Exhibit 10.3
NISOURCE INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
Effective January 1, 2005

 

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TABLE OF CONTENTS

                              Page                     ARTICLE I  
PURPOSE; EFFECTIVE DATE
    1                         1.1  
Purpose
    1       1.2  
Effective Date
    1                     ARTICLE II  
DEFINITIONS
    2                         2.1  
Account
    2       2.2  
Beneficiary
    2       2.3  
Bonus
    2       2.4  
Code
    2       2.5  
Committee
    2       2.6  
Company
    2       2.7  
Compensation
    3       2.8  
Deferral Commitment
    3       2.9  
Deferral Period
    3       2.10  
Determination Date
    3       2.11  
Discretionary Contribution
    3       2.12  
Election Form
    3       2.13  
Employer
    3       2.14  
Participant
    3       2.15  
Plan
    3       2.16  
Post-2004 Account
    4       2.17  
Pre-2005 Account
    4       2.18  
Retirement Committee
    4       2.19  
Severe Financial Hardship
    4       2.20  
Unforeseeable Emergency
    4       2.21  
Gender and Number
    5                     ARTICLE III  
MERGER OF NISOURCE PLAN AND OTHER PLANS
    5                         3.1  
Bay State Plan
    5       3.2  
Columbia Plan
    5                     ARTICLE IV  
PARTICIPATION AND DEFERRAL COMMITMENTS
    5                         4.1  
Eligibility and Participation
    5       4.2  
Form and Amount of Deferral
    7       4.3  
Deferral Options
    7       4.4  
Modification of Deferral Commitment
    8       4.5  
Change in Employment Status
    8                     ARTICLE V  
DEFERRED COMPENSATION ACCOUNT
    8                         5.1  
Account
    8       5.2  
Timing of Credits; Withholding
    8       5.3  
Discretionary Contributions
    9       5.4  
Determination of Account
    9       5.5  
Vesting of Account
    9       5.6  
Statement of Account
    10  

 

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TABLE OF CONTENTS

                              Page                     ARTICLE VI  
INVESTMENTS
    10                         6.1  
Investment Options
    10       6.2  
Special Investment Option for Former Participants in the Bay State Plan and
Participants in the Plan
    10       6.3  
Special Investment Option for Former Participants in the Columbia Plan
    11                     ARTICLE VII  
PLAN BENEFITS
    12                         7.1  
Distributions Prior to Separation From Service
    12       7.2  
Distributions Following Separation from Service
    13       7.3  
Form of Benefit Payment
    14       7.4  
Valuation and Settlement
    14       7.5  
Modification of Distribution
    16       7.6  
Distribution Provisions Applicable to a Transferred Bay State Account
    17       7.7  
Withholding for Taxes
    18       7.8  
Payment to Guardian
    19                     ARTICLE VIII  
BENEFICIARY DESIGNATION
    19                         8.1  
Beneficiary Designation
    19       8.2  
Changing Beneficiary
    19       8.3  
Community Property
    20       8.4  
No Beneficiary Designation
    21                     ARTICLE IX  
ADMINISTRATION
    21                         9.1  
Committee; Duties
    21       9.2  
Agents
    22       9.3  
Binding Effect of Decisions
    22       9.4  
Indemnity of Retirement Committee
    22                     ARTICLE X  
CLAIMS PROCEDURE
    22                         10.1  
Claim
    22       10.2  
Review of Claim
    22       10.3  
Notice of Denial of Claim
    23       10.4  
Reconsideration of Denied Claim
    23       10.5  
Employer to Supply Information
    24                     ARTICLE XI  
AMENDMENT AND TERMINATION OF PLAN
    25                         11.1  
Amendment
    25       11.2  
Employer’s Right to Terminate
    25                     ARTICLE XII  
MISCELLANEOUS
    26                         12.1  
Unfunded Plan
    26       12.2  
Company and Employer Obligations
    26       12.3  
Unsecured General Creditor
    26       12.4  
Trust Fund
    27  

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TABLE OF CONTENTS

                              Page                         12.5  
Nonassignability
    27       12.6  
Not a Contract of Employment
    28       12.7  
Protective Provisions
    28       12.8  
Governing Law
    28       12.9  
Validity
    28       12.10  
Notice
    28       12.11  
Successors
    29       12.12  
Tax Savings Clause
    29                     EXHIBIT A     A-1  

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NISOURCE INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I
PURPOSE; EFFECTIVE DATE
     1.1 Purpose. The purpose of this Executive Deferred Compensation Plan is to
provide current tax planning opportunities as well as supplemental funds for
retirement or death for selected employees of an Employer. It is intended that
the Plan will aid in attracting and retaining employees of exceptional ability
by providing them with these benefits. Effective November 1, 2000, the Bay State
Gas Company Key Employee Deferred Compensation Plan (the “Bay State Plan”) was
merged into the NIPSCO Industries, Inc. Executive Deferred Compensation Plan
(the “NIPSCO Plan”), and the NIPSCO Plan was renamed the NiSource Inc. Executive
Deferred Compensation Plan (the “Plan”). Effective January 1, 2004, the Columbia
Energy Group Deferred Compensation Plan (the “Columbia Plan”) was merged into
the Plan. Effective January 1, 2005, the Plan is hereby amended and restated to
comply with Code Section 409A, and guidance and regulations thereunder. Deferred
Compensation, Discretionary Contributions, and earnings thereon, earned and
vested prior to January 1, 2005 shall be administered without giving effect to
Code Section 409A, and guidance and regulations thereunder.
     1.2 Effective Date. The Plan is effective as of January 1, 2005.

