exv10w4



 







Exhibit 10.4




NISOURCE INC.




1994 LONG-TERM INCENTIVE PLAN




As Amended and Restated Effective January 1, 2005




 









 





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	 






i









 





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	 







ii









 








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





 









 






	 	 	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





2









 






	 	 	 	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





3









 






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.





4









 






	 	(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.





5









 






	 	(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





6









 






	 	 	 	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





7









 






	 	 	 	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





8









 






	 	 	 	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





10









 






	 	 	 	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





13









 






	 	 	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;





15









 






	 	(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





16









 






	 	 	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;





17









 






	 	(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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