Document:

EX-10.2

 Exhibit 10.2 
  

			
	

	 	U.S. Department of Justice
	 	Andrew E. Lelling
	 	United States Attorney
	 	 District of Massachusetts

 

	  
 Main Reception: (617)
748-3100
	 	  
 John Joseph Moakley United States Courthouse

		 	1 Courthouse Way
		 	Suite 9200
		 	Boston, Massachusetts 02210
		
		 	February 25, 2020

 Alejandro N. Mayorkas, Esq. 

WilmerHale, LLP 
 1875 Pennsylvania Avenue NW 

Washington, DC 20006 
  

	 	Re:	 United States v. Bay State Gas Company, d/b/a Columbia Gas of Massachusetts 

Criminal No. 
 Dear Counsel: 

The United States Attorney for the District of Massachusetts (“the U.S. Attorney”) and your client, Bay State Gas Company, doing
business as (“d/b/a”) Columbia Gas of Massachusetts (“Defendant”), agree as follows with respect to the above-referenced case: 
  

	 	1.	 Change of Plea 

At the earliest practicable date, Defendant will waive Indictment and plead guilty to Count One of the Information, attached to this agreement
as Exhibit A, charging the Knowing and Willful Failure to Prepare and Follow a Procedure for the Starting Up and Shutting Down of a Pipeline Designed to Assure Operation within the Maximum Allowable Operating Pressure, in violation of 49
U.S.C. § 60123(a), 49 U.S.C. § 60118(a), and 49 C.F.R. §§ 192.605(a) and 192.605(b)(5). Defendant admits that it committed the crime specified in Count One and is in fact guilty. 

 

	 	2.	 Penalties 

Defendant faces the following maximum penalties: 
  

	 	a.	 A fine of not more than the greater of twice the gross gain or twice the gross loss, whichever is greater,
pursuant to 18 U.S.C. § 3571(d); 

  
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	 	b.	 A term of probation of not less than one (1) year nor more than three (3) years, pursuant to 18
U.S.C. § 3561(c)(1); 

  

	 	c.	 Restitution to any victim of the offense; and 

 

	 	d.	 A mandatory special assessment of $400, pursuant to 18 U.S.C. § 3013(c)(2)(B). 

 

	 	3.	 Fed. R. Crim. P. 11(c)(1)(C) Plea  

This Plea Agreement is made pursuant to Fed. R. Crim. P. 11(c)(1)(C), and Defendant’s guilty plea will be tendered pursuant to that
provision. In accordance with Rule 11(c)(1)(C), if the District Court (“Court”) accepts this Plea Agreement, the Court must include the agreed disposition in the judgment. If the Court rejects any aspect of this Plea Agreement, the U.S.
Attorney or Defendant may deem the Plea Agreement null and void. Defendant understands and acknowledges that it may not withdraw its plea of guilty unless the Court rejects this Plea Agreement under Fed. R. Crim. P. 11(c)(5). 

 

	 	4.	 Sentencing Guidelines 

The parties agree jointly to take the following positions at sentencing under the United States Sentencing Guidelines (“USSG” or
“Guidelines”) and other applicable law. 
  

	 	a)	 No guideline under the USSG has been promulgated for the violation to which Defendant is pleading guilty,
specifically, a violation of 49 U.S.C. §§ 60123(a), and 60118(a) and 49 C.F.R. §§ 192.605(a) and 192.605(b)(5). See USSG §§ 2X5.1; 

 

	 	b)	 Pursuant to USSG § 2X5.1, the most analogous guideline for the facts and circumstances of this case
is USSG § 2Q1.2 as it pertains to the Mishandling of Hazardous or Toxic Substances. 

  

	 	c)	 Pursuant to USSG § 2Q1.2(a), Defendant’s base offense level is 8; 

 

	 	d)	 Defendant’s offense level is increased by 6 levels, because pursuant to USSG § 2Q1.2(b)(1)(A)
the offense resulted in, by analogy, an ongoing and continuous discharge of natural gas; 

  

	 	e)	 Defendant’s offense level is increased by 9 levels, because pursuant to USSG § 2Q1.2(b)(2) the
offense resulted in a substantial likelihood of death and serious bodily injury; 

  

	 	f)	 In accordance with USSG § 3E1.1, based on Defendant’s prompt acceptance of responsibility for
the offense of conviction in this case, the adjusted offense level is reduced by three, resulting in a total adjusted offense level 20. 

  
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	 	g)	 Since USSG § 2Q1.2 is not covered by USSG § 8C2.1, the applicable fine is determined by
USSG § 8C2.10, which provides that the Court “should determine an appropriate fine by applying the provisions of 18 U.S.C. §§ 3553 and 3572.” 

The U.S. Attorney’s agreement that the disposition set forth below is appropriate in this case is based, in part, on Defendant’s
prompt acceptance of responsibility for the offense of conviction in this case, Defendant’s voluntary payments of restitution to the victims of the offense, and Defendant’s parent company, NiSource, Inc.’s (“NiSource”),
agreement to use reasonable best efforts to sell Defendant or Defendant’s gas distribution business to a qualified third-party buyer consistent with the requirements of M.G.L. c. 164, § 96 and Interlocutory Order on Standard of
Review, D.P.U. 10-170, upon the completion of which: (1) NiSource will cease and desist any and all gas pipeline and gas distribution activities in the District of Massachusetts; and (2) NiSource
will pay a fine equal to the amount of any profit or gain NiSource realized from any such sale. 
 The U.S. Attorney may, at his sole
option, be released from his commitments under this Plea Agreement, including, but not limited to, his agreement that Paragraph 5 constitutes the appropriate disposition of this case, if at any time between Defendant’s execution of this Plea
Agreement and sentencing, Defendant: 
  

	 	(a)	 Fails to admit a complete factual basis for the plea; 

 

	 	(b)	 Fails to truthfully admit Defendant’s conduct in the offense of conviction; 

 

	 	(c)	 Falsely denies, or frivolously contests, relevant conduct for which Defendant is accountable under USSG
§ 1B1.3; 

  

	 	(d)	 Fails to provide truthful information about Defendant’s financial status and/or Defendant’s payments
to victims of the offense of conviction; 

  

	 	(e)	 Gives false or misleading testimony in any proceeding relating to the criminal conduct charged in this case and
any relevant conduct for which Defendant is accountable under USSG § 1B1.3; 

  

	 	(f)	 Engages in acts that form a basis for finding that Defendant has obstructed or impeded the administration of
justice under USSG § 3C1.1; 

  

	 	(g)	 Commits a crime; or 

  

	 	(i)	 Attempts to withdraw Defendant’s guilty plea. 

Nothing in this Plea Agreement affects the U.S. Attorney’s obligation to provide the Court and the U.S. Probation Office with accurate
and complete information regarding this case. 

  
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	 	5.	 Agreed Disposition 

Under Fed. R. Crim. P. 11(c)(1)(C), the United States and Defendant agree that the following is a reasonable and appropriate disposition of
this case, taking into consideration all of the factors set forth in 18 U.S.C. §§ 3553(a) and 3572: 
  

	 	a.	 A criminal fine in the amount of $53,030,116 paid within thirty (30) days of sentencing, which amount
represents twice the amount of pecuniary gain of $26,515,058 that Defendant received from its Gas System Enhancement Plan (“GSEP”) in Massachusetts from 2015 through and including 2018. 

 

	 	b.	 A period of probation of three (3) years that will immediately terminate prior to the three (3) year
term upon a certification to the Court of the completion of the sale of Defendant or Defendant’s gas distribution business to a qualified third-party buyer consistent with the requirements of M.G.L. c. 164, § 96 and Interlocutory
Order on Standard of Review, D.P.U. 10-170, and formal acceptance of the sale by the Massachusetts Department of Public Utilities (“MA DPU”). 

