Document:

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                                                                    Exhibit 10.3

                            SAVINGS RESTORATION PLAN

                        FOR NISOURCE INC. AND AFFILIATES

               AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2004

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 PAGE
                                                                                 ----
<S>                                                                              <C>
ARTICLE I          PURPOSE.....................................................    1

ARTICLE II         DEFINITIONS.................................................    2

     2.1       Affiliated Company..............................................    2

     2.2       Annual Addition.................................................    2

     2.3       Basic Plan......................................................    2

     2.4       Code............................................................    2

     2.5       Committee.......................................................    2

     2.6       Company.........................................................    2

     2.7       DCP.............................................................    3

     2.8       Employee........................................................    3

     2.9       Employer........................................................    3

     2.10      ERISA...........................................................    3

     2.11      Interest........................................................    3

     2.12      Limits..........................................................    3

     2.13      Participant.....................................................    3

     2.14      Plan............................................................    3

     2.15      Plan Year.......................................................    4

     2.16      Supplemental Savings Account....................................    4

ARTICLE III        ELIGIBILITY.................................................    4

     3.1.      Eligibility.....................................................    4

     3.2       Notice of Eligibility to Participants...........................    4

     3.3       Method of Becoming a Participant................................    5

     3.4       Continuation of Participation...................................    5

ARTICLE IV         SUPPLEMENTAL SAVINGS ACCOUNT................................    5

     4.1       Supplemental Savings Account....................................    5

     4.2       Employer Credits................................................    6
</TABLE>

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<TABLE>
<S>                                                                               <C>
     4.3       Participant Credits.............................................    6

     4.4       Interest Credits................................................    6

ARTICLE V          WITHDRAWALS.................................................    7

     5.1       Withdrawals.....................................................    7

     5.2       Limitations on Withdrawals......................................    8

ARTICLE VI         TERMINATION OF PARTICIPATION AND PAYMENT OF BENEFITS........    9

     6.1       Termination of Participation....................................    9

     6.2       Benefits at Termination of Participation.......................    10

     6.3       Time and Method of Payment.....................................    10

ARTICLE VII        ADMINISTRATION OF PLAN.....................................    11

ARTICLE VIII       COMPANY'S RIGHTS TO AMEND OR TERMINATE PLAN................    11

ARTICLE IX         MISCELLANEOUS PROVISIONS...................................    11

     9.1       Definitions....................................................    11

     9.2       Unsecured General Creditor.....................................    12

     9.3       Income Tax Payout..............................................    12

     9.4       General Conditions.............................................    13

     9.5       No Guaranty of Benefits........................................    13

     9.6       No Enlargement of Employee Rights..............................    13

     9.7       Spendthrift Provision..........................................    13

     9.8       Applicable Law.................................................    14

     9.9       Incapacity of Recipient........................................    14

     9.10      Unclaimed Benefit..............................................    14

     9.11      Limitations on Liability.......................................    15

     9.12      Claims Procedure...............................................    15
</TABLE>
                                      -ii-

<PAGE>

                            SAVINGS RESTORATION PLAN
                        FOR NISOURCE INC. AND AFFILIATES

                AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2004

                                   ARTICLE I

                                     PURPOSE

      Prior to January 1, 2004, Columbia Energy Group sponsored the Savings
Restoration Plan for Columbia Energy Group, for eligible executives of Columbia
Energy Group and certain affiliated companies. Effective January 1, 2004,
NiSource Inc., the parent company of Columbia Energy Group assumes sponsorship
of the Savings Restoration Plan for Columbia Energy Group, renames the Plan the
Savings Restoration Plan for NiSource Inc. and Affiliates, and broadens the Plan
to include all employees of NiSource Inc. and Affiliated Companies.

      The purpose of the Plan is to provide for the payment of savings
restoration benefits to employees of NiSource Inc. and Affiliated Companies,
whose benefits under the Basic Plan are subject to the Limits, or affected by
deferrals into the DCP, so that the total savings plan benefits of such
employees will be determined on the same basis as is applicable to all other
employees of the Company. The Plan is adopted solely (1) for the purpose of
providing benefits to Participants in the Plan and their Beneficiaries in excess
of the Limits imposed on qualified plans by Sections 415 and 401(a)(17), and any
other sections, of the Code, by restoring benefits to such Plan Participants and
Beneficiaries that are no longer available under the Basic Plan as a result of
the Limits, and (2) for the purpose of restoring benefits to Plan Participants
and Beneficiaries that are no longer available under the Basic Plan as a result
of the Participant's deferrals into the DCP. The provisions of the Plan apply
only to Participants who actively participate in the Plan on or after January 1,
2004. Any Participant who retired or otherwise terminated employment

                                       1

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with the Company and Affiliated Companies prior to January 1, 2004, shall have
his or her rights determined under the provision of the Plan, as it existed when
his or her employment relationship terminated.

                                   ARTICLE II

                                   DEFINITIONS

      2.1   "Affiliated Company" means an affiliate of NiSource Inc.

      2.2   "Annual Addition" for any Participant means the sum, in any Plan
Year, of:

      (a)   the Company's, or any Affiliated Company's, matching or profit
sharing contributions to the Basic Plan on behalf of the Participant; plus

      (b)   all Participant deposits to the Basic Plan, including before-tax and
after-tax deposits.

For purposes of this Plan, the determination of a Participant's Annual Addition
shall be made without regard to the Limits.

      2.3 "'Basic Plan" means the NiSource Inc. Retirement Savings Plan, as
amended and restated effective January 1, 2002, and as may be further amended
from time to time.

      2.4   "Code" means the Internal Revenue Code of 1986, as amended.

      2.5   "Committee" means the NiSource Inc. and Affiliates Retirement Plan
Administrative and Investment Committee.

      2.6   "Company" means NiSource Inc.

                                       2

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      2.7   "DCP" means the Columbia Energy Group, Deferred Compensation Plan on
or prior to December 31, 2003, and thereafter the NiSource Inc. Executive
Deferred Compensation Plan.

      2.8   "Employee" means any individual who is employed by an Employer on a
basis that involves payment of salary, wages or commissions.

      2.9   "Employer" means the Company or an Affiliated Company whose
Employees participate in the Plan.

      2.10  "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.

      2.11  "Interest" means the average of the prime rates of interest charged
as of the last business day of a month, determined under procedures established
by the Committee.

      2.12  "Limits" means the limits imposed on tax qualified retirement plans
by Sections 415 and 401(a)(17) and any other Sections of the Code.

      2.13  "Participant" means any Employee who is participating in the Plan in
accordance with its provisions.

      2.14  "Plan" means the Savings Restoration Plan for NiSource Inc. and
Affiliates (formerly known as the Savings Restoration Plan for the Columbia
Energy Group, and before that as the Thrift Restoration Plan for the Columbia
Energy Group), as set forth herein.

                                        3

<PAGE>

      2.15  "Plan Year" means the 12-month period commencing each January 1 and
ending the following December 31.

      2.16  "Supplemental Savings Account" means the sum of credits accrued
under Article III on behalf of a Participant, adjusted to reflect Interest
credited to the account, and reduced by any withdrawals under Article V.

                                   ARTICLE III

                                   ELIGIBILITY

      3.1   Eligibility. Any Employee who is participating in the Basic Plan and
(i) whose Annual Addition in any Plan Year will exceed the Limits for the Plan
Year, (ii) whose Compensation in a Plan Year will exceed the Limits, or (iii)
who has deferrals in the DCP excluded for purposes of benefit allocations in the
Basic Plan, will be eligible to become a Participant in the Plan as of January 1
of such Plan Year. If an Employee who was not expected to be eligible to become
a Participant in a given Plan Year subsequently qualifies because his or her
Annual Addition exceeds the Limits for that Plan Year, his or her Compensation
exceeds the Limits for that Plan Year, or because he or she becomes eligible
for, or begins to participate in, the DCP, such Employee will be eligible to
participate in the Plan as soon as practicable after this determination has been
made or deferrals begin.

