plan) and the employer maintains or has maintained one or more defined benefit plans
which during the 5-year period ending on the determination date(s) has or has had any accrued
benefits, the top-heavy ratio for any required or permissive aggregation group of plans as
appropriate, is a fraction, the numerator of which is the sum of the account balances under the
aggregated defined contribution plan or plans for all key employees, determined in accordance
with (i) above, and the present value of accrued benefits under the aggregated defined benefit
plan or plans for all key employees as of the determination date(s)), and the denominator of
which is the sum of the account balances under the aggregated defined contribution plan or
plans for all participants, determined in accordance with (i) above, and the present value of
all accrued benefits under the defined benefit plan or plans for all participants as of the
determination date(s), all determined in accordance with Code section 416. The accrued
benefits under a defined benefit plan in both the numerator and denominator of the top-heavy
ratio are increased for any distribution of an accrued benefit made in the 1-year period ending
on the determination date.

(iii) For purposes of (i) and (ii) above the value of account balances and the present value of accrued
benefits will be determined as of the most recent valuation date that falls within or ends with
the 12-month period ending on the determination date, except as provided in Code section 416
for the first and second plan years of a defined benefit plan. The account balances and
accrued benefits of a participant (A) who is not a key employee but who was a key employee in a
prior year, or (B) who has not been credited with at least one hour of service with any
employer maintaining the plan at any time during the 5-year period ending on the determination
date will be disregarded. The calculation of the top-heavy ratio, and the extent to which
distributions, rollovers, and transfers are taken into account will be made in accordance with
Code section 416. Deductible employee contributions will not be taken into account for
purposes of computing the top-heavy ratio. When aggregating plans the value of account
balances and accrued benefits will be calculated with reference to the determination dates that
fall within the same calendar year.

(iv) The accrued benefit of a participant other than a key employee shall be determined under (A) the method,
if any, that uniformly applies for accrual purposes under all defined benefit plans maintained
by the employer, or (B) if there is no such method, as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under the fractional rule of Code section 411(b)(1)(C).

(d) The "permissive aggregation group" is the required aggregation group of plans plus any other plan or
plan of the employer which, when considered as a group with the required aggregation group, would
continue to satisfy the requirements of Code sections 401(a)(4) and 410.

(e) The "required aggregation group" is (i) each qualified plan of the employer in which at least one key
employee participates or participated at any time during the determination period (regardless of whether
the plan has terminated), and (ii) any other qualified plan of the employer which enables a plan
described in (i) to meet the requirements of Code sections 401(a)(4) and 410(b).

(f) For purposes of computing the top-heavy ratio, the valuation date shall be the last day of the
applicable plan year.

(g) The term "determination date" means, with respect to the initial plan year of a plan, the last day of
such plan year and, with respect to any other plan year of a plan, the last day of the preceding plan
year of such plan. The term "applicable determination date" means, with respect to the Plan, the
determination date for the Plan Year of reference and, with respect to any other plan, the determination
date for any plan year of such plan which falls within the same calendar year as the applicable
determination date of the Plan.

ARTICLE 14.

MISCELLANEOUS.

14.1. Exclusive Benefit Rule. No part of the corpus or income of the Trust forming part of the Plan will be
used for or diverted to purposes other than for the exclusive benefit of each Participant and Beneficiary, except
as otherwise provided under the provisions of the Plan relating to Qualified Domestic Relations Orders, the
payment of reasonable expenses of administering the Plan (provided that the expenses of administering any
Investment Fund consisting solely of Shares, including expenses associated with open market purchases of Shares,
will be paid by the Employers), the return of contributions upon nondeductibility or mistake of fact, or the
failure of the Plan to maintain its qualified status. Notwithstanding the above, the provisions for the payment
of administration expenses may be modified by procedures adopted by the National Grid Committee.

14.2. Limitation of Rights. Neither the establishment of the Plan or the Trust, nor any amendment thereof,
nor the creation of any fund or account, nor the payment of any benefits, will be construed as giving to any
Participant or other person any legal or equitable right against any party to this Plan except as provided
herein, and in no event will the terms of employment or service of any Participant be modified or in any way be
affected hereby. It is a condition of the Plan, and each Participant expressly agrees by his or her
participation herein, that each Participant will look solely to the assets held in the Trust for the payment of
any benefit to which he or she is entitled under the Plan.

