Document:

exv10w1

Exhibit 10.1

Section 162(m) Deferred

Compensation Plan

Walgreen Co.

October 1994

 

 

Walgreen Co. Section 162(m) Deferred Compensation Plan

Contents

	 	 	 	 	 
	 	 	Page	 
	Article 1. Establishment and Purposes
	 	 	1	 
	 
	 	 	 	 
	Article 2. Definitions
	 	 	1	 
	 
	 	 	 	 
	Article 3. Administration
	 	 	2	 
	 
	 	 	 	 
	Article 4. Bonus Deferral and Payment
	 	 	3	 
	 
	 	 	 	 
	Article 5. Deferred Compensation Accounts
	 	 	3	 
	 
	 	 	 	 
	Article 6. Rights of Participants
	 	 	4	 
	 
	 	 	 	 
	Article 7. Withholding of Taxes
	 	 	4	 
	 
	 	 	 	 
	Article 8. Amendment and Termination
	 	 	5	 
	 
	 	 	 	 
	Article 9. Miscellaneous
	 	 	5	 
	 
	 	 	 	 

 

 

Walgreen Co.

Section 162(m) Deferred Compensation Plan

Article 1. Establishment and Purposes

     1.1 Establishment. Walgreen Co., an Illinois corporation (the Company), hereby establishes,
effective as of September 1, 1994, a deferred compensation plan for key employees as described
herein, which shall be known as the Walgreen Co. Section 162(m) Deferred Compensation Plan (the
Plan).

     1.2 Purpose. The primary purpose of the Plan is to provide for mandatory deferrals of
compensation by certain key employees of the Company in order to preserve the Company’s tax
deduction for such amounts under Section 162(m) of the Code.

Article 2. Definitions

     Whenever used herein, the following terms shall have the meanings set forth below, and, when
the defined meaning is intended, the term is capitalized:

          (a) Account or Deferred Compensation Account means an individual bookkeeping account
established and maintained for each Participant pursuant to Article 5 herein.

          (b) Board or Board of Directors means the Board of Directors of the Company.

          (c) Code means the Internal Revenue Code of 1986, as amended.

          (d) Committee means the Compensation Committee of the Board or a subcommittee thereof, as
appointed by the Board.

          (e) Company means Walgreen Co., an Illinois corporation, and any subsidiary of the Company.

          (f) Compensation means all compensation or any other remuneration for services performed by
an Eligible Employee which, as determined by the Committee, is subject to the deduction limit under
Code Section 162(m), any successor statute and the regulations promulgated thereunder with respect
to any Year.

          (g) Effective Date means the date the Plan becomes effective, as set forth in Section 1.1
herein.

          (h) Eligible Employee means a “Covered Employee” under Code Section 162(m) and the
regulations promulgated thereunder.

1

 

          i) ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to
time, or any successor Act thereto.

          (j) Participant means an Eligible Employee who is participating in the Plan, as provided in
Section 4.1 herein.

          (k) Plan means the Walgreen Co. Section 162(m) Deferred Compensation Plan.

          (l) Year means the fiscal year of the Company.

Article 3. Administration

     3.1 Authority of the Committee. The Plan shall be administered by the Committee. The members
of such Committee shall be appointed by and shall serve at the discretion of the Board.

          Subject to the provisions herein, the Committee shall have full power to determine which
Eligible Employees of the Company are Participants; to determine the terms and conditions of each
Employee’s participation in the Plan; to construe and interpret the Plan and any agreement or
instrument entered into under the Plan; to establish, amend, or waive rules and regulations for the
Plan’s administration; to amend (subject to the provisions of Article 8 herein) the terms and
conditions of the Plan and any agreement entered into under the Plan; and to make other
determinations which may be necessary or advisable for the administration of the Plan.

     Subject to the terms of the Plan, the Bylaws of the Company and applicable law, the Committee
may delegate any or all of its authority granted under the Plan to any individual or entity,
including but not limited to an executive or executives of the Company.

     3.2 Decisions Binding. All determinations and decisions of the Committee as to any disputed
question arising under the Plan, including questions of construction and interpretation, shall be
final, conclusive, and binding on all parties.

     3.3 Indemnification. Each person who is or shall have been a member of the Committee, or of
the Board, shall be indemnified and held harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by him or her in connection
with or resulting from any claim, action, suit, or proceeding to which he or she may be a party, or
in which he or she may be involved by reason of any action taken or failure to act under the Plan,
and against and from any and all amounts paid by him or her in settlement thereof, with the
Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit,
or proceeding against him or her, provided he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to handle and defend it on
his or her own behalf.