 

	 	c.	 In addition to the mandatory conditions of probation pursuant to USSG § 8D1.3 and 18 U.S.C.
§ 3563(a), which includes the full payment of the fine set forth in paragraph 5(a), the period of probation shall also include the following additional conditions: 

 

	 	i.	 Defendant will implement and adhere to each of the recommendations from the National Transportation Safety
Board (“NTSB”) related to NTSB Accident ID PLD18MR003 regarding the Merrimack Valley Over-Pressurization Event on or about September 13, 2018 (the “Event”); 

 

	 	ii.	 Defendant will agree to employ at Defendant’s expense an in-house
monitor to oversee Defendant’s compliance with the recommendations of the NTSB and applicable laws and regulations. This monitor will report monthly in writing to a government committee composed of a representative from the U.S. Attorney, the
MA DPU and the Massachusetts Attorney General’s Office (“MA AGO”); 

  

	 	iii.	 In the event that Defendant enters into a definitive purchase and sale agreement for the sale of Defendant or
its gas distribution business within the three (3) year term of probation, Defendant will do the following: 

  

	 	A.	 Within three (3) business days of the execution of a definitive purchase and sale agreement with a
purchaser of Defendant or Defendant’s gas distribution business, Defendant will submit to the U.S. Attorney and the Court a filing, which if appropriate may be filed under seal, that completely and accurately details the terms of the purchase
and sale agreement including the proposed purchase price; 

  
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	 	B.	 Within seven (7) business days of the execution of a definitive purchase and sale agreement with a
purchaser of Defendant or Defendant’s gas distribution business, Defendant will provide the U.S. Attorney and the Court, in the form of a declaration under 28 U.S.C. § 1746 that may be filed under seal if appropriate, a true and
accurate detailed accounting following both Generally Accepted Accounting Principles (“GAAP”) and federal income tax obligations, of the total amount of any potential gain, profit or loss that will result from the proposed sale reflected
in the filing described above in paragraph 5(c)(iii)(A) and in accordance with the formula set forth in Exhibit B; 

  

	 	C.	 Upon request from the U.S. Attorney, Defendant will promptly provide to the U.S. Attorney true and accurate
records including income tax returns, to the extent required to verify the accuracy of any potential profit, gain or loss that will result from the sale of Defendant or Defendant’s gas distribution business reflected in the filing described
above in paragraph 5(c)(iii)(A). Defendant understands and agrees that the U.S. Attorney may provide these records to an outside consultant/expert he retains to verify the accuracy of the information, provided that such consultant/expert is subject
to the terms of a confidentiality agreement; and 

  

	 	D.	 No later than three (3) business days before the completion of any sale of Defendant or its gas
distribution business, Defendant will provide the U.S. Attorney and the Court, in a filing that may submitted under seal if appropriate, any updated information about the terms of sale, and Defendant’s calculation of any gain, profit or loss
from the sale of Defendant or Defendant’s gas distribution business in accordance with the formula set forth in Exhibit B. Defendant understands and agrees that Defendant must completely and accurately report to both the Court and the
U.S. Attorney the total amount of any profit, gain or loss from the sale of Defendant or its gas distribution business. 

  

	 	d.	 Defendant understands and agrees that the U.S. Attorney reserves the right to verify and challenge the accuracy
of Defendant’s calculation of any potential profit, gain or loss from the sale of Defendant or its gas distribution business prior to the final sale and that Defendant’s failure to accurately report the information described above in
paragraph 5(c)(iii) may constitute a violation of this Plea Agreement and/or a violation of a condition of Defendant’s probation. See USSG § 8D1.4(b)(3). 

  
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	 	e.	 Notwithstanding the agreed upon disposition described above, pursuant to USSG § 8F1.1, Defendant
understands and agrees that upon a finding by the Court that Defendant violated a condition of probation, including the failure to provide true and accurate information regarding any profit or gain from a sale of Defendant or its gas distribution
business as described above in paragraph 5(c)(iii), the Court may extend the term of probation up to the time of the final sale of Defendant or its gas distribution business, impose more restrictive conditions of probation, or prior to the final
sale of Defendant or its gas distribution business, revoke probation and resentence Defendant. 

  

	 	f.	 The U.S. Attorney agrees that no consequence of any breach of this Plea Agreement or of any violation of a
condition Defendant’s probation will be imposed upon a bona fide purchaser for value of Defendant or Defendant’s gas distribution business. 

  

	 	6.	 No Further Prosecution of Defendant and No Prosecution of its Ultimate Parent Company, NiSource, Inc.

 Under Fed. R. Crim. P. 11(c)(1)(A), the United States agrees that, other than the charges in the Information attached
as Exhibit A, and pursuant to the Deferred Prosecution Agreement (the “DPA”) attached as Exhibit C, the U.S. Attorney shall not prosecute Defendant or NiSource for any conduct related to the allegations in the attached
Information, the Event, or Defendant’s restoration work in the Merrimack Valley following the Event based on the facts and circumstances now known to the U.S. Attorney. 

This provision is expressly contingent on: (i) the Court’s acceptance of the guilty plea of Defendant to the attached Information;
(ii) Defendant’s agreement not to withdraw or otherwise challenge this Plea Agreement; (iii) Defendant’s performance of all of its obligations as set forth in this Plea Agreement prior to the sale of Defendant or its gas
distribution business; and (iv) NiSource’s compliance with the DPA attached as Exhibit C. If Defendant’s guilty plea is withdrawn for any reason, or if Defendant should fail to perform an obligation under this Plea Agreement
prior to the sale of Defendant or its gas distribution business, the U.S. Attorney, at his sole option, may render this Plea Agreement and the DPA attached as Exhibit C null and void. 

While based on the information currently available to him, the U.S. Attorney does not intend to criminally prosecute any individual for
violations of the Natural Gas Pipeline Safety Act, 49 U.S.C. § 60101 et seq. for the conduct related to the allegations in the attached Information, the Event, or Defendant’s and NiSource’s restoration work in the Merrimack
Valley, the U.S. Attorney nonetheless reserves the right to prosecute any individual, including but not limited to present and former officers, directors, employees, and other agents of Defendant or NiSource. 

  
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	 	7.	 Waiver of Right to Appeal and to Bring Future Challenge  

 

	 	(a)	 Defendant has conferred with its attorney and understands that it has the right to challenge its conviction in
the United States Court of Appeals for the First Circuit (“direct appeal”). Defendant also understands that, in some circumstances, Defendant may be able to challenge its conviction in a future proceeding (collateral or otherwise), such as
pursuant to a motion under 28 U.S.C. § 2255 or 28 U.S.C. § 2241. Defendant waives any right to challenge Defendant’s conviction on direct appeal or in any future proceeding (collateral or otherwise). 

 

	 	(b)	 Defendant has conferred with its attorney and understands that defendants ordinarily have a right to challenge
in a direct appeal their sentences (including any orders relating to the terms and conditions of supervised release, fines, forfeiture, and restitution) and may sometimes challenge their sentences (including any orders relating to the terms and
conditions of supervised release, fines, forfeiture, and restitution) in a future proceeding (collateral or otherwise). The rights that are ordinarily available to a defendant are limited when a defendant enters into a Rule 11(c)(1)(C) agreement. In
this case, Defendant waives any rights Defendant may have to challenge the agreed-upon sentence (including any agreement relating to the terms and conditions of supervised release, fines, forfeiture, and restitution) on direct appeal and in a future
proceeding (collateral or otherwise), such as pursuant to 28 U.S.C. § 2255 and 28 U.S.C. § 2241. Defendant also waives any right Defendant may have under 18 U.S.C. § 3582(c)(2) to ask the Court to modify the sentence,
even if the USSG are later amended in a way that appears favorable to Defendant. Likewise, Defendant agrees not to seek to be resentenced with the benefit of any change to Defendant’s Criminal History Category that existed at the time of
Defendant’s original sentencing. Defendant also agrees not to challenge the sentence in an appeal or future proceeding (collateral or otherwise) even if the Court rejects one or more positions advocated by any party at sentencing. In sum,
Defendant understands and agrees that in entering into this Plea Agreement, the parties intend that Defendant will receive the benefits of the Plea Agreement and that the sentence will be final. 

 

	 	(c)	 The U.S. Attorney agrees that he will not appeal the imposition by the Court of the sentence agreed to by the
parties as set out in Paragraph 5, even if the Court rejects one or more positions advocated by either party at sentencing. 

  

	 	(d)	 Regardless of the previous subparagraphs, Defendant reserves the right to claim that: (i) Defendant’s
lawyer rendered ineffective assistance of counsel under Strickland v. Washington; or (ii) the prosecutor in this case engaged in misconduct that entitles Defendant to relief from Defendant’s conviction or sentence.

  
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	 	8.	 Forfeiture 

Defendant hereby waives and releases any claims Defendant may have to any property seized by the United States, or seized by any state or local
law enforcement agency and turned over to the United States, during the investigation and prosecution of this case, and consents to the forfeiture of all such assets. 
  

	 	9.	 Civil Liability 

By entering into this Plea Agreement, the U.S. Attorney does not compromise any civil liability, including but not limited to any tax
liability, Defendant may have incurred or may incur as a result of Defendant’s conduct and plea of guilty to the charges specified in Paragraph 1 of this Plea Agreement.  

 

	 	10.	 Withdrawal of Plea by Defendant or Rejection of Plea by Court 

Should Defendant move to withdraw its guilty plea at any time, this Plea Agreement and the DPA attached as Exhibit C shall be null and
void at the option of the U.S. Attorney. In addition, should the Court reject the parties’ agreed-upon disposition of the case or any other aspect of this Plea Agreement, this Plea Agreement and the DPA attached as Exhibit C shall be
null and void at the option of either the U.S. Attorney or Defendant. In this event, Defendant agrees to waive any defenses based upon the statute of limitations, the constitutional protection against
pre-indictment delay, and the Speedy Trial Act with respect to any and all charges that could have been timely brought or pursued as of the date of this Plea Agreement. 