 

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ARTICLE II
DEFINITIONS
     For the purposes of the Plan, the following terms shall have the meanings
indicated, unless the context clearly indicates otherwise:
     2.1 Account. “Account” means the device used by an Employer to measure and
determine the amount to be paid to a Participant under the Plan. Each Account
shall be divided into a Pre-2005 Account containing contributions to the Plan
earned and vested prior to January 1, 2005, a Post-2004 Account containing
contributions to the Plan earned and/or vested on or after January 1, 2005, and,
if applicable, a Transferred Bay State Account containing any amount transferred
from the Bay State Plan or a Transferred Columbia Account containing any amount
transferred from the Columbia Plan.
     2.2 Beneficiary. “Beneficiary” means the person, persons or entity entitled
under Article VIII to receive any Plan benefits payable after a Participant’s
death.
     2.3 Bonus. “Bonus” means an incentive award paid to a Participant during
the calendar year, before reduction for amounts deferred under the Plan or any
other salary reduction program.
     2.4 Code. “Code” means the Internal Revenue Code of 1986, as amended from
time to time.
     2.5 Committee. “Committee” means the Officer Nomination and Compensation
Committee of the Board of Directors of the Company.
     2.6 Company. “Company” means NiSource Inc., a Delaware corporation.

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     2.7 Compensation. “Compensation” means base salary and incentive awards
paid to a Participant during the calendar year, before reduction for amounts
deferred under the Plan or any other salary reduction program. Compensation
earned on or after January 1, 2005 shall not include a Bonus. Compensation does
not include expense reimbursements, any form of noncash compensation, or
benefits. Compensation does not include lump severance payments or lump sum
vacation payouts.
     2.8 Deferral Commitment. “Deferral Commitment” means a commitment made by a
Participant to defer a Bonus and/or Compensation pursuant to Article IV.
     2.9 Deferral Period. “Deferral Period” means each calendar year.
     2.10 Determination Date. “Determination Date” means each business day.
     2.11 Discretionary Contribution. “Discretionary Contribution” means the
Employer contribution credited to a Participant’s Account under Section 5.3.
     2.12 Election Form. “Election Form” means the agreement submitted by a
Participant to the Retirement Committee prior to the beginning of a Deferral
Period, with respect to a Deferral Commitment made for such Deferral Period.
     2.13 Employer. “Employer” means the Company and any subsidiary or affiliate
of the Company designated by the Committee to participate in the Plan.
     2.14 Participant. “Participant” means any eligible individual who has
elected to defer a Bonus and/or Compensation under the Plan.
     2.15 Plan. “Plan” means the NiSource Inc. Executive Deferred Compensation
Plan, as set forth herein and as amended from time to time.

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     2.16 Post-2004 Account. “Post-2004 Account” means the excess of (1) the
balance of the Participant’s Account determined as of a Participant’s date of
separation from service with all Employers after December 31, 2004 over (2) his
Pre-2005 Account, to which the Participant would be entitled under the Plan if
he voluntarily separated from service without cause as of such date and received
a full payment of benefits from the Plan on the earliest possible date allowed
under the Plan following his separation from service.
     2.17 Pre-2005 Account. "Pre-2005 Account” means the balance of a
Participant’s Account determined as of December 31, 2004, adjusted to reflect
earnings credited to such balance from and after such date.
     2.18 Retirement Committee. “Retirement Committee” means a committee
consisting of the Senior Vice President of Human Resources and the Vice
President, Total Rewards of the Company.
     2.19 Severe Financial Hardship. “Severe Financial Hardship” means a
financial hardship to the Participant resulting from a sudden and unexpected
illness or accident of the Participant or of a dependent of the Participant, or
loss of the Participant’s property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant.
     2.20 Unforeseeable Emergency. “Unforeseeable Emergency” means a severe
financial hardship to the Participant resulting from an illness or accident of
the Participant, the Participant’s spouse, or a dependent (as defined in Code
Section 152(a)) of the Participant, loss of the Participant’s property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant.

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     2.21 Gender and Number. Except when otherwise required by the context, any
masculine terminology in this document shall include the feminine, and any
singular terminology shall include the plural.
ARTICLE III
MERGER OF NISOURCE PLAN AND OTHER PLANS
     3.1 Bay State Plan. As of November 1, 2000, the Bay State Plan was merged
into the Plan. The balance of the account of each Bay State Plan participant,
determined as of November 1, 2000, was transferred to the Plan and became the
initial balance in such Participant’s Transferred Bay State Account in the Plan.
A Participant’s Transferred Bay State Account shall be held, administered,
invested, and distributed pursuant to the terms of the Plan.
     3.2 Columbia Plan. As of January 1, 2004, the Columbia Plan was merged into
the Plan. The balance of the account of each Columbia Plan participant,
determined as of December 31, 2003, was transferred to the Plan and became the
initial balance in such Participant’s Transferred Columbia Account in the Plan.
A Participant’s Transferred Columbia Account shall be held, administered,
invested, and distributed pursuant to the terms of the Plan.
ARTICLE IV
PARTICIPATION AND DEFERRAL COMMITMENTS
     4.1 Eligibility and Participation.
     (a) Eligibility. Any employee who was eligible to participate in the Bay
State Plan or the NIPSCO Plan as of October 31, 2000 remained eligible to
participate in the Plan as of November 1, 2000. Any employee eligible to
participate in the Columbia Plan or the Plan as of December 31, 2003 remained
eligible to participate in the Plan as of January 1, 2004. Any employee eligible
to participate in the Plan as of December 31,