     The foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company’s Articles of Incorporation
or Bylaws, as a matter of law or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.

2

 

Article 4. Bonus Deferral and Payment

     4.1 Eligibility and Participation. Those Eligible Employees whose Compensation exceeds one
million dollars ($1,000,000) in any taxable year of the Company, as determined by the Committee,
shall automatically be deemed to be Participants in the Plan as of the date such Compensation
exceeded one million dollars ($1,000,000).

     4.2 Amount Deferred. The Committee may designate that up to and including one hundred percent
(100%) of Compensation in excess of one million dollars ($1,000,000) payable to a Participant in
any Year shall be deferred pursuant to the terms of the Plan.

     4.3 Length of Deferral. Compensation deferred under the terms of the Plan shall be deferred
until the date such Participant’s Compensation is no longer subject to the deduction limit under
Code Section 162(m), as determined by the Committee.

     4.4 Payment of Deferred Amounts. Payment of deferred amounts together with interest earned
thereon at the end of the deferral period shall be made in cash in one (1) lump sum within
thirty (30) calendar days after the date such Participant is no longer a Covered Employee under
Code Section 162(m), as determined by the Committee; provided, however, that the Committee may
delay payment to such later date as necessary to avoid the application of the deduction limit under
Section 162(m) with respect to Compensation paid to such Participant.

Article 5. Deferred Compensation Accounts

     5.1 Participants’ Accounts. The Committee shall establish and maintain an individual
bookkeeping Account for each Participant deferring Compensation under Article 4 herein. Each
Account shall be credited as of the date the amount of Compensation deferred otherwise would have
become due and payable to the Participant.

     5.2 Interest on Deferred Amounts. Compensation deferred under Article 4 shall accrue interest
on a monthly basis at a monthly compounding rate equal to the prime lending rate of
interest in effect as of the first business day of that month (as quoted by the Company’s then
current leading bank financing source for commercial borrowings), plus the excess of the prime
lending rate over The Federal Funds Rate or such other rate determined by the Committee. Each
Participant’s Deferred Compensation Account shall be credited on the last day of each month, with
interest computed on that month’s beginning balance.

     Interest earned on deferred amounts shall be paid out to Participants at the same time and in
the same manner as the underlying deferred amounts.

     5.3 Charges Against Accounts. There shall be charged against each Participant’s Account any
payments made to the Participant or to his or her beneficiary.

3

 

     5.4 Designation of Beneficiary. Each Participant shall designate a beneficiary or
beneficiaries who, upon the Participant’s death, will receive the amounts that otherwise would have
been paid to the Participant under the Plan. All designations shall be signed by the Participant,
and shall be in such form as prescribed by the Committee. Each designation shall be effective as of
the date delivered to the Senior Vice President, Human Resources, of the Company or such other
officer as may be designated by the Committee.

     Participants may change their designations of beneficiary on such form as prescribed by the
Committee. The payment of amounts deferred under the Plan shall be in accordance with the last
unrevoked written designation of beneficiary that has been signed by the Participant and delivered
by the Participant to the Senior Vice President Human Resources, of the Company or such other
officer as may be designated by the Committee, prior to the Participant’s death.

     In the event that all the beneficiaries named by a Participant pursuant to this Section 5.4
predecease the Participant, the amounts that would have been paid to the Participant or the
Participant’s beneficiaries hereunder shall be paid to the Participant’s estate.

     In the event a Participant does not designate a beneficiary, or for any reason such
designation is ineffective, in whole or in part, the amounts that otherwise would have been paid to
the Participant or the Participant’s beneficiaries under the Plan shall be paid to the
Participant’s estate.

Article 6. Rights of Participants

     6.1 Contractual Obligation. The Plan shall create a contractual obligation on the part of the
Company to make payments from the Participants’ Accounts when due. Payment of deferred amounts and
interest earned thereon shall be made out of the general funds of the Company.

     6.2 Unsecured Interest. No Participant or party claiming an interest in deferred amounts and
interest earned thereon or the Account of a Participant shall have any interest whatsoever in any
specific asset of the Company. To the extent that any party acquires a right to receive payments
under the Plan, such right shall be equivalent to that of an unsecured general creditor of the
Company.

     6.3 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the
Company to terminate any Participant’s employment at any time, nor confer upon any Participant any
right to continue in the employ of the Company.

