Exhibit 10.4
NISOURCE INC.
1994 LONG-TERM INCENTIVE PLAN
As Amended and Restated Effective January 1, 2005

 

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NISOURCE INC.
1994 LONG-TERM INCENTIVE PLAN
As Amended and Restated Effective January 1, 2005
TABLE OF CONTENTS

                              Page
 
                1.   Purpose     1  
 
                2.   Administration     1  
 
                3.   Common Stock Subject to the Plan     2  
 
               
 
  (a)   Aggregate Shares     2  
 
  (b)   Adjustment to Number of Shares     2  
 
                4.   Participants     3  
 
                5.   Awards Under the Plan     3  
 
                6.   Section 162(m) Limitations     3  
 
                7.   NonQualified Stock Options     4  
 
               
 
  (a)   Option Price     4  
 
  (b)   Exercise of Option     4  
 
  (c)   Payment for Common Stock     4  
 
  (d)   Transferability     5  
 
  (e)   Rights Upon Termination of Employment     5  
 
                8.   Incentive Stock Options     5  
 
               
 
  (a)   Option Price     5  
 
  (b)   Exercise of Option     6  
 
  (c)   Payment for Common Stock     6  
 
  (d)   Transferability     7  
 
  (e)   Rights Upon Termination of Employment     7  
 
                9.   Stock Appreciation Rights     7  
 
               
 
  (a)   Awards     7  
 
  (b)   Term     8  
 
  (c)   Payment     8  
 
                10.   Performance Units     8  
 
               
 
  (a)   Performance Period     8  
 
  (b)   Valuation of Units     8  
 
  (c)   Performance Targets     8  
 
  (d)   Adjustments     9  

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TABLE OF CONTENTS
(continued)

                              Page
 
               
 
  (e)   Payments of Units     9  
 
  (f)   Termination of Employment     9  
 
  (g)   Other Terms     9  
 
                11.   Restricted Stock Awards     9  
 
               
 
  (a)   Restriction Period     10  
 
  (b)   Restrictions Upon Transfer     10  
 
  (c)   Certificates     10  
 
  (d)   Lapse of Restrictions     10  
 
  (e)   Termination Prior to Lapse of Restrictions     11  
 
                12.   Contingent Stock Awards     11  
 
               
 
  (a)   Restriction Period     11  
 
  (b)   Lapse of Restrictions     11  
 
  (c)   Termination Prior to Lapse of Restrictions     12  
 
                13.   Fair Market Value     12  
 
                14.   Dividend Equivalents     12  
 
                15.   General Restrictions     12  
 
                16.   Rights as a Shareholder     13  
 
                17.   Employment Rights     13  
 
                18.   Tax Withholding     13  
 
                19.   Change in Control     14  
 
               
 
  (a)   Effect of Change in Control     14  
 
  (b)   Definition of Change in Control     14  
 
                20.   Disability     16  
 
                21.   Amendment or Termination     16  
 
                22.   Effect on Other Plans     17  
 
                23.   Assumption of Options     17  
 
                24.   Duration of the Plan     18  

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NISOURCE INC.
1994 Long-Term Incentive Plan
(As Amended and Restated Effective January 1, 2004)
          WHEREAS, NiSource Inc. (formerly NIPSCO Industries, Inc.) (the
“Company”) adopted the NIPSCO Industries, Inc. 1994 Long-Term Incentive Plan
effective April 13, 1994, as amended and restated effective April 14, 1999, and
now known as the NiSource Inc. 1994 Long-Term Incentive Plan (the “Plan”);
          WHEREAS, the Company further amended and restated the Plan effective
January 1, 2000, and again amended and restated the Plan effective January 1,
2004; and
          WHEREAS, pursuant to Section 21 of the Plan, the Company wishes to
further amend and restate the Plan, effective January 1, 2005, as set forth
below, to comply with Section 409A of the Internal Revenue Code of 1986, as
amended (“Code”) with respect to benefits earned under the Plan from and after
January 1, 2005. Benefits under the Plan earned and vested prior to January 1,
2005 shall be administered without giving effect to Code Section 409A, and
guidance and regulations thereunder.
          NOW THEREFORE, the Plan is hereby amended and restated, effective
January 1, 2005, as follows:

1.   Purpose. The purpose of the NiSource Inc. 1994 Long-Term Incentive Plan
(the “Plan”) is to further the earnings of NiSource Inc. (the “Company”) and its
subsidiaries. The Plan provides long-term incentives to those officers and key
executives who make substantial contributions by their ability, loyalty,
industry and invention. The Company intends that the Plan will thereby
facilitate securing, retaining, and motivating management employees of high
caliber and potential.   2.   Administration. The Plan shall be administered by
the Officer Nomination and Compensation Committee (the “Committee”) of the Board
of Directors of the Company (the “Board”). The Committee shall be composed of
not fewer than two members of the Board who are “nonemployee directors” of the
Company within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the “1934 Act”), and “outside directors” of the Company within
the meaning of Code Section 162(m), and the regulations thereunder. Subject to
the express provisions of the Plan, the Committee may interpret the Plan,
prescribe, amend and rescind rules and regulations relating to it, determine the
terms and provisions of awards to officers and other key executive employees
under the Plan (which need not be identical), and make such other determinations
as it deems necessary or advisable for the administration of the Plan. The
decisions of the Committee under the Plan shall be conclusive and binding. No
member of the Board or of the Committee shall be liable for any action taken, or
determination made, hereunder in good faith. Service on the Committee shall
constitute service as a

 

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    director of the Company so that members of the Committee shall be entitled
to indemnification and reimbursement as directors of the Company, pursuant to
its by-laws.   3.   Common Stock Subject to the Plan.

