<PAGE>As filed with the Securities and Exchange Commission on March 23, 2000
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
__________________
THE NATIONAL GRID GROUP PLC
(Exact name of Registrant as specified in its charter)
__________________
England and Wales 98-0202473
(Jurisdiction of Incorporation (I.R.S. Employer Identification No.)
of Organization)
National Grid House, Kirby Corner Road, Coventry CV4 8JY
(Address of Registrant's Principal Executive Offices)
__________________
National Grid USA Companies'
Incentive Thrift Plan I
National Grid USA Companies'
Incentive Thrift Plan II
(Full Titles of the Plans)
__________________
Jonathan M. G. Carlton John G. Cochrane
The National Grid Group plc Vice President and Treasurer,
c/o 25 Research Drive National Grid USA
Westborough, MA 01582 25 Research Drive
Westborough, MA 01582
(Names and addresses of agents for service)
(508) 389-2000
(Telephone number, including area code, of agents for service)
Copies to:
Fiona B. Smith Kirk L. Ramsauer
General Counsel Deputy General Counsel
The National Grid Group plc National Grid USA
National Grid House 25 Research Drive
Kirby Corner Road Westborough, MA 01582
Coventry CV4 8JY
<PAGE>
Calculation of Registration Fee
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
being to be price per offering registration
registered registered** share*** price*** fee
- ----------- ----------- ---------- ---------- -------------
American Depositary
Shares* 1,000,000 $44.25 $44,250,000 $11,682
* The American Depositary Shares are evidenced by American Depositary Receipts
and each represent five ordinary shares.
** An initial number of shares being registered to provide a number of shares
as may be purchased from time to time at market prices for participants in the
Plans.
*** Based on the average price on the New York Stock Exchange on March 21,
2000, and is used solely for the purpose of determining the registration fee.
In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this registration statement also covers an indeterminate amount of interests
to be offered or sold pursuant to The National Grid USA Companies' Incentive
Thrift Plan I and The National Grid USA Companies' Incentive Thrift Plan II.
<PAGE>INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents and information heretofore filed with the
Securities and Exchange Commission (the Commission) by the Registrant are
incorporated herein by reference:
(a)The Registrant's Form 20-F Registration Statement filed on October 4,
1999 (the Form 20-F), pursuant to Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended (the Exchange Act), which includes audited
financial statements for the year ended March 31, 1999.
(b)The description of the Registrant's American Depositary Shares and
Ordinary Shares as contained in the Form 20-F, including any amendment filed
for the purpose of updating such description.
(c)The New England Electric Companies Incentive Thrift Plan I Audited
Financial Statements for the year ended December 31, 1998, as contained in
Exhibit E-3 of the New England Electric System Annual Report on Form U-5-S for
the year ended December 31, 1998.
(d)The New England Electric Companies Incentive Thrift Plan II Audited
Financial Statements for the year ended December 31, 1998, as contained in
Exhibit E-4 of the New England Electric System Annual Report on Form U-5-S for
the year ended December 31, 1998.
All documents subsequently fled by the Registrant pursuant to Sections
13(a), 13(c), 14, and 15(d) of the Exchange Act, prior to the filing of a
post- effective amendment which indicates that all securities registered
herein have been sold or which deregisters all securities then remaining
unsold, shall be deemed incorporated by reference herein and to be a part
hereof from the date of the filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers and Limitation of
Liability
Indemnification of Directors and Officers of NGG
Article 157 of the Articles of Association of NGG provides as follows:
Subject to the Statutes [as defined in NGG's Articles of Association], the
Company may indemnify any Director or other officer against any liability.
Subject to those provisions, but without prejudice to any indemnity to which
the person concerned may otherwise be entitled, every Director or other
officer of the Company and the Auditors shall be indemnified out of the assets
of the Company against any liability incurred by him as a Director, other
officer of the Company or as Auditor in defending any proceedings (whether
civil or criminal) in which judgment is given in his favour or he is acquitted
or in
<PAGE>
connection with any application under the Statutes in which relief is granted
to him by the court.
Section 310 of the Companies Act 1985 of the United Kingdom (as amended
by Section 137 of the Companies Act 1989 of the United Kingdom) provides as
follows:
310. Provisions exempting officers and auditors from liability
(1) This section applies to any provision, whether contained in a
company's articles or in any contract with the company or otherwise, for
exempting any officer of the company or any person (whether an officer or not)
employed by the company as auditor from, or indemnifying him against, any
liability which by virtue of any rule of law would otherwise attach to him in
respect of any negligence, default, breach of duty or breach of trust of which
he may be guilty in relation to the company.
(2) Except as provided by the following subsection, any such provision is
void.
(3) This section does not prevent a company
(a) from purchasing and maintaining for any such officer or auditor
insurance against any such liability; or
(b) from indemnifying any such officer or auditor against any liability
incurred by him
(i) in defending any proceedings (whether civil or criminal) in
which judgment is given in his favour or he is acquitted, or
(ii) in connection with any application under Section 144(3) or (4)
(acquisition of shares by innocent nominee) or Section 727 (general power to
grant relief in case of honest and reasonable conduct) in which relief is
granted to him by the court.
Section 727 of the Companies Act 1985 of the United Kingdom provides as
follows:
727. Power of court to grant relief in certain cases
(1) If in any proceedings for negligence, default, breach of duty or
breach of trust against an officer of a company or a person employed by a
company as auditor (whether he is or is not an officer of the company) it
appears to the court hearing the case that that officer or person is or may be
liable in respect of the negligence, default, breach of duty or breach of
trust, but that he has acted honestly and reasonably, and that having regard
to all the circumstances of the case (including those connected with his
appointment) he ought fairly to be excused for the negligence, default, breach
of duty or breach of trust, that court may relieve him, either wholly or
partly, from his liability on such terms as it thinks fit.
(2) If any such officer or person as above-mentioned has reason to
apprehend that any claim will or might be made against him in respect of any
negligence, default, breach of duty or breach of trust, he may apply to the
court for relief; and the court on the application
<PAGE>
has the same power to relieve him as under this section it would have had if
it had been a court before which proceedings against that person for
negligence, default, breach of duty or breach of trust had been brought.
(3) Where a case to which subsection (1) applies is being tried by a
judge with a jury, the judge, after hearing the evidence, may, if he is
satisfied that the defendant or defender ought in pursuance of that subsection
to be relieved either in whole or in part from the liability sought to be
enforced against him, withdraw the case in whole or in part from the jury and
forthwith direct judgment to be entered for the defendant or defender on such
terms as to costs or otherwise as the judge may think proper.
Indemnification of Members of the Benefits Committee
Section 10.10 of each of the Plans provides:
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.
Article II.A of the By-laws of New England Power Service Company, the
sponsor of the Plans, provides in part:
The corporation shall indemnify each of its directors and officers
against any loss, liability or expense, including amounts paid in satisfaction
of judgments, in compromise or as fines and penalties, and counsel fees,
imposed upon or reasonably incurred by him in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or
criminal, including but not limited to derivative suits (to the extent
permitted by law), in which he may be involved or with which he may be
threatened, while in office or thereafter, by reason of his being or having
been a director or officer, except with respect to any matter as to which he
shall have been adjudicated in such action, suit or proceeding not to have
acted in good faith in the reasonable belief that his action was in the best
interests of the corporation, or, to the extent that such matter relates to
service with respect to any employee benefit plan, as in the best interests of
the participants or beneficiaries of such plan. As to any matter disposed of
by a compromise payment by a director or officer, pursuant to a consent decree
or otherwise, no indemnification either for said payment or for any other
expenses shall be provided unless such compromise shall be approved as in the
best interests of the corporation, after notice that it involves such
indemnification, if no change in control has occurred (a) by a disinterested
majority of the directors then in office, (b) by a majority of the
disinterested directors then in office, provided that there has been obtained
an opinion in writing of independent legal counsel to the effect that such
director or officer appears to have acted in good faith in the reasonable
belief that his action was in the best interests of the corporation, or (c) by
the vote, at a meeting duly called and held, of the holders of a majority of
the shares outstanding and entitled to
<PAGE>
vote thereon, exclusive of any shares owned by any interested director or
officer or, if a change in control shall have occurred, by an opinion in
writing of independent legal counsel to the effect that such director or
officer appears to have acted in good faith in the reasonable belief that his
action was in the best interests of the corporation.
* * *
The term "officer" includes . . . employees of the corporation and its
affiliates who serve in any capacity with respect to benefit plans for the
corporation's employees.
The By-laws of most of the other Employers provide similar protections.
Insurance and Agreements
The Registrants have not entered into indemnity agreements with their
directors and officers or with members of the Benefits Committee.
NGG provides officers' and directors' insurance to its officers and
directors.
The National Grid USA companies provide fiduciary insurance to members of
the Benefits Committee.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit 4AMemorandum and Articles of Association of The National Grid
Group plc, incorporated by reference to Exhibit 1 of the Registrant's Form
20-F, File No. 1-14958.
Exhibit 4BAmended and Restated Deposit Agreement, dated as of October 6,
1999, among The National Grid Group plc, The Bank of New York, as depositary,
and Holders from time to time of American Depositary Receipts, incorporated by
reference to Exhibit 2(i) of the Registrant's Form 20-F, File No. 1-14958.
Exhibit 4CNational Grid USA Companies' Incentive Thrift Plan I, as
amended and restated effective March 22, 2000
Exhibit 4DNational Grid USA Companies' Incentive Thrift Plan II, as
amended and restated effective March 22, 2000
Exhibit 5The Registrant will submit the Plans and any amendments thereto
to the Internal Revenue Service (IRS) in a timely manner and will make all
changes required by the IRS in order to qualify the Plans.
Exhibit 23AConsent of PricewaterhouseCoopers re 20-F financial statements
<PAGE> Exhibit 23BConsent of PricewaterhouseCoopers re U-5-S financial
statements
Exhibit 23CConsent of PricewaterhouseCoopers re U-5-S financial
statements
Exhibit 24Powers of Attorney of the Directors
Item 9. Undertakings.
The undersigned Registrant and, where applicable, Plan, hereby
undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i)To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii)To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b)(§230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
<PAGE> The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions discussed in item 6 hereof, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
<PAGE>SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Westborough, Commonwealth of
Massachusetts.
THE NATIONAL GRID GROUP PLC
Dated: March 23, 2000 By: s/ D. H. Jones
David Jones, Group Chief Executive
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by or on behalf of the following
persons in the capacities and on the dates indicated.