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2004 shall be eligible to participate in the Plan as of the Effective Date. From
and after the Effective Date, eligibility to participate in the Plan for a
Deferral Period shall be limited to (1) an employee in job scope level D2 or
above, and (2) any other key employee of an Employer who is designated from time
to time by the Committee.
     (b) Participation. An eligible individual may elect to become a Participant
in the Plan with respect to a Bonus and Compensation for services performed in
any Deferral Period by submitting an Election Form to the Retirement Committee
during the annual enrollment period, established by the Retirement Committee,
last preceding the beginning of such Deferral Period.
            Notwithstanding the preceding paragraph, an election to defer a
performance-based Bonus, as defined in Code Section 409A, and guidance and
regulations thereunder, may be made no later than six months before the end of
the 12 month performance period during which the services related to the Bonus
are performed.
     (c) Part-Year Participation. When an individual first becomes eligible to
become a Participant during a Deferral Period, an Election Form may be submitted
to the Retirement Committee within 30 days after the Retirement Committee
notifies the individual of eligibility to participate; provided that such
Participant shall not be considered first eligible if, on the date he becomes a
Participant, he participates in any other nonqualified account balance plan that
is subject to Code Section 409A, maintained by the Company or any affiliate.
Such Election Form shall be effective beginning with a Bonus and Compensation
earned after such election and as soon as practicable following submission of
such Election Form to the Retirement Committee.

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     4.2 Form and Amount of Deferral. A Participant may elect Deferral
Commitments in the Election Form as follows:
     (a) Compensation Deferral Commitment. A Compensation Deferral Commitment
for a Deferral Period shall be related to the Compensation earned by a
Participant and payable by an Employer to a Participant during that Deferral
Period. The amount to be deferred shall be stated as a whole percentage of
Compensation from 5% to 80%.
     (b) Bonus Deferral Commitment. Except as set forth in Section 4.1(b) with
respect to a performance-based Bonus, a Bonus Deferral Commitment for a Deferral
Period shall be related to the Bonus earned by a Participant during the Deferral
Period preceding the Deferral Period for which such Bonus Deferral Commitment is
made. A Bonus Deferral Commitment with respect to a performance-based Bonus for
a Deferral Period shall be related to the Bonus earned by a Participant during
that Deferral Period, provided that such Deferral Commitment is made no later
than six months prior to the end of that Deferral Period. The amount to be
deferred shall be stated as a whole percentage of the Bonus from 5% to 100%.
     No Deferral Commitment shall be made subsequent to the date of a
Participant’s separation from service with all Employers.
     4.3 Deferral Options. A Participant shall make an election in his Election
Form as to the time and form of payment of the Deferral Commitment for each
Deferral Period. A Participant shall not be required to designate the same time
and form of payment for each Deferral Period. Each Deferral Commitment with
respect to a calendar year shall specify the date on which the applicable
deferred amount and earnings thereon shall be distributed. Such

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date shall be the first to occur of (1) the date of the Participant’s separation
from service with all Employers; and (2) a date selected by the Participant,
provided that a selected date must be at least one year after the date the
deferred amount would have been paid to the Participant in cash in the absence
of the election to make the deferral.
     4.4 Modification of Deferral Commitment. Except as provided in
Sections 7.1(a) and 7.5 below, Deferral Commitments shall be irrevocable.
     4.5 Change in Employment Status. If the Committee determines that a
Participant’s performance is no longer at a level that deserves reward through
participation in the Plan, but does not terminate the Participant’s employment
with an Employer, the Participant’s existing Deferral Commitment shall terminate
at the end of the current Deferral Period, and no new Deferral Commitment may be
made by such Participant for any Deferral Period beginning after notice of such
determination is given by the Committee.
ARTICLE V
DEFERRED COMPENSATION ACCOUNT
     5.1 Account. The Compensation deferred by a Participant under the Plan, any
Discretionary Contributions and earnings thereon shall be credited to the
Participant’s Account. Separate subaccounts may be maintained to reflect
different forms of distribution, investment options, levels of vesting, and
forms of payment. The Account shall be a bookkeeping device utilized for the
sole purpose of determining the benefits payable under the Plan and shall not
constitute a separate fund of assets.
     5.2 Timing of Credits; Withholding. A Participant’s deferred Bonus and
Compensation shall be credited to the Participant’s Account at the time it would
have been payable to the Participant. Any withholding of taxes or other amounts
with respect to deferred

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Compensation that is required by federal, state or local law shall be withheld
from the Participant’s nondeferred Bonus and Compensation to the maximum extent
possible and any remaining amount shall reduce the amount credited to the
Participant’s Account.
     5.3 Discretionary Contributions. An Employer may make Discretionary
Contributions to a Participant’s Account. Discretionary Contributions shall be
credited at such times and in such amounts as the Committee in its sole
discretion shall determine.
     5.4 Determination of Account. Each Participant’s Account as of each
Determination Date shall consist of the balance of the Account as of the
immediately preceding Determination Date, adjusted as follows:
     (a) New Deferrals. The Account shall be increased by any deferred Bonus and
Compensation credited since such preceding Determination Date.
     (b) Discretionary Contributions. The Account shall be increased by any
Discretionary Contributions credited since such preceding Determination Date.
     (c) Distributions. The Account shall be reduced by any benefits distributed
from the Account to the Participant since such preceding Determination Date.
     (d) Valuation of Account. The Account shall be increased or decreased by
the aggregate earnings, gains and losses on such Account since such preceding
Determination Date.
     5.5 Vesting of Account. Each Participant shall be vested in the amounts
credited to such Participant’s Account and earnings thereon as follows:

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     (a) Amounts Deferred. A Participant shall be 100% vested at all times in
the amount of Bonus and Compensation elected to be deferred under the Plan, and
earnings thereon.
     (b) Discretionary Contributions. A Participant’s Discretionary
Contributions, and earnings thereon, shall become vested as determined by the
Committee.
     (c) Transferred Account. A Participant shall be 100% vested at all times in
the balance of his Transferred Bay State Account or Transferred Columbia
Account, if any.
     5.6 Statement of Account. The Retirement Committee shall give to each
Participant a statement showing the balance in the Participant’s Account on a
quarterly basis and at such other times as may be determined by the Retirement
Committee.
ARTICLE VI
INVESTMENTS
     6.1 Investment Options. Amounts credited hereunder to the Account of a
Participant shall be invested as such Participant elects among the investment
choices set forth on Exhibit A or available pursuant to Sections 6.2 and 6.3. No
election of a Deferral Commitment by a Participant shall be effective until such
time as the Participant submits his initial investment election to the Company.
Such investment election shall continue to apply to subsequent Deferral
Commitments made by the Participant until changed by the Participant.
     6.2 Special Investment Option for Former Participants in the Bay State Plan
and Participants in the Plan. Former participants in the Bay State Plan who
became Participants in the Plan, or Participants in the Plan on November 1,
2000, shall have an additional special

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investment option applicable solely to their Transferred Bay State Account
balances, or their Account balances in the Plan, valued as of November 1, 2000,
and any subsequent amounts contributed to such Participant’s Account. Such
Participants may invest their Transferred Bay State Account balances, or their
Account balances in the Plan as of November 1, 2000, and any subsequent amounts
contributed to such Participant’s Account, in a subaccount which shall be
credited with earnings equal to one percentage point higher than the effective
annual yield of the average of the Moody’s Average Corporate Bond Yield Index
for the previous calendar month as published by Moody’s Investor Services, Inc.
(or any successor publisher thereto), or, if such index is no longer published,
a substantially similar index selected by the Committee. A Participant’s
Transferred Bay State Account balance, or his Account balance in the Plan on
November 1, 2000, shall be invested pursuant to this special investment option
from and after November 1, 2000 and until such time as another investment choice
is designated by him pursuant to Section 6.1 with respect to all or a portion of
his Transferred Bay State Account, or his Account balance in the Plan on
November 1, 2000. Subsequent amounts contributed to any such Participant’s
Account may be invested pursuant to this option as designated by the Participant
pursuant to Section 6.1. However, any portion of a Transferred Bay State
Account, or an Account balance in the Plan, subsequently transferred from the
investment option described in this Section 6.2 to another investment option may
not be reinvested under this Section 6.2.
     6.3 Special Investment Option for Former Participants in the Columbia Plan.
Former participants in the Columbia Plan who become Participants in the Plan on
January 1, 2004 shall have an additional special investment option applicable
solely to their Transferred Columbia Account balances, valued as of January 1,
2004. Such Participants may invest all or any portion of their Transferred
Columbia Account balances in a subaccount that shall be

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credited each day with earnings equal to the prime rate of interest in effect as
of such business day, as listed in The Wall Street Journal. All or the
designated portion of a Participant’s Transferred Columbia Account balance shall
be invested pursuant to this special investment option from and after January 1,
2004 and until such time as another investment choice is designated by him
pursuant to Section 6.1 with respect to all or a portion of his Transferred
Columbia Account. Any portion of a Transferred Columbia Account subsequently
transferred from the investment option described in this Section 6.3 to another
investment option may not be reinvested under the investment option described in
this Section 6.3. Amounts contributed to any such Participant’s Account on or
after January 1, 2004 shall not be eligible for the investment option described
in this Section 6.3.
ARTICLE VII
PLAN BENEFITS
     7.1 Distributions Prior to Separation From Service. A Participant’s Account
may be distributed to the Participant prior to separation from service as
follows:
     (a) Hardship Distributions.
     (i) Upon a finding that a Participant has suffered a Severe Financial
Hardship, the Retirement Committee may, in its sole discretion, make
distributions from the Participant’s Pre-2005 Account (including his Transferred
Bay State Account or Transferred Columbia Account, if applicable). The amount of
such a distribution shall be limited to the amount reasonably necessary to meet
the Participant’s needs resulting from the Severe Financial Hardship. Any
distribution pursuant to this Section 7.1(a)(i) shall be payable in a lump sum.
The distribution shall be paid within 30 days after the determination of a
Severe Financial Hardship.

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     (ii) Upon a finding that a Participant has suffered an Unforeseeable
Emergency, the Retirement Committee may, in its sole discretion, make
distributions from the Participant’s Post-2004 Account and/or allow a
Participant to suspend his Deferred Commitment entirely. The amount of such
distribution shall be limited to the amount necessary to satisfy such
Unforeseeable Emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution, after taking into account the
extent to which such hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the Participant’s
assets (to the extent the liquidation of such assets would not itself cause
severe financial hardship). Any distribution pursuant to this Section 7.1(a)(ii)
shall be payable in a lump sum. The distribution shall be paid within 30 days
after the determination of an Unforeseeable Emergency.
     (b) Deferral to Designated Year. The Employer shall pay the Participant an
amount of a Deferral Commitment and earnings thereon not paid pursuant to
Section 7.1(a) in the year designated by the Participant in such Deferral
Commitment. Such amount shall be payable in the manner provided in Sections 7.3
and 7.6 and at the time provided in Section 7.4.
     7.2 Distributions Following Separation from Service. Upon a Participant’s
separation from service with an Employer for any reason, the Employer shall pay
the Participant, or, in the case of death, the Participant’s Beneficiary, an
amount equal to the balance in the Participant’s Account. Such amount shall be
payable in the manner provided in Sections 7.3 and 7.6 and at the time provided
in Section 7.4.