14.3. Nonalienability of Benefits. The benefits provided hereunder will not be subject to the voluntary or
involuntary alienation, assignment, garnishment, attachment, execution or levy of any kind, and any attempt to
cause such benefits to be so subjected will not be recognized, except to such extent as may be required by law.
Notwithstanding any provisions of the Plan to the contrary, if the Administrator receives any Qualified Domestic
Relations Order that requires the payment of benefits hereunder or the segregation of any Account, such benefits
shall be paid, and such Account segregated, in accordance with the applicable requirements of such Order and the
distribution options available under the Plan.

14.4. Rules for Withdrawals and Distributions. A withdrawal or distribution request shall be processed and
distributed as soon as practicable after the request in accordance with procedures established by the
Administrator.

14.5. USERRA Compliance. Notwithstanding any provision of this Plan to the contrary, contributions, benefits
and service credit with respect to qualified military service will be provided in accordance with Code section
414(u) and the Regulations thereunder.

14.6. Miscellaneous Employer Contribution. For the purposes of alleviating any deficiencies in the Investment
Fund caused by errors or misallocations, the Employers may, from time to time, subject to applicable provisions
of the Code, make contributions in addition to any contribution that may be specified under the Plan. These
additional contributions shall be allocated in the manner designated by the Employer at the time the additional
contributions are made.

14.7. EGTRRA Provisions. The National Grid Committee may adopt procedures to implement provisions of the
Economic Growth and Tax Relief Reconciliation Act of 2001 not already specifically contemplated by the Plan.

14.8. Applicable Law. All persons who exercise discretion or authority under the terms of the Plan, including
the Board, Administrator, Benefits Committee and National Grid Committee, shall act in accordance with all
applicable laws and regulations, including the Code and ERISA, during the exercise of discretion and/or authority
under the Plan.

14.9. Governing Law. The Plan and Trust will be construed, administered and enforced according to the laws of
Massachusetts to the extent such laws are not preempted by federal law.

ARTICLE 15.

DEFINITIONS.

Wherever used in the Plan, the following terms have the following meanings:

15.1. "Accounts" mean, for any Participant, the accounts established under the Plan to which contributions
made for the Participant's benefit, and any allocable income, expense, gain and loss, are allocated. References
to a Participant's Elective Contribution Account, Employer Account, ESOP Transfer Account, Participant Account
and Rollover Account, respectively, refer to those Accounts established for a Participant to which the respective
contributions are allocated. References to a Participant's Qualified Nonelective Contribution Account refer to
the Account to which Qualified Nonelective Contributions made on behalf of the Participant are allocated.

15.2. "Administrator" means National Grid USA Service Company or such other person appointed to administer the
Plan in accordance with Article 10.

15.3. "Annual Base Rate" means the Participant's annualized rate of pay in effect at the time of determination.

15.4. "Base Compensation" means Compensation as described below, less overtime, premiums, awards, and bonus
pay, or such other combination of components as set forth in procedures adopted by the National Grid Committee.

15.5. "Basic Matching Contribution" means a contribution made by the applicable Employer in the manner and
amounts set forth in Section 3.3, which may include the issue of Shares by National Grid to the Trust on behalf
of the Employer. Notwithstanding the provisions of Section 3.3, the manner and amounts set forth in Section 3.3
may be adjusted under procedures adopted by the National Grid Committee.

15.6. "Beneficiary" means any person entitled to receive benefits under the Plan upon the death of a
Participant.

15.7. "Benefits Appeal Committee" means the committee established in accordance with National Grid USA
Companies' Final Average Pay Pension Plan.

15.8. "Benefits Committee" means the committee established in accordance with National Grid USA Companies'
Final Average Pay Pension Plan.

15.9. "Board" means the Board of Directors of National Grid USA Service Company. The Board may designate a
person or persons (including an Administrator) to carry out any fiduciary responsibilities, in accordance with
ERISA section 405.

15.10. "Business Day" means any day except (a) a Saturday, Sunday, or public holiday or (b) the equivalent
thereof for the New York Stock Exchange.