      3.2   Notice of Eligibility to Participants. The Committee will inform
each Employee of his or her eligibility to participate in the Plan as soon as
practicable but before the earliest date such Employee's participation could
become effective.

                                       4

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      3.3   Method of Becoming a Participant. In order to become a Participant,
each eligible Employee must sign a written agreement with his or her Employer
providing for a reduction of his or her Compensation and a corresponding
direction of Employer contributions or Participant Pre-tax Contributions that
would normally be made to the Basic Plan except for the Limits or deferrals into
the DCP, to be credited to his or her Supplemental Savings Account under this
Plan, to the extent necessary to satisfy the Limits with respect to the Basic
Plan or deferrals into the DCP.

      3.4   Continuation of Participation. A Participant will remain a
Participant so long as his or her Supplemental Savings Account has not been
fully distributed to him or her.

                                   ARTICLE IV

                          SUPPLEMENTAL SAVINGS ACCOUNT

      4.1   Supplemental Savings Account. A Supplemental Savings Account shall
be established for each Participant. The amounts to be credited to a
Participant's Supplemental Savings Account shall be determined under procedures
established by the Committee and shall consist of:

      (a)   Employer credits, as described in Section 4.2; plus

      (b)   Participant credits, as described in Section 4.3; plus

      (c)   Interest credits under Section 4.4.

A Participant's Supplemental Savings Account shall be reduced by any withdrawals
made under Article V.

                                       5

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      4.2   Employer Credits. The amount of Employer credits for a Participant
shall equal (a) minus (b) below:

      (a)   The total amount of Matching Contributions that would otherwise have
            been contributed to the Basic Plan for the Participant without
            regard to the Limits, or deferrals into the DCP;

      (b)   The actual amount of Matching Contributions contributed to the Basic
            Plan for the Participant.

      4.3   Participant Credits. The amount of Participant credits for a
Participant shall equal (a) minus (b) below:

      (a)   The total amount of Pre-tax Contributions that would otherwise have
            been contributed to the Basic Plan for the Participant without
            regard to the Limits or deferrals into the DCP;

      (b)   The actual amount of Pre-tax Contributions contributed to the Basic
            Plan for the Participant.

      4.4   Interest Credits.

      (a)   Interest credits to a Participant's Supplemental Savings Account, if
            applicable, will be considered made on the same day as such amounts
            would otherwise have been credited under the Basic Plan.

                                       6

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      (b)   All credits will accrue Interest starting with the first full
            calendar month in which they are deemed to be a part of the
            applicable Supplemental Savings Account and ending with the last
            full calendar month in which credits are still deemed to be part of
            the Supplemental Savings Account.

      (c)   Interest will be based on the balance of the value of the
            Participant's Supplemental Savings Account as of the first working
            day of the month and credited as of the last working day of the
            calendar month.

      (d)   In the event there is a withdrawal by a Participant from his or her
            Supplemental Savings Account, the value of such Supplemental Savings
            Account, prior to the withdrawal, will be credited with Interest to
            the end of the calendar month in which the withdrawal is actually
            made. The amount at the withdrawal will then be subtracted from the
            balance so determined.

      (e)   Interest will be earned only on monies held under reserve by an
            Employer. If the Committee has invested any portion of a
            Participant's Supplemental Savings Account, Interest shall not be
            earned on such portion, but such Account shall be adjusted for
            actual earnings, gains, and losses on such investment.

                                   ARTICLE V

                                   WITHDRAWALS

      5.1   Withdrawals. Subject to the limitations of Section 5.2, a
Participant, by filing a written request with the Committee, may elect to
withdraw 33%, 67% or 100% of the total amount that has been credited to his or
her Supplemental Savings Account.

                                       7

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      5.2   Limitations on Withdrawals. Any withdrawal under this Article V will
be subject to the following provisions:

      (a)   Only one withdrawal will be permitted in any 12-month period.

      (b)   Withdrawals under this Article V will require suspension of Employer
            credits and Participant credits (but not Interest credits) under
            this Plan for a period of time varying with the percentage of the
            value of the Participant's Supplemental Savings Account which is
            withdrawn, according to the following schedule:

<TABLE>
<CAPTION>
Percentage                       Suspension
----------                       ----------
<S>                              <C>
   33%                            2 months

   67%                            4 months

  100%                            6 months
</TABLE>

This suspension will not affect a Participant's participation in the Basic Plan
nor the basis for determining the Employer contributions or Participant Pre-tax
Contributions under the Basic Plan.

      (c)   Withdrawals under paragraphs (a) and (b) of this Article V will be
            subject to a l0% early distribution penalty.

      (d)   At the written request of a Participant, and in the written
            discretion of the Committee, up to 100% of the balance in a
            Participant's Supplemental Savings Account, determined as of the
            last day of the calendar month prior to the date of distribution,
            may be distributed to a Participant in a lump sum in the case of an
            Unforeseeable Emergency, subject to the limitations set forth below.
            For

                                       8

<PAGE>

            purposes of this paragraph an Unforeseeable Emergency is a severe
            financial hardship of the Participant resulting from a sudden and
            unexpected illness or accident of the Participant or of a dependent
            (as defined in Code Section 152(a)) of the Participant, or loss of
            the Participant's property due to casualty or other similar,
            extraordinary and unforeseeable circumstances arising as a result of
            events beyond the control of the Participant. The circumstances that
            will constitute an Unforeseeable Emergency will depend upon the
            facts of each case, as determined by the Committee in its
            discretion, but in any case payment may not be made to the extent
            that such hardship is or may be relieved:

                  (i)   through reimbursement or compensation by insurance or
                        otherwise;

                  (ii)  by liquidation of the Participant's assets to the extent
                        the liquidation of such assets would not itself cause
                        severe financial hardship; or

                  (iii) by cessation of Participant credits under the Plan.

            Withdrawal of amounts because of an Unforeseeable Emergency shall be
            permitted only to the extent reasonably needed to satisfy the
            Unforeseeable Emergency.

                                   ARTICLE VI

                          TERMINATION OF PARTICIPATION
                             AND PAYMENT OF BENEFITS

      6.1   Termination of Participation. A Participant's participation in this
Plan shall terminate at termination of employment with all Employers for any
reason including separation from service, Disability or death.

                                       9

<PAGE>

      6.2   Benefits at Termination of Participation. Upon his or her
termination of participation in the Plan, a Participant, his or her spouse, or
his or her Beneficiary or legal representative will be entitled to 100 percent
of the value of the Participant's Supplemental Savings Account credited with
Interest, if applicable, through the calendar month preceding the date payment
is made to the Participant (or to his or her spouse, legal representative or
Beneficiary in the case of his or her incapacity or death).

      6.3   Time and Method of Payment. (a) The benefit payable under this Plan
to a Participant or his or her spouse, Beneficiary, or legal representative
shall be paid in the same form under which the Basic Plan benefit is payable to
the Participant or his or her spouse, Beneficiary, or legal representative. The
Participant's election under the Basic Plan of any optional form of payment of
his or her Basic Plan benefit (with the valid consent of his or her surviving
spouse where required under the Basic Plan) shall also be applicable to the
payment of his or her benefit under this Plan.

      (b)   Payment of the benefit under this Plan to a Participant or his or
her spouse, Beneficiary, or legal representative under this Plan shall commence
on the same date as payment of the benefit to the Participant or his or her
spouse, Beneficiary, or legal representative under the Basic Plan commences. Any
election under the Basic Plan made by the Participant with respect to the
commencement of payment of his or her benefit under the Basic Plan shall also be
applicable with respect to the commencement of payment of his or her benefit
under this Plan.