Article 7. Withholding of Taxes

     The Company shall have the right to require Participants to remit to the Company an amount
sufficient to satisfy Federal, state, and local withholding tax requirements, or to deduct from all
payments made pursuant to the Plan amounts sufficient to satisfy withholding tax requirements.

4

 

Article 8. Amendment and Termination

     The Company hereby reserves the right to amend, modify, or terminate the Plan at any time by
action of the Committee. Except as described below in this Article 8, no such amendment or
termination shall in any material manner adversely affect any Participant’s rights accrued with
respect to deferred amounts and interest earned thereon without the consent of the Participant.

     The Plan is intended to be an unfunded plan maintained primarily to provide deferred
compensation benefits for a select group of management or highly compensated employees within the
meaning of Sections 201, 301, and 401 of ERISA, and therefore, to be exempt from the provisions of
Parts 2, 3, and 4 of Title I of ERISA. Accordingly, the Board may terminate the Plan and commence
termination payout for all or certain Participants, or remove certain employees as Participants, if
it is determined by the United States Department of Labor or a court of competent jurisdiction that
the Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of ERISA
which is not so exempt. If payout is commenced pursuant to the operation of this Article 8, the
payment of such amounts shall be made as provided under Section 4 herein.

Article 9. Miscellaneous

     9.1 Effect on Other Benefit Plans. Amounts deferred under this Plan shall not be considered
compensation for the purposes of any qualified plan maintained by the Company. Such amounts
shall be considered compensation for the purposes of other employee benefit plans or programs,
unless specifically excluded by the provisions of such plans or programs.

     9.2 Notice. Any notice or filing required or permitted to be given to the Company under the
Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail
to the Senior Vice President, Human Resources of the Company or such other officer as may be
designated by the Committee. Notice to the Senior Vice President, Human Resources of the Company or
such other officer, if mailed, shall be addressed to the principal executive offices of the
Company. Notice mailed to a Participant shall be at such address as is given in the records
of the Company. Notices shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or certification.

     9.3 Nontransferability. Participants’ rights to deferred amounts and interest earned thereon
under the Plan may not be sold, transferred, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. In no event shall the Company make
any payment under the Plan to any assignee or creditor of a Participant.

     9.4 Severability. In the event any provision of the Plan shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

     9.5 Gender and Number. Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine; the plural shall include the singular, and the
singular shall include the plural.

5

 

     9.6 Costs of the Plan. All costs of implementing and administering the Plan shall be borne by
the Company.

     9.7 Successors. All obligations of the Company under the Plan shall be binding on any
successor to the Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

     9.8 Applicable Law. The Plan shall be governed by and construed in accordance with the laws
of the state of Illinois.

6

 

WALGREEN CO. SECTION 162(m) DEFERRED COMPENSATION PLAN

AMENDMENT NO. 1

(Effective as of July 9, 2003)

Section 4.4 of the Plan is amended in its entirety to read as follows:

     4.4 Payment of Deferred Amounts. Payment of deferred Compensation amounts, together with
interest earned thereon, shall be made in cash as follows:

	 	(a)	 	Form of Payment. The form of payment shall be in accordance with the election
made by the Participant (on such form or forms provided by the Committee for such purpose),
from among the following options:

	 	(i)	 	One lump sum.

	 	(ii)	 	Annual installments over five, 10 or 15
years, with each annual payment (made on or about January 15) equal
to the remaining deferred Compensation balance (including interest
earned pursuant to Section 5.2 below), divided by the number of
remaining annual payments.

	 	(b)	 	Timing of Payment. Payment of the Participant’s deferred Compensation amounts
shall commence (or, in the case of lump-sum payments, shall be made) no earlier than January 15
of the fiscal year following the fiscal year in which the Participant ceases to be a Covered
Employee under Code Section 162(m) (the “Default Commencement Date”); provided that the
Committee may delay payment (or commencement of payment) to such later date as necessary to
avoid the application of the deduction limit under Section 162(m) with respect to Compensation
paid to such Participant. A Participant may elect (on such form or forms provided by the
Committee for such purpose) to defer commencement of payment to on or about January 15 of any
future year, provided that payment must commence no later than the later of:

	 	(i)	 	On or about the five-year anniversary
of the “Default Commencement Date”; or

	 	(ii)	 	On or about the January 15th
following the Participant’s 65th birthday.