  (a)   Aggregate Shares. Subject to the provisions of subsection 3(b), the
shares that may be issued, or may be the measure of stock appreciation rights
granted, under the Plan shall not exceed in the aggregate 43,000,000 shares of
common stock, $0.01 par value per share, of the Company (the “Common Stock”),
any or all of which may be allocated to incentive stock options. Such shares may
be authorized and unissued shares or treasury shares. Except as otherwise
provided herein, any shares subject to an option or right which for any reason
expires or is terminated, unexercised as to such shares, shall again be
available under the Plan.     (b)   Adjustment to Number of Shares.

  (i)   Appropriate adjustments in the aggregate number of shares of Common
Stock issuable pursuant to the Plan, the number of shares of Common Stock
subject to each outstanding award granted under the Plan, the option price with
respect to options and connected stock appreciation rights, the specified price
of stock appreciation rights not connected to options, and the value for
performance units, shall be made to give effect to any increase or decrease in
the number of issued shares of Common Stock resulting from a subdivision or
consolidation of shares, whether through recapitalization, stock split, reverse
stock split, spin-off, spin-out or other distribution of assets to stockholders,
stock distributions or combinations of shares, payment of stock dividends, other
increase or decrease in the number of such shares of Common Stock outstanding
effected without receipt of consideration by the Company, or any other
occurrence for which the Committee determines an adjustment is appropriate.    
(ii)   In the event of any merger, consolidation or reorganization of the
Company with any other corporation or corporations, or an acquisition by the
Company of the stock or assets of any other corporation or corporations, there
shall be substituted on an equitable basis, as determined by the Committee in
its sole discretion, for each share of Common Stock then subject to the Plan,
and for each share of Common Stock then subject to an award granted under the
Plan, the number and kind of shares of stock, other securities, cash or other
property to which the holders of Common Stock of the Company are entitled
pursuant to such transaction.     (iii)   Without limiting the generality of the
foregoing provisions of this paragraph, any such adjustment shall be deemed to
have prevented any dilution or enlargement of a participant’s rights, if such
participant receives in any such adjustment, rights that are substantially
similar (after

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      taking into account the fact that the participant has not paid the
applicable option price) to the rights the participant would have received had
he exercised his outstanding award and become a shareholder of the Company
immediately prior to the event giving rise to such adjustment. Adjustments under
this paragraph shall be made by the Committee, whose decision as to the amount
and timing of any such adjustment shall be conclusive and binding on all
persons.

4.   Participants. Persons eligible to participate shall be limited to those
officers and other key executive employees of the Company and its subsidiaries
who are in positions in which their decisions, actions and counsel significantly
impact upon profitability. Directors who are not otherwise officers or employees
shall not be eligible to participate in the Plan.   5.   Awards Under the Plan.
Awards under the Plan may be in the form of stock options (both options designed
to satisfy statutory requirements necessary to receive favorable tax treatment
pursuant to any present or future legislation and options not designed to so
qualify), incentive stock options, stock appreciation rights, performance units,
restricted Common Stock, contingent stock awards, or such combinations of the
above as the Committee may in its discretion deem appropriate. Except in
accordance with equitable adjustments as provided in subsection 3(b), no stock
option granted under the Plan shall at any time be repriced or subject to
cancellation and replacement.   6.   Section 162(m) Limitations. Subject to
subsection 3(b) of the Plan, the maximum number of stock options and stock
appreciation rights that may be granted to any person who qualifies as an
executive officer named from time to time in the summary compensation table in
the Company’s annual meeting proxy statement and who is employed by the Company
on the last day of the taxable year (the “SCT Executives”) shall be 600,000
options and stock appreciation rights with respect to shares of Common Stock per
year and 3,000,000 options and stock appreciation rights with respect to shares
of Common Stock during the term of the Plan. The maximum number of performance
units that may be granted to any SCT Executive shall be 400,000 units per year,
provided that no more than 800,000 units may be granted in any three year period
and the maximum number of units that may be granted to any SCT Executive during
the term of the Plan shall be 1,500,000. The maximum number of restricted stock
awards that may be granted to any SCT Executive shall be 400,000 shares of
Common Stock per year, provided that no more than 800,000 shares of restricted
Common Stock may be granted in any three year period, and that the maximum
number of shares of restricted Common Stock that may be granted to any SCT
Executive during the term of the Plan shall be 1,500,000. The maximum number of
contingent stock awards that may be granted to any SCT Executive shall be
400,000 shares of Common Stock per year, provided that no more than 800,000
shares of Common Stock may be subject to contingent stock awards granted in any
three year period and the maximum number of shares of Common Stock subject to
contingent stock awards that may be granted to any SCT Executive during the term
of the Plan shall be 1,500,000. The limitations set forth in this Section 6
shall relate

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only to years or other periods of time in which such awards constitute
“applicable employee remuneration” under Code Section 162(m).