 

	 	11.	 Breach of Plea Agreement 

If the U.S. Attorney determines that Defendant has failed to comply with any provision of this Plea Agreement, has engaged in any of the
activities set forth in Paragraph 4(a)-(i) or has committed any crime following Defendant’s execution of this Plea Agreement, the U.S. Attorney may, at his sole option, be released from his commitments under this Plea Agreement and the DPA in
their entirety by notifying Defendant, through counsel or otherwise, in writing. The U.S. Attorney may also pursue all remedies available to him under the law, regardless whether he elects to be released from his commitments under this Plea
Agreement and/or the DPA. Further, the U.S. Attorney may pursue any and all charges which otherwise may have been brought against Defendant and/or have been, or are to be, dismissed pursuant to this Plea Agreement and/or the DPA. Defendant
recognizes that its breach of any obligation under this Plea Agreement shall not give rise to grounds for withdrawal of Defendant’s guilty plea, but will give the U.S. Attorney the right to use against Defendant before any grand jury, at any
trial or hearing, or for sentencing purposes, any statements made by Defendant and any information, materials, documents or objects provided by Defendant to the government, without any limitation, regardless of any prior agreements or
understandings, written or oral, to the contrary. In this regard, Defendant hereby waives any defense to any charges the U.S. Attorney brings that Defendant might otherwise have based upon any statute of limitations, the constitutional protection
against pre-indictment delay, or the Speedy Trial Act. 

  
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	 	12.	 Who is Bound by Plea Agreement 

This Agreement is only between Defendant and the U.S. Attorney for the District of Massachusetts. It does not bind the Attorney General of the
United States or any other federal, state, or local prosecuting authorities. 
 13. Corporate Authorization 

Defendant shall provide to the U.S. Attorney and the Court a certified copy of a resolution of the Board of Directors of Defendant, affirming
that the Board of Directors has authority to enter into the Plea Agreement and has (1) reviewed the Information in this case and the proposed Plea Agreement; (2) consulted with legal counsel in connection with the matter; (3) voted to
enter into the proposed Plea Agreement; (4) voted to authorize Defendant to plead guilty to the charges specified in the Plea Agreement; and (5) voted to authorize Joseph Hamrock, Chief Executive Officer of NiSource, Inc., to execute the
Plea Agreement and all other documents necessary to carry out the provisions of the Plea Agreement. 
  

	 	14.	 Modifications to Plea Agreement 

This Agreement can be modified or supplemented only in a written memorandum signed by both parties, or through proceedings in open court. 

If this letter accurately reflects the agreement between the U.S. Attorney and Defendant, please have Defendant sign the Acknowledgment of
Plea Agreement below. Please also sign below as Witness. Return the original of this letter to Assistant U.S. Attorney Neil Gallagher. 
  

			
		 	 Sincerely,

		
		 	 ANDREW E. LELLING

		 	 United States Attorney

		
	By:	 	/s/ Fred M. Wyshak, Jr.
		 	 Fred M. Wyshak, Jr.

		 	 Chief, Public Corruption and

Special Prosecutions Unit

		
		 	 /s/ Neil J. Gallagher, Jr.

		 	 Neil J. Gallagher, Jr.

		 	 Evan Gotlob

Assistant U.S. Attorneys

  
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 Corporate Acknowledgment of Plea Agreement 

The Board of Directors has authorized me to execute this Plea Agreement on behalf of Bay State Gas Company, doing business as
(“d/b/a”) Columbia Gas of Massachusetts (“CMA”). The Board has read this letter of Agreement in its entirety and has discussed it fully with CMA’s attorney. The Board acknowledges that this letter fully sets forth CMA’s
agreement with the U.S. Attorney. The Board further states that no additional promises or representations have been made to the Board by any officials of the United States in connection with this matter. 

 

			
		
		 	/s/ Joseph Hamrock
		 	Joseph Hamrock
		 	Chief Executive Officer
		 	NiSource, Inc.
		
		 	/s/ Kimberly Cuccia
		 	Kimberly Cuccia
		 	General Counsel
		 	Bay State Gas, d/b/a Columbia Gas of
		 	Massachusetts

  
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 I certify that Defendant’s Board of Directors has authority to enter into this Plea
Agreement and has (1) reviewed the Information in this case and the proposed Plea Agreement; (2) consulted with legal counsel in connection with the matter; (3) voted to enter into the proposed Plea Agreement; (4) voted to
authorize Defendant to plead guilty to the charges specified in the Plea Agreement; and (5) voted to authorize Joseph Hamrock, Chief Executive Officer of NiSource, Inc. and Kimberly Cuccia, General Counsel for Bay State Gas, d/b/a Columbia Gas
of Massachusetts, to execute the Plea Agreement and all other documents necessary to carry out the provisions of the Plea Agreement. 
  

	
	 /s/ Alejandro N. Mayorkas, Esq.

	Alejandro N. Mayorkas, Esq.
	WilmerHale, LLP
	Attorney for Bay State Gas Company, doing business as (“d/b/a”) Columbia Gas of Massachusetts

  
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 UNITED STATES DISTRICT COURT 

DISTRICT OF MASSACHUSETTS 
  

					
	 UNITED STATES OF AMERICA
  

v.
  

BAY STATE GAS COMPANY, doing

business as (“d/b/a”) Columbia Gas of Massachusetts,

 
 Defendant
	  	 )
 )

)
 )

)
 )

)
 )

)
 )

)
 )
	  	 Criminal No.
  

Violation:
  

Count One: Failure to Prepare and Follow a

Procedure for the Starting Up and Shutting

Down of a Pipeline Designed to Assure

Operation within the Maximum Allowable

Operating Pressure

(49 U.S.C. §§ 60123(a),60118(a); 49 C.F.R.

§§ 192.605(a), 192.605(b)(5))

 INFORMATION 

At all times relevant to this Information: 

General Allegations 
 1.
Bay State Gas Company, d/b/a Columbia Gas of Massachusetts (“CMA”), was a Massachusetts corporation that supplied natural gas to approximately 325,000 customers in Massachusetts in and around Springfield, Brockton, and three Merrimack
Valley communities in Lawrence, Andover, and North Andover. CMA was a wholly-owned subsidiary of NiSource, Inc. (“NiSource”), a publically traded company based in Merrillville, Indiana. 

2. CMA engaged in the transportation of natural gas, was an operator of a gas pipeline system as well as a gas distributor operator
(“Operator”), and was subject to the jurisdiction of the U.S. Department of Transportation (“US DOT”) as well as state and local regulations. 

  
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 CMA’s Low-Pressure Gas Distribution System in
South Lawrence 
 3. CMA owned and operated a network of gas pipeline systems for the transportation and delivery of natural gas that
included a series of approximately 25 different low-pressure (“LP”) gas distribution systems in Massachusetts. Among these systems, CMA owned and operated a LP gas distribution system in the area of
South Lawrence (“the South Lawrence LP System”). 
 4. The South Lawrence LP System used fourteen (14) regulator stations
(“Reg. Stations”) to supply natural gas to main distribution lines (“mains”) and control downstream pressure. The Reg. Stations were belowground and contained “regulators” that monitored and controlled downstream gas
pressure. 
 5. Natural gas came into the South Lawrence LP System at high pressure, about 77 pounds per square inch gauge
(“psig”). The regulators decreased pressure to approximately 0.5 psig or 14 inches of water column (“w/c”), a more refined pressure measurement. The Reg. Stations supplied mains with gas through an outlet pipe. Mains, in turn,
supplied gas to individual houses and businesses through service lines at roughly the same pressure, 0.5 psig or 14 inches w/c. 
 6. The
fourteen (14) Reg. Stations that were part of the South Lawrence LP System controlled and regulated pressure in an automated manner. Based on the pressure the regulator sensed downstream, the regulator valve opened or closed to control
downstream pressure at a pre-set limit called a “set-point” to ensure that the pressure in the system did not exceed the Maximum Allowable Operating Pressure
(“MAOP”) and become unsafe. Although it varied, the MAOP for the South Lawrence LP System was generally 14 inches w/c. 

  
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 7. Each regulator was equipped with a “regulator control line” also called a
“control line,” “sensing line,” or “static line” (“control line”). A control line was generally a 3⁄4 inch steel pipe that
connected the regulator to the main downstream. Without a control line connected from the regulator to the downstream gas main, the regulators in the South Lawrence LP System could not properly function. 