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     7.3 Form of Benefit Payment.
     (a) Subject to Section 8.3(c), the amount of a Deferral Commitment and
earnings thereon not paid pursuant to Section 7.1(a) shall be paid (1) in the
year designated by the Participant in such Deferral Commitment, or (2) following
separation from service, as applicable, to the Participant (or to his
Beneficiary in the case of his death) in the form selected by the Participant in
his Election Form at the time of the Deferral Commitment. Options include:
     (i) A lump sum payment.
     (ii) Equal annual installments over a period of not more than 15 years.
     (b) In the event a Participant’s Pre-2005 Account balance at the time
distribution begins, or following a distribution pursuant to subsection (a)(ii)
above, is $15,000 or less, that balance shall be paid to the Participant or his
Beneficiary in a lump sum on the next annual installment distribution date
notwithstanding any form of benefit payment elected by the Participant.
     7.4 Valuation and Settlement.
     (a) Lump Sum in Designated Year. The amount of a lump sum payment in a
designated year pursuant to Section 7.1(b) shall be based on the value of the
Participant’s Account, or a Deferral Commitment and earnings thereon, as of the
March 15th of such designated year. The distribution date shall be March 31st of
such year, or, if later, within such timeframe permitted under Code
Section 409A, and guidance and regulations thereunder.

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     (b) Lump Sum Following Separation From Service. The amount of a lump sum
payment following separation from service pursuant to Section 7.2 shall be based
on the value of the Participant’s Account, or a Deferral Commitment and earnings
thereon, on the date of separation. The distribution date shall be within
45 days after the Participant’s date of separation from service, or, if later,
within such timeframe permitted under Code Section 409A, and guidance and
regulations thereunder; provided, however, that in no event will distribution of
a Participant’s Post-2004 Account begin earlier than six months following
separation from service, unless due to such Participant’s death, if the
Participant was a Specified Employee of any Employer, at a time during which the
Company’s capital stock or capital stock of an Employer is publicly traded on an
established securities market, in the calendar year of his separation from
service.
            A Participant shall be deemed to be a Specified Employee for
purposes of this paragraph (b) if he is in job category C2 or above with respect
to any Employer that employs him; provided that if at any time the total number
of Employees in job category C2 and above is less than 50, a Specified Employee
shall include any person who meets the definition of a Key Employee set forth in
Code Section 416(i) without reference to paragraph (5). A Participant shall be
deemed to be a Specified Employee with respect to a calendar year if he is a
Specified Employee on September 30th of the preceding calendar year. If a
Specified Employee will receive payments hereunder in the form of installments,
the first payment made as of the date six months after the date of the
Participant’s separation from service with the Company and all Affiliated
Companies

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shall be a lump sum, paid as soon as practicable after the end of such six-month
period, that includes all payments that would otherwise have been made during
such six-month period. From and after the end of such six-month period, any such
installment payments shall be made pursuant to the terms of the applicable
installment form of payment.
     (c) Installments. The amount of an installment payment, pursuant to Section
7.1(b) or 7.2, shall be based on the value of the Participant’s Account, or a
Deferral Commitment and earnings thereon, as of the March 15th preceding
distribution of each such installment. The distribution date shall be each
subsequent March 31st, or, if later, within such timeframe permitted under Code
Section 409A, and guidance and regulations thereunder.
     7.5 Modification of Distribution.
     (a) Pre-2005 Account. Notwithstanding any other provision of the Plan, a
Participant may modify his election as to the form or time of distribution of
his entire Pre-2005 Account, and earnings thereon, by a writing filed with the
Retirement Committee at any time prior to the commencement of payment. A
Participant’s modification of his election as to the form or time of
commencement of payment shall be ineffective, unless (1) the modification
election is filed with the Retirement Committee more than 12 months prior to the
time of commencement of payment, or (2) a Participant elects by written
instrument delivered to the Company prior to the time of commencement of payment
to have his Pre-2005 Account reduced by 10%. This reduction shall be forfeited
and used by the Plan to reduce expenses of administration. This reduction is
intended to discourage a Participant from modifying his election as to the form
or time of commencement of payment within the period set forth in clause
(1) above and prevent him from being deemed in constructive receipt of his
Pre-2005 Account prior to its actual payment to him.

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     (b) Post-2004 Account.
     (i) A Participant may modify his election as to the form or time of
distribution of his entire Post-2004 Account, and earnings thereon, or of any
Post-2004 Deferral Commitment under the Plan and earnings thereon, if (1) such
election does not take effect until at least 12 months after the date on which
the election is made, (2) the first payment with respect to which such election
is made is deferred for a period of not less than five years from the date on
which such payment would otherwise have been made, and (3) any election related
to a payment to be made at a specified date is made at least 12 months prior to
the date of the first scheduled payment.
     (ii) Notwithstanding any other provision of this Section 7.5, a Participant
may change an election with respect to the time and form of payment of a
Post-2004 Benefit, without regard to the restrictions imposed under paragraph
(i) next above, on or before December 31, 2006; provided that such election
(1) applies only to amounts that would not otherwise be payable in calendar year
2006, and (2) shall not cause an amount to be paid in calendar year 2006 that
would not otherwise be payable in such year
     7.6 Distribution Provisions Applicable to a Transferred Bay State Account.
Notwithstanding any other provision in the Plan, the following provisions shall
apply to the form and time of payment of the balance of a Transferred Bay State
Account:

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     (a) The portion of a Transferred Bay State Account not paid pursuant to
paragraph (a) of Section 7.1 shall be paid to a Participant following his
separation from service, or to his Beneficiary in the case of death, in the form
selected by the Participant, by written instrument delivered to the Retirement
Committee before November 1, 2000. If no form is selected by the Participant,
payment shall be made in a lump sum. The provisions of Sections 7.3 and 7.5
shall apply with respect to the election of the form of payment of a Transferred
Bay State Account and the modification of such election.
     (b) Any former employee of Bay State Gas Company who (1) was a participant
in the Bay State Plan immediately prior to November 1, 2000, (2) terminated
employment with Bay State Gas Company prior to November 1, 2000 for any reason
other than Retirement, death or Disability (as such terms were defined in the
Bay State Plan immediately prior to November 1, 2000), and (3) as of November 1,
2000, had not commenced payment of his Account shall not commence payment of his
Transferred Bay State Account until the earlier of the Participant’s attainment
of age 65, Disability or death. Notwithstanding the preceding sentence, the
Retirement Committee may, in its sole discretion, vary the manner and time of
making the payment of a Participant’s Transferred Bay State Account to such
former Bay State employee, and may make such distributions over a longer or
shorter period of time or in a lump sum.
     7.7 Withholding for Taxes. To the extent required by the law in effect at
the time payments are made, an Employer shall withhold from the payments made
hereunder any taxes required to be withheld by the federal or any state or local
government, including any amounts which the Employer determines is reasonably
necessary to pay any generation-skipping transfer

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tax which is or may become due. A Beneficiary, however, may elect not to have
withholding of federal income tax pursuant to Code Section 3405(a)(2).
     7.8 Payment to Guardian. The Retirement Committee may direct payment to the
duly appointed guardian, conservator or other similar legal representative of a
Participant or Beneficiary to whom payment is due. In the absence of such a
legal representative, the Retirement Committee may, in its sole and absolute
discretion, make payment to a person having the care and custody of a minor,
incompetent or person incapable of handling the disposition of property upon
proof satisfactory to the Retirement Committee of incompetency, minority or
incapacity. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
ARTICLE VIII
BENEFICIARY DESIGNATION
     8.1 Beneficiary Designation. Subject to Section 8.3, each Participant shall
have the right, at any time, to designate one or more persons or an entity as
Beneficiary (both primary as well as secondary) to whom benefits under the Plan
shall be paid in the event of the Participant’s death prior to complete
distribution of the Participant’s Account. Each Beneficiary designation shall be
in a written form prescribed by the Retirement Committee and shall be effective
only when filed with the Retirement Committee during the Participant’s lifetime.
     8.2 Changing Beneficiary. Subject to Section 8.3, any Beneficiary
designation may be changed by a Participant without the consent of the
previously named Beneficiary by the filing of a new designation with the
Retirement Committee. The filing of a new designation shall cancel all
designations previously filed.

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     8.3 Community Property. If the Participant resides in a community property
state, the following rules shall apply:
     (a) Designation by a married Participant of a Beneficiary other than the
Participant’s spouse shall not be effective unless the spouse executes a written
consent that acknowledges the effect of the designation, or it is established
that the consent cannot be obtained because the spouse cannot be located.
     (b) A married Participant’s Beneficiary designation may be changed by a
Participant with the consent of the Participant’s spouse as provided for in
Section 8.3(a) by the filing of a new designation with the Retirement Committee.
     (c) If the Participant’s marital status changes after the Participant has
designated a Beneficiary, the following shall apply:
     (i) If the Participant is married at the time of death but was unmarried
when the designation was made, the designation shall be void unless the spouse
has consented to it in the manner prescribed in Section 8.3(a).
     (ii) If the Participant is unmarried at the time of death but was married
when the designation was made:
     (A) The designation shall be void if the spouse was named as Beneficiary,
unless the designation is reaffirmed when the Participant is unmarried.
     (B) The designation shall remain valid if a nonspouse Beneficiary was
named.

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     (iii) If the Participant was married when the designation was made and is
married to a different spouse at death, the designation shall be void unless the
new spouse has consented to it in the manner prescribed above.
     8.4 No Beneficiary Designation. If any Participant fails to designate a
Beneficiary in the manner provided above, if the designation is void or if the
Beneficiary designated by a deceased Participant dies before the Participant or
before complete distribution of the Participant’s benefits, the Participant’s
Beneficiary shall be the person in the first of the following classes in which
there is a survivor:
     (a) The Participant’s spouse;
     (b) The Participant’s children in equal shares, except that if any of the
children predeceases the Participant but leaves issue surviving, then such issue
shall take, by right of representation, the share the parent would have taken if
living;
     (c) The Participant’s estate.
ARTICLE IX
ADMINISTRATION
     9.1 Committee; Duties. The Plan shall be administered by the Retirement
Committee. The Retirement Committee shall have the authority to make, amend,
interpret, and enforce all appropriate rules and regulations for the
administration of the Plan and decide or resolve any and all questions,
including interpretations of the Plan, as may arise in such administration.
Members of the Retirement Committee may be Participants under the Plan.

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     9.2 Agents. The Retirement Committee may, from time to time, employ agents
and delegate to them such administrative duties as it sees fit, and may from
time to time consult with counsel who may be counsel to the Company.
     9.3 Binding Effect of Decisions. The decision or action of the Retirement
Committee with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final, conclusive and binding upon
all persons having any interest in the Plan.
     9.4 Indemnity of Retirement Committee. The Company shall indemnify and hold
harmless the members of the Retirement Committee against any and all claims,
loss, damage, expense, or liability arising from any action or failure to act
with respect to the Plan on account of such person’s service on the Retirement
Committee, except in the case of gross negligence or willful misconduct.
ARTICLE X
CLAIMS PROCEDURE
     10.1 Claim. The Retirement Committee shall establish rules and procedures
to be followed by Participants and Beneficiaries in filing claims for benefits,
and for furnishing and verifying proof necessary to establish the right to
benefits in accordance with the Plan, consistent with the remainder of this
Article. Such rules and procedures shall require that claims and proofs be made
in writing and directed to the Retirement Committee.
     10.2 Review of Claim. The Retirement Committee shall review all claims for
benefits. Upon receipt by the Retirement Committee of such a claim, it shall
determine all facts that are necessary to establish the right of the claimant to
benefits under the provisions of the Plan and the amount thereof as herein
provided within 90 days of receipt of such claim. If prior