Principal Executive Officer: Directors (a majority):
Stephen Box*
s/ D. H. Jones Group Finance Director
David Jones, Group Chief Executive
Bob Faircloth*
Non-executive Director
Principal Financial Officer: Wob Gerretsen*
Group Director, Latin America
s/ S. J. Box John Grant*
Stephen Box, Group Finance Director Non-executive Director
David Jones*
Director
Principal Accounting Officer: and Group Chief Executive
James Ross*
s/ S. J. Box Non-executive Chairman
Stephen Box, Group Finance Director
Richard Reynolds*
Non-executive Director
Roger Urwin*
Group Director, Europe
s/ J. M. G. Carlton *David Jones, the undersigned
Jonathan M. G. Carlton attorney-in-fact, by signing his name
Authorized United States hereto, does execute this Registration
Representative Statement on behalf of the above-named
Directors pursuant to a power of attorney
filed with the Securities and Exchange
Commission as Exhibit 24 to this
Registration Statement.
Date as to each signature
on this page
March 23, 2000 S/ D. H. Jones
Attorney-in-Fact
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the Chairman
and Members of the Benefits Committee have duly caused this Registration
Statement to be signed by the undersigned, thereunto duly authorized, in the
Town of Westborough, Commonwealth of Massachusetts.
National Grid USA Companies' Incentive Thrift Plan I
and
National Grid USA Companies' Incentive Thrift Plan II
By: s/ John G. Cochrane
John G. Cochrane, Chairman of the
Benefits Committee
s/ Linwood B. Stockwell
Member, Benefits Committee
s/ David C. Kennedy
Member, Benefits Committee
s/ Frances M. Skypeck
Member, Benefits Committee
s/ Nancy B. Kellogg
Member, Benefits Committee
s/ Jennifer K. Zschokke
Member, Benefits Committee
s/Andrea Foley-Stapleford
Member, Benefits Committee
Dated: March 23, 2000
<PAGE>EXHIBIT INDEX
Exhibit 4AMemorandum and Articles of Association of The National Grid Group
plc, incorporated by reference to Exhibit 1 of the Registrant's 1998 Form
20-F, File No. 1-14958
Exhibit 4BAmended and Restated Deposit Agreement, dated as of October 6, 1999,
among The National Grid Group plc, The Bank of New York, as depositary, and
Holders from time to time of American Depositary Receipts, incorporated by
reference to Exhibit 2(i) of the Registrant's 1998 Form 20-F, File No. 1-14958
Exhibit 4CNational Grid USA Companies' Incentive Thrift Plan I, as amended and
restated effective March 22, 2000
Exhibit 4DNational Grid USA Companies' Incentive Thrift Plan II, as amended
and restated effective March 22, 2000
Exhibit 23AConsent of PricewaterhouseCoopers re 20-F financial statements
Exhibit 23BConsent of PricewaterhouseCoopers re U-5-S financial statements
Exhibit 23CConsent of PricewaterhouseCoopers re U-5-S financial statements
Exhibit 24Powers of Attorney of the Directors
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<PAGE>
THE NATIONAL GRID USA COMPANIES'
INCENTIVE THRIFT PLAN I
Amended and Restated Document #2
<PAGE>TABLE OF CONTENTS
ARTICLE 1. INTRODUCTION1
1.1. In General1
1.2. Nantucket Plan Merger1
1.3. Defined Terms1
ARTICLE 2. PARTICIPATION2
2.1. Date of Participation2
2.2. Participation by Former Nonparticipating Employees2
2.3. Duration of Participation2
ARTICLE 3. CONTRIBUTIONS.3
3.1. Elective Contributions3
3.2. Form and Manner of Elections3
3.3. Basic Matching Contributions3
3.4. Discretionary Matching Contributions3
3.5. Change in Control or Major Transaction4
3.6. Qualified Nonelective Contributions4
3.7. Rollover Contributions5
3.8. After-tax Contributions5
3.9. Transfer Contributions5
3.10. Time for Making Contributions5
3.11. Crediting of Contributions5
3.12. Certain Limits Apply6
3.13. Return of Contributions6
3.14. Establishment of Trust6
ARTICLE 4. PARTICIPANT ACCOUNTS7
4.1. Accounts7
4.2. Adjustment of Accounts7
4.3. Investment of Accounts7
4.4. Appointment of Investment Manager or Named Fiduciary9
4.5. Transfers From Other Plans9
ARTICLE 5. VESTING OF ACCOUNTS10
5.1. Immediate Vesting of Certain Accounts10
ARTICLE 6. WITHDRAWALS PRIOR TO SEPARATION FROM SERVICE.11
6.1. Hardship Withdrawals11
6.2. Withdrawals After Age 59½12
6.3. Withdrawals Before Age 59½12
6.4. Required Minimum Distributions12
6.5. Restrictions on Certain Distributions12
6.6. Distributions Required by a Qualified Domestic Relations Order13
6.7. Certain Dispositions13
6.8. Spousal Consent to Withdrawals by Certain Former
Participants in Other Plans13
ARTICLE 7. LOANS TO PARTICIPANTS15
7.1. In General15
7.2. Rules and Procedures15
7.3. Maximum amount of loan; Maximum number of loans15
7.4. Minimum amount of loan15
7.5. Note; security; interest15
<PAGE> 7.6. Repayment16
7.7. Repayment upon distribution16
7.8. Default16
7.9. Nondiscrimination17
7.10. Adjustment of Accounts17
7.11. Spousal Consent to Loans to Certain Former Participants
in Other Plans17
7.12. Loans Upon Termination of Employment During Company
Restructuring17
ARTICLE 8. BENEFITS UPON DEATH OR SEPARATION FROM SERVICE19
8.1. Separation from Service for Reasons other than Death19
8.2. Time of Distributions19
8.3. Distributions After a Participant's Death or Disability.20
8.4. Designation of Beneficiary20
8.5. Optional Forms of Benefit21
8.6. Distributions Upon Required Beginning Date22
8.7. Direct Rollovers of Eligible Distributions22
8.8. Special Rules for Former Participants in Merged Plans23
ARTICLE 9. VOTING AND DISPOSITION OF SHARES25
9.1. Voting of Shares25
9.2. Tender or Exchange Offers25
9.3. Cash Out Merger25
9.4. Investment of Proceeds of Tender Offer, Shares Received
in Exchange Offer26
9.5. Investment Following Cash Out Merger26
9.6. Confidentiality of Instructions26
ARTICLE 10. ADMINISTRATION.27
10.1. Administrator27
10.2. Powers of Administrator27
10.3. Action27
10.4. Authority to Act28
10.5. Effect of Interpretation or Determination28
10.6. Reliance on Tables, etc28
10.7. Claims and Review Procedures28
10.8. Denied Claims28
10.9. Liability for Acts29
10.10. Indemnification of Administrator and Assistants29
10.11. Examination of Records29
10.12. APRSC Procedures.29
ARTICLE 11. AMENDMENT AND TERMINATION.30
11.1. Amendment30
11.2. Termination30
11.3. Distributions upon Termination of the Plan31
11.4. Merger or Consolidation of Plan; Transfer of Plan Assets31
ARTICLE 12. LIMITS ON CONTRIBUTIONS32
12.1. Code Section 404 Limits32
12.2. Code Section 415 Limits32
12.3. Code Section 402(g) Limits33
12.4. Code Section 401(k)(3) Limits35
12.5. Code Section 401(m) Limits39
<PAGE>ARTICLE 13. SPECIAL TOP-HEAVY PROVISIONS.43
13.1. Provisions to apply43
13.2. Minimum Contribution43
13.3. Adjustment to Limitation on Benefits44
13.4. Definitions44
ARTICLE 14. MISCELLANEOUS.47
14.1. Exclusive Benefit Rule47
14.2. Limitation of Rights47
14.3. Nonalienability of Benefits47
14.4. Rules for Withdrawals and Distributions47
14.5. USERRA Compliance47
14.6. Miscellaneous Employer Contribution47
14.7. Governing law48
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
15.13. "Code"49
15.14. "Compensation"51
15.15. "Computation Period"51
15.16. "Contribution Agreement"51
15.17. "Discretionary Matching Contribution"51
15.18. "Elective Contribution"51
15.19. "Eligible Employee"52
15.20. "Employee52
15.21. "Employer"52
15.22. "Employer Account"52
15.24. "ERISA"52
15.25. "ESOP"52
15.26. "ESOP Transfer Account"52
15.27. "FAPP I"53
15.28. "Financial Objective"53
15.29. "Goals Program"53
15.30. "Highly Compensated Employee"53
15.31. "Highly Compensated Participant"53
15.33. "Investment Date"54
15.34. "Investment Fund"54
15.35. "Matching Contributions"54
15.36. "Major Transaction"54
15.37. "New England Electric System"55
15.38. "NEES Board"55
15.39. "NEES Share Fund"55
15.40. "Nonparticipating Employee"56
15.41. "Normal Retirement Age"56
15.42. "Officer"56
15.43. "Participant"56
15.44. "Participant Account"57
15.45. "Plan Year"57
<PAGE> 15.46. "Person"57
15.47. "Prior Plan"57
15.48. "Qualified Domestic Relations Order"57
15.49. "Qualified Nonelective Contribution"57
15.50. "Regulation"57
15.51. "Required Beginning Date"57
15.52. "Rollover Contribution"57
15.53. "Rollover Account"57
15.54. "Section"58
15.55. "Shares"58
15.56. "System"58
15.57. "Trust"58
15.58. "Trustee"58
15.59. "Trust Fund"58
15.60. "Year of Service for Participation"58
SUPPLEMENT A59
<PAGE>ARTICLE 1. INTRODUCTION.
1.1. In General. This document amends and restates the provisions of
the New England Electric System Companies Incentive Thrift Plan I effective
April 10, 2000 or the effective date of the merger of New England Electric
System with the National Grid Group PLC, if earlier; furthermore, this
document will rename the Plan the National Grid USA Companies' Incentive
Thrift Plan I effective upon the merger of New England Electric System with
the National Grid Group PLC. The original effective date of the Plan is
January 1, 1980. 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 the effective date of this document
shall be determined under the applicable provisions of the Plan as in effect
from time to time prior to their termination of employment. The Plan and its
related Trust are intended to qualify as a Discretionary Matching plan and
trust under Code section 401(a), and the cash or deferred arrangement forming
part of the Plan is intended to qualify under Code section 401(k). The
provisions of the Plan and the Trust shall be construed and applied
accordingly. 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.
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 Nonunion 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. Defined Terms. Capitalized terms used in the provisions of the
Plan have the meanings given them under Article 14.
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 Benefits Committee. For purposes of determining
eligibility to receive Matching Contributions, each Eligible Employee shall
become a Participant as of the Entry Date continuing 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.