7.   NonQualified Stock Options. Options shall be evidenced by stock option
agreements in such form and not inconsistent with the Plan as the Committee
shall approve from time to time, which agreements shall contain in substance the
following terms and conditions:

  (a)   Option Price. The purchase price per each share of Common Stock
deliverable upon the exercise of an option shall not be less than 100% of the
Fair Market Value of a share of Common Stock on the day the option is granted,
as determined by the Committee.     (b)   Exercise of Option. Each stock option
agreement shall state the period or periods of time within which the option may
be exercised by the optionee, in whole or in part, which shall be such period or
periods of time as may be determined by the Committee, provided that the option
exercise period shall not end later than ten years after the date of the grant
of the option. The Committee shall have the power to permit in its discretion an
acceleration of the previously determined exercise terms, within the terms of
the Plan, under such circumstances and upon such terms and conditions as it
deems appropriate.     (c)   Payment for Common Stock. Except as otherwise
provided in the Plan, or in any stock option agreement, the optionee shall pay
the purchase price of the Common Stock upon the exercise of any option (i) in
cash, (ii) in cash received from a broker-dealer to whom the optionee has
submitted an exercise notice consisting of a fully endorsed option (however in
the case of an optionee subject to Section 16 of the 1934 Act, this payment
option shall only be available to the extent such payment procedures comply with
Regulation T issued by the Federal Reserve Board), (iii) by delivering Common
Stock owned by the optionee for at least six months prior to the date of
exercise having an aggregate Fair Market Value on the date of exercise equal to
the option exercise price, (iv) by such other medium of payment as the Committee
in its discretion shall authorize at the time of grant, or (v) by any
combination of (i), (ii), (iii) and (iv). In the case of an election pursuant to
(i) or (ii) above, cash shall mean cash or check issued by a federally insured
bank or savings and loan association and made payable to NiSource Inc. In the
case of payment pursuant to (ii) or (iii) above, the optionee’s election must be
made on or prior to the date of exercise and shall be irrevocable. In lieu of a
separate election governing each exercise of an option, an optionee may file a
blanket election with the Committee, which shall govern all future exercises of
options until revoked by the optionee. The Company shall issue, in the name of
the optionee, stock certificates representing the total number of shares of
Common Stock issuable pursuant to the exercise of any option as soon as
reasonably practicable after such exercise, provided that any Common Stock
purchased by an optionee through a broker-dealer pursuant to clause (ii) above,
shall be delivered to such broker-dealer in accordance with 12 C.F.R. §
220.3(e)(4), or other applicable provision of law.

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  (d)   Transferability. Each stock option agreement shall provide that the
option subject thereto is not transferable by the optionee otherwise than by
will or the laws of descent or distribution. Notwithstanding the preceding
sentence, an optionee, at any time prior to his death, may assign all or any
portion of the option to (i) his spouse or lineal descendant, (ii) the trustee
of a trust for the primary benefit of his spouse or lineal descendant, or
(iii) a tax-exempt organization as described in Code Section 501(c)(3). In such
event the spouse, lineal descendant, trustee or tax-exempt organization shall be
entitled to all of the rights of the optionee with respect to the assigned
portion of such option, and such portion of the option shall continue to be
subject to all of the terms, conditions and restrictions applicable to the
option as set forth herein, and in the related stock option agreement,
immediately prior to the effective date of the assignment. Any such assignment
shall be permitted only if (i) the optionee does not receive any consideration
therefore, and (ii) the assignment is expressly approved by the Committee or its
delegate. Any such assignment shall be evidenced by an appropriate written
document executed by the optionee, and a copy thereof shall be delivered to the
Committee or its delegate on or prior to the effective date of the assignment.
This paragraph shall apply to all nonqualified stock options granted under the
Plan at any time.     (e)   Rights Upon Termination of Employment. In the event
that an optionee ceases to be an employee for any reason other than death,
Disability or retirement, the optionee shall have the right to exercise the
option during its term within a period of thirty days after such termination to
the extent that the option was exercisable at the date of such termination of
employment, or during such other period and subject to such terms as may be
determined by the Committee. In the event that an optionee dies, retires, or
becomes Disabled prior to termination of his option without having fully
exercised his option, the optionee or his successor shall have the right to
exercise the option during its term within a period of three years after the
date of such termination due to death, Disability or retirement, to the extent
that the option was exercisable at the date of termination due to death,
Disability or retirement, or during such other period and subject to such terms
as may be determined by the Committee. For purposes of the Plan, the term
“retirement” shall mean retirement as defined in the Company’s pension plan.

8.   Incentive Stock Options. Incentive stock options shall be evidenced by
stock option agreements in such form and not inconsistent with the Plan as the
Committee shall approve from time to time, which agreements shall contain in
substance the following terms and conditions:

  (a)   Option Price. Except as otherwise provided in subsection 8(b), the
purchase price per share of stock deliverable upon the exercise of an incentive
stock option shall not be less than 100% of the Fair Market Value of the Common
Stock on the day the option is granted, as determined by the Committee.

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  (b)   Exercise of Option. Each stock option agreement shall state the period
or periods of time within which the option may be exercised by the optionee, in
whole or in part, which shall be such period or periods of time as may be
determined by the Committee, provided that the option period shall not commence
earlier than six months after the date of the grant of the option nor end later
than ten years after the date of the grant of the option. The aggregate Fair
Market Value (determined with respect to each incentive stock option at the time
of grant) of the Common Stock with respect to which incentive stock options are
exercisable for the first time by an individual during any calendar year (under
all incentive stock option plans of the Company and its parent and subsidiary
corporations) shall not exceed $100,000. If the aggregate Fair Market Value
(determined at the time of grant) of the Common Stock subject to an option,
which first becomes exercisable in any calendar year, exceeds the limitation of
this Section 8(b), so much of the option that does not exceed the applicable
dollar limit shall be an incentive stock option and the remainder shall be a
nonqualified stock option; but in all other respects, the original option
agreement shall remain in full force and effect. As used in this Section 8, the
words “parent” and “subsidiary” shall have the meanings given to them in Code
Sections 424(e) and 424(f). Notwithstanding anything herein to the contrary, if
an incentive stock option is granted to an individual who owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of its parent or subsidiary corporations, within the
meaning of Code Section 422(b)(6), (i) the purchase price of each share of
Common Stock subject to the incentive stock option shall be not less than one
hundred ten percent (110%) of the Fair Market Value of the Common Stock on the
date the incentive stock option is granted, and (ii) the incentive stock option
shall expire, and all rights to purchase Common Stock thereunder shall cease, no
later than the fifth anniversary of the date the incentive stock option was
granted.     (c)   Payment for Common Stock. Except as otherwise provided in the
Plan or in any stock option agreement, the optionee shall pay the purchase price
of the Common Stock upon the exercise of any option (i) in cash, (ii) in cash
received from a broker-dealer to whom the optionee has submitted an exercise
notice consisting of a fully-endorsed option (however, in the case of an
optionee subject to Section 16 of the 1934 Act, this payment option shall only
be available to the extent such payment procedures comply with Regulation T
issued by the Federal Reserve Bank), (iii) by delivering Common Stock owned by
the optionee for at least six months prior to the date of exercise having an
aggregate Fair Market Value on the date of exercise equal to the option exercise
price, (iv) by such other medium of payment as the Committee in its discretion
shall authorize at the time of grant, or (v) by any combination of (i), (ii),
(iii) and (iv). In the case of an election pursuant to (i) or (ii), cash shall
mean cash or check issued by a federally insured bank or savings and loan
association made payable to NiSource Inc. In the case of a payment pursuant to
(ii) or (iii) above, the optionee’s election must be made on or prior to the
date of exercise and shall be irrevocable. In lieu of a separate election
governing each exercise of an option, an optionee may file a