	 	(c)	 	Notwithstanding the foregoing, deferred Compensation with respect to which no timing
and/or form of payment election(s) are made by the Participant (or with respect to which no
such election(s) are made within the prescribed time frame), shall be paid in annual
installments over a five-year period, commencing as of the Default Commencement Date.

 

 

WALGREEN CO. SECTION 162(m) DEFERRED COMPENSATION PLAN

AMENDMENT NO. 2

(Effective as of January 1, 2008)

     1. Section 4.3 of the Plan is amended in its entirety to read as follows:

	 	4.3	 	Length of Deferral. Compensation deferred under the terms of the Plan
shall be deferred until the payment date described in Section 4.4(b) below.

     2. Section 4.4(b) of the Plan is amended in its entirety to read as follows:

	 	(b)	 	Timing of Payment. Payment of the Participant’s deferred
Compensation amounts shall commence (or, in the case of lump-sum payments, shall be
made) on or as soon as practicable after the Default Commencement Date. The
Default Commencement Date shall be January 15 of the fiscal year following the
fiscal year in which the Participant has a termination of employment within the
meaning of Code Section 409A, but in no event earlier than the date which is six
months after such termination of employment. A Participant may elect (on such form
or forms provided by the Committee for such purpose) to defer commencement of
payment to on or about January 15 of any future year, provided that payment must
commence no later than the later of:

	 	(i)	 	On or about the five-year
anniversary of the “Default Commencement Date”; or

	 	(ii)	 	On or about the January
15th following the Participant’s 65th
birthday.

	 	 	 	Any such deferral election must be made prior to the beginning of the Year or Years
in which the deferred compensation subject to the election would otherwise be
earned.

 

 

WALGREEN CO. SECTION 162(m) DEFERRED COMPENSATION PLAN

AMENDMENT NO. 3

(Effective as of October 1, 2009)

1. The heading to Article 4 is amended by replacing the word “Bonus” with the word
“Compensation.”

2. The introductory paragraph to Section 4.4(b) of the Plan is amended in its entirety to read
as follows:

	 	“4.4. 	 	Payment of Deferred Cash Compensation. Payment of deferred cash
Compensation amounts, together with interest earned thereon, shall be made as
follows:”

3. The following new Section 4.5 shall be added to the Plan:

	 	“4.5. 	 	Payment of Deferred Stock or Other Non-Cash Compensation. Payment of
deferred Compensation that is in the form of Company stock or other non-cash
compensation, shall be made as follows:

	 	(a)	 	Method of Payment. Unless otherwise determined by
the Committee, such Compensation shall be settled in full in the form that such
Compensation would have been paid had it not been deferred under this Plan.

	 	(b)	 	Timing of Payment. Such Compensation shall be
settled and distributed as the date as of which deferred cash Compensation is
first paid in accordance with Section 4.4 above (or, to the extent there is no
deferred cash Compensation, as of the date as of which deferred cash
Compensation would first be paid in accordance with Section 4.4 above).”

4. The heading to Section 5.2 is amended by replacing the word “Amounts” with the words “Cash
Compensation.”

 

 

WALGREEN CO. SECTION 162(m) DEFERRED COMPENSATION PLAN

AMENDMENT NO. 4

(Effective as of November 1, 2010)

I.

The Walgreen Co. Section 162(m) Deferred Compensation Plan (the “Plan”) is amended to add the
following sentence to the end of Section 4.2 (Amount Deferred):

     “In its discretion, the Committee may also designate that all or a portion of such excess
Compensation that is attributable to base pay and that is payable to a Participant during a
calendar year shall be deferred pursuant to the terms of the Plan. To the extent that the excess
Compensation that the Committee designates for deferral is attributable to base pay, such
designation must be made on or before January 1 of the calendar year in which such base pay will be
earned. To the extent that the excess Compensation that the Committee designates for deferral is
attributable to a bonus, such designation must be made on or before the first day of the Year in
which the bonus is earned; provided, however, that if the bonus qualifies as “performance-based
compensation” within the meaning of Code Section 409A, such designation may be made on or before
the last day of the sixth month of such Year. In the absence of a specific designation by the
Committee as to the amount of such excess Compensation to be deferred during a Year or calendar
year, the full amount of such excess Compensation shall be deemed to have been designated for
deferral.”

II.

