Exhibit 10.12
NISOURCE INC.
1994 LONG-TERM INCENTIVE PLAN
FORM OF CONTINGENT STOCK AGREEMENT
     This Agreement is made as of the ___ day of _______________, between
NiSource Inc. (the “Company”) and __________________ (the “Grantee”). In
consideration of the agreements set forth below, the Company and the Grantee
agree as follows:
     1. Grant. A contingent stock award (“Award”) of _______________ shares
(“Contingent Shares”) of the Company’s common stock, par value of $.01 each
(“Common Stock”), will be granted by the Company to the Grantee, subject to the
following contingencies, terms and conditions. This Award is also subject to the
provisions of the NiSource Inc. 1994 Long-Term Incentive Plan as amended and
restated effective January 1, 2005 (the “Plan”), the terms of which are
incorporated by reference herein, except for the dividend reinvestment provision
contained in Section 14 of the Plan. The number of Contingent Shares to be
granted pursuant to this Agreement shall be maintained as a bookkeeping entry on
the books of the Company until the Common Stock underlying the Contingent Shares
is delivered. No funds shall be set aside or earmarked for any Contingent Share.
The right of the Grantee or his or her beneficiary to receive a distribution
hereunder shall be an unsecured claim against the general assets of the Company,
and neither the Grantee nor his or her beneficiary shall have any rights in or
against any amounts credited to the books of the Company or any other specific
assets of the Company.
     2. Transfer Restrictions. Neither the rights with respect to the Award nor
the Contingent Shares shall be sold, assigned, pledged or otherwise transferred,
voluntarily or involuntarily, by the Grantee prior to the lapse of the
“Performance Restrictions” (as set forth in Section 3 of this Agreement), and
until permitted pursuant to the terms of the Plan.
     3. Lapse of Performance Restrictions.
          (a) The Performance Restrictions shall lapse on the date the Officer
Nomination and Compensation Committee of the Board of Directors of the Company
certifies that the following conditions have been met: (i) cumulative “net
operating earnings” per share of Common Stock for the three year period
beginning January 1, 2008, and ending December 31, 2010 (the “Performance
Period”), equal or exceed $3.90, and (ii) cumulative “funds from operations” for
the Performance Period equal or exceed $2.8 billion. Upon the lapse of the
Performance Conditions, the Grantee shall receive ___ shares of Common Stock. To
the extent the cumulative “net operating earnings” per share of Common Stock for
the Performance Period exceed $3.90 (as described above), 50% of this number of
shares of Common Stock shall be increased as follows:

 

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          Cumulative Net   Increase Operating Earnings   In Per Share   Award
$3.96
    10 %
$4.02
    20 %
$4.08
    30 %
$4.14
    40 %
$4.20
    50 %

     To the extent cumulative “funds from operations” for the Performance Period
exceed $2.8 billion (as described above), 50% of the number of shares of Common
Stock promised under this Section 3 shall be increased as follows:

          Cumulative Net   Increase Funds from   In Operations   Award
$2.825 billion
    10 %
$2.85 billion
    20 %
$2.875 billion
    30 %
$2.9 billion
    40 %
$2.925 billion
    50 %

     An Award of all shares of Common Stock granted in accordance with this
Section 3 will be delivered to the Grantee no later than March 15, 2011.
          (b) As soon as practicable after the end of the Performance Period,
the Committee will certify in writing whether the Performance Restrictions have
been met for the Performance Period and determine the number of shares of Common
Stock, if any, payable in accordance with Section 3(a) of this Agreement;
provided, however, that if the Committee certifies that the Performance
Restrictions have been met, the Committee may, in its sole discretion, adjust
the number of shares of Common Stock payable to the Grantee with respect to the
Award to reflect the effect of extraordinary events upon the Performance
Restrictions. The date of the Committee’s certification under this Section 3(b)
shall hereinafter be referred to as the “Certification Date”. The Company will
notify the Grantee (or the executors or administrators of the Grantee’s estate,
if appropriate) of the Committee’s certification following the Certification
Date (such notice being the “Determination Notice”). The Determination Notice
shall specify (i) the Company’s cumulate earnings per share and return on
invested capital for the Performance Period and (ii) the number of shares of
Common Stock payable in accordance with the Committee’s certification.