15.11. "Cash Out Merger" shall have occurred if National Grid is merged into or with another entity and as a
result thereof all of the then outstanding publicly held Shares of National Grid are converted into a right to
receive cash.

15.12. "Code" means the Internal Revenue Code of 1986, as amended from time to time. Reference to any section
or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation which
amends, supplements or replaces such section or subsection, and also includes reference to any Regulation issued
pursuant to or with respect to such section or subsection.

15.13. "Compensation" means, during the applicable Plan Year, the base, overtime, premium, and bonus pay
(including awards by an Employer under the National Grid Goals cash bonus plan, but not including awards by an
Employer under the National Grid USA Companies' Incentive Share Plan; received by a Participant during a pay
period, plus the amount of any Elective Contributions to the Plan and any salary reductions under the National
Grid USA Companies Elective Benefits Plan (or other similar plans) with respect to such pay period, and in
addition, guaranteed lump sum payments.

Compensation shall exclude compensation deferred under other plans, reimbursements of expenses, payments
in lieu of vacation days, Supplemental Disability Income payments; payments made from the Short-term Disability
or Long-term Disability Plans; Christmas remembrances; awards not described in the preceding paragraph; and
other additional forms of earnings (including contributions made by an Employer to or under any other form of
employee benefit program, such as a health insurance, pension, or severance pay plan).

For all purposes under the Plan, Compensation for any individual will be limited to any Plan Year as
provided under Code section 401(a)(17) (which for the 2001 Plan Year is $170,000 and for the 2002 Plan Year is
$200,000).

Notwithstanding the provisions of this Section 15.13, the combination of components pay under the
definition of Compensation may be adjusted under procedures adopted by the National Grid Committee.

15.14. "Computation Period" means a 12-consecutive month period beginning with an individual's initial date of
hire or any anniversary thereof. An individual's date of hire is the date on which the individual first performs
an Hour of Service for an Employer.

15.15. "Contribution Agreement" means an election made by a Participant pursuant to procedures established by
the Administrator that establishes the level of Elective Contributions to be made for the Participant's benefit.

15.16. "Discretionary Matching Contribution" means a contribution made for Plan for the benefit of a
Participant by an Employer which is based upon the Financial Objective obtained by the close of the Plan Year in
accordance with Section 3.4.

15.17. "Elective Contribution", also known as "Salary Reduction Contribution", means a contribution made to the
Plan for the benefit of a Participant pursuant to a Compensation Agreement.

15.18. "Eligible Employee" means any Employee who is employed by an Employer except that Eligible Employee does
not include: any individual who is not included in a unit of employees covered by a collective bargaining
agreement that provides for participation in the Plan; independent contractors; any individual who is employed
and paid by an agency or a party other than an Employer in connection with services provided to an Employer;
interns; or co-op students. In no event shall a "leased employee" within the meaning of Code section 414(n)
become an Eligible Employee until he or she becomes actually employed by an Employer.

Notwithstanding anything herein to the contrary, an individual who is not characterized or treated as a
common law employee of an Employer shall not be considered an Eligible Employee. In the event that such an
individual is reclassified or deemed to be reclassified as a common law employee of an Employer who meets the
definition of an Eligible Employee, the individual shall become an Eligible Employee as of the actual date of
reclassification. If the effective date of any such reclassification is prior to the actual date of such
reclassification, in no event shall the reclassified individual be considered an Eligible Employee retroactively
to the date of such reclassification.

Notwithstanding the provisions of this Section 15.18, the definition of "Eligible Employee" may be
adjusted under procedures adopted by the National Grid Committee.

15.19. "Employee" means any individual employed by an Employer, including any leased employee and any other
individual required to be treated as an employee pursuant to Code sections 414(n) and 414(o), who is included in
a unit of employees covered by a collective bargaining agreement that provides for such person being included in
the Plan.

15.20. "Employer" means any subsidiary or affiliate of National Grid USA, which has, by appropriate action of
the Board, been designated to participate in this Plan, provided that the board of directors (or other applicable
governing body) of the so-designated Employer has taken appropriate action to adopt the Plan.

15.21. "Employer Account" means the account into which shall be credited the contributions made by an Employer
on a Participant's behalf (but not Elective Contributions), and all income, gains and losses attributable thereto.