8. Each Reg. Station in the South Lawrence LP System had at least two regulators, a “worker regulator” and a “monitor
regulator,” each with a control line that sensed downstream pressure and connected back to the regulator, thereby enabling the regulator to regulate system pressure. The worker regulator was the primary regulator that maintained system
pressure. The monitor regulator was the redundant backup in case the worker regulator was damaged or malfunctioned. If both control lines malfunctioned or failed to read any downstream pressure, the worker regulator would automatically and
continually increase the pressure resulting in an “over-pressurization” of the LP system. 
 Background of the Pipeline Safety
Act 
 9. Congress first established minimum safety standards for the transportation of natural gas and other gases by pipeline in the
Natural Gas Pipeline Safety Act of 1968 (“NGPSA”) and directed the Secretary of the US DOT to issue regulations to protect against risks to life and property posed by pipeline transportation and pipeline facilities. 

10. In 1970, in accordance with NGPSA, the Secretary of the US DOT issued regulations codified in Part 192 of Title 49 of the Federal Code of
Regulations, Subparts A through M (“Part 192”). 

  
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 11. In 1979, Congress amended the NGPSA to add criminal penalties for knowing and willful
violations of any Part 192 regulation as part of the Hazardous Liquid Pipeline Safety Act of 1979 (“HLPSA”). 
 12. In 1994,
Congress enacted the Pipeline Safety Act (“PSA”), 49 U.S.C. § 60101 et seq. The PSA combined and re-codified, without substantive changes, the two then existing pipeline safety statutes,
NGPSA and HLPSA. The purpose of the PSA was to “provide adequate protection against risks to life and property posed by pipeline transportation and pipeline facilities.” 49 U.S.C. § 60102(a)(1). 

13. In 2004, Congress amended the PSA by enacting the Norman Y. Mineta Research and Special Programs Improvement Act of 2004 to create the
Pipeline and Hazardous Materials Safety Administration (“PHMSA”), an agency within the US DOT. 
 14. In 2006, Congress enacted the
the Pipeline Inspection, Protection, Enforcement and Safety Act (“PIPES”) which directed PHMSA to “prescribe minimum standards for integrity management programs for distribution pipelines.” 49 U.S.C. § 60109(e). 

15. On December 4, 2009, PHMSA promulgated the regulations codified in Subpart P of Part 192, entitled “Gas Distribution Pipeline
Integrity Management (IM).” Subpart P requires an Operator to “develop and implement” an IM Program by no later than August 2, 2011. 49 C.F.R. § 192.1005. 

Regulations Regarding Pipeline Operations and Over-Pressurization 

16. Subpart L of Part 192 prescribes the minimum requirements for safe pipeline operations and states that “no person may operate a
segment of pipeline unless it is operated in accordance with this subpart.” 49 C.F.R. § 192.603(a). 

  
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 17. Part 192 defines the Maximum Allowable Operating Pressure (“MAOP”) as
“the maximum pressure at which a pipeline or segment of a pipeline may be operated[.]” 49 C.F.R. § 192.3. It also defines a “low-pressure distribution system” as a
“distribution system in which the gas pressure in the main is substantially the same as the pressure provided to the customer.” 49 C.F.R. § 192.3.    Subpart L further mandates that “[n]o person may
operate a low-pressure distribution system at a pressure high enough to make unsafe the operation of any connected and properly adjusted low-pressure gas burning
equipment” (referring to gas appliances). 49 C.F.R. § 192.623(a). 
 18. Under Part 192, “[e]ach operator shall prepare
and follow for each pipeline, a manual of written procedures for conducting operations and maintenance activities,” otherwise known as an operation and maintenance manual (“O&M Manual”). Among other requirements, §
192.605(b)(5) requires that the O&M Manual include a procedure for “starting up and shutting down any part of a pipeline in a manner designed to assure operation within the MAOP limits prescribed by this part” in order “to provide
safety during maintenance and operations.” 
 19. Subpart L also requires an operator to “keep records necessary to administer the
procedures under § 192.605.” 49 C.F.R. § 192.603. Among the records required to be kept, and made available to operating personnel include, “construction records, maps and operating history.” 49 C.F.R.
§ 192.605(b)(3). 
 The September 13, 2018 Over-Pressurization Event 

20. On or about September 13, 2018, beginning at approximately 4:00 p.m., a series of fires and explosions resulted from an
over-pressurization of the South Lawrence LP System (“the Event”). By approximately 4:07 p.m., the actual operating pressure of the South Lawrence LP System increased to more than 35 inches of w/c and ultimately increased until the actual
operating pressure was approximately 13 times greater than the MAOP. 

  
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 21. The over-pressurization of the South Lawrence LP System caused multiple fires and
explosions including inside house-hold appliances and residences. The resulting fires and explosions caused substantial damage to approximately 131 residential and commercial structures in the communities of Lawrence, Andover, and North Andover,
including the total destruction of three houses in Lawrence, injured 22 people, killed one individual in Lawrence and severely disabled another. 

Operational Notice 15-05 

22. By at least September 2015, CMA’s employees in the Lawrence Division from Field Engineering, Construction, and Measurement and
Regulation (“M&R”), as well as Senior Field Engineering Management in CMA were aware of the particular dangers associated with belowground control lines. In particular, these employees and CMA knew that a faulty, damaged, or
unaccounted for control line on a Reg. Station in a LP system could lead to a dangerous over-pressurization of the system resulting in fires and explosions in a populated area. 

23. On or about September 2, 2015, NiSource and CMA internally disseminated Operational Notice (“ON”) 15-05, entitled “Below Grade Regulator Control Lines: Caution When Excavating Near Regulator Stations or Regulator Buildings.” The impetus for ON 15-05 was a
“near miss” experience involving another NiSource company outside of Massachusetts where a construction crew, excavating to repair a gas leak near a Reg. Station, came close to hitting a control line and was unaware of its purpose and
importance. 

  
 6 

 24. The stated objective of ON 15-05 was two-fold: “1. Bring awareness to Company and Contractor employees regarding the existence and importance of regulator control lines . . . that help to provide critical sensing information for the accurate
monitoring and control of outlet pressure into the Company’s piping systems . . .” and “2. Set forth required actions for future Company excavations.” 

25. ON 15-05 described what Reg. Station control lines did, and said control lines: 

. . . sense the outlet pressure of the regulator. Based on the pressure sensed through the control line, the regulator valve will open or close
to control the downstream pressure at the set point of the regulator. 
 26. ON 15-05 further warned
that a broken or disrupted control line could lead to a “catastrophic event:” 
 If a control line breaks, the regulator
will sense a pressure loss, causing the valve to open further, resulting in an over pressurization of the downstream piping system, which may lead to a catastrophic event. The same result occurs if the flow through the control line is otherwise
disrupted (e.g., control line valve shut off, control line isolated from the regulator it is controlling). 
 27. Finally, the
“Required Action” from ON 15-05 to the Company’s employees was that: 
 any
Company excavations within the footprint of a [Reg. Station] and/or within 25 feet of a station building or fence shall only proceed with M&R standing by throughout the excavation . . . 

28. While over-pressurization that could result in a “catastrophic event” was a known risk, CMA never prepared or implemented any
written procedure to ensure that belowground control lines were accounted for, and, if necessary, removed or relocated. Instead, CMA relied upon an informal practice of encouraging verbal communication among members of Field Engineering,
Construction and M&R when excavation took place within the footprint of a Reg. Station. 

  
 7 

 CMA’s Gas System Enhancement Program (“GSEP”) 

29. An Act Relative to Gas Leaks, Massachusetts General Law, Chapter 164, Section 145), effective October 1, 2014
(“Section 145”), provided Massachusetts gas utility companies with a financial incentive to replace or improve aging or leaking gas infrastructure. Under Section 145, a gas distribution company was permitted to submit a Gas
System Enhancement Program (“GSEP”) plan to the Massachusetts Department of Public Utilities (“MA DPU”). Among other requirements, the overall GSEP plan had to include a timeline for the removal of all leak-prone infrastructure
within 20 years. 
 30. If accepted by the MA DPU, Section 145 permitted a gas distribution company “to begin recovery of the
estimated costs of [pipe replacement] projects included in the plan on May 1 of the year following the initial filing and collect any revenue requirement, including property taxes and return associated with the plan.” More broadly,
Section 145 permitted a gas company to more quickly recover its capital costs associated with its yearly forecasted pipeline replacement through the rates the MA DPU permitted the Company to charge its customers. 