      (c)   Notwithstanding the provisions of paragraphs (a) and (b) above, an
election made by the Participant under the Basic Plan with respect to the form
of payment of his or her benefit thereunder (with the valid consent of his or
her surviving spouse where required under the Basic

                                       10

<PAGE>

Plan), or the date for commencement of payment thereof, shall not be effective
with respect to the form of payment or date for commencement of payment of his
or her benefit under this Plan unless such election is expressly approved in
writing by the Committee with respect to his or her benefit. If the Committee
shall not approve such election in writing, then the form of payment or date for
commencement of payment of the Participant's benefit under this Plan shall be
selected by the Committee at its sole discretion.

                                  ARTICLE VII

                             ADMINISTRATION OF PLAN

      The Plan shall be administered by the Committee.

                                  ARTICLE VIII

                   COMPANY'S RIGHTS TO AMEND OR TERMINATE PLAN

      While the Company intends to maintain the Plan in conjunction with the
Basic Plan, the Company, or the Officer Nomination and Compensation Committee of
the Board of Directors of the Company, reserves the right to amend the Plan at
any time and from time to time, or to terminate it at any time for any reason;
provided, however, that no amendment or termination of the Plan shall impair or
alter such right to a benefit that would have arisen under the Plan as it read
before the effective date of such amendment or termination to or with respect to
any employee who has become a Participant in the Plan before the effective date
of such amendment or termination or with respect to his or her Beneficiary.

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

      9.1   Definitions. The terms used in the Plan, that are defined in the
Basic Plan, shall have the meanings assigned to them in the Basic Plan unless
otherwise defined in the Plan.

                                       11

<PAGE>

      9.2   Unsecured General Creditor. Participants and Beneficiaries shall be
unsecured general creditors, with no secured or preferential right to any assets
of the Company, any other Employer, or any other party for payment of benefits
under the Plan. Obligations of the Company and each other Employer under the
Plan shall be an unfunded and unsecured promise to pay money in the future.

      9.3   Income Tax Payout. Notwithstanding anything to the contrary
contained herein, (a) in the event that the Internal Revenue Service prevails in
its claim that any amount of a benefit payable pursuant to the Plan and held in
the general assets of the Company or any other Employer, constitutes taxable
income to a Participant or his or her Beneficiary for such taxable year of him
or her, prior to the taxable year in which such amount is distributed to him or
her, or (b) in the event that legal counsel satisfactory to the Company, and the
applicable Participant or his or her Beneficiary, renders an opinion that the
Internal Revenue Service would likely prevail in such a claim, the amount of
such benefit held in the general assets of the Company or any other Employer, to
the extent constituting taxable income, shall be immediately distributed to the
Participant or his or her Beneficiary. For purposes of this Section, the
Internal Revenue Service shall be deemed to have prevailed in a claim if such
claim is upheld by a court of final jurisdiction, or if the Participant or
Beneficiary, based upon an opinion of legal counsel satisfactory to the Company
and the Participant or his or her Beneficiary, fails to appeal a decision of the
Internal Revenue Service, or a court of applicable jurisdiction, with respect to
such claim, to an appropriate Internal Revenue Service appeals authority or to a
court of higher jurisdiction within the appropriate time period.

                                       12

<PAGE>

      9.4   General Conditions. Except as otherwise expressly provided herein,
all terms and conditions of the Basic Plan applicable to a Basic Plan benefit
shall also be applicable to a benefit payable hereunder. Any Basic Plan benefit
shall be paid solely in accordance with the terms and conditions of the Basic
Plan and nothing in the Plan shall operate or be construed in any way to modify,
amend or affect the terms and provisions of the Basic Plan.

      9.5   No Guaranty of Benefits. Nothing contained in the Plan shall
constitute a guaranty by the Company or any other Employer or any other entity
or person that the assets of the Company or any other Employer will be
sufficient to pay any benefit hereunder.

      9.6   No Enlargement of Employee Rights. No Participant or Beneficiary
shall have any right to a benefit under the Plan except in accordance with the
terms of the Plan. Establishment of the Plan shall not be construed to give any
Participant or Beneficiary the right to be retained in the service of the
Company or any other Employer.

      9.7   Spendthrift Provision. No interest of any person or entity in, or
right to receive a benefit under, the Plan shall be subject in any manner to
sale, transfer, assignment, pledge, attachment, garnishment, or other alienation
or encumbrance of any kind; nor may such interest or right to receive a benefit
be taken, either voluntarily or involuntarily, for the satisfaction of the debts
of, or other obligations or claims against, such person or entity, including
claims for alimony, support, separate maintenance, and claims in bankruptcy
proceedings. Notwithstanding the preceding sentence, the Supplemental Savings
Account of any Participant shall be subject to and payable in the amount
determined in accordance with any qualified domestic relations order, as that
term is defined in Section 206(d)(3) of ERISA. The Committee shall provide for
payment

                                       13

<PAGE>

of such portion of a Supplemental Savings Account to an alternate payee (as
defined in ERISA Section 206(d)(3)) as soon as administratively possible
following receipt of such order. Any federal, state or local income tax
associated with such payment shall be the responsibility of the alternate payee.
The balance of any Supplemental Savings Account that is subject to any qualified
domestic relations order shall be reduced by the amount of any payment made
pursuant to such order.

      9.8   Applicable Law. The Plan shall be construed and administered under
the laws of the State of Indiana, except to the extent preempted by applicable
federal law.

      9.9   Incapacity of Recipient. If any person entitled to a benefit payment
under the Plan is deemed by the Committee to be incapable of personally
receiving and giving a valid receipt for such payment, then, unless and until
claim therefor shall have been made by a duly appointed guardian or other legal
representative of such person, the Committee may provide for such payment or any
part thereof to be made to any other person or institution then contributing
toward or providing for the care and maintenance of such person. Any such
payment shall be a payment for the account of such person and a complete
discharge of any liability of the Company, any other Employer, the Committee and
the Plan therefor.

      9.10  Unclaimed Benefit. Each Participant shall keep the Committee
informed of his or her current address and the current address of his or her
Beneficiaries. The Committee shall not be obligated to search for the
whereabouts of any person. If the location of a Participant is not made known to
the Committee within three (3) years after the date on which payment of the
Participant's benefit may first be made, payment may be made as though the
Participant had died

                                       14

<PAGE>

at the end of the three-year period. If, within one additional year after such
three-year period has elapsed, or, within three years after the actual death of
a Participant, the Committee is unable to locate any Beneficiary of the
Participant, then the Committee shall have no further obligation to pay any
benefit hereunder to such Participant, Beneficiary, or any other person and such
benefit shall be irrevocably forfeited.

      9.11  Limitations on Liability. Notwithstanding any of the preceding
provisions of the Plan, none of the Company, any other Employer, or any
individual acting as an employee, or agent at the direction of the Company or
any other Employer, or any member of the Committee, shall be liable to any
Participant, former Participant, Beneficiary, or any other person for any claim,
loss, liability or expense incurred in connection with the Plan.

      9.12  Claims Procedure. Claims for benefits under the Plan shall be made
in writing to the Committee. If the Committee wholly or partially denies a claim
for benefits, the Committee shall, within a reasonable period of time, but no
later than 90 days after receiving the claim, notify the claimant in writing of
the denial of the claim. If the Committee fails to notify the claimant in
writing of the denial of the claim within 90 days after the Committee receives
it, the claim shall be deemed denied. A notice of denial shall be written in a
manner calculated to be understood by the claimant, and shall contain:

      (a)   the specific reason or reasons for denial of the claim;

      (b)   a specific reference to the pertinent Plan provisions upon which the
            denial is based;

      (c)   a description of any additional material or information necessary
            for the claimant to perfect the claim, together with an explanation
            of why such material or information is necessary; and

      (d)   an explanation of the Plan's review procedure.