15.22. "Entry Date" means the first effective payroll cutoff following that date an Employee becomes an
Eligible Employee.

15.23. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute
or statutes of similar import.

15.24. "ESOP" means the New England Electric System Companies Employee Share Ownership Plan, as amended.

15.25. "ESOP Transfer Account" means the account into which are credited transfer contributions described in
Section 3.8, and all income, gains, and losses attributable thereto.

15.26. "FAPP II" means National Grid USA Companies' Final Average Pay Pension Plan, as from time to time
amended.

15.27. "Financial Objective" means the financial objective goal (stated in ranges) set for the year in question
by the National Grid Committee.

15.28. "Goals Program" means the New England Electric System Companies Goals Program, as amended.

15.29. "Highly Compensated Employee" means an Employee of an Employer who is a "highly compensated employee"
within the meaning of Code section 414(q). The term "Highly Compensated Employee" includes each individual
employed by an Employer who (i) during such Plan Year or preceding Plan Year, is a "5% owner" within the meaning
of Code section 414(q), or (ii) during the preceding Plan Year received compensation in excess of $80,000 (as
adjusted under such Code section) and was in the top-paid group of Employees of the Employer for such preceding
Plan Year. An Employee is in the top-paid group of Employees for purposes of (ii) above for any Plan Year if
such Employee is in the group consisting of the top 20 percent of the Employees ranked on the basis of
Compensation paid during such Plan Year. Notwithstanding the foregoing definitions, the Administrator may use an
alternative definition of Highly Compensated Employee to the extent permitted by Code section 414(q), which is
hereby incorporated by reference.

15.30. "Highly Compensated Participant" means a Participant who is a Highly Compensated Employee.

15.31. "Hour of Service".

An Employee will receive 190 Hours of Service for each month for which the Employee is credited with at
least one "Qualifying Hour". A "Qualifying Hour" consists of the following hours:

(a) Each hour for which an individual is, directly or indirectly, paid or entitled to payment for the
performance of duties as an Employee for an Employer, each such hour to be credited to such individual
for the Computation Period in which the duties were performed;

(b) Each hour for which the individual is, directly or indirectly, paid or entitled to payment as an
Employee by an Employer for a period of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity,
disability, layoff, jury duty, military duty, or leave of absence, each such hour to be credited to the
individual for the Computation Period in which such period of time occurs; provided, however, no more
than 501 Hours of Service shall be credited under this subparagraph (b) to the individual on account on
any single continuous period during which the individual performs no duties; and provided, further,
hours under this subparagraph (b) shall be calculated and credited pursuant to section 2530.200b-2(b)
and (c) of the Regulations;

(c) Each hour not counted under subparagraph (a) or subparagraph (b) for which back pay, irrespective of
mitigation of damages, has been awarded or agreed to be paid by an Employer; each such hour to be
credited to the individual for the Computation Period to which the award or agreement for back pay
pertains;

(d) Each hour for which an individual was, directly or indirectly, paid or entitled to payment for the
performance of duties as an employee of an entity that falls within the "controlled group of
corporations" relative to the Employers as set forth in section 1563(a) of the Code; and

(e) Each noncompensated hour during a period of absence from an Employer for service in the armed forces of
the United States if the individual returns to work for an Employer at a time when s/he has reemployment
rights under Federal law.

In crediting Hours of Service to an individual under subparagraph (b) above because of payments made or
due for a period during which the individual performs no duties, (i) if such payments are calculated on the basis
of units of time, such as hours, days, weeks, or months, the number of Hours of Service to be credited shall be
the number of the individual's regularly scheduled working hours normally included in such units of time, and
(ii) if such payments are not calculated on the basis of units of time, the number of Hours of Service to be
credited shall be equal to the lesser of (A) the amount of the payments divided by the individual's most recent
hourly rate of compensation (B) the number of regularly scheduled working hours which would normally be included
in the period of time on account of which such payments are made. The number of Hours of Service to be credited
to an individual during a period described in subparagraph (d) above will be determined by the Administrator with
reference to the individual's most recent normal work.

15.32. "Investment Date" means the business day prior to the date when weekly or monthly contributions are
wired from an Employer to the Trustee, which transaction involves a purchase of shares from National Grid, or
such other date as set forth in procedures adopted by the National Grid Committee.