31. On or about October 31, 2014, CMA submitted its first annual GSEP plan and thereafter in 2015, 2016 and 2017. In the 2014 GSEP plan,
CMA proposed to replace 44 miles of leak-prone mains and recover approximately $2.6 million in related costs. In its later GSEP plans submitted to the MA DPU, CMA sought to recover approximately $9 million in costs for 2016, approximately
$16.8 million in 2017 and approximately $26.8 million in 2018. 
 32. In total, between 2015 and 2018, as part of the GSEP program,
CMA earned a total of approximately $49.3 million in accelerated capital cost recovery and, after costs, realized a total profit of approximately $26.5 million. 

  
 8 

 The South Union Street Project 

33. In or about August 2016, CMA began construction on a GSEP pipe replacement project in the South Lawrence LP System called the “South
Union Street Project” (“the South Union Project”). The Field Engineering Department in Lawrence selected the South Union Project in part due to a pending City of Lawrence water-main project that would encroach upon the two aging
cast-iron (“CI”) mains on South Union Street. 
 34. The South Union Project sought to replace two CI mains from the intersection
of Market Street to Winthrop Avenue on South Union Street, measuring approximately 6 inches and 8 inches in diameter, with one plastic main. Once installed, the new plastic main would be “tied-in”
and connected to the pipes on the side streets that supplied gas to customers through service lines. As typical in pipe replacement projects, upon completion of the project, the two CI mains on South Union Street would be completely disconnected
from the LP system and abandoned in the ground. 
 35. The scope of the South Union Street project included the replacement of the CI mains
near a belowground Reg. Station located at the intersection of Winthrop Avenue and South Union Street (the “Winthrop Reg. Station”), one of the fourteen (14) different regulator stations that monitored and controlled downstream
pressure in the South Lawrence LP System. 
 36. From in or about September 2015 and continuing up until the time of the Event, two control
lines connected the Winthrop Reg. Station to the two CI mains on South Union Street. 

  
 9 

	A.	 The Control Lines at the Winthrop Avenue Reg. Station 

37. In or about early September 2015, two CMA M&R technicians conducting an annual inspection of the Winthrop Reg. Station discovered that
one of the control lines on the Winthrop Reg. Station failed to read any downstream pressure. Under CMA’s O&M Manual, each belowground Reg. Station was required to have at least two functional control lines (one for the “worker”
regulator, one for the “monitor” regulator) that connected the Reg. Station to the mains to monitor and regulate downstream pressure. 

38. Further investigation by the M&R technicians revealed that the control line reading zero pressure had been erroneously left on the CI
main on Winthrop Avenue sometime in 2015, near the intersection of South Union Street, during an earlier pipe replacement project known as the “Parker Street Project.” Having only one functional control line was a violation of CMA’s
O&M procedures and created a significant risk of an over-pressurization event had the second control line also failed. 
 39. Following
the discovery of the control line erroneously left on the abandoned pipe, on or about September 21, 2015, a CMA Construction Leader (“Construction Leader-1”) coordinated the installation of a
new control line for the Winthrop Reg. Station. Instead of connecting to the abandoned main on Winthrop Avenue, the new control line connected the Winthrop Reg. Station to the 8-inch CI main on South Union
Street approximately 39 feet from the Winthrop Reg. Station, a distance further than the 25 feet parameter in ON 15-05. 

40. Following the installation of the new control line, a CMA inspector created a hand-drawn
“as-built” drawing to document the location of the new control line. Although not foreseen as part of the construction in the Parker Street Project, records of the installation of the new control
line from the Winthrop Reg. Station became part of CMA’s records relating to the Parker Street Project. As a result of the installation, a darkened asphalt trench with spray-painted markings remained visible on the street from the Winthrop Reg.
Station across South Union Street to the location of the CI mains up through the day of the Event. 

  
 10 

 41. Less than a year later, on or about May 13, 2016, a third party construction crew
conducted an additional pressure test of the same newly installed control line from the Winthrop Reg. Station. As part of the process, the construction crew, with a CMA inspector onsite, excavated and removed a portion of the new control line and re-attached the control line again to the 8-inch South Union CI main. 
  

	B.	 CMA’s Records of Control Lines in Lawrence 

42. Prior to the Event, CMA did not maintain consistent and reliable records of control lines. Instead of mapping control lines into their main
computerized mapping system, Geographic Information System (“GIS”), records of control lines were primarily located in a patchwork of multiple locations, including records of completed construction projects known as the “Work Done
Files” and “Capital Close-Out” Files; a paper notebook of the location of critical valves known as the “Critical Valve Book” (“CVB”); and in a binder of documents that
M&R personnel kept in their CMA trucks. 
 43. As employees from CMA Engineering, Construction and M&R in Lawrence knew, the records
regarding the location of control lines were often outdated, incomplete and thus unreliable. Records of the locations of the control lines for the Winthrop Reg. Station were first located in the CVB, a binder that contained hard copies of maps that
depicted the location of “critical valves,” valves designated by both state and federal code as critical. The Lawrence Engineering Department kept and maintained the CVB, but did not regularly or consistently update information about the
location of control lines. For example, for the Winthrop Regulator Station, the CVB had the location of the control lines as they existed in approximately May 2010, but when the new control line was installed in or about September 2015, the CVB was
never updated to reflect the change. 

  
 11 

 44. A second location for records of control lines was the Work-Done and Capital Close-Out Files. Following the completion of a construction job, CMA Construction inspectors completed hand-drawn “as-built” drawings to record the location of pipes
and new infrastructure. In the case of the Winthrop Reg. Station, while the Work-Done and Capital Close-Out File for the Parker Street Project included the
“as-built” drawing for the September 2015 installation of the new control line, the drawing did not depict the location of the second control line from the Winthrop Reg. Station to the CI main on
South Union Street. 
 45. A third location for records of control lines were the binders of documents and hand-drawn diagrams often referred
to as “bibles” that M&R personnel kept in their trucks that were not maintained in a centralized location. With regards to the Winthrop Reg. Station, the M&R book contained two diagrams with information about the location of the
control lines in approximately 2000 and 2010, but did not reflect the location of the newly installed control line from September 2015. 

46. While GIS, CMA’s most readily available and centralized record of their pipeline system, depicted the location of the Reg. Stations
and the outlet pipes, it generally did not include any information about the control lines. Furthermore, despite concerns that CMA engineers raised about control lines not being consistently mapped in GIS, CMA deliberately chose to not include
consistent and reliable information about the location of control lines in GIS and instead relied upon the patchwork of records described above that were often outdated and unreliable. 

  
 12 

 47. For example, on or about April 24, 2017, a NiSource engineer in Gas Systems
Planning (“GSP”) working with CMA Field Engineers scheduled a telephonic meeting entitled “Feasibility discussion of mapping reg station control lines in GIS” with the Leader of GIS Capital Closeout and a Leader of Field
Engineering (“FE Leader”). During the meeting, GSP Engineer expressed concerns that control lines were not included in GIS and was adversely affecting the accuracy of gas pressure models for Field Engineers. 

48. Despite this concern, CMA deliberately chose not to change its practice and failed to include the location of control lines into GIS
because of the substantial cost involved in proactively locating and mapping control lines. Instead, the primary use and utility of GIS continued to be the accounting of the replacement and abandonment of CI pipe for capital recapture in the GSEP
program, a financial benefit for CMA. 
  

	C.	 The Responsibility for Control Lines 

49. Without any clear direction and implementation of a procedure to address the dangers associated with control lines, and despite the known
risk, employees in CMA’s Lawrence Division in Engineering, M&R and Construction frequently ignored and shifted the responsibility for locating and accounting for control lines to other Departments. For example, while employees in the Field
Engineering Department in Lawrence considered the control lines to be an M&R responsibility (because they were associated with Reg. Stations), M&R personnel considered control lines to be an Engineering responsibility because the control
line pipes extended outside the boundaries of the Reg. Station. 

  
 13 

 D. Early Planning Stages of the South Union Project 

50. In and around 2015, CMA Field Engineering in Lawrence was understaffed and consisted only of two Field Engineers: a more junior Field
Engineer (“Field Engineer-1”) whom CMA hired in approximately July 2015 with no prior professional engineering experience and a more senior Field Engineer ( “Field
Engineer-2”). Because of Field Engineer-2’s workload, in or about late 2015, Field Engineer-2 gave the South Union
Project to Field Engineer-1. In terms of size, complexity and budget, the South Union Project, at a projected cost of over $1.4 million, was the largest project on which Field Engineer-1 had ever worked to date. 
 51. In or about February 2016, Field
Engineer-1 finalized an initial Proposed Drawing (“Pro-Drawing”) for the South Union Project that included maps derived from GIS that depicted the location of
the existing gas main to be abandoned and the proposed location of the new plastic main. The Pro-Drawing also depicted the location of the Winthrop Reg. Station and outlet pipes, but because CMA did not
include information about control lines in GIS, the Pro-Drawing also did not include any information about control lines. 