<PAGE> 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 in half percentage points (effective
January 1, 2000, expressed in whole percentage points) 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 Benefits Committee (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 Benefits Committee 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 Benefits Committee 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 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 Plan
Years prior to January 1, 2000, the amount of the Basic Matching Contribution
made by an Employer for the Plan Year shall be equal to 40% of the Elective
Contributions made on behalf of the Participant for the Plan Year which do not
exceed the first 5% 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 5% 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 75% 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.
<PAGE> 3.4. Discretionary Matching Contributions. For Plan Years prior to
January 1, 2000, as soon as practicable after the close of a 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 5% 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; 30% if the middle Financial Objective is met or exceeded, provided
that the third tier Financial Objective is not met; or 60% if the third tier
Financial Objective is met or exceeded. If the financial performance falls
between the middle Financial Objective and the third tier Financial Objective,
the applicable percentage shall be determined ratably between 30% and 60%. 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. Change in Control or Major Transaction. For Plan Years before
January 1, 2000, notwithstanding Sections 3.3 and 3.4 above, in the event of a
Change in Control or Major Transaction, in lieu of any further Employer
contributions for the year in which the event occurs, each Employer shall make
a Plan contribution within 30 days of consummation of the Change in Control or
of the transaction approved by the Major Transaction in an amount equal to (a)
times (b) less (c), where
(a) is the Participant's cumulative Base Compensation at the date of
said consummation;
(b) is the average of the Basic Matching Contribution plus Discretionary
Matching Contribution percentages made for the Participant for the last three
years prior to the year in which the consummation occurs; and
(c) is the total Matching Contribution plus Discretionary Matching
Contribution made on behalf of the Participant for that year through the date
of the consummation.
Further, the Employer shall make a cash payment to the Participant from its
general assets equal to (i) the Participant's Annual Base Rate times (b)
above, less (ii) the total Employer contribution for the year, including the
amount contributed under the foregoing sentence.
3.6. 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.
<PAGE>
3.7. Rollover Contributions. An Employee and, under certain limited
circumstances designated by the Benefits Committee, 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. 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 6, 7, 8, 9, 10 and 13 and Section 4.3. 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.
3.8. After-tax Contributions. Employee after-tax contributions are
neither required nor permitted. However, 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.
3.9. 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.
3.10. 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 of the Business Day
coinciding with or next 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.
<PAGE>
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 has established a Trust to
accept and hold contributions made under the Plan. The Trust shall be
governed by an agreement between the Board and the Trustee 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 shall provide New
England Power 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. To the extent
permitted by the Benefits Committee, shares held by the Trustee will be
eligible to participate in the New England Electric System Dividend
Reinvestment and Common Share Purchase Plan.
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
<PAGE>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, 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) and (c) 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 NEES Share Fund, if such Shares are being purchased from the System, 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; 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 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
<PAGE>
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.
(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; 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.
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 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.
<PAGE>ARTICLE 5. VESTING OF ACCOUNTS.
5.1. Immediate Vesting of Certain 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.
ARTICLE 6. WITHDRAWALS PRIOR TO SEPARATION FROM SERVICE.
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.
<PAGE> (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, 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.
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.
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. Distribution to a
Beneficiary shall be completed not later than the fifth anniversary of the
Participant's death; and further, if the Participant had received a
distribution on or after April 1 of the calendar year following the calendar
year the Participant turned age 70½, any remaining distribution to a
Beneficiary shall be completed at least as rapidly as distributions would have
been completed to the Participant.
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.
<PAGE>
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 or, for distributions
before March 2, 1999, exceeded such amount at the time of any prior
distribution to (or withdrawal by) the Participant under the Plan. 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 separation
from service as described in Sections 6.1 and 6.2, 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 separation from service 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 Sections 6.1 or 6.2 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.
ARTICLE 7. LOANS TO PARTICIPANTS
7.1. In General. Upon the request of an Eligible Borrower in the form
approved or prescribed by the Benefits Committee (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
<PAGE>
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 Benefits Committee shall promulgate such
rules and procedures, not inconsistent with the express provisions of this
Article, as it deems necessary to carry out the purposes of this Article. 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
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 Benefits Committee shall establish the maximum number of loans an Eligible
Borrower may have outstanding at any one time. The Benefits Committee 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 Benefits Committee 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
<PAGE>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 Benefits Committee 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 Benefits Committee.
<PAGE>
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 8.7 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 Non-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 SEPARATION FROM SERVICE
8.1. Separation from Service for Reasons other than Death. Following a
Participant's separation from the service 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 NEES 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 NEES Share
Fund entirely in cash; further provided, upon the occurrence of a Cash Out
Merger, payments from the NEES 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 separation from service, in lieu of a single sum payment, and
<PAGE>in accordance with procedures adopted by the Benefits Committee, 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
separation from service, 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 or, for distributions before March 2, 1999, exceeded
such amount at the time of any prior distribution to (or withdrawal by) the
Participant under the Plan.
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,
included in the next recalculation of installments.
8.2. Time of Distributions. Distributions after a Participant's
separation from service 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 Separation From Service. If a Participant dies prior
to his or her separation from the service 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 Separation From Service. If a Participant dies after
separation from service 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 separation from
service 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
<PAGE>
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 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
<PAGE>
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 separation
from the service 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 Benefits Committee:
(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
(c) a portion or all of the remaining value of his or her Accounts,
including his or her Elective Contribution Account.
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 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).
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
<PAGE>
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).
(ii) With respect to a distributee other than the Participant's
surviving spouse, 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 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
<PAGE>
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 8.7 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 8.7, 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.
<PAGE>
(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.
ARTICLE 9. VOTING AND DISPOSITION OF SHARES.
9.1. Voting of Shares. Before each annual or special meeting of
shareholders of the System there shall be sent to each Participant 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 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 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 Shares for
which the Trustee receives no instructions shall be deemed an affirmative
instruction by the Participant not to tender or exchange the Shares. Each
Participant 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 the System setting forth its position
with respect to the tender or exchange offer may be included with the request
for instructions sent to Participants. 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 interest in the Plan.
For purposes of this Section 9.2, the number of Shares held by a
Participant 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, a
Participant shall be advised in writing thereof and provided with a form
requesting instructions to the Trustee on whether the Participant's right to
receive cash shall be executed or whether the Participant 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 rights to which the Trustee receives no
instructions within 30 days after mailing of the aforesaid advice in writing,
the Participant shall be deemed to have given an affirmative instruction to
<PAGE>
exercise the right to receive cash. Each Participant 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 the System setting forth its position
with respect to the Cash Out Merger may be included with the request for
instructions sent to Participants. 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 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 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 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 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 in the
Investment Fund providing the most security to its principal.
9.6. Confidentiality of Instructions. All instructions to the Trustee
by Participants relating to proxies, tender offers, or exchange offers shall
be held in strict confidence.
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;
<PAGE>
(c) to decide all questions concerning the Plan and the eligibility of
any person to participate in 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.
<PAGE>
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 therefor; 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; 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.
<PAGE>
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. APRSC Procedures. The Administrator shall adopt procedures to
facilitate the Plan's compliance with Code Section 401(a) and related
provisions in accordance with the "Administrative Policy Regarding
Self-Correction".
ARTICLE 11. AMENDMENT AND TERMINATION.
11.1. Amendment. The Board reserves the power at any time or times to
amend the provisions of the Plan and Trust to any extent and in any manner
that it may deem advisable by a written instrument signed by an authorized
officer of New England Power Service Company providing for such amendment.
However, the Board will not 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 provisions of Sections 3.5, 15.12 or 15.36 to be
effective any earlier than the following Plan Year; or
(d) to amend the Plan in such manner as would increase the duties or
liabilities of the Trustee, unless the Trustee consents thereto in writing.
Notwithstanding any provision of the Plan to the contrary, the Board may not
amend or terminate the Plan between the occurrence of a Major Transaction and
the payment of benefits due upon the consummation of the Major Transaction
under Section 3.5, except to the extent amendments are necessary to maintain
the Plan's Code section 401(a) tax qualified status or to comport with the
Code or ERISA, or unless the shareholders have rescinded their approval of the
Major Transaction.
11.2. Termination. The Board has established the Plan and authorized
the establishment of the Trust with the bona fide intention and expectation
that contributions will be continued indefinitely, but neither the Board nor
<PAGE>
the Administrator will have an obligation or liability whatsoever to maintain
the Plan for a given length of time and may discontinue contributions under
the Plan or terminate the Plan 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 Administrator.
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 II 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 Benefits Committee.
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.
<PAGE>
(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. 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
<PAGE>
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
Benefits Committee, 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 Benefits Committee
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). 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)).
<PAGE>
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.
<PAGE>
(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 electi
ve 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;
<PAGE>
(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.
<PAGE>
(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.
(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(k)(3) limits including the extent to
which Qualified Nonelective Contributions are taken into account in
determining the actual deferral ratios.
<PAGE>
(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;
<PAGE>
(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) 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);
(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.
(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.
<PAGE>
(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.
(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.
<PAGE>
(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.
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
<PAGE>
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.
(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. 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.
(c) "top-heavy ratio":
(i) If employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the employers 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 5-year period ending on the
determination date(s)), and the
<PAGE>
denominator of which is the sum of all account balances (including any part of
an account balance 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 5-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).
<PAGE>
(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 qualify initially.
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 Employer
or Administrator or Trustee, 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
<PAGE>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 Benefits
Committee.
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. 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 ERISA.
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 the New England Power 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.
15.5. "Basic Matching Contribution" means a contribution made by the
applicable Employer in accordance with Section 3.3.
15.6. "Beneficiary" means any person entitled to receive benefits under
the Plan upon the death of a Participant.
<PAGE>
15.7. "Benefits Appeal Committee" means the committee established in
accordance with New England Electric System Companies' Final Average Pay
Pension Plan I.
15.8. "Benefits Committee" means the committee established in accordance
with New England Electric System Companies' Final Average Pay Pension Plan I.
15.9. "Board" means the Board of Directors of the New England Power
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 the System is merged
into or with another entity and as a result thereof all of the then
outstanding publicly held Shares of the System are converted into a right to
receive cash.
15.12. "Change in Control" occurs when the conditions set forth in
either of the following paragraphs shall have been satisfied:
(a) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of New England Electric System (not including in the
securities beneficially owned by such Person any securities acquired directly
from New England Electric System or its affiliates) representing 20% or more
of the combined voting power of New England Electric System's then outstanding
securities; or
(b) during any period of not more than two consecutive years,
individuals who at the beginning of such period constitute the NEES Board and
any new director(s) (other than a director designated by a Person who has
entered into an agreement with New England Electric System to effect a
transaction described in clause (a) of this paragraph) whose election by the
NEES Board or nomination for election by New England Electric System's
shareholders was approved or recommended by a vote of at least two-thirds of
the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved or recommended, cease for any reason to constitute a majority of the
NEES Board.