15.33. "Investment Fund" means each separate fund in which contributions to the Plan are invested.

15.34. "Matching Contributions" means the Basic Matching Contributions and Discretionary Matching Contributions
made for the benefit of a Participant under the Plan on account of an Elective Contribution.

15.35. "National Grid" means National Grid Group plc or its successors.

15.36. "National Grid Committee" means the board of directors of National Grid, or such other
person(s) or committee appointed to carry out all or a portion of the board's authority.

15.37. "National Grid USA"means National Grid USA or its successor.

15.38. "National Grid Share Fund" means a fund consisting of Shares or securities issued in exchange for
Shares. Unless otherwise instructed by an Officer, the Trustee shall, when practical to do so, net Participants'
purchases and sales of Shares within the Plan prior to purchasing or selling Shares from or to alternative
sources.

Shares may be purchased on the open market, from National Grid, or from another Employer benefit plan
which provides for inter-plan purchase and sale of Shares. Whenever the Trustee shall be required to invest in
Shares, the Trustee shall purchase Shares from National Grid, unless an Officer instructs the Trustee to purchase
the Shares from one of the other sources or a combination of the three sources.

Whenever the Trustee shall be required to sell Shares, the Trustee shall sell the Shares to National
Grid, unless an Officer of National Grid USA instructs the Trustee to sell the Shares on the open market or to
another Employer benefit plan which provides for inter-plan purchase and sale of Shares or a combination of the
three.

If Shares are netted between Participants or between Participants and participants from another Employer
benefit plan, the price shall be computed based upon the closing price for Shares on the New York Stock Exchange
- Composite Transactions at the closing of the New York Stock Exchange, on the Business Day prior to the
particular transaction; provided, however, to the extent Shares are netted in more than a single transaction
during a given day or period, as applicable, the price of Shares shall reflect the average price of Shares netted
during that period. The pricing method set forth in this paragraph may be modified by procedures adopted by the
National Grid Committee.

If Shares are purchased on the open market, the price will be computed at the average purchase price of
all Shares purchased during that day or period, as applicable. If Shares are purchased from National Grid, the
price will be computed on the basis of the average of high and low prices on the New York Stock Exchange -
Composite Transactions as reported in The Wall Street Journal for the five consecutive trading days ending with
the applicable Investment Date; provided, however, if the Shares are National Grid American Depository Receipts
or American Depository Shares, the price will be computed based upon the market value of the underlying
securities at closing of the London Stock Exchange on the Investment Date. The pricing method set forth in this
paragraph may be modified by procedures adopted by the National Grid Committee.

If Shares are sold on the open market, the price will be computed at the average sale price of all
Shares sold during that day or period, as applicable. If Shares are sold to National Grid, the price will be
computed on the basis of the average of the high and low prices on the New York Stock Exchange - Composite
Transactions at the closing of the New York Stock Exchange for the trading day on which the Shares are sold;
provided, however, if the Shares are National Grid American Depository Receipts or American Depository Shares,
the price will be computed based upon the market value of the underlying securities at closing of the London
Stock Exchange on the business day prior to the date they are sold. The pricing method set forth in this
paragraph may be modified by procedures adopted by the National Grid Committee.

If there is not trading in the Shares on the New York Stock Exchange for a substantial amount of time
during the period of computation, or reporting of Share transactions for any day in the period does not take
place or is subject to reporting error, the value of the Shares shall be determined by National Grid on the basis
of such market quotations or other method as National Grid and the Trustee shall deem appropriate.

To the extent Shares are purchased from or sold to more than one source during any given day or period,
as applicable, the price of Shares shall reflect the average price of Shares purchased from or sold to National
Grid or the open market for that day or period. The pricing method set forth in this paragraph may be modified
by procedures adopted by the National Grid Committee.

No contribution involving the issue of Shares directly from National Grid can be made if, as a result of
such contribution, the total number of Shares contributed directly under this Plan, or issued or issuable
pursuant to the exercise of options or other rights granted within the preceding ten years under all employee
share plans established by National Grid, or a subsidiary, would exceed 10% of the issued ordinary share capital
of National Grid on the day of such contribution.