52. While Field Engineer-1 and others members of Field Engineering knew the precise danger associated
with control lines, throughout the duration of the project from approximately late 2015 and continuing until the day of the Event, Field Engineer-1 never took any action to locate the control lines associated
with the Winthrop Reg. Station. Moreover, despite the high probability of a catastrophic over-pressurization of a LP system that would result if a Reg. Station’s control lines were left connected to a main that was then replaced and abandoned,
CMA and CMA’s Field Engineering Department never implemented any formal written procedure to ensure the necessary relocation of control lines. 

  
 14 

 53. Instead, CMA followed an informal practice of encouraging verbal communication and
collaboration among members of Field Engineering, Construction and M&R involved in a particular project including through a process called “Constructability Reviews.” 

54. For example, on or about March 1, 2016, Construction Leader-1 and Field Engineer-1 engaged in the first of three “Constructability Reviews” on the South Union Project, a discussion between Field Engineering and Construction that followed a
two-page checklist entitled “Constructability/Safety Review.” The two-page checklist, from a CMA template, was required documentation for a pipe
replacement project, but made no reference to control lines and did not require a formal discussion with M&R.  
 55. Despite the
fact that Construction Leader-1 knew that in September 2015, a new control line had been installed from the Winthrop Reg. Station to the CI main on South Union Street that was now planned for abandonment in
the South Union Project, Construction Leader-1 never discussed with or identified to Field Engineer-1 the need to relocate the control line on the South Union Street CI
main. Instead, Construction Leader-1 encouraged Field Engineer-1 to discuss with then-Leader of M&R (“M&R
Leader-1”) the type and size of the valve needed for a new outlet pipe that would connect the Winthrop Reg. Station to the new plastic main on South Union Street. 

56. While Field Engineer-1 generally discussed the South Union Project with M&R Leader-1, Field Engineer-1 did not have a meaningful conversation about the control lines or the necessity to relocate the control lines at the end of the project with M&R
Leader-1. Instead, Field Engineer-1 assumed that nothing further was needed from Engineering even though Field Engineer-1 knew
that nothing had been done to plan for, or actually relocate, the control lines before the final abandonment of the CI mains on South Union Street. In doing so, CMA recklessly disregarded a known and certain risk of a catastrophic
over-pressurization. 

  
 15 

 E. Approval of the South Union Street Project 

57. In or about March 2016, Field Engineer-1 submitted the South Union Project for approval first to
the Leader of FE and then to the Manager of Field Engineering for CMA (“FE Manager”). Among the materials that Field Engineer-1 submitted through the company’s Work Management System were a
scope map of the project, specific tie-in and abandonment procedures for the various stages of the project, and a Project Budget Request (“PBR”) that indicated that the total cost of the project was
approximately $1.4 million, but which would ultimately result in the retirement of approximately 7,500 feet of CI main pipe for the GSEP Program. 

58. The PBR also made clear that the project involved the ultimate abandonment of a substantial portion of CI mains but not their entirety
“due to the regulator station at the intersection of S. Union Street and Winthrop Ave and that the LP system in this area depends on the stretch of LP mains on S. Union St.” The documents that Field
Engineer-1 submitted through WMS Docs to senior Engineering Management did not include any procedure for the relocation of the control lines before the final abandonment of the CI mains. 

  
 16 

 59. Even though Field Engineering was ultimately responsible for the design and procedures
for the execution of the South Union Project, and Engineering Management knew that the South Union Project was Field Engineer-1’s largest and most difficult project
to-date, members of Field Engineering Management never addressed the need to relocate, or account for, the control lines on the Winthrop Reg. Station to prevent an over-pressurization event. Instead, Field
Engineering Management focused its’ project review on cost and budget issues. Both the FE Leader and FE Manager approved the project for release to the construction phase without any discussion about control lines or concerns about
over-pressurization. 
 Construction of the South Union Project in 2016 

60. In or about July 2016, construction of the South Union Project began with a third-party contractor construction crew and one of three CMA
inspectors onsite. From in or about August 2016 through the remainder of 2017, a third-party contractor (“CMA Inspector-1”) served as the project’s primary inspector. On at least two different
occasions in 2016, the construction crew, with a CMA inspector onsite conducted work in and around the Winthrop Reg. Station. 
 61. First,
on or about August 9, 2016, the construction crew excavated in the area of the Winthrop Reg. Station in order to install the new plastic main directly under the two control lines that connected the Winthrop Reg. Station to the CI main’s on
South Union Street. Even though a CMA inspector was onsite during the work, CMA did not document or record the location of the control lines. 

62. Second, on or about October 17, 2016, the construction crew installed an outlet pipe from the Winthrop Reg. Station to the newly
installed plastic main. The same day, in an email at approximately 9:09 p.m., Construction Leader-1 informed M&R Leader-1 that construction was “working on
the low pressure outlet [at the Winthrop Reg. Station] . . . and eventually moving the static lines to the new outlet piping.”  

  
 17 

 63. On or about October 27, 2016, CMA was required to discontinue construction on the
South Union Project due to a citywide moratorium from the City of Lawrence on all gas, water and sewer construction projects in Lawrence. Thereafter, from in or about 2017 until in or about early 2018, the City of Lawrence discontinued authorizing
permits for all but a limited number of public utility construction projects due to a concern about a lack of coordination and communication about ongoing construction projects. 

64. While originally planned for completion by the end of 2016, due to the citywide moratorium, in late 2016 the project was placed on hold. By
in or about October 2016, the construction crew installed and “energized” the new plastic main on South Union Street by feeding the main with gas from the Winthrop Reg. Station. The construction crew, however, was unable to begin any of
the “tie-in” and abandonment procedures to “tie-in” or connect the side-streets to the new plastic main and thus was also unable to abandon the CI
mains on South Union Street. 
 65. By December 2016, CMA Inspector 1’s notes on the tie-in
procedures to Field Engineering made clear that the regulator at the Winthrop Reg. Station was still connected to the old CI-mains on South Union Street and were “NOT
CUT-OFF AS OF 12-9-16,” meaning that gas from the Winthrop Reg. Station was still feeding the two CI mains on South
Union Street. 
 66. Around the same time, Construction Leader-1 and CMA Inspector-1 had discussions about the need to eventually move the control lines, but neither took any material action to ensure that the controls lines were moved at the appropriate time to prevent a catastrophic
over-pressurization event. Moreover, by the completion of the project in 2018, Construction Leader-1 was working in a new position and CMA Inspector-1 was working on
different construction projects. 

  
 18 

 67. As a result, though it was originally planned to be one of three “carry-over
projects” that was at first scheduled for 2017, the continued construction of the South Union Project was ultimately delayed until approximately May 2018. 

The Project Cost Review of the South Union Project in 2017 

68. On or about January 16, 2017, Field Engineer-1 submitted an updated PBR for the
“carry-over” South Union Project to Field Engineering Management. In contrast to the first PBR submitted for the South Union Project on March 9, 2016, the updated PBR had an estimated total additional cost of more than
$1.1 million with a projected completion date of the fall of 2017, though no construction took place in 2017. 
 69. As a result of the
increased costs related to the South Union Project, the FE Manager scheduled a “Project Cost Review” to take a closer look at the South Union Project “due to its’ size and the financial impact to the budget.” 

70. The Project Cost Review for the South Union Project took place on or about February 17, 2017 and included a presentation from Field Engineer-1 and Construction Leader-1 to the FE Manager. The presentation was focused on cost and included a slide entitled “Work Completed in 2016 (what did we get for
our money).” The presentation also addressed the construction involving the Winthrop Reg. Station and made clear was still feeding both old CI mains as well as the new plastic main on South Union Street. The presentation also included a
timeline of events that emphasized the fact that “City of Lawrence shut down all work” on October 17, 2016 as the primary reason for the “extended contracting costs.” 

  
 19 

 71. While over three consecutive years in 2016, 2017 and 2018 both the FE Manager and FE
Leader participated in the approval of the South Union Project and a more detailed Project Cost Review in February 2017, no one from Field Engineering involved in the project ever specifically addressed the need to account for the control lines on
the Winthrop Reg. Station to prevent a known risk of catastrophic over-pressurization. Instead, CMA and Field Engineering’s evaluation of risk focused on the actual occurrence of prior events affecting pipeline integrity and the fact that,
despite a 2015 “near-miss” involving control lines within NiSource, CMA had never previously had a serious over-pressurization event involving control lines. 

Field-Engineering’s Focus on GSEP Goals and Company Earnings 

72. While CMA Field Engineering was ultimately responsible for the design and written procedures relating to pipeline replacement projects,
the focus of the FE Manager’s position was the management and administration of CMA’s Capital Expenditure and GSEP Program, and promoting the achievement of the company’s financial objectives. Following the initiation of the GSEP
Program in or about 2015, CMA dictated yearly mileage goals under the GSEP program that increased annually. The FE Manager made clear to CMA employees that meeting GSEP mileage goals was directly connected to company earnings. 