The Walgreen Co. Section 162(m) Deferred Compensation Plan (the “Plan”) is amended to add the
following language to the end of the last sentence of Section 4.4(b) (Payment of Amount
Deferred/Timing of Payment):

     “; provided, however, that should the Committee elect to designate a portion of excess
Compensation attributable to base pay for deferral in a calendar year pursuant to Section 4.2
above, then the Participant’s election to defer payment of such Compensation to a date later than
the Default Commencement Date may be made prior to the first day of the calendar in which the
Compensation subject to the deferral election would otherwise be earned.”exv4w1

Exhibit 4.1

UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO NISOURCE FINANCE CORP. AND NISOURCE
INC. OR THEIR AGENT OR AGENTS FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY GLOBAL
NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.

			
	 	 	 
	No.: [___]
	 	[_________]
	CUSIP No.: 65473QAW3	 	 
	ISIN No.: US65473QAW33	 	 

6.25% Notes due 2040

          NiSource Finance Corp., an Indiana corporation, promises to pay to Cede & Co, or registered
assigns, the principal sum of [_______] Dollars on December 15, 2040.

          Interest Payment Dates: June 15 and December 15, commencing June 15, 2011.

          Record Dates: June 1 and December 1.

 

 

          Additional provisions of this Note are set forth on the other side of this Note.

Dated: [________]

	 	 	 	 	 
	 	NISOURCE FINANCE CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	David J. Vajda 	 
	 	 	Title:  	Vice President, Treasurer and Chief Risk
Officer 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Gary W. Pottorff 	 
	 	 	Title:  	Secretary 	 
	 

TRUSTEE’S CERTIFICATE OF

AUTHENTICATION

This is one of the Notes of the series

referred to in the within-mentioned Indenture.

THE BANK OF NEW YORK MELLON,

as Trustee

	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	 	Authorized Officer 	 	 
	 	 	 	 

 

 

	 	 	 	 	 

6.25% Notes due 2040

1. Interest

          NiSource Finance Corp., an Indiana corporation (such corporation, and its successors and
assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises
to pay interest on the principal amount of this Note at the rate per annum shown above. The
Company will pay interest semiannually on June 15 and December 15 of each year, commencing June 15,
2011. Interest on the Notes will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from December 8, 2010. Interest will be computed on the basis of
a 360-day year of twelve 30-day months. The Company will pay interest on overdue principal and
premium at the above rate and will pay interest on overdue installments of interest at such rate to
the extent lawful.

2. Method of Payment

          The Company will pay interest on the Notes (except defaulted interest) to the Persons who are
registered Holders of Notes at the close of business on the June 1 and December 1 next preceding
the Interest Payment Date even if Notes are canceled after the Record Date and on or before the
Interest Payment Date. Holders must surrender Notes to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United States that at the
time of payment is legal tender for payment of public and private debts. Payments in respect of
the Notes represented by a Global Note (including principal, premium, if any, and interest) will be
made by wire transfer of immediately available funds to the accounts specified by The Depository
Trust Company.

3. Guarantee

          NiSource Inc., a Delaware corporation and parent of the Company, will fully and
unconditionally guarantee to each Holder of the Notes and to The Bank of New York Mellon (as
successor in interest to JPMorgan Chase Bank, N.A. (formerly known as The Chase Manhattan Bank)),
as Trustee (the “Trustee”) under the Indenture (as defined below) and its successors all the
Obligations of the Company under the Notes, including the due and punctual payment of the principal
of, premium, if any, and interest, if any, on the Notes (the “Security Guarantee”). The Security
Guarantee applies whether the payment is due at Stated Maturity, on an Interest Payment Date or as
a result of acceleration, redemption or otherwise. The Security Guarantee includes payment of
interest on the overdue principal of, premium, if any, and interest, if any, on the Notes (if
lawful) and all other Obligations of the Company under the Indenture. The Security Guarantee will
remain valid even if the Indenture is found to be invalid. NiSource Inc. is obligated under the
Security Guarantee to pay any guaranteed amount immediately after the Company’s failure to do so.

 

 

4. Paying Agent and Security Registrar

          Initially, the Trustee will act as Paying Agent and Security Registrar. The Company may
appoint and change any Paying Agent or Security Registrar without notice to the Holders. The
Company may act as Paying Agent or Security Registrar.