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      blanket election with the Committee, which shall govern all future
exercises of options until revoked by the optionee. The Company shall issue, in
the name of the optionee, stock certificates representing the total number of
shares of Common Stock issuable pursuant to the exercise of any option as soon
as reasonably practicable after such exercise, provided that any Common Stock
purchased by an optionee through a broker-dealer pursuant to clause (ii) above,
shall be delivered to such broker-dealer in accordance with 12 C.F.R. §
220.3(e)(4), or other applicable provision of law.     (d)   Transferability.
Each stock option agreement shall provide that it is not transferable by the
optionee otherwise by will or the laws of descent or distribution.     (e)  
Rights Upon Termination of Employment. In the event that an optionee ceases to
be an employee for any reason other than death, Disability or retirement, the
optionee shall have the right to exercise the option during its term within a
period of thirty days after such termination to the extent that the option was
exercisable at the date of such termination of employment, or during such other
period and subject to such terms as may be determined by the Committee. In the
event that an optionee dies, retires, or becomes Disabled prior to termination
of his option without having fully exercised his option, the optionee or his
successor shall have the right to exercise the option during its term within a
period of three years after the date of such termination due to death,
Disability or retirement, to the extent that the option was exercisable at the
date of termination due to death, Disability or retirement, or during such other
period and subject to such terms as may be determined by the Committee.
Notwithstanding the foregoing, in accordance with Code Section 422, if an
incentive stock option is exercised more than ninety days after termination of
employment, that portion of the option exercised after such date shall
automatically be a nonqualified stock option, but, in all other respects, the
original option agreement shall remain in full force and effect.

    The provisions of this Section 8 shall be construed and applied, and
(subject to the limitations of Section 24) shall be amended from time to time so
as to comply with Code Section 422 or its successors and regulations issued
thereunder.   9.   Stock Appreciation Rights. Stock appreciation rights shall be
evidenced by stock appreciation right agreements in such form and not
inconsistent with the Plan as the Committee shall approve from time to time,
which agreements shall contain in substance the following terms and conditions:

  (a)   Awards. A stock appreciation right shall entitle the grantee to receive
upon exercise the excess of (i) the Fair Market Value of a specified number of
shares of the Company’s Common Stock at the time of exercise over (ii) a
specified price which shall not be less than 100% of the Fair Market Value of
the Common Stock at the time the stock appreciation right was granted, or, if
connected with a previously issued stock option, not less than 100% of the Fair
Market Value of

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      Common Stock at the time such option was granted. A stock appreciation
right may be granted in connection with all or any portion of a previously or
contemporaneously granted stock option or not in connection with a stock option.
    (b)   Term. Stock appreciation rights shall be granted for a period of not
less than one year nor more than ten years, and shall be exercisable in whole or
in part, at such time or times and subject to such other terms and conditions,
as shall be prescribed by the Committee at the time of grant, subject to the
following:

  (i)   Stock appreciation rights shall be exercisable only during a grantee’s
employment, except that in the discretion of the Committee a stock appreciation
right may be made exercisable for up to thirty days after the grantee’s
employment is terminated for any reason other than death, Disability or
retirement. In the event that a grantee dies, retires, or becomes Disabled
without having fully exercised his stock appreciation rights, the grantee or his
successor shall have the right to exercise the stock appreciation rights during
their term within a period of three years after the date of such termination due
to death, Disability or retirement to the extent that the right was exercisable
at the date of such termination or during such other period and subject to such
terms as may be determined by the Committee.     (ii)   The Committee shall have
the power to permit in its discretion an acceleration of previously determined
exercise terms, within the terms of the Plan, under such circumstances and upon
such terms and conditions as it deems appropriate.

  (c)   Payment. Upon exercise of a stock appreciation right, payment shall be
made in cash, in the form of Common Stock at Fair Market Value, or in a
combination thereof, as the Committee may determine.