73. For example, on or about January 6, 2017, following the completion of the first full year of GSEP in 2016, the FE Manager emailed
Engineering, Construction and Senior Management in CMA to tout the booking of approximately $67.3 million in capital expenditures as a “huge milestone” and stated that their meeting “the GSEP targets is contributing to
the earnings of CMA.” 

  
 20 

 74. In addition, during monthly Capital Program Management Meetings, the FE Manager
frequently encouraged CMA employees from Construction and Engineering to timely execute and close-out capital GSEP projects and connected the completion of these projects to company earnings. In April 2016,
the FE Manager’s presentation included a graphic linking the terms “Concept,” “Execute,” and “Close Out” to promote the timely completion of projects. By April 2018, the FE Manager added the term
“Earnings” to flow directly from the “Close Out” or completion of GSEP projects to emphasize the point that company earnings derived directly from completed GSEP projects. 

75. In addition to touting success, the FE Manager also frequently expressed dissatisfaction directly to subordinates and direct reports about
the failure to meet GSEP goals for the retirement of “priority pipe.” For example, on or about November 16, 2017, the FE Manager emailed that “failing to meet a goal of retiring 234,000 ft will be severely frowned upon. (think
Game of Thrones . . . :-).” 
 76. On or about March 12, 2018, after CMA had reported the retirement of only 43 miles of pipe,
the FE Manager emailed that, “We better have retired more than 43 miles of priority pipe! More like 53 miles.” 
 77. On or
about September 7, 2018, following an email from the leader of the Capital Closeout that CMA was approximately 14 miles behind its goal for the retirement of priority pipe, the FE Manager emailed a group of subordinates, “For CMA we are
14 miles behind. My question to the group, is anyone concerned that we will not meet our target for the year? If so, what can we do to mitigate the risk?” referring to the risk of failing to meet the GSEP goal rather than any particular
risk of pipeline integrity or safety. 

  
 21 

 The M&R Department in Lawrence 

78. Between approximately 1988 and January 2018, CMA’s M&R Department in Lawrence was primarily responsible for maintaining the Reg.
Stations and ensuring compliance with state and federal regulations as well as the company’s internal Gas Standards that were based on state and federal regulations, primarily Part 192. During the same period of time, among other
responsibilities, M&R was also responsible for maintaining and staffing a Liquefied Natural Gas (“LNG”) and Liquid Propane Gas (“LPG”) Plant in the Lawrence area that provided additional supplies of gas for winter. 

79. In or about 2017, CMA Senior Management proposed a structural change to the Lawrence M&R Department, already in place in the Brockton
and Springfield M&R Departments, that would divide the responsibility for M&R and the LNG/LPG Plant into two separate departments. By no later than mid-2017, M&R
Leader-1 complained to CMA’s Vice President and Operations Center Manager (“OCM-1”) that the change would be a bad decision, resulting in a lack of
resources to manage not only the LNG/LPG Plant, but the area Reg. Stations. 
 80. Specifically, because the six total qualified employees in
M&R could not shift responsibility between Plants and M&R as needed, only two M&R personnel would be left to manage all the Reg. Stations in Lawrence, Andover and North Andover. Around the same time, CMA Senior Management also knew that
CMA needed more use of its LNG/LPG Plant, particularly in winter, due to the recent defeat of a proposed transmission pipeline in Northern Massachusetts, requiring four M&R Technicians to work 12-hours
shifts to operate the Plant around-the-clock with a minimum staff of two employees per shift. According to an October 2017 email regarding M&R Leader-1’s concern, “That leaves no time to respond to regulator station issues or the like.”  

  
 22 

 81. Pursuant to a request from CMA’s Vice President, M&R Leader-1 was required to put together “a business case” for more resources in M&R. As a result, on or about October 16, 2017, M&R Leader-1 made a
presentation to CMA’s Vice President, OCM-1 and the Finance Director about the need for more resources in M&R and the Plant. During the meeting, M&R
Leader-1 described the need for more resources as “urgent” and warned that there were potential consequences for not adding the resources, including the fact that M&R could not adequately respond
if there were multiple Reg. Station concerns. While the CMA Vice President ultimately agreed to provide the additional resources that M&R Leader-1 requested, CMA did not secure more resources for M&R
until after the Event, and still divided M&R and the Plant into separate divisions. 
 82. Specifically, between in or about December
2017 and April 2018, CMA senior management shifted the responsibility for Lawrence M&R and Reg. Stations from M&R Leader-1 to the leader of M&R for Brockton and Springfield (“M&R Leader-2”) while M&R Leader-1 retained responsibility for the Plant.    By in or about May 2018, M&R
Leader-1, the sole CMA employee with the most knowledge of all Lawrence Reg. Stations, abruptly retired from CMA. 

83. Around the same time, in April 2018, CMA shifted managerial responsibilities in Lawrence in order to focus on the “rate case”
before the MA DPU to increase the rates CMA could charge to CMA’s customers, based in part on the GSEP Program. According to a January 29, 2019 email from the Vice President of CMA, “After the filing [of the rate case in April
2018], the next six to eight months are focused on the case management and the litigation process – creating a significant burden on resources.” 

  
 23 

 84. In order to shift CMA’s focus to the upcoming rate case, in late January 2018, CMA
temporarily gave the Lawrence Manager of Systems Operations (“OCM-2”) the additional responsibility of serving as the Lawrence OCM, with oversight over M&R in Lawrence even though OCM-2 had no prior experience with M&R as well as no understanding of ON 15-05 and the importance of control lines. 

The Continuation of the South Union Project in 2018 

85. On or about January 19, 2018, for the third consecutive year, Field Engineer-1 submitted a
PBR for the South Union Project to Senior Field Engineering Management. After several revisions to the budget and cost documents that the FE Manager directed, by on or about March 20, 2018, both the FE Leader and FE Manager again approved the
continuation of the South Union Project for construction and completion in 2018. 
 86. The managerial review of the project was again
focused on cost and budget in part because the project was delayed, over-budget, and needed to be completed in order to allow for a City of Lawrence water project to commence in the same area. Immediately following the approval, in an email on or
about March 20, 2016, Field Engineer-1 informed Construction that, “This is one of the projects that needs to start as soon as the city allows us” in order to complete the project in
2018.    Furthermore, unlike the previous two years, no Constructability Review took place between Field Engineering and M&R. Instead, the South Union Project proceeded to the final construction phase without any formal or
informal collaboration or planning among Field Engineering, Construction, and M&R. 

  
 24 

 87. The final stages of the South Union Project involved step-by-step “tie-in” and abandonment procedures whereby the construction crew would “tie-in” or connect the
new plastic main to the side-streets and cut-off portions of the CI mains on South Union Street. As CMA collectively contemplated and planned, the project would be completed upon the final “tie-in” and abandonment procedure. At that time, the CI mains on South Union Street would be abandoned and completely disconnected from the flow of gas. 

88. Nevertheless, despite the fact that CMA knew that the control lines were still attached to the CI mains and that the complete abandonment
of the CI mains would cause the Winthrop Reg. Station control lines to read decreasing pressure, prompting the regulators to automatically and continually supply more gas to the South Lawrence LP System to the point of a dangerous
over-pressurization, CMA did not prepare and follow, nor even contemplate, a formal written procedure for the removal of the control lines CMA knew was needed to prevent an over-pressurization and assure operation within the MAOP. 

89. Furthermore, while CMA had encouraged an informal practice of verbal communications and collaboration among Field Engineering, CMA and
Senior Management knew that by 2018, with the exception of Field Engineer-1, each of the prior significant participants in the South Union Project – including Construction
Leader-1, M&R Leader-1, CMA Inspector-1, and the 2016 construction crew – were no longer involved in the project. Yet,
CMA did nothing to manage the change in personnel or to pass on the information about the project they collectively shared. 