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to the expiration of the initial 90 day period, the Retirement Committee
determines additional time is needed to come to a determination on the claim,
the Retirement Committee shall provide written notice to the Participant,
Beneficiary or other claimant of the need for the extension, not to exceed a
total of 180 days from the date the application was received.
     10.3 Notice of Denial of Claim. In the event that any Participant,
Beneficiary or other claimant claims to be entitled to a benefit under the Plan,
and the Retirement Committee determines that such claim should be denied in
whole or in part, the Retirement Committee shall, in writing, notify such
claimant that the claim has been denied, in whole or in part, setting forth the
specific reasons for such denial. Such notification shall be written in a manner
reasonably expected to be understood by such claimant and shall refer to the
specific sections of the Plan relied on, shall describe any additional material
or information necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary, and, where
appropriate, shall include an explanation of how the claimant can obtain
reconsideration of such denial.
     10.4 Reconsideration of Denied Claim.
     (a) Within 60 days after receipt of the notice of the denial of a claim,
such claimant or duly authorized representative may request, by mailing or
delivery of such written notice to the Retirement Committee, a reconsideration
by the Retirement Committee of the decision denying the claim. If the claimant
or duly authorized representative fails to request such a reconsideration within
such 60 day period, it shall be conclusively determined for all purposes of the
Plan that the denial of such claim by the Retirement Committee is correct. If
such claimant or duly authorized representative requests a reconsideration
within such 60 day period, the claimant or duly authorized

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representative shall have 30 days after filing a request for reconsideration to
submit additional written material in support of the claim, review pertinent
documents and submit issues and comments in writing.
     (b) After such reconsideration request, the Retirement Committee shall
determine within 60 days of receipt of the claimant’s request for
reconsideration whether such denial of the claim was correct and shall notify
such claimant in writing of its determination. The written notice of decision
shall be in writing and shall include specific reasons for the decision, written
in a manner calculated to be understood by the claimant, as well as specific
references to the pertinent Plan provisions on which the decision is based. In
the event of special circumstances determined by the Retirement Committee, the
time for the Retirement Committee to make a decision may be extended by an
additional 60 days upon written notice to the claimant prior to the commencement
of the extension. If such determination is favorable to the claimant, it shall
be binding and conclusive. If such determination is adverse to such claimant, it
shall be binding and conclusive unless the claimant or his duly authorized
representative notifies the Retirement Committee within 90 days after the
mailing or delivery to the claimant by the Retirement Committee of its
determination that claimant intends to institute legal proceedings challenging
the determination of the Retirement Committee and actually institutes such legal
proceedings within 180 days after such mailing or delivery.
     10.5 Employer to Supply Information. To enable the Retirement Committee to
perform its functions, each Employer shall supply full and timely information to
the Retirement Committee of all matters relating to the retirement, death or
other cause for separation from service of all Participants, and such other
pertinent facts as the Retirement Committee may require.

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ARTICLE XI
AMENDMENT AND TERMINATION OF PLAN
     11.1 Amendment. The Committee may at any time amend the Plan by written
instrument, notice of which is given to all Participants, and to Beneficiaries
receiving installment payments. Notwithstanding the preceding sentence, no
amendment shall reduce the amount accrued in any Account prior to the date such
notice of the amendment is given.
     11.2 Employer’s Right to Terminate. The Committee may at any time partially
or completely terminate the Plan if, in its judgment, the tax, accounting or
other effects of the continuance of the Plan, or potential payments thereunder,
would not be in the best interests of the Employers.
     (a) Partial Termination. The Committee may partially terminate the Plan by
instructing the Retirement Committee not to accept any additional Deferral
Commitments. If such a partial termination occurs, the Plan shall continue to
operate and be effective with regard to Deferral Commitments entered into prior
to the effective date of such partial termination.
     (b) Complete Termination. The Committee may completely terminate the Plan
by instructing the Retirement Committee not to accept any additional Deferral
Commitments, and by terminating all ongoing Deferral Commitments. If such a
complete termination occurs, the Plan shall cease to operate and the Employers
shall pay out each Pre-2005 Account in equal monthly installments over the
following period, based on the Pre-2005 Account balance:

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      Account Balance   Payout Period
Less than $50,000
  Lump Sum
$50,000 but less than $100,000
  3 Years
More than $100,000
  5 Years

Payments shall commence within 65 days after the Committee terminates the Plan,
and earnings shall continue to be credited on the unpaid Account balance.
Employers shall pay out each Post-2004 Account in the manner and at the time
described in Articles IV and VII.
ARTICLE XII
MISCELLANEOUS
     12.1 Unfunded Plan. The Plan is an unfunded plan maintained primarily to
provide deferred compensation benefits for a select group of “management or
highly-compensated employees” within the meaning of Sections 201, 301 and 401 of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and
therefore is exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
     12.2 Company and Employer Obligations. The obligation to make benefit
payments to any Participant under the Plan shall be a joint and several
liability of the Company and the Employer that employed the Participant.
     12.3 Unsecured General Creditor. Participants and Beneficiaries shall be
unsecured general creditors, with no secured or preferential right to any assets
of the Employer or any other party for payment of benefits under the Plan. Any
life insurance policies, annuity contracts or other property purchased by the
Employer in connection with the Plan shall remain its general, unpledged and
unrestricted assets. The Employer’s obligation under the Plan shall be an
unfunded and unsecured promise to pay money in the future.