10.   Performance Units. Performance Units (“Units”) shall be evidenced by
performance unit agreements in such form and not inconsistent with the Plan as
the Committee shall approve from time to time, which agreements shall contain in
substance the following terms and conditions:

  (a)   Performance Period. At the time of award, the Committee shall establish
with respect to each Unit award a performance period of not less than two, nor
more than five, years.     (b)   Valuation of Units. At the time of award, the
Committee shall establish with respect to each such award a value for each Unit
which shall not thereafter change, or which may vary thereafter determinable
from criteria specified by the Committee at the time of award.     (c)  
Performance Targets. At the time of award, the Committee shall establish maximum
and minimum performance targets to be achieved with respect to each

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      award during the performance period. The participant shall be entitled to
payment with respect to all Units awarded if the maximum target is achieved
during the performance period, but shall be entitled to payment with respect to
a portion of the Units awarded according to the level of achievement of
performance targets, as specified by the Committee, for performance during the
performance period that meets or exceeds the minimum target but fails to meet
the maximum target.         The performance targets established by the Committee
shall relate to corporate, division, or unit performance and may be established
in terms of growth in gross revenue, earnings per share, ratio of earnings to
shareholders’ equity or to total assets, dividend payments and total
shareholders’ return. Multiple targets may be used and may have the same or
different weighting, and they may relate to absolute performance or relative
performance as measured against other institutions or divisions or units
thereof.     (d)   Adjustments. At any time prior to payment of the Units, the
Committee may adjust previously established performance targets and other terms
and conditions, including the corporation’s, or division’s or unit’s financial
performance for Plan purposes, to reflect major unforeseen events such as
changes in laws, regulations or accounting practices, mergers, acquisitions or
divestitures or extraordinary, unusual or non-recurring items or events.     (e)
  Payments of Units. Following the conclusion of each performance period, the
Committee shall determine the extent to which performance targets have been
attained for such period as well as the other terms and conditions established
by the Committee. The Committee shall determine what, if any, payment is due on
the Units. Payment shall be made as soon as practicable after the end of the
applicable Performance Period in cash, in the form of Common Stock at Fair
Market Value, or in a combination thereof, as the Committee may determine.    
(f)   Termination of Employment. In the event that a participant holding a Unit
award ceases to be an employee prior to the end of the applicable performance
period by reason of death, Disability or retirement, his Units, to the extent
earned under the applicable performance targets, shall be payable at the end of
the performance period in proportion to the active service of the participant
during the performance period, as determined by the Committee. Upon any other
termination of employment, participation shall terminate forthwith and all
outstanding Units held by the participant shall be canceled.     (g)   Other
Terms. The Unit agreements shall contain such other terms and provisions and
conditions not inconsistent with the Plan as shall be determined by the
Committee.

11.   Restricted Stock Awards. Restricted stock awards under the Plan shall be
in the form of Common Stock of the Company, restricted as to transfer and
subject to forfeiture, and

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    shall be evidenced by restricted stock agreements in such form and not
inconsistent with the Plan as the Committee shall approve from time to time,
which agreements shall contain in substance the following terms and conditions:

  (a)   Restriction Period. Restricted Common Stock awarded pursuant to the Plan
shall be subject to such terms, conditions, and restrictions, including without
limitation: prohibitions against transfer, substantial risks of forfeiture,
attainment of performance objectives and repurchase by the Company or right of
first refusal, and for such period or periods as shall be determined by the
Committee at the time of grant. The Committee shall have the power to permit in
its discretion, an acceleration of the expiration of the applicable restriction
period with respect to any part or all of the Common Stock awarded to a
participant.         The performance objectives established by the Committee
shall relate to corporate, division or unit performance, and may be established
in terms of growth and gross revenue, earnings per share, ratio of earnings to
shareholder’s equity or to total assets, dividend payments and total
shareholders’ return. Multiple objectives may be used and may have the same or
different weighting, and they may relate to absolute performance or relative
performance as measured against other institutions or divisions or units
thereof.     (b)   Restrictions Upon Transfer. Common Stock awarded, and the
right to vote such Common Stock and to receive dividends thereon, may not be
sold, assigned, transferred, exchanged, pledged, hypothecated, or otherwise
encumbered, except as herein provided, during the restriction period applicable
to such Common Stock. Subject to the foregoing, and except as otherwise provided
in the Plan or a restricted stock award agreement, the participant shall have
all the other rights of a shareholder including, but not limited to, the right
to receive dividends and the right to vote such Common Stock.     (c)  
Certificates. Each certificate issued in respect of Common Stock awarded to a
participant shall be deposited with the Company, or its designee, and shall bear
the following legend:

          “This certificate and the shares represented hereby are subject to the
terms and conditions (including forfeiture and restrictions against transfer)
contained in the NiSource Inc. 1994 Long-Term Incentive Plan and an Agreement
entered into by the registered owner. Release from such terms and conditions
shall be obtained only in accordance with the provisions of the Plan and
Agreement, a copy of each of which is on file in the office of the Secretary of
said Company.”

  (d)   Lapse of Restrictions. A restricted stock agreement shall specify the
terms and conditions upon which any restrictions upon Common Stock awarded under
the Plan shall lapse, as determined by the Committee. Upon the lapse of such

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      restrictions, Common Stock, free of the foregoing restrictive legend,
shall be issued to the participant or his legal representative.     (e)  
Termination Prior to Lapse of Restrictions. In the event of a participant’s
termination of employment, other than due to death, Disability or retirement,
prior to the lapse of restrictions applicable to any Common Stock awarded to
such participant, all Common Stock as to which there still remains unlapsed
restrictions shall be forfeited by such participant without payment of any
consideration to the participant, and neither the participant nor any
successors, heirs, assigns, or personal representatives of such participant
shall thereafter have any further rights or interest in such Common Stock or
certificates.