                                       15

<PAGE>

Within 60 days of the receipt by the claimant of the written notice of denial of
the claim, or within 60 days after the claim is deemed denied as set forth
above, if applicable, the claimant may file a written request with the Committee
that it conduct a full and fair review of the denial of the claimant's claim for
benefits, including the conducting of a hearing, if the Committee deems one
necessary. In connection with the claimant's appeal of the denial of his or her
benefit, the claimant may review pertinent documents and may submit issues and
comments in writing. The Committee shall render a decision on the claim appeal
promptly, but not later than 60 days after receiving the claimant's request for
review, unless, in the discretion of the Committee, special circumstances (such
as the need to hold a hearing) require an extension of time for processing, in
which case the 60-day period may be extended to 120 days. The Committee shall
notify the claimant in writing of any such extension. The decision upon review
shall (1) include specific reasons for the decision, (2) be written in a manner
calculated to be understood by the claimant, and (3) contain specific references
to the pertinent Plan provisions upon which the decision is based.

                                       16

<PAGE>

      IN WITNESS WHEREOF, NiSource Inc. has caused this amended and restated
Plan to be executed in its name, by its duly authorized officer, on this 16th
day of April, 2004, effective as of January 1, 2004.

                                           NISOURCE INC.

Date: April 16, 2004                       By: /s/ S. LaNette Zimmerman
                                               ---------------------------

                                           ATTEST:

Date: April 19, 2004                       By: /s/ Gary W. Pottorff
                                               ---------------------------

                                       17<PAGE>

                                                                    Exhibit 10.4

                                  NISOURCE INC.

                              NONEMPLOYEE DIRECTOR
                              STOCK INCENTIVE PLAN

               (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2004)

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                     PAGE
                                                                                     ----
<S>                                                                                  <C>
ARTICLE I         ESTABLISHMENT, PURPOSE, AND DURATION...........................      1

     1.1      Establishment of the Plan..........................................      1
     1.2      Purpose of the Plan................................................      2
     1.3      Duration of the Plan...............................................      2

ARTICLE II        DEFINITIONS....................................................      3

     2.1      Award..............................................................      3
     2.2      Award Agreement....................................................      3
     2.3      Board or Board of Directors........................................      3
     2.4      Change in Control..................................................      3
     2.5      Code...............................................................      3
     2.6      Company............................................................      3
     2.7      Committee..........................................................      3
     2.8      Director...........................................................      4
     2.9      Disability.........................................................      4
     2.10     Employee...........................................................      4
     2.11     Fair Market Value..................................................      4
     2.12     Nonemployee Director...............................................      4
     2.13     Nonqualified Stock Option or NQSO..................................      4
     2.14     Option.............................................................      4
     2.15     Participant........................................................      4
     2.16     Period of Restriction..............................................      5
     2.17     Restricted Stock...................................................      5
     2.18     Restricted Stock Unit..............................................      5
     2.19     Shares.............................................................      5

ARTICLE III       ADMINISTRATION.................................................      5

     3.1      Committee..........................................................      5
     3.2      Administration by the Committee....................................      5
     3.3      Decisions Binding..................................................      5

ARTICLE IV        SHARES AND RESTRICTED STOCK UNITS SUBJECT TO THE PLAN..........      6

     4.1      Number of Shares and Restricted Stock Units........................      6
     4.2      Lapsed Awards......................................................      6
     4.3      Adjustments in Authorized Shares and Restricted Stock Units........      6

ARTICLE V         ELIGIBILITY AND PARTICIPATION..................................      7

     5.1      Eligibility........................................................      7
     5.2      Actual Participation...............................................      7

ARTICLE VI        GRANTS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS..........      7
</TABLE>

                                        i
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                                     PAGE
                                                                                     ----
<S>                                                                                  <C>
     6.1      Initial Grant......................................................      7
     6.2      Special Grant of Restricted Stock Units............................      7
     6.3      Grants Prior to January 1, 2004....................................      8
     6.4      Future Grants On and After January 1, 2004.........................      8
     6.5      Award Agreements...................................................      9
     6.6      Other Restrictions.................................................     10
     6.7      Certificate Legend.................................................     10
     6.8      Restricted Stock Unit Account......................................     10
     6.9      Vesting and Transferability........................................     11
     6.10     Voting and Stock Ownership Rights..................................     12
     6.11     Dividends and Other Distributions..................................     12
     6.12     Payment of Restricted Stock Units..................................     12

ARTICLE VII       NONQUALIFIED STOCK OPTIONS.....................................     13

     7.1      Potential Grants of Options........................................     13
     7.2      Option Award Agreement.............................................     13
     7.3      Option Price.......................................................     13
     7.4      Duration of Options................................................     14
     7.5      Vesting of Shares Subject to Option................................     14
     7.6      Payment............................................................     14
     7.7      Restrictions on Share Transferability..............................     15

ARTICLE VIII      CHANGE IN CONTROL..............................................     15

ARTICLE IX        AMENDMENT, MODIFICATION AND TERMINATION........................     16

     9.1      Amendment, Modification and Termination............................     16
     9.2      Awards Previously Granted..........................................     16

ARTICLE X         GENERAL PROVISIONS.............................................     16

     10.1     Additional Awards..................................................     16
     10.2     Gender and Number..................................................     17
     10.3     Severability.......................................................     17
     10.4     Indemnification....................................................     17
     10.5     Beneficiary Designation............................................     18
     10.6     Termination of Directorship........................................     18
     10.7     Nontransferability of Options......................................     19
     10.8     No Right of Nomination.............................................     21
     10.9     Shares Available...................................................     21
     10.10    Additional Compensation............................................     21
     10.11    Successors.........................................................     21
     10.12    Requirements of Law................................................     21
     10.13    Governing Law......................................................     21
</TABLE>

                                       ii
<PAGE>

                                  NISOURCE INC.
                              NONEMPLOYEE DIRECTOR
                              STOCK INCENTIVE PLAN

               (AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2004)

      WHEREAS, NiSource Inc. (the "Company") adopted the NiSource Inc.
Nonemployee Director Stock Incentive Plan (formerly the NIPSCO Industries, Inc.
Nonemployee Director Stock Incentive Plan), effective February 1, 1992, as last
amended effective December 16, 1997 and February 1, 1998 ("Plan"); and

      WHEREAS, the Company adopted the NiSource Inc. Nonemployee Director
Restricted Stock Unit Plan (formerly the NIPSCO Industries, Inc. Nonemployee
Director Restricted Stock Unit Plan) effective January 1, 1999 ("Stock Unit
Plan") and

      WHEREAS, pursuant to Section 9.1 of the Plan and Section 14 of the Stock
Unit Plan, the Company amended the Plan and the Stock Unit Plan in certain
respects, and merged the Stock Unit Plan into the Plan and restated the merged
Plan in a single document, effective July 1, 2002; and

      WHEREAS, pursuant to Section 9.1 of the Plan, the Company wishes to
further amend and restate the Plan to reflect changes in the structure of
nonemployee director compensation.

      NOW THEREFORE, the Plan is hereby amended and restated, effective January
1, 2004, as follows:

                                    ARTICLE I

                      ESTABLISHMENT, PURPOSE, AND DURATION

      1.1   ESTABLISHMENT OF THE PLAN. NiSource Inc. established an incentive
compensation plan known as the "NiSource Inc. Nonemployee Director Stock
Incentive Plan" (the "Plan"), as set forth in this document. The Plan permits
the grant of Restricted Stock, Nonqualified Stock

<PAGE>

Options and Restricted Stock Units to Nonemployee Directors, subject to the
terms and provisions set forth herein.

            Upon approval by the Board of Directors of the Company, subject to
ratification within twelve (12) months by an affirmative vote of a majority of
Shares present and entitled to vote at the May 20, 2003 annual shareholders
meeting at which a quorum was present, the Plan became effective as of July 1,
2002. All grants of Awards made under the Plan from and after July 1, 2002 and
prior to the date of such approval were conditioned upon such shareholder
approval and would have been null and void if such approval was not obtained by
May 20, 2003.