15.13. "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.
15.14. "Compensation" means, during the applicable Plan Year, the base,
overtime, premium, and bonus pay (including awards by an Employer under the
NEES Goals cash bonus plan, but not including awards by an Employer under the
NEES Incentive Share Plan; provided, however, for Plan Year 1999, if a
Participant elected to designate as an Elective Contribution the 1998 NEES
Goals cash bonus, said award shall not be included under this definition)
<PAGE>
received by a Participant during a pay period, plus the amount of any Elective
Contributions to the Plan and any salary reductions under the New England
Electric System Companies Elective Benefits Plan (or other similar plans) with
respect to such pay period, and in addition, Annual Individual Recognition
Awards and Special Individual Recognition Awards.
Compensation shall exclude compensation deferred under other plans, reimbur
sements 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).
No more than $160,000 of Compensation (or such larger amount as the
Secretary of the Treasury may determine pursuant to section 401(a)(17) of the
Code) shall be taken into account under the Plan.
15.15. "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.
15.16. "Contribution Agreement" means an election made by a Participant
pursuant to procedures established by the Benefits Committee that establishes
the level of Elective Contributions to be made for the Participant's
benefit.
15.17. "Discretionary Matching Contribution" means a contribution made
for Plan Years prior to January 1, 2000 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.
15.18. "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.
15.19. "Eligible Employee" means any Employee who is employed by an
Employer except that Eligible Employee does not include: any individual
included in a unit of employees covered by a collective bargaining agreement
(unless such agreement provides for such person being included 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.
<PAGE> 15.20. "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).
15.21. "Employer" means any subsidiary or affiliate of New England
Electric System, which has, by appropriate action of the Board, been
designated to participate in this Plan, provided that the board of directors
of the so-designated Employer has taken appropriate action to adopt the Plan.
15.22. "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.
15.23. "Entry Date" means the first effective payroll cutoff following
that date an Employee becomes an Eligible Employee.
15.24. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute or statutes of similar import.
15.25. "ESOP" means the New England Electric System Companies Employee
Share Ownership Plan, as amended.
15.26. "ESOP Transfer Account" means the account into which are credited
transfer contributions described in Section 3.9, and all income, gains, and
losses attributable thereto.
15.27. "FAPP I" means New England Electric System Companies Final
Average Pay Pension Plan I, as from time to time amended.
15.28. "Financial Objective" means the financial objective goal (stated
in ranges) set for the year in question for the NEES Goals cash bonus plan,
unless there are other than three such goals, in which case the Benefits
Committee shall establish the range of the middle Financial Objective.
15.29. "Goals Program" means the New England Electric System Companies
Goals Program, as amended.
15.30. "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.
15.31. "Highly Compensated Participant" means a Participant who is a
Highly Compensated Employee.
<PAGE> 15.32. "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; and
(d) 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
Benefits Committee with reference to the individual's most recent normal work.
15.33. "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 the System.
15.34. "Investment Fund" means each separate fund in which contributions
to the Plan are invested.
<PAGE>
15.35. "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.
15.36. "Major Transaction" means the occurrence of the conditions set
forth in any one of the following paragraphs:
(a) the shareholders of New England Electric System approve a merger or
consolidation with any corporation or business trust, other than (i) a merger
or consolidation which would result in the individuals who, prior to such
merger or consolidation, constitute the NEES Board constituting at least
two-thirds of the board of directors of New England Electric System or the
surviving or succeeding entity immediately after such merger or consolidation,
or (ii) a merger or consolidation effected to implement a recapitalization (or
similar transaction) in which no Person acquires more than 20% of the combined
voting power of New England Electric System's then outstanding securities;
(b) the shareholders of New England Electric System approve a plan of
complete liquidation thereof; or
(c) the shareholders of New England Electric System approve an agreement
for the sale or disposition of all or substantially all of New England
Electric System's assets, other than a sale or disposition which would result
in the individuals who prior to such sale or disposition constitute the NEES
Board constituting at least two-thirds of the board of directors of the Person
purchasing such assets immediately after such sale or disposition.
15.37. "New England Electric System" means New England Electric System
or its successor.
15.38. "NEES Board" means the board of directors of New England Electric
System.
15.39. "NEES Share Fund" means a fund consisting of Shares or securities
issued in exchange for Shares. Unless otherwise instructed by an Officer of
New England Electric System, 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 the System, 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 the System, unless an Officer of New
England Electric System 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 the System, unless an Officer of New England Electric
System 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 -
<PAGE>
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; provided, further, if the Shares are
National Grid Group American Depository Receipts, the price will be computed
based upon the market value of the underlying securities at close of the
London Stock Exchange on the Business Day prior to the particular transaction
and based upon such other necessary assumptions as an Officer shall approve
from time to time.
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 the System, 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 Group American
Depository Receipts, 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.
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 the System, 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 Group American Depository Receipts, 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.
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 the System
on the basis of such market quotations or other method as the System 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 the System or
the open market for that day or period.
15.40. "Nonparticipating Employee" means any person in the employ of an
Employer who is included in a unit of employees covered by a collective
bargaining agreement, unless such agreement provides for such person being
included in the Plan.
15.41. "Normal Retirement Age" means age 55.
15.42. "Officer" means the Chairman, President, Chief Financial Officer
or Treasurer of New England Electric System or its successor, provided the
successor is organized under the laws of the United States.
15.43. "Participant" means each Eligible Employee and former Eligible
Employee who participates in the Plan pursuant to Article 2 of the Plan.
<PAGE>
15.44. "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.
15.45. "Plan Year" means the 12-month period ending each December 31.
15.46. "Person" shall have the meaning given in Section 3(a)(9) of the
Securities Exchange Act of 1934, as modified and used in Sections 13(d) and
14(d) thereof; however, a Person shall not include (i) New England Electric
System or any subsidiary thereof, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of New England Electric System or
any subsidiary thereof, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the shareholders of New England Electric System in
substantially the same proportions as their ownership of shares of New England
Electric System.
15.47. "Prior Plan" means the New England Electric System Companies
Incentive Thrift Plan I as in effect prior to the effective date of this
amendment and restatement.
15.48. "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.
15.49. "Qualified Nonelective Contribution" means a contribution made in
the discretion of the Employers which is designated by the Employers as a
Qualified Nonelective Contribution.
15.50. "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.
15.51. "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.
15.52. "Rollover Contribution" means a contribution made by a
Participant which satisfies the requirements for rollover contributions asset
forth in the Plan.
15.53. "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.
15.54. "Section" means a section of the Plan.
15.55. "Shares" means common shares (or such other securities which
represent or are comparable to common shares) of the System.
15.56. "System" means New England Electric System and/or any parent,
affiliate, successor or successors.
<PAGE>
15.57. "Trust" means the trust established in conjunction with the Plan,
together with any and all amendments thereto.
15.58. "Trustee" mean the person or persons who are at any time the
acting trustee under the Trust as so designated by the Board.
15.59. "Trust Fund" means the property held in trust by the Trustee for
the benefit of Participants, Qualified Domestic Relations Order alternate
payees, and Beneficiaries.
15.60. "Year of Service for Participation" means a Computation Period
during which an individual has accumulated at least 1,000 Hours of Service.
IN WITNESS WHEREOF, the Board has caused this instrument to be signed in
its name and on its behalf by its duly authorized officer, this ______ day of
__________, 2000.
NEW ENGLAND POWER SERVICE COMPANY
By: William F. Dowd
<PAGE>"SUPPLEMENT A" TO
THE NEW ENGLAND ELECTRIC SYSTEM COMPANIES
INCENTIVE THRIFT PLAN
1.The merger of that Portion of the Nantucket Electric Company 401(k) Plan
Attributable to Nantucket Non-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 Non-union
Employees is merged with and into the Plan. For purposes of this Supplement
A, the term "Nantucket Non-union Employees" means a person (i) who was an
employee of Nantucket Electric Company who was not 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 Non-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 14.14, and each Nantucket
Non-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 Non-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 Non-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 Non-union Employee who was fully vested under the Nantucket
Plan will be fully vested at all times under the Plan, and each Nantucket
Non-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 Non-union Employee under the Plan will be calculated
pursuant to Article IV of the Plan;
f.each Nantucket Non-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 Non-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
<PAGE>
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).