12.   Contingent Stock Awards. Contingent stock awards under the Plan shall be
in the form of the issuance of Common Stock of the Company following the lapse
of restrictions applicable to such awards. Such awards shall be restricted as to
transfer and subject to forfeiture, and shall be evidenced by contingent stock
award agreements in such form and not inconsistent with the Plan as the
Committee shall approve from time to time, which agreements shall contain in
substance the following terms and conditions:

  (a)   Restriction Period. Contingent stock awards shall be subject to such
terms, conditions and restrictions, including without limitations, prohibitions
against transfer, substantial risk of forfeiture and attainment of performance
objectives, and for such period or periods, as shall be determined by the
Committee at the time of grant. The Committee shall have the power to permit in
its discretion an acceleration of the expiration of the applicable restriction
period with respect to any part or all of a contingent stock award.         The
performance objectives established by the Committee shall relate to corporate,
division or unit performance, and may be established in terms of growth and
gross revenue, earnings per share, ratios of earnings to shareholders’ equity or
to total assets, dividend payments and total shareholders’ return. Multiple
objectives may be used and may have the same or different weighting, and they
may relate to absolute performance or relative performance as measured against
other institutions or divisions or units thereof.     (b)   Lapse of
Restrictions. A contingent stock award agreement shall specify the terms and
conditions upon which any restrictions applicable to such award shall lapse as
determined by the Committee. Upon lapse of such restrictions, Common Stock
subject to such contingent stock award shall be issued to the participant or his
legal representative. Such Common Stock, when issued to the participant or his
legal representative, shall either be free of any restrictions, or shall be
subject to such further restrictions, as the Committee shall determine. In the
event that Common Stock issued pursuant to a contingent stock award are subject
to further restrictions, the certificates issued in respect of the Common Stock
awarded pursuant to the contingent stock award shall be deposited with the
Company, or its designee, and shall bear the legend set forth in subsection
11(c) above. Upon

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      the lapse of such restrictions, Common Stock free of such restrictive
legend shall be issued to the participant or his legal representative.     (c)  
Termination Prior to Lapse of Restrictions. Except as otherwise provided in any
contingent stock award agreement, in the event of a participant’s termination of
employment, other than due to death, Disability or retirement, prior to the
lapse of restrictions applicable to any contingent stock award granted to such
participant, such award, and all Common Stock subject thereto as to which there
still remain unlapsed restrictions, shall be forfeited by such participant
without payment of any consideration to the participant and neither the
participant nor any successors, heirs, assigns or personal representatives of
such participant shall have any further rights or interests in such contingent
stock awards or such Common Stock subject thereto.

13.   Fair Market Value. The Fair Market Value of the Common Stock for purposes
of the Plan shall be such amount set forth in an award agreement that complies
with the definition of fair market value under Code Section 409A, and guidance
and regulations thereunder. If no such amount is set forth in the award
agreement, Fair Market Value shall be the average of the high and low prices on
the New York Stock Exchange Composite Transactions on the date of grant or on
any other applicable date.   14.   Dividend Equivalents. From and after the
date, if any, specified in an applicable incentive stock option agreement, stock
appreciation right agreement not granted in connection with a stock option,
performance unit award agreement or contingent stock award agreement, and except
as otherwise provided in such agreement, the holder of such award shall receive
a distribution of an amount equivalent to the dividends payable in cash or
property (other than stock of the Company) that would have been payable to the
holder with respect to the number of shares of Common Stock subject to such
award, had the holder been the legal owner of such Common Stock on the
applicable date on which such dividend is declared by the Company on Common
Stock. Except as otherwise provided in any contingent stock award agreement, any
such dividend equivalent payable in cash or property (other than stock of the
Company) shall be payable directly to the holder of the applicable award at such
time, in such form, and upon such terms and conditions, as are applicable to the
actual cash or property dividend actually declared with respect to Common Stock.
Except as otherwise provided in any contingent stock award agreement, any
participant entitled to receive a cash dividend equivalent pursuant to his
applicable award agreement may, by written election filed with the Company, at
least ten days prior to the date for payment of such dividend equivalent, elect
to have such dividend equivalent credited to an account maintained for his
benefit under a dividend reinvestment plan maintained by the Company.
Appropriate adjustments with respect to awards shall be made to give effect to
the payment of stock dividends as set forth in subsection 3(b) above.   15.  
General Restrictions. Each award under the Plan shall be subject to the
requirement that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the Common Stock subject or related
thereto upon any securities

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    exchange or under any state or federal law, or (ii) the consent or approval
of any government regulatory body, or (iii) an agreement by the recipient of an
award with respect to the disposition of Common Stock is necessary or desirable
as a condition of, or in connection with, the granting of such award or the
issue or purchase of Common Stock thereunder, such award may not be consummated
in whole or in part unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained, free of any
conditions not acceptable to the Committee.   16.   Rights as a Shareholder. The
recipient of any award under the Plan, unless otherwise provided by the Plan,
shall have no rights as a shareholder with respect thereto unless and until
certificates for Common Stock are issued to the recipient.   17.   Employment
Rights. Nothing in the Plan or in any agreement entered into pursuant to the
Plan shall confer upon any participant the right to continue in employment with
the Company or affect any right which his employer or the Company may have to
terminate the employment of such participant. For purposes of the Plan,
termination of employment shall be deemed to occur on the date the recipient of
an award last performed services for the Company or his employer affiliated with
the Company and shall not be deemed to include any period during which the
recipient is entitled to receive severance pay from the Company or any such
affiliate.   18.   Tax Withholding. Whenever the Company proposes or is required
to issue or transfer Common Stock to a participant under the Plan, the Company
shall have the right to require the participant to remit to the Company an
amount sufficient to satisfy all federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
Common Stock. If such certificates have been delivered prior to the time a
withholding obligation arises, the Company shall have the right to require the
participant to remit to the Company an amount sufficient to satisfy all federal,
state or local withholding tax requirements at the time such obligation arises
and to withhold from other amounts payable to the participant, as compensation
or otherwise, as necessary. Whenever payments under the Plan are to be made to a
participant in cash, such payment shall be net of any amount sufficient to
satisfy all federal, state and local withholding tax requirements. In lieu of
requiring a participant to make a payment to the Company in an amount related to
the withholding tax requirement, the Committee may, in its discretion, provide
that, at the participant’s election, the tax withholding obligation shall be
satisfied by the Company’s withholding a portion of the Common Stock otherwise
distributable to the participant, such Common Stock being valued at its Fair
Market Value at the date of exercise, or by the participant’s delivering to the
Company a portion of the Common Stock previously delivered by the Company, such
Common Stock being valued at its Fair Market Value as of the date of delivery of
such Common Stock by the participant to the Company. For this purpose, the
amount of required withholding shall be a specified rate not less than the
statutory minimum federal, state and local (if any) withholding rate, and not
greater than the maximum federal, state and local (if any) marginal tax rate
applicable to the participant and to the particular transaction. Notwithstanding
any provision of the Plan to the contrary, a participant’s election pursuant to
the preceding sentences (a) must be made on or prior to the date as of