            Effective July 1, 2002, the Stock Unit Plan was merged into and
become a part of the Plan as amended and restated herein.

      1.2   PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
achievement of long-term objectives of the Company by linking the personal
interests of Nonemployee Directors to those of Company shareholders, enhancing
the interest of Nonemployee Directors in the growth and success of the Company,
and attracting and retaining Nonemployee Directors of outstanding competence.

      1.3   DURATION OF THE PLAN. The Plan, as amended and restated herein, is
effective January 1, 2004 and shall remain in effect, subject to the right of
the Committee to terminate the Plan at any time pursuant to Article IX herein,
until all Shares subject to it shall have been purchased or acquired according
to the Plan's provisions. However, in no event may an Award be granted under the
Plan on or after June 30, 2012.

                                       2
<PAGE>

                                   ARTICLE II

                                   DEFINITIONS

      Whenever used in the Plan, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word is
capitalized:

      2.1   AWARD. "Award" means, individually or collectively, a grant of
Restricted Stock, Nonqualified Stock Options or Restricted Stock Units under the
Plan.

      2.2   AWARD AGREEMENT. "Award Agreement" means an agreement entered into
by and between the Company and a Nonemployee Director, setting forth the terms
and provisions applicable to an Award granted under the Plan.

      2.3   BOARD OR BOARD OF DIRECTORS. "Board" or "Board of Directors" means
the Board of Directors of the Company, and includes any committee of the Board
of Directors designated by the Board to administer part or all of the Plan.

      2.4   CHANGE IN CONTROL. "Change in Control" of the Company shall be
deemed to have occurred if any one of the occurrences of "Change in Control" set
forth in the Change in Control and Termination Agreements between the Company
and certain executive officers thereof shall have been satisfied.

      2.5   CODE. "Code" means the Internal Revenue Code of 1986, as amended
from time to time.

      2.6   COMPANY. "Company" means NiSource Inc., a Delaware corporation, or
any successor thereto as provided in Section 10.11 herein.

      2.7   COMMITTEE. "Committee" means the Corporate Governance Committee of
the Board.

                                       3
<PAGE>

      2.8   DIRECTOR. "Director" means any individual who is a member of the
Board of Directors of the Company.

      2.9   DISABILITY. "Disability" means any physical or mental condition of a
permanent nature which, in the sole judgment of the Committee, based upon the
advice of a competent medical professional selected by the Committee, prevents a
Director from performing his or her duties as a member of the Board.

      2.10  EMPLOYEE. "Employee" means any full-time, nonunion, salaried
employee of the Company. For purposes of the Plan, an individual whose only
employment relationship with the Company is as a Director shall not be deemed to
be an Employee.

      2.11  FAIR MARKET VALUE. "Fair Market Value" means the average of the high
and low prices on the New York Stock Exchange Composite Transactions on the date
of the grant, or on any other applicable date.

      2.12  NONEMPLOYEE DIRECTOR. "Nonemployee Director" means any individual
who is a member of the Board of Directors of the Company, but who is not
otherwise an Employee of the Company.

      2.13  NONQUALIFIED STOCK OPTION OR NQSO. "Nonqualified Stock Option" or
"NQSO" means an option to purchase Shares, granted under Article VII herein that
does not constitute an Incentive Stock Option under Section 422 (or any
successor Section) of the Code.

      2.14  OPTION. "Option" means a Nonqualified Stock Option granted under the
Plan.

      2.15  PARTICIPANT. "Participant" means a Nonemployee Director of the
Company who has outstanding a viable Award granted under the Plan.

                                       4
<PAGE>

      2.16  PERIOD OF RESTRICTION. "Period of Restriction" means the period
during which the transfer of Shares of Restricted Stock is limited in some way,
and the Shares are subject to a substantial risk of forfeiture, as provided in
Article VI herein.

      2.17  RESTRICTED STOCK. "Restricted Stock" means an Award granted to a
Nonemployee Director pursuant to Article VI herein.

      2.18  RESTRICTED STOCK UNIT. "Restricted Stock Unit" means an Award
granted to a Nonemployee Director pursuant to Article VI herein.

      2.19  SHARES. "Shares" means the common shares of NiSource Inc., without
par value.

                                   ARTICLE III

                                 ADMINISTRATION

      3.1   COMMITTEE. The Plan shall be administered by the Committee, subject
to the restrictions set forth in the Plan.

      3.2   ADMINISTRATION BY THE COMMITTEE. The Committee shall have the full
power, discretion and authority to interpret and administer the Plan in a manner
which is consistent with the Plan's provisions. However, except as otherwise set
forth in Section 10.1, in no event shall the Committee have the power to
determine Plan eligibility, or to determine the number, the value, the vesting
period, or the timing, of Awards to be made under the Plan (all such
determinations are automatic pursuant to the provisions of the Plan).
Notwithstanding the preceding sentence, the Committee shall have the authority
to designate whether an upcoming grant of Awards shall consist of Restricted
Stock, Nonqualified Stock Options or Restricted Stock Units.

      3.3   DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan, and all related orders or
resolutions of the Committee,

                                       5
<PAGE>

shall be final, conclusive and binding on all persons, including the Company,
its stockholders, employees, Participants, and their estates and beneficiaries.

                                   ARTICLE IV

              SHARES AND RESTRICTED STOCK UNITS SUBJECT TO THE PLAN

      4.1   NUMBER OF SHARES AND RESTRICTED STOCK UNITS. Subject to adjustment
as provided in Section 4.3 herein, the total number of Shares available for
grant as Awards under the Plan may not exceed an aggregate of 500,000.

      4.2   LAPSED AWARDS. If any Share of Restricted Stock, Option, or
Restricted Stock Unit granted under the Plan terminates, expires or lapses for
any reason, any such Share of Restricted Stock, any Share subject to purchase
pursuant to such Option and any such Restricted Stock Unit again shall be
available for grant under the Plan. Awards shall be subject to such terms and
conditions, in addition to the terms and conditions set forth in the Plan, as
the Committee shall determine.

      4.3   ADJUSTMENTS IN AUTHORIZED SHARES AND RESTRICTED STOCK UNITS.

            (a)   Appropriate adjustments in the aggregate number of Shares and
Restricted Stock Units issuable pursuant to the Plan, the number of Shares and
Restricted Stock Units subject to each outstanding Award granted under the Plan
and the option price with respect to Options, shall be made to give effect to
any increase or decrease in the number of issued Shares resulting from a
subdivision or consolidation of shares, whether through recapitalization, stock
split, reverse stock split, spin-off, spinout 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 outstanding
effected without receipt of consideration by the Company, or any other
occurrence for which the Committee determines an adjustment is appropriate.

            (b)   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 then subject to the Plan, and for each Share
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
Shares of the Company are entitled pursuant to such transaction.

                                       6
<PAGE>

            (c)   Without limiting the generality of the foregoing provisions of
this section, 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 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 or she exercised his or
her 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.

                                    ARTICLE V

                          ELIGIBILITY AND PARTICIPATION

      5.1   ELIGIBILITY. Persons eligible to participate in the Plan are limited
to Nonemployee Directors who are serving on the Board on the date of each grant
under the Plan.

      5.2   ACTUAL PARTICIPATION. All eligible Nonemployee Directors shall
receive grants of Restricted Stock, Options and Restricted Stock Units pursuant
to the terms and provisions set forth in Articles VI and VII herein.

                                   ARTICLE VI

              GRANTS OF RESTRICTED STOCK AND RESTRICTED STOCK UNITS

      6.1   INITIAL GRANT. Each person who was a Nonemployee Director on
February 1, 1992 was then granted two hundred fifty (250) Shares of Restricted
Stock for each year of service as a Nonemployee Director of the Company or its
predecessor (the number of years of service was determined as of the date of the
first annual meeting of shareholders of the Company following February 1, 1992).

            Each person who was a Nonemployee Director on April 14, 1999 was
then granted five hundred (500) Restricted Stock Units.