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THE NATIONAL GRID USA COMPANIES'
INCENTIVE THRIFT PLAN II
Amended and Restated Document #2
<PAGE>TABLE OF CONTENTS
ARTICLE 1. INTRODUCTION1
1.1. In General1
1.2. Nantucket Plan Merger1
1.3. Defined Terms1
ARTICLE 2. PARTICIPATION2
2.1. Date of Participation2
2.2. Participation by Former Nonparticipating Employees2
2.3. Duration of Participation2
ARTICLE 3. CONTRIBUTIONS.3
3.1. Elective Contributions3
3.2. Form and Manner of Elections3
3.3. Basic Matching Contributions3
3.4. Discretionary Matching Contributions4
3.5. Qualified Nonelective Contributions5
3.6. Rollover Contributions5
3.7. After-tax Contributions5
3.8. Transfer Contributions5
3.9. Time for Making Contributions5
3.10. Crediting of Contributions6
3.11. Certain Limits Apply6
3.12. Return of Contributions6
3.13. Establishment of Trust6
ARTICLE 4. PARTICIPANT ACCOUNTS8
4.1. Accounts8
4.2. Adjustment of Accounts8
4.3. Investment of Accounts8
4.4. Appointment of Investment Manager or Named Fiduciary10
4.5. Transfers From Other Plans10
ARTICLE 5. VESTING OF ACCOUNTS11
5.1. Immediate Vesting of Certain Accounts11
ARTICLE 6. WITHDRAWALS PRIOR TO SEPARATION FROM SERVICE.12
6.1. Hardship Withdrawals12
6.2. Withdrawals After Age 59½13
6.3. Withdrawals Before Age 59½13
6.4. Required Minimum Distributions13
6.5. Restrictions on Certain Distributions13
6.6. Distributions Required by a Qualified Domestic Relations Order14
6.7. Certain Dispositions14
6.8. Spousal Consent to Withdrawals by Certain Former
Participants in Other Plans14
ARTICLE 7. LOANS TO PARTICIPANTS16
7.1. In General16
7.2. Rules and Procedures16
7.3. Maximum amount of loan; Maximum number of loans16
7.4. Minimum amount of loan16
7.5. Note; security; interest16
7.6. Repayment17
7.7. Repayment upon distribution17
<PAGE> 7.8. Default17
7.9. Nondiscrimination18
7.10. Adjustment of Accounts18
7.11. Spousal Consent to Loans to Certain Former Participants
in Other Plans18
7.12. Loans Upon Termination of Employment During Company
Restructuring19
ARTICLE 8. BENEFITS UPON DEATH OR SEPARATION FROM SERVICE20
8.1. Separation from Service for Reasons other than Death20
8.2. Time of Distributions20
8.3. Distributions After a Participant's Death or Disability.21
8.4. Designation of Beneficiary21
8.5. Optional Forms of Benefit22
8.6. Distributions Upon Required Beginning Date23
8.7. Direct Rollovers of Eligible Distributions23
8.8. Special Rules for Former Participants in Merged Plans24
ARTICLE 9. VOTING AND DISPOSITION OF SHARES27
9.1. Voting of Shares27
9.2. Tender or Exchange Offers27
9.3. Cash Out Merger27
9.4. Investment of Proceeds of Tender Offer, Shares Received in
Exchange Offer28
9.5. Investment Following Cash Out Merger28
9.6. Confidentiality of Instructions28
ARTICLE 10. ADMINISTRATION.29
10.1. Administrator29
10.2. Powers of Administrator29
10.3. Action29
10.4. Authority to Act30
10.5. Effect of Interpretation or Determination30
10.6. Reliance on Tables, etc30
10.7. Claims and Review Procedures30
10.8. Denied Claims30
10.9. Liability for Acts31
10.10. Indemnification of Administrator and Assistants31
10.11. Examination of Records31
10.12. APRSC Procedures.31
ARTICLE 11. AMENDMENT AND TERMINATION.32
11.1. Amendment32
11.2. Termination32
11.3. Distributions upon Termination of the Plan32
11.4. Merger or Consolidation of Plan; Transfer of Plan Assets33
ARTICLE 12. LIMITS ON CONTRIBUTIONS34
12.1. Code Section 404 Limits34
12.2. Code Section 415 Limits34
12.3. Code Section 402(g) Limits35
12.4. Code Section 401(k)(3) Limits37
12.5. Code Section 401(m) Limits41
ARTICLE 13. SPECIAL TOP-HEAVY PROVISIONS.45
13.1. Provisions to apply45
13.2. Minimum Contribution45
13.3. Adjustment to Limitation on Benefits46
13.4. Definitions46
<PAGE>ARTICLE 14. MISCELLANEOUS.49
14.1. Exclusive Benefit Rule49
14.2. Limitation of Rights49
14.3. Nonalienability of Benefits49
14.4. Rules for Withdrawals and Distributions49
14.5. USERRA Compliance49
14.6. Miscellaneous Employer Contribution49
14.7. Governing law50
ARTICLE 15. DEFINITIONS.51
15.1. "Accounts"51
15.2. "Administrator"51
15.3. "Annual Base Rate"51
15.4. "Base Compensation"51
15.5. "Basic Matching Contribution" 51
15.6. "Beneficiary"51
15.7. "Benefits Appeal Committee" 51
15.8. "Benefits Committee"51
15.9. "Board"51
15.10. "Business Day"51
15.11. "Cash Out Merger"51
15.12. "Code"52
15.13. "Compensation"52
15.14. "Computation Period"52
15.15. "Contribution Agreement"52
15.16. "Discretionary Matching Contribution"52
15.17. "Elective Contribution"52
15.18. "Eligible Employee"53
15.19. "Employee53
15.20. "Employer"53
15.21. "Employer Account"53
15.23. "ERISA"53
15.24. "ESOP"53
15.25. "ESOP Transfer Account"53
15.26. "FAPP II"54
15.27. "Financial Objective"54
15.28. "Goals Program"54
15.29. "Highly Compensated Employee"54
15.30. "Highly Compensated Participant"54
15.31. "Hour of Service"54
15.32. "Investment Date"55
15.33. "Investment Fund"55
15.34. "Matching Contributions"55
15.35. "NEES Board"55
15.36. "New England Electric System"55
15.37. "NEES Share Fund"56
15.38. "Nonparticipating Employee"57
15.39. "Normal Retirement Age"57
15.40. "Officer"57
15.41. "Participant"57
15.42. "Participant Account"57
15.43. "Plan Year"57
15.44. "Prior Plan"57
15.45. "Qualified Domestic Relations Order"57
15.46. "Qualified Nonelective Contribution"57
15.47. "Regulation"57
15.48. "Required Beginning Date"58
15.49. "Rollover Contribution"58
15.50. "Rollover Account"58
15.51. "Section"58
<PAGE> 15.52. "Shares"58
15.53. "System"58
15.54. "Trust"58
15.55. "Trustee"58
15.56. "Trust Fund"58
15.57. "Year of Service for Participation"58
SUPPLEMENT A59
<PAGE>ARTICLE 1. INTRODUCTION.
1.1. In General. This document amends and restates the provisions of
the New England Electric System Companies Incentive Thrift Plan II effective
April 10, 2000 or the effective date of the merger of New England Electric
System with the National Grid Group PLC, if earlier; furthermore, this
document will rename the Plan the National Grid USA Companies' Incentive
Thrift Plan II effective upon the merger of New England Electric System with
the National Grid Group PLC. 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 the effective date of this document
shall be determined under the applicable provisions of the Plan as in effect
from time to time prior to their termination of employment. The Plan and its
related Trust are intended to qualify as a Discretionary Matching plan and
trust under Code section 401(a), and the cash or deferred arrangement forming
part of the Plan is intended to qualify under Code section 401(k). The
provisions of the Plan and the Trust shall be construed and applied
accordingly. 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.
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. Defined Terms. Capitalized terms used in the provisions of the
Plan have the meanings given them under Article 14.
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 Benefits Committee. For purposes of determining
eligibility to receive Matching Contributions, each Eligible Employee shall
become a Participant as of the Entry Date continuing 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.
<PAGE> 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 in half percentage points (effective
January 1, 2000, expressed in whole percentage points) 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 Benefits Committee (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 Benefits Committee 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 Benefits Committee 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 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.
<PAGE>
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, 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
<PAGE>
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 Benefits Committee, 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. 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 6, 7, 8, 9, 10 and 13 and Section 4.3. 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 are
neither required nor permitted. However, 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. 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.
<PAGE>
3.10. 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 of the Business Day
coinciding with or next following the date the contributions are received by
the Trustee (but in no event later than the last Business Day of the Plan
Year).
3.11. 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.
3.12. 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.
3.13. Establishment of Trust. The Board has established a Trust to
accept and hold contributions made under the Plan. The Trust shall be
governed by an agreement between the Board and the Trustee 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 shall provide New
England Power 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. To the extent
permitted by the Benefits Committee, shares held by the Trustee will be
eligible to participate in the New England Electric System Dividend
Reinvestment and Common Share Purchase Plan.
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,
<PAGE>
(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, 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) and (c) 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 NEES Share Fund, if such Shares are being purchased from the System, 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; 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.
<PAGE>
(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 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.
(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; 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.
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.
<PAGE>
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 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 Certain 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.
ARTICLE 6. WITHDRAWALS PRIOR TO SEPARATION FROM SERVICE.
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
<PAGE>
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, 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.
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.
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. Distribution to a
Beneficiary shall be completed not later than the fifth anniversary of the
Participant's death; and further, if the Participant had received a
distribution on or after April 1 of the calendar year following the calendar
year the Participant turned age 70½, any remaining distribution to a
Beneficiary shall be completed at least as rapidly as distributions would have
been completed to the Participant.
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
<PAGE>
(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 or, for distributions
before March 2, 1999, exceeded such amount at the time of any prior
distribution to (or withdrawal by) the Participant under the Plan. 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 separation
from service as described in Sections 6.1 and 6.2, 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 separation from service 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 Sections 6.1 or 6.2 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
<PAGE>
because of such other circumstances as the Secretary of the Treasury may
prescribe.
ARTICLE 7. LOANS TO PARTICIPANTS
7.1. In General. Upon the request of an Eligible Borrower in the form
approved or prescribed by the Benefits Committee (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 Benefits Committee shall promulgate such
rules and procedures, not inconsistent with the express provisions of this
Article, as it deems necessary to carry out the purposes of this Article. 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
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 Benefits Committee shall establish the maximum number of loans an Eligible
Borrower may have outstanding at any one time. The Benefits Committee 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 Benefits Committee 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
<PAGE>
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 Benefits Committee 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.
<PAGE>
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 Benefits Committee.
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 8.7 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.
<PAGE>ARTICLE 8. BENEFITS UPON DEATH OR SEPARATION FROM SERVICE
8.1. Separation from Service for Reasons other than Death. Following a
Participant's separation from the service 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 NEES 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 NEES Share
Fund entirely in cash; further provided, upon the occurrence of a Cash Out
Merger, payments from the NEES 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 separation from service, in lieu of a single sum payment, and in
accordance with procedures adopted by the Benefits Committee, 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
separation from service, 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 or, for distributions before March 2, 1999, exceeded
such amount at the time of any prior distribution to (or withdrawal by) the
Participant under the Plan.
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,
included in the next recalculation of installments.
8.2. Time of Distributions. Distributions after a Participant's
separation from service 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 Separation From Service. If a Participant dies prior
to his or her separation from the service of the Employers, the Participant's
Beneficiary will receive the Participant's Accounts not later than the fifth
anniversary of the Participant's death.
<PAGE>
(b) Death After Separation From Service. If a Participant dies after
separation from service 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 separation from
service 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 Becoming Disabled. A Participant who is unable
to engage in any substantial gainful activity by reason of any medically determi
nable 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
<PAGE>
(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 separation
from the service 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 Benefits Committee:
(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
(c) a portion or all of the remaining value of his or her Accounts,
including his or her Elective Contribution Account.
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 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
<PAGE>
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).
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).
(ii) With respect to a distributee other than the Participant's
surviving spouse, 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 a distributee who is a Participant's surviving spouse, an eligible
retirement plan is an individual retirement account or an individual
retirement annuity.
<PAGE> (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 8.7 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
<PAGE>
(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 8.7, 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.
ARTICLE 9. VOTING AND DISPOSITION OF SHARES.
9.1. Voting of Shares. Before each annual or special meeting of
shareholders of the System there shall be sent to each Participant 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 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 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 Shares for
which the Trustee receives no instructions shall be deemed an affirmative
instruction by the Participant not to tender or exchange the Shares. Each
Participant who holds Shares in an Account(s) shall be named fiduciary for
purposes of tendering and exchanging those Shares.