For the purpose of this 10% limit, any shares in National Grid Holdings One plc which have been issued
(or remain issuable) under any executive or employees' share scheme shall be treated as shares in National Grid,
subject to the proviso that:

(a) any shares issued or issuable pursuant to any options granted as "Replacement Options" under paragraph
(f) of the Unapproved Appendix to the National Grid Executive Share Option Scheme (1990) shall be
regarded as having been granted on the date that the "1998 Option" (as that term is defined in such
paragraph) to which they relate was granted; and

(b) any shares issued or issuable pursuant to any option granted under The National Grid Company plc's 1995
Unapproved Savings Related Share Option Scheme and any corresponding option granted under The National
Grid Company plc's Savings Related Share Option Scheme established in 1990 shall be treated as a single
option in recognition that only on or other, but not both, of such options may be exercised.

References in this Section 15.38 to shares issued or issuable pursuant to the exercise of options or
other rights shall include any shares issued for the purpose of satisfying any such option or other right.

Notwithstanding the provisions of this Section 15.38, with the exception of the 10% limit on the issue
of ordinary shares by National Grid, the provisions of this Section 15.38 may be adjusted under procedures
adopted by the National Grid Committee.

This Section 15.38 is intended to be a portion of the Plan constituting an employee stock
ownership plan under section 4975(e) of the Code.

15.39. "Nonparticipating Employee" means any person in the employ of an Employer who is not included in a unit
of employees covered by a collective bargaining agreement that provides for participation in the Plan.

15.40. "Normal Retirement Age" means age 55.

15.41. "Officer" means the Chairman, President, Chief Financial Officer or Treasurer of National Grid USA or
its successor.

15.42. "Participant" means each Eligible Employee and former Eligible Employee who participates in the Plan
pursuant to Article 2 of the Plan.

15.43. "Participant Account" means the account into which are credited the contributions made by a Participant,
if any, prior to January 1, 1983, and all income, gains, and losses attributable thereto.

15.44. "Plan Year" means the 12-month period ending each December 31.

15.45. "Prior Plan" means the National Grid USA Companies Incentive Thrift Plan II as in effect prior to the
effective date of this amendment and restatement.

15.46. "Qualified Domestic Relations Order" means any judgment, decree or order (including approval of a
property settlement agreement) which constitutes a "qualified domestic relations order" within the meaning of
Code section 414(p). A judgment, decree or order shall not be considered not to be a Qualified Domestic
Relations Order merely because it requires a distribution to an alternate payee (or the segregation of accounts
pending distribution to an alternate payee) before the Participant is otherwise entitled to a distribution under
the Plan.

15.47. "Qualified Nonelective Contribution" means a contribution made in the discretion of the Employers which
is designated by the Employers as a Qualified Nonelective Contribution.

15.48. "Regulation" means a regulation issued by the Department of Treasury, including any final regulation,
proposed regulation, temporary regulation, as well as any modification of any such regulation contained in any
notice, revenue procedure, or similar pronouncement issued by the Internal Revenue Service.

15.49. "Required Beginning Date" means the latest date by which distributions to a Participant are required to
begin under Code section 401(a)(9), which is hereby incorporated into the Plan by reference.

15.50. "Rollover Contribution" means a contribution made by a Participant which satisfies the requirements for
rollover contributions asset forth in the Plan.

15.51. "Rollover Account" means the account into which are credited Rollover Contributions, if any, and/or
assets transferred from the Participant's Goals Program Account, if any, and all income, gains and losses
attributable thereto.

15.52. "Section" means a section of the Plan.

15.53. "Shares" means ordinary shares or American Depository Shares (or American Depository Receipts) of
National Grid.

15.54. "Trust" means the trust(s) established in conjunction with the Plan, together with any and all
amendments thereto.

15.55. "Trustee" mean the person or persons who are at any time the acting trustee(s) under the Trust as so
designated by the Board.

15.56. "Trust Fund" means the property held in trust by the Trustee(s) for the benefit of Participants,
Qualified Domestic Relations Order alternate payees, and Beneficiaries.

15.57. "Year of Service for Participation" means a Computation Period during which an individual has
accumulated at least 1,000 Hours of Service or such lesser number of Hours of Service set forth in procedures
adopted by the National Grid Committee.