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    which income is realized by the recipient in connection with the particular
transaction, and (b) must be irrevocable. In lieu of a separate election on each
effective date of each transaction, a participant may file a blanket election
with the Committee, which shall govern all future transactions until revoked by
the participant.   19.   Change in Control.

  (a)   Effect of Change in Control. Notwithstanding any of the provisions of
the Plan or any agreement evidencing awards granted hereunder, upon a Change in
Control of the Company (as defined in subsection 19(b)), all outstanding awards
shall become fully exercisable and all restrictions thereon shall terminate in
order that participants may fully realize the benefits thereunder. Further, the
Committee, as constituted before such Change in Control, is authorized, and has
sole discretion, as to any award, either at the time such award is granted
hereunder or any time thereafter, to take any one or more of the following
actions: (i) provide for the exercise of any such award for an amount of cash
equal to the difference between the exercise price and the then Fair Market
Value of the Common Stock covered thereby had such award been currently
exercisable; (ii) make such adjustment to any such award then outstanding as the
Committee deems appropriate to reflect such Change in Control; or (iii) cause
any such award then outstanding to be assumed, by the acquiring or surviving
corporation, after such Change in Control.     (b)   Definition of Change in
Control. A “Change in Control” shall be deemed to take place on the occurrence
of either a “Change in Ownership,” “Change in Effective Control” or a “Change of
Ownership of a Substantial Portion of Assets,” as defined below:

  (i)   Change in Ownership. A Change in Ownership of the Company occurs on the
date that any one person, or more than one Person Acting as a Group (as defined
below), acquires ownership of stock of the Company that, together with stock
held by such person or group, constitutes more than 50% of the total fair market
value or total voting power of the stock of the Company. However, if any one
person or more than one Person Acting as a Group, is considered to own more than
50% of the total fair market value or total voting power of the stock of the
Company, the acquisition of additional stock by the same person or persons is
not considered to cause a Change in Ownership of the Company, as applicable (or
to cause a Change in Effective Control of the Company). An increase in the
percentage of stock owned by any one person, or Persons Acting as a Group, as a
result of a transaction in which the Company acquires its stock in exchange for
property shall be treated as an acquisition of stock. This paragraph (i) applies
only when there is a transfer of stock of the Company (or issuance of stock of
the Company) and stock in the Company remains outstanding after the transaction.

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  (ii)   Change in Effective Control. A Change in Effective Control of the
Company occurs on the date that either —

  (1)   Any one person, or more than one Person Acting as a Group, acquires (or
has acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Company
possessing 35% or more of the total voting power of the stock of the Company; or
    (2)   a majority of members of the Board is replaced during any 12-month
period by directors whose appointment or election is not endorsed by a majority
of the members of the Board prior to the date of the appointment or election,

      In the absence of an event described in paragraph (1) or (2), a Change in
Effective Control of the Company shall not have occurred.         Acquisition of
additional control. If any one person, or more than one Person Acting as a
Group, is considered to effectively control the Company, the acquisition of
additional control of the Company by the same person or persons is not
considered to cause a Change in Effective Control of the Company (or to cause a
Change in Ownership of the Company).     (iii)   Change of Ownership of a
Substantial Portion of Assets. A Change of Ownership of a Substantial Portion of
Assets occurs on the date that any one person, or more than one Person Acting as
a Group, acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) assets from the
Company that have a total gross fair market value equal to or more than 40% of
the total gross fair market value of all of the assets of the Company
immediately prior to such acquisition or acquisitions. For this purpose, gross
fair market value means the value of the assets of the Company, or the value of
the assets being disposed of, determined without regard to any liabilities
associated with such assets.         Transfers to a related person. There is no
Change in Control when there is a transfer to an entity that is controlled by
the shareholders of the Company immediately after the transfer. A transfer of
assets by the Company is not treated as a Change of Ownership of a Substantial
Portion of Assets if the assets are transferred to —

  (1)   A shareholder of the Company (immediately before the asset transfer) in
exchange for or with respect to its stock;     (2)   An entity, 50% or more of
the total value or voting power of which is owned, directly or indirectly, by
the Company;

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  (3)   A person, or more than one Person Acting as a Group, that owns, directly
or indirectly, 50% or more of the total value or voting power of all the
outstanding stock of the Company; or     (4)   An entity, at least 50% of the
total value or voting power of which is owned, directly or indirectly, by a
person described in paragraph (3).