<PAGE>
A statement from the management of the System setting forth its position
with respect to the tender or exchange offer may be included with the request
for instructions sent to Participants. 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 interest in the Plan.
For purposes of this Section 9.2, the number of Shares held by a
Participant 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, a
Participant shall be advised in writing thereof and provided with a form
requesting instructions to the Trustee on whether the Participant's right to
receive cash shall be executed or whether the Participant 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 rights to which the Trustee receives no
instructions within 30 days after mailing of the aforesaid advice in writing,
the Participant shall be deemed to have given an affirmative instruction to
exercise the right to receive cash. Each Participant 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 the System setting forth its position
with respect to the Cash Out Merger may be included with the request for
instructions sent to Participants. 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 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 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 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 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 in the
Investment Fund providing the most security to its principal.
9.6. Confidentiality of Instructions. All instructions to the Trustee
by Participants relating to proxies, tender offers, or exchange offers shall
be held in strict confidence.
<PAGE>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;
(c) to decide all questions concerning the Plan and the eligibility of
any person to participate in 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
<PAGE>
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 therefor; 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; 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
<PAGE>
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. APRSC Procedures. The Administrator shall adopt procedures to
facilitate the Plan's compliance with Code Section 401(a) and related
provisions in accordance with the "Administrative Policy Regarding
Self-Correction".
ARTICLE 11. AMENDMENT AND TERMINATION.
11.1. Amendment. The Board reserves the power at any time or times to
amend the provisions of the Plan and Trust to any extent and in any manner
that it may deem advisable by a written instrument signed by an authorized
officer of New England Power Service Company providing for such amendment.
However, the Board will not 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
<PAGE>
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; or
(c) to amend the Plan in such manner as would increase the duties or
liabilities of the Trustee, unless the Trustee consents thereto in writing.
11.2. Termination. The Board has established the Plan and authorized
the establishment of the Trust with the bona fide intention and expectation
that contributions will be continued indefinitely, but neither the Board nor
the Administrator will have an obligation or liability whatsoever to maintain
the Plan for a given length of time and may discontinue contributions under
the Plan or terminate the Plan 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 Administrator.
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
<PAGE>
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 Benefits Committee.
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. 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
<PAGE>
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 Benefits Committee, 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
Benefits Committee 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
<PAGE>
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). 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
<PAGE>
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
<PAGE>
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).
<PAGE>
(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
<PAGE>
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.
(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(k)(3) limits including the extent to
which Qualified Nonelective Contributions are taken into account in
determining the actual deferral ratios.
(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
<PAGE>
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;
(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) 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);
<PAGE> (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.
(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.
<PAGE>
(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.
<PAGE> (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.
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.
<PAGE>
(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. 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.
(c) "top-heavy ratio":
(i) If employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the employers 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 5-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 5-year
period
<PAGE>
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 5-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).
<PAGE>
(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 qualify initially.
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 Employer
or Administrator or Trustee, 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
<PAGE>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 Benefits
Committee.
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. 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 ERISA.
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 the New England Power 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.
15.5. "Basic Matching Contribution" means a contribution made by the
applicable Employer in accordance with Section 3.3.
<PAGE>
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 New England Electric System Companies' Final Average Pay
Pension Plan I.
15.8. "Benefits Committee" means the committee established in accordance
with New England Electric System Companies' Final Average Pay Pension Plan I.
15.9. "Board" means the Board of Directors of the New England Power
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 New England Electric
System is merged into or with another entity and as a result thereof all of
the then outstanding publicly held Shares of New England Electric System 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
NEES Goals cash bonus plan, but not including awards by an Employer under the
NEES Incentive Share Plan; provided, however, for Plan Year 1999, if a
Participant elected to designate as an Elective Contribution the 1998 NEES
Goals cash bonus, said award shall not be included under this definition)
received by a Participant during a pay period, plus the amount of any Elective
Contributions to the Plan and any salary reductions under the New England
Electric System 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).
No more than $160,000 of Compensation (or such larger amount as the
Secretary of the Treasury may determine pursuant to section 401(a)(17) of the
Code) shall be taken into account under the Plan.
<PAGE> 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 Benefits Committee 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 Years prior to January 1, 2000 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.
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 New England
Electric System, which has, by appropriate action of the Board, been
designated to participate in this Plan, provided that the board of directors
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.
<PAGE>
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 3.9, and all income, gains, and
losses attributable thereto.
15.26. "FAPP II" means New England Electric System Companies Final
Average Pay Pension Plan II, as from time to time amended.
15.27. "Financial Objective" means the financial objective goal (stated
in ranges) set for the year in question for the NEES Goals cash bonus plan,
unless there are other than three such goals, in which case the Benefits
Committee shall establish the range of the middle Financial Objective.
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;
<PAGE>
(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; and
(d) 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
Benefits Committee 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 the System.
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. "NEES Board" means the board of directors of New England Electric
System.
<PAGE>
15.36. "New England Electric System" means New England Electric System
or its successor.
15.37. "NEES Share Fund" means a fund consisting of Shares or securities
issued in exchange for Shares. Unless otherwise instructed by an Officer of
New England Electric System, 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 the System, 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 the System, unless an Officer of New
England Electric System 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 the System, unless an Officer of New England Electric
System 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; provided, further, if the Shares are
National Grid Group American Depository Receipts, 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 particular transaction
and based upon such other necessary assumptions as an Officer shall approve
from time to time.
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 the System, 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 Group American
Depository Receipts, 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.
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 the System, 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 Group American Depository Receipts, 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.
<PAGE>
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 the System
on the basis of such market quotations or other method as the System 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 the System or
the open market for that day or period.
15.38. "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.
15.39. "Normal Retirement Age" means age 55.
15.40. "Officer" means the Chairman, President, Chief Financial Officer
or Treasurer of New England Electric System or its successor, provided the
successor is organized under the laws of the United States.
15.41. "Participant" means each Eligible Employee and former Eligible
Employee who participates in the Plan pursuant to Article 2 of the Plan.
15.42. "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.
15.43. "Plan Year" means the 12-month period ending each December 31.
15.44. "Prior Plan" means the New England Electric System Companies
Incentive Thrift Plan II as in effect prior to the effective date of this
amendment and restatement.
15.45. "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.
15.46. "Qualified Nonelective Contribution" means a contribution made in
the discretion of the Employers which is designated by the Employers as a
Qualified Nonelective Contribution.
15.47. "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.
15.48. "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.
<PAGE> 15.49. "Rollover Contribution" means a contribution made by a
Participant which satisfies the requirements for rollover contributions asset
forth in the Plan.
15.50. "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.
15.51. "Section" means a section of the Plan.
15.52. "Shares" means common shares (or such other securities which
represent or are comparable to common shares) of the System.
15.53. "System" means New England Electric System and/or any parent,
affiliate, successor or successors.
15.54. "Trust" means the trust 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 under the Trust as so designated by the Board.
15.56. "Trust Fund" means the property held in trust by the Trustee 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.
IN WITNESS WHEREOF, the Board has caused this instrument to be signed in
its name and on its behalf by its duly authorized officer, this ______ day of
__________, 2000.
NEW ENGLAND POWER SERVICE COMPANY
By: s/ William F. Dowd
<PAGE>"SUPPLEMENT A" TO
THE NEW ENGLAND ELECTRIC SYSTEM 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 14.14, 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
<PAGE>
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).
<PAGE>PricewaterhouseCoopers
PricewaterhouseCoopers
1 Embankment Place
London WCZN 6NN
Telephone +44 (0) 171 583 5000
Facsimile +44 (0) 171 822 4652
The Directors
The National Grip Group PLC
National Grid House
Kirby Corner Road
Coventry CV4 8JY
Dear Sirs
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated 7 October 1999 relating to the
financial statements of The National Grip Group plc which appear in the
Registration Statement on Form 20-F dated 7 October 1999.
Yours faithfully
s/ PricewaterhouseCoopers
PricewaterhouseCoopers
London
23 March 2000
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, in this Registration
Statement on Form S-8 of the National Grid Group PLC to register one million
American Depository Shares, of our report dated April 26, 1999 relating to the
financial statements of the New England Electric System Companies Incentive
Thrift Plan I, which appears in New England Electric System's annual report on
Form U-5-S dated May 3, 1999.
s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
March 22, 2000
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference, in this Registration
Statement on Form S-8 of the National Grid Group PLC to register one million
American Depository Shares, of our report dated April 26, 1999 relating to the
financial statements of the New England Electric System Companies Incentive
Thrift Plan II, which appears in New England Electric System's annual report
on Form U-5-S dated May 3, 1999.
s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
March 22, 2000
<PAGE>DIRECTOR'S POWER OF ATTORNEY
THE NATIONAL GRID GROUP plc (the "Company")
REGISTRATION OF
AMERICAN DEPOSITARY SHARES
OF THE COMPANY TO BE ISSUED PURSUANT TO
THE NEW ENGLAND ELECTRIC SYSTEM COMPANIES
INCENTIVE THRIFT PLAN I AND THE
NEW ENGLAND ELECTRIC SYSTEM COMPANIES INCENTIVE THRIFT
PLAN II WITH THE US SECURITIES AND EXCHANGE COMMISSION
(the "Registration")
I, STEPHEN JOHN BOX, BEING A DIRECTOR OF THE COMPANY HEREBY APPOINT and
authorise any other director for the time being of the Company (any such
director acting in such capacity being hereinafter called "my Attorney") to be
my lawful attorney in connection with the Registration on the following basis:
1.I hereby authorise my Attorney to do and perform all matters and things to
be done or performed by me and to agree the form and content of and to
approve, sign, execute and deliver on my behalf (as a director of the Company)
any application, agreement, deed or other document whatsoever pursuant to the
regulations of the Securities and Exchange Commission (the "SEC") or otherwise
in connection with the Registration, as my Attorney may consider necessary or
desirable and which shall have been approved by resolution of the directors of
the Company or a duly authorised committee thereof, including without
prejudice to the generality of the foregoing a registration statement on Form
S-8 for registration of American Depositary Shares to be issued pursuant to
the new England Electric System Companies Incentive Thrift Plan I and the New
England Electric System Companies Incentive Thrift Plan II ("Thrift Plans")
and a prospectus to be circulated to participants in the Thrift Plans.
2.I hereby undertake to ratify and confirm everything which my Attorney shall
do or purport to do by virtue of this power of attorney and will fully
indemnify my Attorney against all losses, liabilities, costs, claims, actions,
demands or expenses which he may incur or which may be made against him as a
result of or in connection with anything lawfully done by virtue of this power
of attorney.