IN WITNESS WHEREOF, the Board has caused this instrument to be signed in its name and on its behalf by
its duly authorized officer as of the 19th day of December 2001.

NATIONAL GRID USA SERVICE COMPANY, INC.

By:_____________________________________________

NATIONAL GRID GROUP, plc

By:_____________________________________________

"SUPPLEMENT A" TO
THE NATIONAL GRID USA COMPANIES'
INCENTIVE THRIFT PLAN II

1. The merger of that Portion of the Nantucket Electric Company 401(k) Plan Attributable to Nantucket Union
Employees. Effective as of October 1, 1996 (the "Merger Effective Date"), that portion of the Nantucket
Electric Company 401(k) Plan (the "Nantucket Plan") pertaining to Nantucket Union Employees is merged
with and into the Plan. For purposes of this Supplement A, the term "Nantucket Union Employees" means a
person (i) who was an employee of Nantucket Electric Company who was included in a unit of employees
covered by a collective bargaining agreement as to which retirement benefits had been the subject of
good faith bargaining, and (ii) who, immediately prior to the Merger Effective Date, was a participant
in the Nantucket Plan.

2. Treatment of Nantucket Union Employees. Notwithstanding any other provision of the Plan to the contrary,

a. as of the Merger Effective Date, Nantucket Electric Company will constitute an Employer under the Plan,
as defined under Section 15.20, and each Nantucket Union Employee will become a Participant in
the Plan and thereafter will be subject to the provisions of the Plan as they may be amended or
restated form time to time, except as provided in this Supplement A;

b. as of the Merger Effective Date, all liabilities and assets of the Nantucket Plan pertaining to the
Nantucket Union Employees will be transferred to, assumed by, and become a part of the Plan and
the trust thereunder;

c. as of the Merger Effective Date, each Nantucket Union Employee will have an amount credited to his or
her Accounts under the Plan that is at least equal to the amounts which he or she had credited
to his or her accounts under the Nantucket Plan immediately prior to the Merger Effective Date;

d. each Nantucket Union Employee who was fully vested under the Nantucket Plan will be fully vested at all
times under the Plan, and each Nantucket Union Employee who was not fully vested under the
Nantucket Plan will become vested in his or her Accounts in accordance with Section 5.1 of the
Plan, but in any event no less rapidly than under the Nantucket Plan;

e. for periods following the Merger Effective Date, the amounts credited to the Account of each Nantucket
Union Employee under the Plan will be calculated pursuant to Article IV of the Plan;

f. each Nantucket Union Employee will be entitled to elect to receive, in the form of any distribution
option available under the Nantucket Plan, such portion of his or her Accounts under the Plan
as is equal to the amount that he or she had credited under the Nantucket Plan immediately
prior to the Merger Effective Date;

g. each Nantucket Union Employee who was not a participant in the Nantucket Plan immediately before the
Merger Effective Date will become a Participant in the Plan pursuant to Article III and
thereafter will be subject to the provisions of the Plan as they may be amended or restated
from time to time; and

h. for purposes of determining a Year of Service and a Computation Period under the Plan, employees of
Nantucket Electric Company who (in accordance with this Supplement A) become eligible to
participate in the Plan as of the Merger Effective Date will be credited with an Hour of
Service for each of his or her "Hours of Service" under the Nantucket Plan (as determined under
the Nantucket Plan).

"SUPPLEMENT B" TO
THE NATIONAL GRID USA COMPANIES'
INCENTIVE THRIFT PLAN II

1. The merger of that Portion of the Eastern Utilities Associates Employees' Savings Plan Attributable to
EUA Union Employees. The portion of the Eastern Utilities Associates Employees' Savings Plan (the "EUA
Plan") pertaining to EUA Union Employees shall be merged with and into the Plan, as of May 1, 2000 or as
soon as practical thereafter (the "Merger Effective Date"). For purposes of this Supplement B, the term
"EUA Union Employee" means a person (i) who was an employee of Eastern Utility Associates or an
affiliate ("EUA") who was included in a unit of employees covered by a collective bargaining agreement
as to which retirement benefits had been the subject of good faith bargaining, and (ii) who, immediately
prior to the Merger Effective Date, was a participant, or eligible to participate, in the EUA Plan.