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     12.4 Trust Fund. Subject to Section 12.3, the Company may establish
separate subtrusts for deferrals by employees of each Employer, pursuant to a
trust agreement entered into with such trustees as the Committee may approve,
for the purpose of providing for the payment of benefits owed under the Plan. At
its discretion, each Employer may contribute deferrals under the Plan for its
employees to the subtrust established with respect to such Employer under such
trust agreement. To the extent any benefits provided under the Plan are paid
from any such subtrust, the Employer shall have no further obligation to pay
them. If not paid from a subtrust, such benefits shall remain the obligation of
the Employer. Although such subtrusts may be irrevocable, their assets shall be
held for payment of all the Company’s general creditors in the event of
insolvency or bankruptcy.
     12.5 Nonassignability. Neither a Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage,
or otherwise encumber, transfer, hypothecate, or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof or rights
to, which are expressly declared to be unassignable and nontransferable. No part
of the amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony, or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant’s or any other person’s
bankruptcy or insolvency.
     Notwithstanding the preceding paragraph, the Account of any Participant
shall be subject to and payable in the amount determined in accordance with any
qualified domestic relations order, as that term is defined in Section 206(d)(3)
of ERISA. The Retirement Committee shall provide for payment in a lump sum from
a Participant’s Account to an alternate payee (as defined in Code
Section 414(p)(8)) as soon as administratively practicable following receipt of

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such order. Any federal, state or local income tax associated with such payment
shall be the responsibility of the alternate payee. The balance of an Account
that is subject to any qualified domestic relations order shall be reduced by
the amount of any payment made pursuant to such order.
     12.6 Not a Contract of Employment. The Plan shall not constitute a contract
of employment between an Employer and the Participant. Nothing in the Plan shall
give a Participant the right to be retained in the service of an Employer or to
interfere with the right of an Employer to discipline or discharge a Participant
at any time.
     12.7 Protective Provisions. A Participant shall cooperate with his Employer
by furnishing any and all information requested by the Employer in order to
facilitate the payment of benefits hereunder, and by taking such physical
examinations as the Employer may deem necessary and taking such other action as
may be requested by the Employer.
     12.8 Governing Law. The provisions of the Plan shall be construed and
interpreted according to the laws of the State of Indiana, except as preempted
by federal law.
     12.9 Validity. In case any provision of the Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but the Plan shall be construed and enforced as if such
illegal and invalid provision had never been inserted herein.
     12.10 Notice. Any notice required or permitted under the Plan shall be
sufficient if in writing and hand delivered or sent by registered or certified
mail. Such notice shall be deemed as given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification. Mailed notice to the Retirement Committee
shall be directed to the Company’s address. Mailed notice to a Participant or
Beneficiary shall be directed to the individual’s last known address in the
applicable Employer’s records.

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     12.11 Successors. The provisions of the Plan shall bind and inure to the
benefit of the Employers and their successors and assigns. The term successors
as used herein shall include any corporate or other business entity that shall,
whether by merger, consolidation, purchase, or otherwise, acquire all or
substantially all of the business and assets of an Employer, and successors of
any such corporation or other business entity.
     12.12 Tax Savings Clause. Notwithstanding anything to the contrary
contained in the Plan, (1) in the event that the Internal Revenue Service
prevails in its claim that amounts contributed to the Plan for the benefit of a
Participant, and/or earnings thereon, constitute taxable income under Code
Section 409A, and guidance and regulations thereunder, to the Participant or his
Beneficiary for a taxable year prior to the taxable year in which such
contributions and/or earnings are distributed to him, or (2) in the event that
legal counsel satisfactory to the Company, and the applicable Participant or his
Beneficiary, renders an opinion that the Internal Revenue Service would likely
prevail in such a claim, the Post-2004 Account, to the extent constituting such
taxable income, shall be immediately distributed to the Participant or his
Beneficiary. For purposes of this Section, the Internal Revenue Service shall be
deemed to have prevailed in a claim if such claim is upheld by a court of final
jurisdiction, or, if based upon an opinion of legal counsel satisfactory to the
Company and the Participant or his Beneficiary, the Plan fails to appeal a
decision of the Internal Revenue Service, or a court of applicable jurisdiction,
with respect to such claim to an appropriate Internal Revenue Service appeals
authority or to a court of higher jurisdiction within the appropriate time
period.

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     IN WITNESS WHEREOF, the Company has caused the Plan to be executed in its
name by its duly authorized officer this 2nd day of December, 2005, effective as
of the 1st day of January, 2005.

            NISOURCE INC.
      By:   /s/ Michael W. O’Donnell       Michael W. O’Donnell            

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EXHIBIT A
Investment Options

          Fidelity Based Funds

Contra Fund
  Equity Income Fund   Growth & Income Fund
Growth Company Fund
  Magellan Fund   Small Cap Independence Fund
Managed Income Portfolio
  Overseas Fund   Money Market Fund
Freedom 2010 Fund
  Freedom 2020 Fund   Freedom 2030 Fund
Freedom 2040 Fund
  Freedom Income Fund   Balanced Fund
Intermediate Bond Fund
  Spartan U.S. Equity Index Fund    

          Non Fidelity Funds

 
  American Funds EuroPacific Growth Fund    
 
  Dreyfus Emerging Leaders Fund    
 
  Janus Small Cap Value Inst. Fund    
 
  Morgan Stanley IFT U.S. Small Cap Core Fund    
 
  PIMCO Long Term Gov’t Fund    
 
  PIMCO Low Duration Fund    
 
  PIMCO Total Return Fund Inst.    
 
  PIMCO StocksPLUS Fund Inst.    

A-1