5. Indenture

          The Company issued the Notes under an Indenture dated as of November 14, 2000, among the
Company, NiSource Inc. and the Trustee (as supplemented, the “Indenture”) and pursuant to an
Officers’ Certificate of the Company dated December 8, 2010 (the “Officer’s Certificate”). The
terms of the Notes include those stated in the Indenture and the Officer’s Certificate and those
made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. sections
77aaa-77bbbb) as in effect on the date of the Officer’s Certificate (the “Act”). Capitalized terms
used herein and defined in the Indenture but not defined herein have the meanings ascribed thereto
in the Indenture. The Notes are subject to all such terms, and Holders of Notes are referred to
the Indenture and the Act for a statement of those terms.

          The Notes are senior unsecured obligations of the Company. The Notes issued on the Issue Date
will be treated as a single class for all purposes under the Indenture. The Indenture contains
covenants that limit the ability of the Company, NiSource Inc. and their Subsidiaries (other than
Utilities) to incur additional indebtedness and create liens on assets unless the total amount of
all the secured debt would not exceed 10% of Consolidated Net Tangible Assets. These covenants are
subject to important exceptions and qualifications.

6. Optional Redemption

          The Company may redeem all or part of the Notes at any time at its option at a redemption
price equal to the greater of (1) 100% of the principal amount of the Notes being redeemed plus
accrued interest to the Redemption Date or (2) the Make-Whole Amount for the Notes being redeemed.
For purposes of this provision:

          “Make-Whole Amount” means the sum, as determined by a Quotation Agent, of the present values
of the principal amount of the Notes to be redeemed, together with scheduled payments of interest
(exclusive of interest to the Redemption Date) from the Redemption Date to the Stated Maturity of
the Notes, in each case discounted to the Redemption Date on a semi-annual basis, assuming a
360-day year consisting of twelve 30-day months, at the Adjusted Treasury Rate, plus accrued
interest on the principal amount of the Notes being redeemed to the Redemption Date.

          “Adjusted Treasury Rate” means, with respect to any Redemption Date, (i) the yield, under the
heading which represents the average for the immediately preceding week, appearing in the most
recently published statistical release designated “H.15 (519)” or any successor publication which
is published weekly by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to constant maturity under the
caption “Treasury Constant

 

 

Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity
is within three months before or after the remaining term of the Notes, yields for the two
published maturities most closely corresponding to the Comparable Treasury Issue shall be
determined and the Adjusted Treasury Rate shall be interpolated or extrapolated from such yields on
a straight line basis, rounding to the nearest month) or (ii) if such release (or any successor
release) is not published during the week preceding the calculation date or does not contain such
yields, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue assuming a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such Redemption Date, in each case
calculated on the third Business Day preceding the Redemption Date, plus 0.35%.

          “Comparable Treasury Issue” means the United States Treasury security selected by the
Quotation Agent as having a maturity comparable to the remaining term from the Redemption Date to
the Stated Maturity of the Notes that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Notes.

          “Comparable Treasury Price” means, with respect to any Redemption Date, if clause (ii) of the
definition of Adjusted Treasury Rate is applicable, the average of three, or such lesser number as
is obtained by the Company, Reference Treasury Dealer Quotations for such Redemption Date.

          “Quotation Agent” means the Reference Treasury Dealer selected by the Company.

          “Reference Treasury Dealer” means a primary U.S. Government securities dealer selected by the
Company.

          “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Redemption Date, the average, as determined by a Reference Treasury Dealer, of the bid and
asked prices for the Comparable Treasury Issue, expressed in each case as a percentage of its
principal amount, quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m.,
New York City time, on the third Business Day preceding such Redemption Date.

7. Notice of Redemption

          If the Company is redeeming less than all the Notes at any time, the Trustee will select the
Notes to be redeemed using a method it considers fair and appropriate. Notice of redemption will
be mailed by first-class mail at least 30 days but not more than 60 days before the Redemption Date
to each Holder of Notes to be redeemed in accordance with Section 106 of the Indenture. Notes in
denominations larger than $1,000 principal amount may be redeemed in part but only in integral
multiples of $1,000. The Company will not know the exact Redemption Price until three Business
Days before the Redemption Date. Therefore, the notice of redemption will

 

 

only describe how the Redemption Price will be calculated. If money sufficient to pay the
Redemption Price of and accrued interest on all Notes (or portions thereof) to be redeemed on the
Redemption Date is deposited with the Paying Agent on or before the Redemption Date and certain
other conditions are satisfied, on and after such Redemption Date interest will cease to accrue on
such Notes (or such portions thereof) called for redemption.