3.I hereby declare that this power of attorney shall be irrevocable for six
months from the date hereof and shall at all times (both during and after the
said period) be conclusively binding on me and my personal representatives in
favour of third parties who have not received notice of revocation but so that
the exercise by me in person from time to time of any of the powers hereby
conferred shall not of itself be deemed to be a revocation.
4.This power of attorney shall be governed by and construed in accordance with
the laws of England and I submit to the nonexclusive jurisdiction of the
English Courts for all purposes connected with it.
<PAGE>
5.I authorise a copy of this document to be delivered to the SEC and to any
other person who may require it.
IN WITNESS of which this power of attorney has been executed as a deed on 15
February 2000.
SIGNED as a deed )
by STEPHEN JOHN BOX ) s/ S.J. Box
in the presence of:- )
Witness s/ Fiona B. Smith
Signature
Name Fiona Smith
Address National Grid House
Coventry
Occupation Company Secretary
<PAGE>DIRECTOR'S POWER OF ATTORNEY
THE NATIONAL GRID GROUP plc (the "Company")
REGISTRATION OF
AMERICAN DEPOSITARY SHARES
OF THE COMPANY TO BE ISSUED PURSUANT TO
THE NEW ENGLAND ELECTRIC SYSTEM COMPANIES
INCENTIVE THRIFT PLAN I AND THE
NEW ENGLAND ELECTRIC SYSTEM COMPANIES INCENTIVE THRIFT
PLAN II WITH THE US SECURITIES AND EXCHANGE COMMISSION
(the "Registration")
I, WOLBERT GERRETSEN, BEING A DIRECTOR OF THE COMPANY HEREBY APPOINT and
authorise any other director for the time being of the Company (any such
director acting in such capacity being hereinafter called "my Attorney") to be
my lawful attorney in connection with the Registration on the following basis:
1.I hereby authorise my Attorney to do and perform all matters and things to
be done or performed by me and to agree the form and content of and to
approve, sign, execute and deliver on my behalf (as a director of the Company)
any application, agreement, deed or other document whatsoever pursuant to the
regulations of the Securities and Exchange Commission (the "SEC") or otherwise
in connection with the Registration, as my Attorney may consider necessary or
desirable and which shall have been approved by resolution of the directors of
the Company or a duly authorised committee thereof, including without
prejudice to the generality of the foregoing a registration statement on Form
S-8 for registration of American Depositary Shares to be issued pursuant to
the new England Electric System Companies Incentive Thrift Plan I and the New
England Electric System Companies Incentive Thrift Plan II ("Thrift Plans")
and a prospectus to be circulated to participants in the Thrift Plans.
2.I hereby undertake to ratify and confirm everything which my Attorney shall
do or purport to do by virtue of this power of attorney and will fully
indemnify my Attorney against all losses, liabilities, costs, claims, actions,
demands or expenses which he may incur or which may be made against him as a
result of or in connection with anything lawfully done by virtue of this power
of attorney.
3.I hereby declare that this power of attorney shall be irrevocable for six
months from the date hereof and shall at all times (both during and after the
said period) be conclusively binding on me and my personal representatives in
favour of third parties who have not received notice of revocation but so that
the exercise by me in person from time to time of any of the powers hereby
conferred shall not of itself be deemed to be a revocation.
4.This power of attorney shall be governed by and construed in accordance with
the laws of England and I submit to the nonexclusive jurisdiction of the
English Courts for all purposes connected with it.
<PAGE>
5.I authorise a copy of this document to be delivered to the SEC and to any
other person who may require it.
IN WITNESS of which this power of attorney has been executed as a deed on 15
February 2000.
SIGNED as a deed )
by WOLBERT GERRETSEN ) s/ WOLBERT GERRETSEN
in the presence of:- )
Witness s/ Fiona B. Smith
Signature
Name Fiona Smith
Address National Grid House
Coventry
Occupation Company Secretary
<PAGE>DIRECTOR'S POWER OF ATTORNEY
THE NATIONAL GRID GROUP plc (the "Company")
REGISTRATION OF
AMERICAN DEPOSITARY SHARES
OF THE COMPANY TO BE ISSUED PURSUANT TO
THE NEW ENGLAND ELECTRIC SYSTEM COMPANIES
INCENTIVE THRIFT PLAN I AND THE
NEW ENGLAND ELECTRIC SYSTEM COMPANIES INCENTIVE THRIFT
PLAN II WITH THE US SECURITIES AND EXCHANGE COMMISSION
(the "Registration")
I, JAMES HOOD ROSS, BEING A DIRECTOR OF THE COMPANY HEREBY APPOINT and
authorise any other director for the time being of the Company (any such
director acting in such capacity being hereinafter called "my Attorney") to be
my lawful attorney in connection with the Registration on the following basis:
1.I hereby authorise my Attorney to do and perform all matters and things to
be done or performed by me and to agree the form and content of and to
approve, sign, execute and deliver on my behalf (as a director of the Company)
any application, agreement, deed or other document whatsoever pursuant to the
regulations of the Securities and Exchange Commission (the "SEC") or otherwise
in connection with the Registration, as my Attorney may consider necessary or
desirable and which shall have been approved by resolution of the directors of
the Company or a duly authorised committee thereof, including without
prejudice to the generality of the foregoing a registration statement on Form
S-8 for registration of American Depositary Shares to be issued pursuant to
the new England Electric System Companies Incentive Thrift Plan I and the New
England Electric System Companies Incentive Thrift Plan II ("Thrift Plans")
and a prospectus to be circulated to participants in the Thrift Plans.
2.I hereby undertake to ratify and confirm everything which my Attorney shall
do or purport to do by virtue of this power of attorney and will fully
indemnify my Attorney against all losses, liabilities, costs, claims, actions,
demands or expenses which he may incur or which may be made against him as a
result of or in connection with anything lawfully done by virtue of this power
of attorney.
3.I hereby declare that this power of attorney shall be irrevocable for six
months from the date hereof and shall at all times (both during and after the
said period) be conclusively binding on me and my personal representatives in
favour of third parties who have not received notice of revocation but so that
the exercise by me in person from time to time of any of the powers hereby
conferred shall not of itself be deemed to be a revocation.
4.This power of attorney shall be governed by and construed in accordance with
the laws of England and I submit to the nonexclusive jurisdiction of the
English Courts for all purposes connected with it.
<PAGE>
5.I authorise a copy of this document to be delivered to the SEC and to any
other person who may require it.
IN WITNESS of which this power of attorney has been executed as a deed on 15
February 2000.
SIGNED as a deed )
by JAMES HOOD ROSS ) s/ James H. Ross
in the presence of:- )
Witness s/ Fiona B. Smith
Signature
Name Fiona Smith
Address National Grid House
Coventry
Occupation Company Secretary
<PAGE>DIRECTOR'S POWER OF ATTORNEY
THE NATIONAL GRID GROUP plc (the "Company")
REGISTRATION OF
AMERICAN DEPOSITARY SHARES
OF THE COMPANY TO BE ISSUED PURSUANT TO
THE NEW ENGLAND ELECTRIC SYSTEM COMPANIES
INCENTIVE THRIFT PLAN I AND THE
NEW ENGLAND ELECTRIC SYSTEM COMPANIES INCENTIVE THRIFT
PLAN II WITH THE US SECURITIES AND EXCHANGE COMMISSION
(the "Registration")
I, DAVID HAROLD JONES, BEING A DIRECTOR OF THE COMPANY HEREBY APPOINT and
authorise any other director for the time being of the Company (any such
director acting in such capacity being hereinafter called "my Attorney") to be
my lawful attorney in connection with the Registration on the following basis:
1.I hereby authorise my Attorney to do and perform all matters and things to
be done or performed by me and to agree the form and content of and to
approve, sign, execute and deliver on my behalf (as a director of the Company)
any application, agreement, deed or other document whatsoever pursuant to the
regulations of the Securities and Exchange Commission (the "SEC") or otherwise
in connection with the Registration, as my Attorney may consider necessary or
desirable and which shall have been approved by resolution of the directors of
the Company or a duly authorised committee thereof, including without
prejudice to the generality of the foregoing a registration statement on Form
S-8 for registration of American Depositary Shares to be issued pursuant to
the new England Electric System Companies Incentive Thrift Plan I and the New
England Electric System Companies Incentive Thrift Plan II ("Thrift Plans")
and a prospectus to be circulated to participants in the Thrift Plans.
2.I hereby undertake to ratify and confirm everything which my Attorney shall
do or purport to do by virtue of this power of attorney and will fully
indemnify my Attorney against all losses, liabilities, costs, claims, actions,
demands or expenses which he may incur or which may be made against him as a
result of or in connection with anything lawfully done by virtue of this power
of attorney.
3.I hereby declare that this power of attorney shall be irrevocable for six
months from the date hereof and shall at all times (both during and after the
said period) be conclusively binding on me and my personal representatives in
favour of third parties who have not received notice of revocation but so that
the exercise by me in person from time to time of any of the powers hereby
conferred shall not of itself be deemed to be a revocation.
4.This power of attorney shall be governed by and construed in accordance with
the laws of England and I submit to the nonexclusive jurisdiction of the
English Courts for all purposes connected with it.
<PAGE>
5.I authorise a copy of this document to be delivered to the SEC and to any
other person who may require it.
IN WITNESS of which this power of attorney has been executed as a deed on 15
February 2000.
SIGNED as a deed )
by DAVID HAROLD JONES ) s/ D. H. Jones
in the presence of:- )
Witness s/ Fiona B. Smith
Signature
Name Fiona Smith
Address National Grid House
Coventry
Occupation Company Secretary
<PAGE>DIRECTOR'S POWER OF ATTORNEY
THE NATIONAL GRID GROUP plc (the "Company")
REGISTRATION OF
AMERICAN DEPOSITARY SHARES
OF THE COMPANY TO BE ISSUED PURSUANT TO
THE NEW ENGLAND ELECTRIC SYSTEM COMPANIES
INCENTIVE THRIFT PLAN I AND THE
NEW ENGLAND ELECTRIC SYSTEM COMPANIES INCENTIVE THRIFT
PLAN II WITH THE US SECURITIES AND EXCHANGE COMMISSION
(the "Registration")
I, ROGER JOHN URWIN, BEING A DIRECTOR OF THE COMPANY HEREBY APPOINT and
authorise any other director for the time being of the Company (any such
director acting in such capacity being hereinafter called "my Attorney") to be
my lawful attorney in connection with the Registration on the following basis:
1.I hereby authorise my Attorney to do and perform all matters and things to
be done or performed by me and to agree the form and content of and to
approve, sign, execute and deliver on my behalf (as a director of the Company)
any application, agreement, deed or other document whatsoever pursuant to the
regulations of the Securities and Exchange Commission (the "SEC") or otherwise
in connection with the Registration, as my Attorney may consider necessary or
desirable and which shall have been approved by resolution of the directors of
the Company or a duly authorised committee thereof, including without
prejudice to the generality of the foregoing a registration statement on Form
S-8 for registration of American Depositary Shares to be issued pursuant to
the new England Electric System Companies Incentive Thrift Plan I and the New
England Electric System Companies Incentive Thrift Plan II ("Thrift Plans")
and a prospectus to be circulated to participants in the Thrift Plans.