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          (c) Except as otherwise provided herein, if the Grantee’s employment
terminates for any reason before the lapse of the Performance Restrictions, the
Award shall automatically terminate and the Grantee shall not be entitled to
receive any shares of Common Stock under this Agreement. If, however, before the
lapse of the Performance Restrictions, the Grantee terminates employment with
the Company and its Affiliates (1) due to retirement, with having attained age
55 and completed 10 years of Service, (2) due to disability (as defined in
Internal Revenue Code Section 409A and the regulations promulgated thereunder
(“Code Section 409A”), or (3) due to death with less than or equal to 12 months
remaining in the Performance Period, the Grantee shall receive a pro rata
distribution of shares of Common Stock after the Certification Date, provided
that the Committee actually certifies that the Performance Restrictions for the
Performance Period have been met. Such pro rata grant of Common Stock shall be
determined using a fraction, where the numerator shall be the number of full or
partial calendar months elapsed between the Date of Award and the date the
Grantee terminates employment, and the denominator shall be the number of full
or partial calendar months elapsed between the Date of Award and December 31,
2010. Additionally, if before the lapse of the Performance Restrictions, the
Grantee terminates employment with the Company and its Affiliates due to death
with more than 12 months remaining in the Performance Period, the Grantee shall
receive, as soon as practicable after the date of termination, a pro rata
distribution of shares of Common Stock equal to the number of shares of Common
Stock that the Grantee otherwise would have received had the Performance
Restrictions been met for the Performance Period. The Grantee will not be
entitled to any additional shares provided in Section 3(a) of this Agreement for
exceeding the Performance Restrictions. Such pro rata grant of Common Stock
shall be determined using a fraction, where the numerator shall be the number of
full or partial calendar months elapsed between the Date of Award and the date
the Grantee terminates employment, and the denominator shall be the number of
full or partial calendar months elapsed between the Date of Award and
December 31, 2010. For purposes of this Agreement, “Service” has the same
meaning used in the NiSource Inc. and Northern Indiana Public Service Company
Pension Plan or such other pension plan in which the Grantee is a Participant.
     4. Change in Control. Notwithstanding the provisions of Section 3 above, in
the event of a Change in Control of the Company, as defined in the Plan, all
Performance Restrictions and Employment Restrictions applicable to the
Contingent Shares shall lapse on the fifth business day prior to the date such
Change in Control is consummated. Grantees will not be entitled to an increased
number of shares (as provided in Section 3 of the Plan) upon such Change in
Control even if the target Performance Restrictions are exceeded.
     5. Forfeiture. All of the Contingent Shares with respect to which the
Performance Restrictions have not lapsed shall be forfeited to the Company upon
the date the Board of Directors of the Company determines that performance
triggers described in Section 3 above have not been met. All of the Contingent
Shares not forfeited pursuant to the preceding sentence, and with respect to
which the Employment Restrictions have not lapsed, shall be forfeited to the
Company upon the Grantee’s termination of employment with the Company and its
affiliates for any reason other than those identified in Section 3 above.