      6.2   SPECIAL GRANT OF RESTRICTED STOCK UNITS. Each Nonemployee Director
participating in the NiSource Inc. Nonemployee Director Retirement Plan (the
"Retirement

                                       7
<PAGE>

Plan") on December 31, 2001 made an irrevocable election, by written instrument
delivered to the Committee between May 1, 2002 and June 30, 2002, to: (i)
continue his or her participation in the Retirement Plan on and after July 1,
2002 or (ii) terminate his or her participation in the Retirement Plan as of
June 30, 2002 and have the present value of his or her retirement benefit under
Section 5 of the Retirement Plan, determined as of June 30, 2002, converted to
Restricted Stock Units of comparable value and granted to him or her under the
Plan on July 1, 2002. Any Restricted Stock Units granted to a Nonemployee
Director pursuant to this Section 6.2 who had fewer than five (5) Years of
Service on June 30, 2002 shall fully vest upon the completion of such
Nonemployee Director's fifth Year of Service. "Year of Service" means the
12-month period commencing with the first day of the calendar month in which
each annual meeting of the shareholders of the Company takes place, and
throughout which a Nonemployee Director served on the Board as a Nonemployee
Director.

      6.3   GRANTS PRIOR TO JANUARY 1, 2004. Upon each election, reelection or
appointment, as applicable, of a Nonemployee Director to serve on the Board, on
and after July 1, 2002 and prior to January 1, 2004, such Nonemployee Director
was granted twenty-six hundred (2,600) Shares of Restricted Stock and six
hundred (600) Restricted Stock Units, subject to the terms of the Plan. Each
such grant was made as of the first day of the Board term of the newly-elected,
reelected or appointed, as applicable, Nonemployee Director, which began
immediately following such election, reelection or appointment, as applicable.

      6.4   FUTURE GRANTS ON AND AFTER JANUARY 1, 2004.

            (a)   Each Nonemployee Director shall receive a portion of his or
her annual retainer equal to $20,000 in the form of an Award granted in four
equal installments on the last business day of each calendar quarter, commencing
on March 31, 2004. Such Award shall be a grant of Restricted Stock or Restricted
Stock Units, or a combination thereof, as determined by the Committee in its
sole discretion. The number of Shares of Restricted Stock or Restricted

                                       8
<PAGE>

Stock Units, as applicable, constituting such quarterly grant shall be
determined by dividing $5,000 by the Fair Market Value of Shares on the last
business day of the relevant quarter.

            (b)   Each Nonemployee Director elected, reelected or appointed on
the date of an Annual Meeting of Shareholders shall receive an additional Award
equal to $30,000 for each full Year in the term for which he or she is elected,
reelected or appointed, granted upon the date of such election, reelection or
appointment, as applicable, of such Nonemployee Director to serve on the Board,
on and after May 11, 2004. Such additional Award shall be a grant of Restricted
Stock or Restricted Stock Units, or a combination thereof, as determined by the
Committee in its sole discretion. The number of Shares of Restricted Stock or
Restricted Stock Units, as applicable, constituting such grant shall be
determined by dividing the total value of the grant under this subsection (b) by
the Fair Market Value of Shares on the date of the Annual Meeting of
Shareholders coincident with such election, reelection or appointment, or if the
Annual Meeting of Shareholders is not held on a business day, the first business
day preceding the date of such Meeting.

            (c)   Each Nonemployee Director elected or appointed on a date other
than the date of an Annual Meeting of Shareholders shall receive an additional
Award equal to $30,000 for each full Year in the term for which he or she is
elected or appointed, granted upon the date of such election or appointment, as
applicable, of such Nonemployee Director to serve on the Board, on and after May
11, 2004; such Nonemployee Director shall receive an additional Award with
respect to any fractional Year in the term for which he or she is elected or
appointed equal to $2,500 for each full month of the term from the date of
election or appointment to the date of the first Annual Meeting of Shareholders
next following such election or appointment, granted upon the date of such
election or appointment, as applicable, of such Nonemployee Director to serve on
the Board, on and after May 11, 2004. Such additional Award shall be a grant of
Restricted Stock or Restricted Stock Units, or a combination thereof, as
determined by the Committee in its sole discretion. The number of Shares of
Restricted Stock or Restricted Stock Units, as applicable, constituting such
grant shall be determined by dividing the total value of the grant under this
subsection (c) by the Fair Market Value of Shares on the date of the election or
appointment of such Nonemployee Director, or if the election or appointment does
not occur on a business day, the first business day preceding such election or
appointment.

            (d)   For purposes of subsections (b) and (c), Year shall mean each
period commencing on the date of an Annual Meeting of Shareholders and ending on
the date of the next Annual Meeting of Shareholders.

      6.5   AWARD AGREEMENTS.

            (a)   Each Restricted Stock grant under the Plan shall be evidenced
by a Restricted Stock Award Agreement that shall specify the Period(s) of
Restriction, the number of Restricted Stock Shares granted and such other
provisions as the Committee shall determine consistent with the Plan.

            (b)   Each Restricted Stock Unit grant under the Plan may, in the
Committee's sole discretion, be evidenced by a Restricted Stock Unit Award
Agreement that shall specify the

                                       9
<PAGE>

vesting period of Restricted Stock Units, the number of Restricted Stock Units
granted and such other provisions as the Committee shall determine consistent
with the Plan.

      6.6   OTHER RESTRICTIONS. The Committee shall impose such other
restrictions on any Shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable, including restrictions imposed under Section 7.7 hereof.
Any restriction imposed on Shares of Restricted Stock shall be included in a
legend appearing on the certificates representing Shares of Restricted Stock.

      6.7   CERTIFICATE LEGEND. In addition to any legends placed on
certificates pursuant to Section 6.6 herein, each certificate representing
Shares of Restricted Stock granted pursuant to the Plan shall bear the following
legend:

      "The sale or other transfer of the Shares of stock represented by this
      certificate, whether voluntary, involuntary or by operation of law, is
      subject to certain restrictions on transfer as set forth in the NiSource
      Inc. Nonemployee Director Stock Incentive Plan, and in a Restricted Stock
      Award Agreement. A copy of the Plan and such Restricted Stock Award
      Agreement may be obtained from the Secretary of NiSource Inc."

      6.8   RESTRICTED STOCK UNIT ACCOUNT. Restricted Stock Units granted to a
Nonemployee Director under the Plan shall be credited to a Restricted Stock Unit
Account (the "Account") established and maintained for such Nonemployee
Director. The Account of a Nonemployee Director shall be the record of
Restricted Stock Units granted to him or her under the Plan. The Account is
solely for accounting purposes and shall not require a segregation of any assets
of the Company. Each Restricted Stock Unit shall be valued by the Committee, in
the manner provided in Section 6.12, as of the date of payment thereof. Each
grant of Restricted Stock Units under the Plan to a Nonemployee Director and the
value of such Restricted Stock Units as of the date of grant shall be
communicated by the Committee in writing to the Nonemployee Director within
thirty (30) days after the date of grant.

                                       10
<PAGE>

      6.9   VESTING AND TRANSFERABILITY. Except as otherwise provided in the
Plan, all Restricted Stock Units granted under the Plan shall vest, and in the
case of Restricted Stock shall become freely transferable, by the Participant
according to the following schedule:

<TABLE>
<CAPTION>
                                 Annual                             Cumulative
                         Percentage of Units or                Percentage of Units or
 Anniversary              Shares Which Vest or               Shares Which are Vested or
of Grant Date          Become Freely Transferable            Became Freely Transferable
-------------          --------------------------            --------------------------
<S>                    <C>                                   <C>
      1                            20%                                   20%
      2                            20%                                   40%
      3                            20%                                   60%
      4                            20%                                   80%
      5                            20%                                   100%
</TABLE>

            Regardless of the schedule set forth above, all Shares of Restricted
Stock and Restricted Stock Units held by a Participant or credited to a
Participant's Account, as applicable, shall immediately become one hundred
percent (100%) freely transferable or vested, as applicable, upon the first to
occur of the following:

            (a)   The completion of the schedule set forth above (or in Section
6.2, if applicable);

            (b)   The death of the Participant;

            (c)   The Disability of the Participant;

            (d)   The retirement of the Participant from service on the Board
prior to death or Disability and after attaining the age of seventy (70) years;
or

            (e)   The effective date of a Change in Control of the Company.