8. Additional Notes

          The Company may, without the consent of the Holders of the Notes, create and issue Additional
Notes ranking equally with the Notes in all respects, including having the same CUSIP number, so
that such Additional Notes shall be consolidated and form a single series with the Notes and shall
have the same terms as to status, redemption or otherwise as the Notes. No Additional Notes may be
issued if an Event of Default has occurred and is continuing with respect to the Notes.

9. Denominations; Transfer; Exchange

          The Notes are in registered form without coupons in denominations of $1,000 principal amount
and integral multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the
Indenture. The Security Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Security Registrar need not register the transfer or exchange of any Notes
selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the
Note not to be redeemed) for a period of 15 days before a selection of Notes to be redeemed.

10. Persons Deemed Owners

          The registered Holder of this Note may be treated as the owner of it for all purposes.

11. Unclaimed Money

          If money for the payment of principal or interest remains unclaimed for two years, the Trustee
or Paying Agent shall pay the money back to the Company at its request. After any such payment,
Holders entitled to the money must look only to the Company and not to the Trustee, the Paying
Agent or NiSource Inc., as guarantor, for payment.

12. Satisfaction and Discharge

          Under the Indenture, the Company can terminate its obligations with respect to the Notes not
previously delivered to the Trustee for cancellation when those Notes have become due and payable
or will become due and payable at their Stated Maturity within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for giving notice of
redemption. The Company may terminate its obligations with respect to the Notes by depositing with
the Trustee, as

 

 

funds in trust dedicated solely for that purpose, an amount sufficient to pay and discharge
the entire indebtedness on the Notes. In that case, the Indenture will cease to be of further
effect and the Company’s obligations will be satisfied and discharged with respect to the Notes
(except as to the Company’s obligations to pay all other amounts due under the Indenture and to
provide certain Officers’ Certificates and Opinions of Counsel to the Trustee). At the expense of
the Company, the Trustee will execute proper instruments acknowledging the satisfaction and
discharge.

13. Amendment, Waiver

          Subject to certain exceptions set forth in the Indenture, (i) the Indenture and the Notes may
be amended with the written consent of the Holders of at least a majority in principal amount
outstanding of the Notes and (ii) any default or noncompliance with any provision may be waived
with the written consent of the Holders of a majority in principal amount outstanding of the Notes.
Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the
Company and the Trustee shall be entitled to amend the Indenture to cure any ambiguity, omission,
defect or inconsistency, or to evidence the succession of another Person as obligor under the
Indenture, or to add to the Company’s or NiSource Inc.’s covenants or to surrender any right or
power conferred on the Company or NiSource Inc. under the Indenture, or to add events of default,
or to secure the Notes, or to evidence or provide for the acceptance or appointment by a successor
Trustee or facilitate the administration of the trusts under the Indenture by more than one
trustee, or to effect assumption by NiSource Inc. or one of its Subsidiaries of the Company’s
obligations under the Indenture, or to conform the Indenture to any amendment of the Trust
Indenture Act.

14. Defaults and Remedies

          Under the Indenture, Events of Default include: (i) default by the Company in the payment of
any interest upon any Note and the continuance of such default for 60 days; (ii) default by the
Company in the payment of principal of or any premium on any Note when due at Stated Maturity, on
redemption, by declaration or otherwise, and the continuance of such default for three Business
Days; (iii) default by the Company or NiSource Inc. in the performance of or breach of any covenant
or warranty in the Indenture and continuance of such default for 90 days after written notice to
the Company or NiSource Inc. from the Trustee or to the Company, NiSource Inc. and the Trustee from
the Holders of at least 33% in principal amount of the Outstanding Notes; (iv) default by the
Company or NiSource Capital Markets, Inc. under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company or NiSource Capital Markets, Inc., or the Company or
NiSource Capital Markets, Inc. defaults under any mortgage, indenture or instrument under which
there may be issued, secured or evidenced indebtedness constituting a failure to pay in excess of
$50,000,000 of the principal or interest when due and payable, subject to certain cure rights; (v)
the guarantee by NiSource Inc. ceases to be in full force and effect or is disaffirmed or denied
(other than according to its terms), or is found to be unenforceable or invalid; or (vi) certain
events of bankruptcy, insolvency or reorganization of the Company, NiSource Capital Markets, Inc.
or NiSource Inc. If an Event of Default occurs and is continuing,

 

 

the Trustee or the Holders of at least 33% in principal amount of the Notes may declare all
the Notes to be due and payable immediately. Certain events of bankruptcy or insolvency are Events
of Default which will result in the Notes being due and payable immediately upon the occurrence of
such Events of Default.

          Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may refuse to enforce the Indenture or the Notes unless it receives indemnity or security
satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of
the Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold
from Holders notice of any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in the interest of the Holders.

15. Trustee Dealings with the Company

          Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its
individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal
with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were not Trustee.

16. No Recourse Against Others

          A director, officer, employee or stockholder, as such, of the Company, NiSource Inc. or the
Trustee shall not have any liability for any obligations of the Company under the Notes or the
Indenture, or any obligations of NiSource Inc. under the Security Guarantee or the Indenture, or
for any claim based on, in respect of or by reason of such obligations or their creation. By
accepting a Note, each Holder waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Notes and the Security Guarantee.

17. Authentication

          This Note shall not be valid until an authorized signatory of the Trustee (or an
Authenticating Agent) manually signs the certificate of authentication on the other side of this
Note.

18. Abbreviations

          Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM
(=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).

19. CUSIP, ISIN and Common Code Numbers

          Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification
Procedures, the Company has caused CUSIP numbers to be

 

 

printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Holders. To the extent such numbers have been issued, the Company
has caused ISIN and Common Code numbers to be similarly printed on the Notes and has similarly
instructed the Trustee. No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.

20. Governing Law.

          THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK, WITHOUT GIVING EFFECT TO CONTRARY CONFLICT OF LAWS OR CHOICE OF LAWS PROVISIONS OF THE
STATE OF NEW YORK OR ANY OTHER JURISDICTION.

          The Company will furnish to any Holder upon written request and without charge to the Holder a
copy of the Indenture. Requests may be made to:

NiSource Finance Corp.

801 East 86th Avenue

Merrillville, Indiana 46410

Attention: Secretary

 

 

ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

 

 
(Print or type assignee’s name, address and zip code)

 
(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint _____________________ agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.

	 	 	 	 	 	 	 

	Date: ________________________

	 	Your Signature:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 
	 

	 	 	 	Sign exactly as your name appears on the

other side of this Note.

 	 	 

	 	 	 	 	 	 	 

	Signature Guarantee: 
	 
	 
	 

	 	 
	 	 

	 	 
	Signature must be guaranteed

	 	 	 	Signature	 	 

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of
the Security Registrar, which requirements include membership or participation in the Security
Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be
determined by the Security Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.

 

 

SECURITY GUARANTEE

          NiSource Inc. irrevocably and unconditionally guarantees the Obligations of NiSource Finance
Corp., an Indiana corporation (the “Company”) under the 6.25% Notes due 2040 (the “Notes”) of the
Company, including that (i) the principal of, premium, if any, and interest on the Notes shall be
promptly paid in full when due, whether at Stated Maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of, premium, if any, and interest on the Notes, if
lawful, and all other Obligations of the Company to the Holders or the Trustee shall be promptly
paid in full or performed, and (ii) in case of any extension of time of payment or renewal of any
Notes or any such other Obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance
so guaranteed, NiSource Inc. shall be obligated to pay or perform the same immediately.

          The obligations of NiSource Inc. to the Holders and to the Trustee pursuant to this Security
Guarantee and the Indenture are expressly set forth in Article Fifteen of the Indenture, and
reference is hereby made to such Indenture for the precise terms of this Security Guarantee.

          No stockholder, employee, officer, director or incorporator, as such, past, present or future,
of NiSource Inc. shall have any liability under this Security Guarantee by reason of his or its
status as such stockholder, employee, officer, director or incorporator.

          This Security Guarantee shall remain in full force and effect and continue notwithstanding any
petition filed by or against the Company for liquidation or reorganization.

          This Security Guarantee shall not be valid or obligatory for any purpose until the certificate
of authentication on the Note upon which this Security Guarantee is noted shall have been executed
by the Trustee under the Indenture by the manual signature of one of its authorized officers.

          THE TERMS OF ARTICLE FIFTEEN OF THE INDENTURE ARE INCORPORATED HEREIN BY REFERENCE.

 

 

          Capitalized terms used herein have the same meanings given in the Indenture unless otherwise
indicated.

	 	 	 	 	 
	 	NISOURCE INC.

 	 
	 	By:  	 	 
	 	 	Name:  	David J. Vajda 	 
	 	 	Title:  	Vice President, Treasurer and Chief Risk
Officer 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Jon D. Veurink 	 
	 	 	Title:  	Vice President and Chief Accounting
Officer

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