2. Treatment of EUA Union Employees. Notwithstanding any other provision of the Plan to the contrary,

a. as of the Merger Effective Date, each EUA Union Employee who was a participant in the EUA Plan will
become a Participant in the Plan and thereafter will be subject to the provisions of the Plan
as they may be amended or restated form time to time, except as provided in this Supplement B;

b. as of the Merger Effective Date, all liabilities and assets of the EUA Plan pertaining to the EUA Union
Employees will be transferred to, assumed by, and become a part of the Plan and the trust
thereunder;

c. as of the Merger Effective Date, each EUA Union Employee will have an amount credited to his or her
Accounts under the Plan that is at least equal to the amounts which he or she had credited to
his or her accounts under the EUA Plan immediately prior to the Merger Effective Date;

d. for periods following the Merger Effective Date, the amounts credited to the Account of each EUA Union
Employee under the Plan will be calculated pursuant to Article IV of the Plan;

e. each EUA Union Employee will be entitled to receive in-service distributions of no less than of such
portion of his or her Accounts under the Plan as is equal to the amount that he or she had
credited under the EUA Plan immediately prior to the Merger Effective Date in accordance with
any such in-service distribution options available under the EUA Plan;

f. each EUA Union Employee will be entitled to elect to receive, in the form of any distribution option
available under the EUA Plan, no less than such portion of his or her Accounts under the Plan
as is equal to the amount that he or she had credited under the EUA Plan immediately prior to
the Merger Effective Date; and

g. for purposes of determining a Year of Service and a Computation Period under the Plan, employees of EUA
will be credited with an Hour of Service for each of his or her "Hours of Service" under the
EUA Plan (as determined under the EUA Plan).

"SUPPLEMENT C" TO
THE NATIONAL GRID USA COMPANIES'
INCENTIVE THRIFT PLAN II

1. Merger of the Niagara Mohawk Power Corporation Represented Employees' Savings Fund Plan. Effective as
of the date of the merger of Niagara Mohawk Power Corporation into National Grid USA Companies (the
"Merger Effective Date"), the Niagara Mohawk Power Corporation Represented Employees' Savings Fund Plan
(the "Niagara Mohawk Plan") is merged with and into the Plan.

2. Treatment of Niagara Mohawk Employees. Notwithstanding any other provision of the Plan to the contrary,

a. as of the Merger Effective Date, Niagara Mohawk Power Corporation, and its successor, ("Niagara Mohawk")
will constitute an Employer under the Plan, as defined under Section 15.20, and each
participant of the Niagara Mohawk Plan ("Niagara Mohawk Participant") will become a Participant
in the Plan and thereafter will be subject to the provisions of the Plan as they may be amended
or restated from time to time, except as provided in this Supplement C;

b. all provisions under the Niagara Mohawk Plan pertaining to eligibility, participation, contributions,
investment of accounts, vesting, in-service withdrawals, loans, benefits upon death or
separation from service, and distribution options shall remain applicable to each Niagara
Mohawk Participant, shall herein be incorporated by reference and the corresponding provisions
of the Plan, including without limitation, Article Two, Articles Five through Eight, and
Sections 3.1,.3.3, 3.4, 3.5, 3.7, 3.8, 4.1, 4.2 and 4.3, inclusive, shall not apply to the
Niagara Mohawk Participants;

c. each Niagara Mohawk employee eligible to participate in the Niagara Mohawk Plan but who was not a
participant in the Niagara Mohawk Plan immediately before the Merger Effective Date will become
a Participant in the Plan pursuant to the applicable provision of the Niagara Mohawk Plan, and
thereafter will be treated as a Niagara Mohawk Participant and subject to the provisions of
this Supplement C;

d. As of the Merger Effective Date, all liabilities and assets of the Niagara Mohawk Plan will be
transferred to, assumed by and become part of the Plan; and

e. as of the Merger Effective Date, each Niagara Mohawk Participant will have assets credited to his or her
Accounts under the Plan that are at least equal to the assets which he or she had credited to
his or her accounts under the Niagara Mohawk Plan immediately prior to the Merger Effective
Date.