            However, in no event may any Shares of Restricted Stock granted
under the Plan become freely transferable by a Participant prior to six (6)
months following the date of its grant. Upon becoming freely transferable, each
Participant shall be entitled to have the legend required by Section 6.6 and/or
Section 6.7 removed from his or her Share certificates.

                                       11
<PAGE>

      6.10  VOTING AND STOCK OWNERSHIP RIGHTS.

            (a)   During the Period of Restriction, except as set forth in the
applicable Restricted Stock Award Agreement, a Participant holding Shares of
Restricted Stock granted hereunder may exercise full voting and other stock
ownership rights with respect to such Shares.

            (b)   Except as set forth in Section 6.11(b), no Participant shall
be entitled to any voting or other stock ownership rights with respect to Shares
attributable to Restricted Stock Units granted under the Plan.

      6.11  DIVIDENDS AND OTHER DISTRIBUTIONS.

            (a)   During the Period of Restriction, Participants holding Shares
of Restricted Stock granted hereunder shall be entitled to receive all dividends
and other distributions paid with respect to such Shares while they are so held.
Any such dividends or distributions shall be fully vested and shall be paid to
Participants on the date such dividends are actually paid to shareholders of the
Company.

            (b)   Additional Restricted Stock Units shall be credited to each
Participant's Account with respect to Restricted Stock Units included in such
Account from time to time, to reflect dividends paid to stockholders of the
Company with respect to Shares. The additional Restricted Stock Units credited
before January 1, 2004 shall be granted at such time or times and shall be
subject to such terms and conditions, in addition to the terms and conditions
set forth in the Plan, as the Committee shall determine. The additional
Restricted Stock Units credited on or after January 1, 2004 shall be fully
vested and granted on the date such dividends are actually paid to shareholders
of the Company

      6.12  PAYMENT OF RESTRICTED STOCK UNITS.

            (a)   Except as provided in paragraph (b) or (c) below, upon a
Participant's termination of service on the Board for any reason other than for
Cause (as defined in Section 10.6), the Participant shall be entitled to receive
from the Company, with respect to each then vested Restricted Stock Unit in the
Participant's Account, a number of Shares with an aggregate Fair Market Value on
the date of payment equal to the aggregate Fair Market Value of such vested
Restricted Stock Units. Payment to a Participant for Restricted Stock Units
shall be made in Shares in a single payment within sixty (60) days after the
date of termination of the Participant's service on the Board.

            (b)   Restricted Stock Units in the Participant's Account granted
pursuant to Section 6.2, and additional Restricted Stock Units with respect
thereto credited pursuant to Section 6.11(b), shall be paid to the Participant
in a single payment within six (6) months after the date of the Participant's
termination of service on the Board. Payment to a Participant for such
Restricted Stock Units shall be made in the form of a number of Shares with an
aggregate Fair Market Value on the date of payment equal to the aggregate Fair
Market Value of such vested Restricted Stock Units in the Participant's Account
on the date of payment.

                                       12
<PAGE>

            (c)   With respect to Restricted Stock Units granted pursuant to
Section 6.4, and additional Restricted Stock Units with respect thereto credited
pursuant to Section 6.11(b), on or after January 1, 2004, upon a Participant's
termination of service on the Board for any reason other than for Cause (as
defined in Section 10.6), the Participant shall be entitled to receive from the
Company, with respect to such then vested Restricted Stock Units in the
Participant's Account, a number of Shares with an aggregate Fair Market Value on
the date of payment equal to the aggregate Fair Market Value of such vested
Restricted Stock Units. Payment to a Participant for Restricted Stock Units
shall be made in Shares in a single payment six (6) months after the date of
termination of the Participant's service on the Board, or as soon as
administratively practicable thereafter.

            (d)   A Participant shall be credited with additional Restricted
Stock Units pursuant to Section 6.11(b) on the value of his or her Restricted
Stock Units with respect to the period between his or her termination of service
on the Board and the receipt of payment under the Plan.

                                   ARTICLE VII

                           NONQUALIFIED STOCK OPTIONS

      7.1   POTENTIAL GRANTS OF OPTIONS. In the event that the Committee
properly designates (pursuant to Section 3.2 herein) that a scheduled Award
under Section 6.4 shall consist of Options rather than Restricted Stock or
Restricted Stock Units, then each eligible Nonemployee Director shall be granted
an Option to purchase a number of Shares so that the Option shall have a value,
as determined by the Committee in its sole discretion, equal to the value of the
Restricted Stock or Restricted Stock Units that would otherwise have been
awarded, subject to the terms and provisions of the Plan.

      7.2   OPTION AWARD AGREEMENT. Each Option grant shall be evidenced by an
Option Award Agreement that shall specify the Option Price, the duration of the
Option, the number of Shares available for purchase under the Option, and such
other provisions as the Committee shall determine.

      7.3   OPTION PRICE. The purchase price per Share available for purchase
under an Option shall equal the Fair Market Value of a Share on the date the
Option is granted.

                                       13
<PAGE>

      7.4   DURATION OF OPTIONS. Each Option shall expire on the tenth (10th)
anniversary date of its grant.

      7.5   VESTING OF SHARES SUBJECT TO OPTION. Subject to Section 10.6,
Participants shall be entitled to exercise Options at any time and from time to
time, but no sooner than the time period beginning six (6) months after the
grant of the Option and ending ten (10) years after the grant of the Option, and
according to the following vesting schedule:

<TABLE>
<CAPTION>
                               Annual                   Cumulative
 Anniversary               Percentage of              Percentage of
of Grant Date            Options Which Vest      Options Which are Vested
-------------            ------------------      ------------------------
<S>                      <C>                     <C>
      1                         20%                        20%
      2                         20%                        40%
      3                         20%                        60%
      4                         20%                        80%
      5                         20%                       100%
</TABLE>

Regardless of the vesting schedule set forth above, all Options held by a
Participant shall immediately become one hundred percent (100%) vested upon the
first to occur of the following:

            (a)   The completion of the vesting schedule set forth above;

            (b)   The death of the Participant;

            (c)   The Disability of the Participant;

            (d)   The retirement of the Participant from service on the Board
prior to death or Disability and after attaining the age of seventy (70) years;
or

            (e)   The effective date of a Change in Control of the Company.

      7.6   PAYMENT. Options shall be exercised by the delivery of a written
notice of exercise to the Secretary of the Company, setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by full
payment for the Shares.

                                       14
<PAGE>

            The Option Price upon exercise of any Option shall be payable to the
Company in full either: (i) in cash or its equivalent, or (ii) by tendering
previously acquired Shares having a Fair Market Value at the time of exercise
equal to the total Option Price of the Shares for which the Option is being
exercised (provided that the Shares tendered upon Option exercise have been held
by the Participant for at least six (6) months prior to their tender to satisfy
the Option Price), or (iii) by a combination of (i) and (ii). The proceeds from
such a payment shall be added to the general funds of the Company and shall be
used for general corporate purposes.

            As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased pursuant to the exercise of the Option.

      7.7   RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee shall impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities laws, under the requirements of
any stock exchange or market upon which such Shares are then listed and/or
traded, and under any blue sky or state securities laws applicable to such
Shares.