      A person’s status is determined immediately after the transfer of the
assets. For example, a transfer to a corporation in which the Company has no
ownership interest before the transaction, but which is a majority-owned
subsidiary of the Company after the transaction is not treated as a Change of
Ownership of a Substantial Portion of Assets of the Company.     (iv)   Persons
Acting as a Group. Persons shall not be considered to be acting as a group
solely because they purchase or own stock of the same corporation at the same
time or as a result of the same public offering. However, persons shall be
considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the Company. If a person, including an entity,
owns stock in both corporations that enter into a merger, consolidation,
purchase or acquisition of stock, or similar transaction, such shareholder is
considered to be acting as a group with other shareholders in a corporation
prior to the transaction giving rise to the change and not with respect to the
ownership interest in the other corporation.

20.   Disability. A participant has a “Disability” or becomes “Disabled” when he
or she has a condition that (a) causes the participant to be 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 can be
expected to last for a continuous period of not less than 12 months, (b) causes
the participant, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, to receive income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Company or its subsidiaries
or affiliates or (c) causes the participant to be eligible to receive Social
Security disability payments. The Committee, in its sole discretion, shall
determine the date of any Disability.   21.   Amendment or Termination. The
Board or the Committee may at any time terminate, suspend or amend the Plan
without the authorization of shareholders to the extent allowed by law,
including without limitation any rules issued by the Securities and Exchange
Commission under Section 16 of the 1934 Act, insofar as shareholder approval
thereof is required in order for the Plan to continue to satisfy the
requirements of Rule 16b-3 under the 1934 Act, or the rules of any applicable
stock exchange. No

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    termination, suspension or amendment of the Plan shall adversely affect any
right acquired by any participant under an award granted before the date of such
termination, suspension or amendment, unless such participant shall consent; but
it shall be conclusively presumed that any adjustment for changes in
capitalization as provided for herein does not adversely affect any such right.
Subject to the preceding sentence, the Plan as amended and restated effective
January 1, 2005, shall apply to all awards at any time granted hereunder.   22.
  Effect on Other Plans. Unless otherwise specifically provided, participation
in the Plan shall not preclude an employee’s eligibility to participate in any
other benefit or incentive plan and any awards made pursuant to the Plan shall
not be considered as compensation in determining the benefits provided under any
other plan.   23.   Assumption of Options. Pursuant to the terms of Section 5.22
of the Amended and Restated Agreement and Plan of Merger by and among the
Company, Acquisition Gas Company, Inc., a wholly owned subsidiary of the
Company, and Bay State Gas Company (“Bay State”), dated as of December 18, 1997
and amended and restated as of March 4, 1998 and further amended as of
November 16, 1998 (as may be further amended, restated or supplemented, the
“Agreement”), and at the Effective Time defined in the Agreement, each
outstanding stock option issued under the Bay State Gas Company 1989 Key
Employee Stock Option Plan (“Bay State Stock Option Plan”), shall be assumed by
the Company. Each such stock option (“Assumed Option”) shall be deemed to
constitute an option to acquire Common Stock in an amount and at a purchase
price determined pursuant to Section 5.22 of the Agreement. Each Assumed Option
shall be subject to all of the terms and conditions applicable to options
granted under the Plan. Notwithstanding the preceding sentence:

  (a)   if the employment of the holder of an Assumed Option with the Company
and its subsidiaries terminates for any reason other than death, Disability,
retirement or Cause, he, or his legal representatives or beneficiary, may
exercise the Assumed Option at any time within three months immediately
following such termination of employment, but not later than the expiration of
the term of such Assumed Option;     (b)   if the holder of an Assumed Option
that is a non-qualified stock option terminates employment with the Company and
its subsidiaries because of death, Disability or retirement, he, or his legal
representatives or beneficiary, may exercise the Assumed Option at any time
during the term of such Assumed Option to the extent he was entitled to exercise
it at the date of death, Disability or retirement;     (c)   if the holder of an
Assumed Option that is an incentive stock option terminates employment with the
Company and its subsidiaries because of death, his legal representatives or
beneficiary may exercise the Assumed Option at any time during the term of such
Assumed Option to the extent he was entitled to exercise it at the date of
death;

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  (d)   if the holder of an Assumed Option that is an incentive stock option
terminates employment with the Company and its subsidiaries because of
Disability or retirement, he, or his legal representatives or beneficiary, may
exercise the Assumed Option at any time within three months immediately
following such termination of employment, but not later than the expiration of
the term of such Assumed Option;     (e)   if the employment of the holder of an
Assumed Option with the Company and its subsidiaries terminates for Cause, the
Assumed Option shall expire as of the date of such termination of employment.

    For purposes of this Section, “Cause” shall have the same meaning as defined
in the holder’s severance agreement with the Company or any of its subsidiaries
in effect on the date of termination of employment. If the holder has not
entered into a severance agreement with the Company or any subsidiary that is in
effect on the date of termination of employment, or if the term “Cause” is not
defined therein, Cause shall mean the holder’s conviction for the commission of
a felony, or the holder’s fraud or dishonesty which has resulted in or is likely
to result in material economic damage to the Company or any subsidiary.      
Each Assumed Option shall be evidenced by an amended and restated stock option
agreement entered into as of the Effective Time by and among the Company, Bay
State and the applicable optionee.   24.   Duration of the Plan. The Plan shall
remain in effect until all awards under the Plan have been satisfied by the
issuance of Common Stock or the payment of cash, but no award shall be granted
more than ten years after the date the Plan, as amended and restated effective
January 1, 2005, was approved by the shareholders, which shall be its effective
date of adoption.

          IN WITNESS WHEREOF, the Company has caused this Amendment and
Restatement to be executed on its behalf by its officer duly authorized, on this
2nd day of December, 2005.

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

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