2.I hereby undertake to ratify and confirm everything which my Attorney shall
do or purport to do by virtue of this power of attorney and will fully
indemnify my Attorney against all losses, liabilities, costs, claims, actions,
demands or expenses which he may incur or which may be made against him as a
result of or in connection with anything lawfully done by virtue of this power
of attorney.
3.I hereby declare that this power of attorney shall be irrevocable for six
months from the date hereof and shall at all times (both during and after the
said period) be conclusively binding on me and my personal representatives in
favour of third parties who have not received notice of revocation but so that
the exercise by me in person from time to time of any of the powers hereby
conferred shall not of itself be deemed to be a revocation.
4.This power of attorney shall be governed by and construed in accordance with
the laws of England and I submit to the nonexclusive jurisdiction of the
English Courts for all purposes connected with it.
<PAGE>
5.I authorise a copy of this document to be delivered to the SEC and to any
other person who may require it.
IN WITNESS of which this power of attorney has been executed as a deed on 15
February 2000.
SIGNED as a deed )
by ROGER JOHN URWIN ) s/ R.J. Urwin
in the presence of:- )
Witness s/ Fiona B. Smith
Signature
Name Fiona Smith
Address National Grid House
Coventry
Occupation Company Secretary
<PAGE>DIRECTOR'S POWER OF ATTORNEY
THE NATIONAL GRID GROUP plc (the "Company")
REGISTRATION OF
AMERICAN DEPOSITARY SHARES
OF THE COMPANY TO BE ISSUED PURSUANT TO
THE NEW ENGLAND ELECTRIC SYSTEM COMPANIES
INCENTIVE THRIFT PLAN I AND THE
NEW ENGLAND ELECTRIC SYSTEM COMPANIES INCENTIVE THRIFT
PLAN II WITH THE US SECURITIES AND EXCHANGE COMMISSION
(the "Registration")
I, RICHARD GURDON REYNOLDS, BEING A DIRECTOR OF THE COMPANY HEREBY APPOINT and
authorise any other director for the time being of the Company (any such
director acting in such capacity being hereinafter called "my Attorney") to be
my lawful attorney in connection with the Registration on the following basis:
1.I hereby authorise my Attorney to do and perform all matters and things to
be done or performed by me and to agree the form and content of and to
approve, sign, execute and deliver on my behalf (as a director of the Company)
any application, agreement, deed or other document whatsoever pursuant to the
regulations of the Securities and Exchange Commission (the "SEC") or otherwise
in connection with the Registration, as my Attorney may consider necessary or
desirable and which shall have been approved by resolution of the directors of
the Company or a duly authorised committee thereof, including without
prejudice to the generality of the foregoing a registration statement on Form
S-8 for registration of American Depositary Shares to be issued pursuant to
the new England Electric System Companies Incentive Thrift Plan I and the New
England Electric System Companies Incentive Thrift Plan II ("Thrift Plans")
and a prospectus to be circulated to participants in the Thrift Plans.
2.I hereby undertake to ratify and confirm everything which my Attorney shall
do or purport to do by virtue of this power of attorney and will fully
indemnify my Attorney against all losses, liabilities, costs, claims, actions,
demands or expenses which he may incur or which may be made against him as a
result of or in connection with anything lawfully done by virtue of this power
of attorney.
3.I hereby declare that this power of attorney shall be irrevocable for six
months from the date hereof and shall at all times (both during and after the
said period) be conclusively binding on me and my personal representatives in
favour of third parties who have not received notice of revocation but so that
the exercise by me in person from time to time of any of the powers hereby
conferred shall not of itself be deemed to be a revocation.
4.This power of attorney shall be governed by and construed in accordance with
the laws of England and I submit to the nonexclusive jurisdiction of the
English Courts for all purposes connected with it.
<PAGE>
5.I authorise a copy of this document to be delivered to the SEC and to any
other person who may require it.
IN WITNESS of which this power of attorney has been executed as a deed on 15
February 2000.
SIGNED as a deed )
by RICHARD GURDON REYNOLDS ) s/ R.G. Reynolds
in the presence of:- )
Witness s/ Fiona B. Smith
Signature
Name Fiona Smith
Address National Grid House
Coventry
Occupation Company Secretary
<PAGE>DIRECTOR'S POWER OF ATTORNEY
THE NATIONAL GRID GROUP plc (the "Company")
REGISTRATION OF
AMERICAN DEPOSITARY SHARES
OF THE COMPANY TO BE ISSUED PURSUANT TO
THE NEW ENGLAND ELECTRIC SYSTEM COMPANIES
INCENTIVE THRIFT PLAN I AND THE
NEW ENGLAND ELECTRIC SYSTEM COMPANIES INCENTIVE THRIFT
PLAN II WITH THE US SECURITIES AND EXCHANGE COMMISSION
(the "Registration")
I, JOHN ALBERT MARTIN GRANT, BEING A DIRECTOR OF THE COMPANY HEREBY APPOINT
and authorise any other director for the time being of the Company (any such
director acting in such capacity being hereinafter called "my Attorney") to be
my lawful attorney in connection with the Registration on the following basis:
1.I hereby authorise my Attorney to do and perform all matters and things to
be done or performed by me and to agree the form and content of and to
approve, sign, execute and deliver on my behalf (as a director of the Company)
any application, agreement, deed or other document whatsoever pursuant to the
regulations of the Securities and Exchange Commission (the "SEC") or otherwise
in connection with the Registration, as my Attorney may consider necessary or
desirable and which shall have been approved by resolution of the directors of
the Company or a duly authorised committee thereof, including without
prejudice to the generality of the foregoing a registration statement on Form
S-8 for registration of American Depositary Shares to be issued pursuant to
the new England Electric System Companies Incentive Thrift Plan I and the New
England Electric System Companies Incentive Thrift Plan II ("Thrift Plans")
and a prospectus to be circulated to participants in the Thrift Plans.
2.I hereby undertake to ratify and confirm everything which my Attorney shall
do or purport to do by virtue of this power of attorney and will fully
indemnify my Attorney against all losses, liabilities, costs, claims, actions,
demands or expenses which he may incur or which may be made against him as a
result of or in connection with anything lawfully done by virtue of this power
of attorney.
3.I hereby declare that this power of attorney shall be irrevocable for six
months from the date hereof and shall at all times (both during and after the
said period) be conclusively binding on me and my personal representatives in
favour of third parties who have not received notice of revocation but so that
the exercise by me in person from time to time of any of the powers hereby
conferred shall not of itself be deemed to be a revocation.
4.This power of attorney shall be governed by and construed in accordance with
the laws of England and I submit to the nonexclusive jurisdiction of the
English Courts for all purposes connected with it.
<PAGE>
5.I authorise a copy of this document to be delivered to the SEC and to any
other person who may require it.
IN WITNESS of which this power of attorney has been executed as a deed on 15
February 2000.
SIGNED as a deed )
by JOHN ALBERT MARTIN GRANT ) s/ J. Grant
in the presence of:- )
Witness s/ Fiona B. Smith
Signature
Name Fiona Smith
Address National Grid House
Coventry
Occupation Company Secretary
<PAGE>DIRECTOR'S POWER OF ATTORNEY
THE NATIONAL GRID GROUP plc (the "Company")
REGISTRATION OF
AMERICAN DEPOSITARY SHARES
OF THE COMPANY TO BE ISSUED PURSUANT TO
THE NEW ENGLAND ELECTRIC SYSTEM COMPANIES
INCENTIVE THRIFT PLAN I AND THE
NEW ENGLAND ELECTRIC SYSTEM COMPANIES INCENTIVE THRIFT
PLAN II WITH THE US SECURITIES AND EXCHANGE COMMISSION
(the "Registration")
I, ROBERT FREDERICK WILLIAM FAIRCLOTH, BEING A DIRECTOR OF THE COMPANY HEREBY
APPOINT and authorise any other director for the time being of the Company
(any such director acting in such capacity being hereinafter called "my
Attorney") to be my lawful attorney in connection with the Registration on the
following basis:
1.I hereby authorise my Attorney to do and perform all matters and things to
be done or performed by me and to agree the form and content of and to
approve, sign, execute and deliver on my behalf (as a director of the Company)
any application, agreement, deed or other document whatsoever pursuant to the
regulations of the Securities and Exchange Commission (the "SEC") or otherwise
in connection with the Registration, as my Attorney may consider necessary or
desirable and which shall have been approved by resolution of the directors of
the Company or a duly authorised committee thereof, including without
prejudice to the generality of the foregoing a registration statement on Form
S-8 for registration of American Depositary Shares to be issued pursuant to
the new England Electric System Companies Incentive Thrift Plan I and the New
England Electric System Companies Incentive Thrift Plan II ("Thrift Plans")
and a prospectus to be circulated to participants in the Thrift Plans.
2.I hereby undertake to ratify and confirm everything which my Attorney shall
do or purport to do by virtue of this power of attorney and will fully
indemnify my Attorney against all losses, liabilities, costs, claims, actions,
demands or expenses which he may incur or which may be made against him as a
result of or in connection with anything lawfully done by virtue of this power
of attorney.
3.I hereby declare that this power of attorney shall be irrevocable for six
months from the date hereof and shall at all times (both during and after the
said period) be conclusively binding on me and my personal representatives in
favour of third parties who have not received notice of revocation but so that
the exercise by me in person from time to time of any of the powers hereby
conferred shall not of itself be deemed to be a revocation.
4.This power of attorney shall be governed by and construed in accordance with
the laws of England and I submit to the nonexclusive jurisdiction of the
English Courts for all purposes connected with it.
<PAGE>
5.I authorise a copy of this document to be delivered to the SEC and to any
other person who may require it.
IN WITNESS of which this power of attorney has been executed as a deed on 15
February 2000.
SIGNED as a deed )
by ROBERT FREDERICK WILLIAM FAIRCLOTH ) s/ Robert F.W. Faircloth
in the presence of:- )
Witness s/ Fiona B. Smith
Signature
Name Fiona Smith
Address National Grid House
Coventry
Occupation Company Secretary