                                  ARTICLE VIII

                                CHANGE IN CONTROL

      In the event of a Change in Control of the Company, all Awards granted
under the Plan that are still outstanding and not yet vested or freely
transferable, shall become immediately one hundred percent (100%) vested and
freely transferable for each Participant, as of the effective date of the Change
in Control, and shall remain as such for the remaining life of the Award, as
such life is provided herein, and within the provisions of the related Award
Agreements. All

                                       15
<PAGE>

Options that are outstanding as of the effective date of the Change in Control
shall remain exercisable for the remaining lives of the Options.

                                   ARTICLE IX

                     AMENDMENT, MODIFICATION AND TERMINATION

      9.1   AMENDMENT, MODIFICATION AND TERMINATION. Subject to the terms set
forth in this Section 9.1, the Committee may terminate, amend or modify the Plan
at any time and from time to time; provided, however, that the provisions set
forth in the Plan regarding the amount of securities to be awarded to
Nonemployee Directors, the price of securities to be awarded to Nonemployee
Directors, and the timing of Awards to Nonemployee Directors, may not be amended
more than once within any six (6) month period.

            Amendment or termination of the Plan may occur without the approval
of the shareholders of the Company (except as may be required by law or by any
national securities exchange or system on which the Shares are then listed or
reported, or by a regulatory body having jurisdiction with respect hereto).

      9.2   AWARDS PREVIOUSLY GRANTED. Unless required by law, no termination,
amendment or modification of the Plan shall in any manner adversely affect any
Award previously granted under the Plan without the written consent of the
Participant holding the Award.

                                    ARTICLE X

                               GENERAL PROVISIONS

      10.1  Additional Awards. In addition to any Award received pursuant to
Section 6.3, 6.4 or 7.1, each Nonemployee Director who first serves on the Board
on or after January 1, 2002, and each Nonemployee Director who served on the
Board on December 31, 2001 and who

                                       16
<PAGE>

elected to discontinue participation in the NiSource Inc. Nonemployee Director
Retirement Plan on and after July 1, 2002, shall receive a grant of Shares of
Restricted Stock upon each election, reelection or appointment, as applicable,
to the Board on or after July 1, 2002. At the discretion of the Committee, such
grant may be in any combination of Shares of Restricted Stock, and Restricted
Stock Units, as determined by the Committee. Such Award shall have an aggregate
value, as determined by the Committee, based on information provided by the
management of the Company, that ensures that the Award, together with other
compensation paid to the Nonemployee Director for service on the Board, delivers
a compensation package to the Nonemployee Director competitive with the
nonemployee director compensation packages offered by companies in the same or
similar industries as that of the Company.

      10.2  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.

      10.3  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.

      10.4  INDEMNIFICATION. Each individual who is or shall have been a member
of the Committee 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

                                       17
<PAGE>

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 individuals may be entitled under
the Company's Articles of Incorporation or By-laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

      10.5  BENEFICIARY DESIGNATION. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in the event of his or her death (and/or who may exercise the Participant's
vested Options following his or her death). Each designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Committee, and shall be effective only when filed by the Participant in writing
with the Committee during his or her lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate (and, subject to the terms and provisions of the
Plan, any unexercised vested Options may be exercised by the administrator or
executor of the Participant's estate).

      10.6  TERMINATION OF DIRECTORSHIP. In the event a Participant ceases to be
a Director for any reason other than death, Disability, retirement from service
on the Board after attaining the age of seventy (70) years, or a Change in
Control of the Company, all Shares of Restricted Stock, all Options and all
Restricted Stock Units that have not vested or become freely transferable on or
prior to the date of the occurrence of such event shall terminate and be

                                       18
<PAGE>

forfeited and neither the Participant nor his or her heirs, personal
representatives, successors or assigns shall have any future rights with respect
to any such Shares of Restricted Stock, Options and Restricted Stock Units. All
Options that are vested as of such date shall remain exercisable for six (6)
months following the date the Director's service on the Board terminates, or
until their expiration date, whichever period is shorter.

            Notwithstanding any other provision of the Plan, in the event a
Participant is discharged from service on the Board for Cause, all rights to any
Shares of Restricted Stock that have not become freely transferable, any vested
or unvested Options granted on and after July 1, 2002, and any vested or
unvested Restricted Stock Units shall be discontinued and forfeited, and the
Company shall have no further obligation hereunder to such Participant or any
other person. For purposes of the Plan, "Cause" shall mean:

            (a)   the Participant's conviction of any criminal violation
involving dishonesty, fraud or breach of trust;

            (b)   the Participant's willful engagement in any misconduct in the
performance of his or her duty that materially injures the Company;

            (c)   the Participant's performance of any act which, if known to
the customers or stockholders of the Company, would materially and adversely
impact the business of the Company; or

            (d)   the Participant's willful and substantial nonperformance of
assigned duties.

            The Committee shall have sole discretion with respect to the
application of the provisions of subsections (a)-(d) next above, and such
exercise of discretion shall be conclusive and binding upon the Participant and
all other persons.

      10.7  NONTRANSFERABILITY OF OPTIONS. No Share of Restricted Stock (until
the end of the applicable Period of Restriction specified in the Restricted
Stock Award Agreement), Option or Restricted Stock Unit granted under the Plan
may be sold, transferred, pledged, assigned, or

                                       19
<PAGE>

otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. In the event of a Participant's death, payment of any
amount due under the Plan shall be made to the duly appointed and qualified
executor or other personal representative of the Participant's estate to be
distributed in accordance with the Participant's will or applicable intestacy
law; or in the event that there shall be no such representative duly appointed
and qualified within six (6) months after the date of death of such deceased
Participant, then to such persons as, at the date of his or her death, would be
entitled to share in the distribution of such deceased Participant's personal
estate under the provisions of the applicable statute then in force governing
the descent of intestate property, in the proportions specified in such statute.
All Options granted to a Participant under the Plan shall be exercisable, during
his or her lifetime, only by such Participant.

            Notwithstanding the preceding provisions of this Section, a
Participant, at any time prior to his or her death, may assign all or any
portion of an Award granted to him or her under the Plan to (i) his or her
spouse or lineal descendant, (ii) the trustee of a trust for the primary benefit
of his or her spouse or lineal descendant or (iii) a tax-exempt organization as
described in Section 501(c)(3) of the Code. In such event, the spouse, lineal
descendant, trustee, or tax-exempt organization shall be entitled to all of the
rights of the Participant with respect to the assigned portion of such Award,
and such portion of the Award shall continue to be subject to all of the terms,
conditions and restrictions applicable to the Award as set forth herein, and in
the related Award Agreement, immediately prior to the effective date of the
assignment. Any such assignment shall be permitted only if (A) the Participant
does not receive any consideration therefor, and (B) 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

                                       20
<PAGE>

Participant, and a copy thereof shall be delivered to the Committee or its
delegate on or prior to the effective date of the assignment.

      10.8  NO RIGHT OF NOMINATION. Nothing in the Plan shall be deemed to
create any obligation on the part of the Board to nominate any Director for
reelection by the Company's shareholders.

      10.9  SHARES AVAILABLE. The Shares made available pursuant to Awards under
the Plan may be either authorized but unissued Shares or Shares which have been
or may be reacquired by the Company, as determined from time to time by the
Committee.

      10.10 ADDITIONAL COMPENSATION. Awards granted under the Plan shall be in
addition to any additional annual retainer, attendance fees or other
compensation payable to each Participant as a result of his or her service on
the Board.

      10.11 SUCCESSORS. All obligations of the Company under the Plan, with
respect to Awards granted hereunder, 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.

      10.12 REQUIREMENTS OF LAW. The granting of Awards under the Plan shall be
subject to all applicable laws, rules and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.

      10.13 GOVERNING LAW. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Indiana.

                                       21
<PAGE>

      IN WITNESS WHEREOF, the Company has caused the amended and restated Plan
to be signed on this 29th day of April 2004, effective as of January 1, 2004.

                                          NISOURCE INC.

                                          By: /s/ S. LaNette Zimmerman
                                              --------------------------------

                                       22

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