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     6. Issuance of Certificates. Certificates of Common Stock relating to any
of the Contingent Shares shall be issued in Grantee’s name and delivered to the
Grantee as soon as practicable after the Certification Date. However,
notwithstanding any provision to the contrary, if, in the reasonable
determination of the Company, a Grantee is a “specified employee” for purposes
of Code Section 409A, then, if necessary to avoid the imposition on the Grantee
of excise tax and interest under Code Section 409A, the Company shall not
deliver the Common Stock otherwise payable upon the Grantee’s termination and
separation of service until a date that is as soon as practicable after 6 months
following the Grantee’s termination and separation of service from the Company.
     7. No Rights as Stockholder. During the Performance Period and until Common
Stock has been issued, the Grantee shall not have any rights as a stockholder of
the Company with respect to the Contingent Shares.
     8. Section 162(m) Limitation on Contingent Shares. Notwithstanding
Sections 3 and 4, during any calendar year with respect to which the Grantee is
a “covered employee” (as defined in Section 162(m) of the Internal Revenue Code
of 1986, as amended (the “Code), or any successor section, and regulations
issued thereunder), the Employment Restrictions shall lapse only with respect to
such number of Contingent Shares whose aggregate fair market value (calculated
with reference to the closing price of Common Stock on the New York Stock
Exchange Composite Transactions on the date such Employment Restrictions would,
but for this Section 8 lapse), when added to the Grantee’s “applicable employee
remuneration” (as defined in Section 162(m) of the Code or any successor section
regulations thereunder) for the applicable calendar year that does not
constitute “qualified performance-based compensation” (as defined in Section
162(m) of the Code or any successor section and regulations thereunder), would
not exceed the aggregate amount of $999,999.00 for the applicable calendar year
(“Limitation”).
          To the extent the restrictions on any Contingent Shares do not lapse
due to the application of this Section 8, the restrictions on such Contingent
Shares shall lapse on the first to occur of:
          (a) the last business day of any subsequent calendar year or years to
the extent that the Limitation is not exceeded for such year or years;
          (b) the date next following the Grantee’s termination of employment
with the Company and its affiliates for any reason other than for Cause, or
          (c) the first business day of the year next following the year with
respect to which the Grantee ceases to be a “covered employee” (as defined in
Section 162(m) of the Code or any successor section and regulations thereunder).
     “Cause means the Grantee’s conviction for the commission of a felony, or
the Grantee’s fraud or dishonesty which has resulted in or is likely to result
in material economic damage to the Company or any affiliate.

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     9. Government Regulations. Notwithstanding anything contained herein to the
contrary, the Company’s obligation to issue or deliver certificates evidencing
Common Stock shall be subject to all applicable laws, rules and regulations, and
to such approvals by any governmental agencies or national securities exchanges
as may be required.
     10. Withholding Taxes. The Company shall have the right to require the
Grantee to remit to the Company, or to withhold from other amounts payable to
the Grantee, as compensation or otherwise, an amount sufficient to satisfy all
federal, state and local withholding tax requirements as provided in the Plan.
     11. Governing Law. This Agreement shall be construed under the laws of the
State of Indiana.
     12. Securities Law Compliance. The delivery of all or any of the Common
Stock relating to Contingent Shares shall only be effective at such time that
the issuance of such Common Stock will not violate any state or federal
securities or other laws. The Company is under no obligation to effect any
registration of Common Stock under the Securities Act of 1933 or to effect any
state registration or qualification of the Common Stock issued under this
Agreement. The Company may, in its sole discretion, delay the delivery of Common
Stock or place restrictive legends on Common Stock in order to ensure that the
issuance of any Common Stock will be in compliance with federal or state
securities laws and the rules of any exchange upon which the Company’s Common
Stock is traded. If the Company delays the delivery of Common Stock in order to
ensure compliance with any state or federal securities or other laws, the
Company shall deliver the Common Stock at the earliest date at which the Company
reasonably believes that such delivery will not cause such violation, or at such
other date that may be permitted under Code Section 409A.
     13. Entire Agreement; Code Section 409A Compliance. This Agreement and the
Plan contain the terms and conditions with respect to the subject matter hereof
and supersede any previous agreements, written or oral, relating to the subject
matter hereof. This Agreement shall be interpreted in accordance with Code
Section 409A. This Agreement shall be deemed to be modified to the maximum
extent necessary to be in compliance with Code Section 409A’s rules. If the
Grantee is unexpectedly required to include in the Grantee’s current year’s
income any amount of compensation relating to the Contingent Shares because of a
failure to meet the requirements of Code Section 409A, then to the extent
permitted by Code Section 409A, the Grantee may receive a distribution of Common
Stock in an amount not to exceed the amount required to be included in income as
a result of the failure to comply with Code Section 409A.

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          IN WITNESS WHEREOF, the company has caused this Award to be granted,
and the Grantee has accepted this Award, as of the date first above written.

            NISOURCE INC.
      By:                     (Grantee)     

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