  
 25 

 90. For example, in early 2018, Construction
Leader-1 took a new position with CMA in the Lawrence Operations Department. Construction Leader-1 was directly involved in the installation of the new control line in
2015, and knew that CMA would have to eventually move the control lines on the Winthrop Reg. Station, but failed to inform the new Construction Leader or the new CMA Inspector (“CMA Inspector-2’)
about the need to relocate the control lines to prevent an over-pressurization. 
 91. The renewed construction of the South Union Project
began with a new construction crew and CMA Inspector-2 on or about May 22, 2018. On or about June 12, 2018, the construction crew began work near the Winthrop Reg. Station. During the construction,
CMA Inspector-2 contacted Field Engineer-2 and Field Engineer-1 when it was discovered that the construction crew could not
excavate in a particular area because the street had been newly paved. 
 92. As a result, Field
Engineer-2 and Field Engineer-1 viewed the construction site, and directed the construction crew to alter the procedure to “cut-and-cap” portions of the old CI mains on South Union Street, thus removing portions of the CI mains from the street. At the time of the construction, CMA
Inspector-2 noted the darkened asphalt trench—depicting the location of the control line installed in September 2015—but wrongly assumed the trench was the location of the outlet pipe. At the same
time, while present at the construction site, neither Field Engineer-2 or Field Engineer-1 ever took any steps to investigate or determine the location of the control
lines or contact M&R even though the construction site was in close proximity to the Winthrop Reg. Station. 

  
 26 

 93. On or about September 13, 2018, at approximately 4:00 p.m., the construction crew
completed the final “tie-in” and abandonment procedure following the procedures CMA provided to the crew at the intersection of Salem Street and South Union Street. While not anticipated by the
construction crew, the final “tie-in” and abandonment procedure resulted in the complete abandonment of the CI mains on South Union Street. Upon the complete abandonment and isolation of the CI mains
on South Union Street, the Winthrop Reg. Station—that CMA knew was still connected to the CI mains on South Union Street—sensed a sharp decline in pressure, causing the Winthrop Reg. Station to automatically and continually feed more
pressure into the South Lawrence LP System causing the catastrophic over-pressurization event described above in paragraphs 20 and 21. 

  
 27 

 COUNT ONE 

Failure to Prepare and Follow a Procedure for the Starting Up and Shutting Down of a Pipeline 

Designed to Assure Operation within the Maximum Allowable Operating Pressure 

(49 U.S.C. §§ 60123(a), 49 U.S.C. § 60118(a); 

49 C.F.R. §§ 192.605(a), 192.605(b)(5)) 

The United States Attorney charges: 

94. The United States Attorney re-alleges and incorporates by reference paragraphs 1-93 of this Information. 
 95. From in or about 2015 through on or about September 13, 2018, in in
the District of Massachusetts, the defendant, 
 BAY STATE GAS COMPANY, 

d/b/a Columbia Gas of Massachusetts, 
 by and
through the actions of its employees, and through a pattern of flagrant organizational indifference, knowingly and willfully violated a minimum safety standard for the starting up and shutting of any part of a distribution pipeline, as set forth in
Title 49, Code of Federal Regulations, Section 192.605(b)(5). Specifically, BAY STATE GAS COMPANY, d/b/a Columbia Gas of Massachusetts, knowingly and willfully failed to prepare and follow procedures to remove and relocate regulator control
lines on the South Union Project to assure operation of the South Lawrence LP System within the Maximum Allowable Operating Pressure and safety during maintenance and operations. 

All in violation of Title 49, United State Code, Section 60123(a). 

  
 28 

 
			
		 	ANDREW E. LELLING
		 	United States Attorney
		
	By:	 	 /s/ Neil J. Gallagher, Jr.

		 	Neil J. Gallagher, Jr.
		 	Evan Gotlob
		 	Assistant U.S. Attorneys
		 	

 Dated: February 26, 2020 

  
 29 

 EXHIBIT B 

(Calculation of Profit, Gain or Loss) 
 For
purposes of this Agreement, any such profit or gain shall mean the amount, if any, by which the net purchase price (after related costs and expenses) received by NiSource from the sale of CMA or its gas distribution business (hereinafter
“A”), as the case may be, exceeds the total of: 
  

	 	(i)	 the book value of CMA (including any liabilities assumed by the purchaser) or the business so purchased
(excluding the book value of any CMA assets not included in the sale) (“hereinafter “B”); 

  

	 	(ii)	 the charges for impairment of goodwill and other intangible assets related to CMA (hereinafter “C”);
plus 

  

	 	(iii)	 the aggregate amount of the liabilities of CMA not included in the sale (hereinafter “D”),

 in each case specified in (i)-(iii) above, as reflected on the financial statements of NiSource as of December 31, 2019. 

Stated another way, in sum: 
 A (net purchase
price) 
 – B (book value of assets) + C (impairment of good will/intangible assets) + D (aggregate amount of liabilities) 

= gain or loss 
 The U.S. Attorney reserves the
right to challenge the veracity, accuracy and proper application under GAAP of each of the above described assets and liabilities in parts B, C and D of the calculation. 

 UNITED STATES DISTRICT COURT 

DISTRICT OF MASSACHUSETTS 
  

					
	  
	  	)	  	
	UNITED STATES OF AMERICA	  	)	  	
		  	)	  	
	v.	  	)	  	    Criminal No.
		  	)	  	
	NiSOURCE, Inc.	  	)	  	
		  	)	  	
	 Defendant.
	  	)	  	
	  
	  	)	  	

 DEFERRED PROSECUTION AGREEMENT 

1. Andrew E. Lelling, United States Attorney for the District of Massachusetts (by Assistant U.S. Attorneys Neil J. Gallagher, Jr. and Evan
Gotlob) (the “Government”); and defendant NiSource, Inc. (“NiSource”) (by counsel Alejandro N. Mayorkas, Esq., WilmerHale, LLP and NiSource Chief Executive Officer Joseph Hamrock) hereby enter into the following Deferred
Prosecution Agreement (“Agreement”). 
 2. It is the intention of the parties that this Agreement will cover any and all of
NiSource’s federal criminal liability in the District of Massachusetts arising from the conduct of its wholly-owned subsidiary, Bay State Gas Company, d/b/a Columbia Gas of Massachusetts (“CMA”), or any of NiSource’s conduct that
is related to the conduct alleged in the criminal information filed against CMA (“the CMA Criminal Information”), attached to this Agreement as Exhibit A, and covered by the plea agreement dated February 24, 2020 between the
Government and CMA (“the CMA Plea Agreement,” attached to this Agreement as Exhibit B), or that is in any other way related to the Merrimack Valley Over-Pressurization Event on September 13, 2018 (hereinafter, “the
Event”), including CMA’s and NiSource’s restoration work in the Merrimack Valley following the Event that is currently known to the Government. 

  
 1 

 3. This Agreement is effective for a period beginning on the date on which this Agreement is
signed (“Effective Date”) and ending thirty-six (36) months from the Effective Date (the “Term”). 
 4. The
Government enters into this Agreement based upon the individual facts and circumstances of this case, including: 
  

	 	a.	 NiSource’s agreement to use reasonable best efforts to sell CMA or CMA’s gas distribution business,
to a qualified third-party buyer consistent with the requirements of M.G.L. c. 164, § 96 and Interlocutory Order on Standard of Review, D.P.U. 10-170 and upon the completion of any such sale, to cease and desist any and all gas pipeline
and distribution activities in the District of Massachusetts; 

  

	 	b.	 In the event that CMA or its gas distribution business is sold within CMA’s three (3) year term of
probation, NiSource’s agreement to forfeit and pay a monetary penalty equal to the total amount of any profit or gain from the sale of CMA or CMA’s gas distribution business; 

 

	 	c.	 NiSource’s prior voluntary payments of restitution to the victims of the Event including, but not limited
to, payments to the individuals, businesses and municipalities affected; 

  

	 	d.	 NiSource’s agreement to seek to resolve all pending civil claims, including NiSource’s agreement to
seek to settle the claims filed by the Massachusetts Department of Public Utilities (“MA DPU”); 

  

	 	e.	 NiSource’s acknowledgement that, based on the allegations in the CMA Criminal Information, the Government
has sufficient basis to allege that NiSource is responsible for CMA’s conduct as alleged in the CMA Criminal Information; and 

  

	 	f.	 NiSource’s commitment to fulfill all of the terms of this Agreement. 

5. The Government agrees that so long as NiSource adheres to and complies with the provisions of this Agreement, the Government will not file
criminal charges against NiSource, either for NiSource’s conduct or CMA’s conduct, related to the allegations in the CMA Criminal Information, the Event, or CMA’s and NiSource’s restoration work in the Merrimack Valley following
the Event that is currently known to the Government. In the event of a breach of this Agreement, the Government reserves the right to prosecute NiSource for the conduct related to the allegations in the CMA Criminal Information, the Event, or
CMA’s and NiSource’s restoration work in the Merrimack Valley following the Event that is currently known to the Government or any other conduct the Government in its sole discretion deems appropriate. 

  
 2 

 6. In consideration of the Government’s agreement described above in paragraph 5,
NiSource waives its right to a speedy trial pursuant to the Sixth Amendment to the United States Constitution and Rule 48(b) of the Federal Rules of Criminal Procedure. NiSource also expressly waives and will not plead, argue, or otherwise raise any
statute of limitations or other similar defenses to any criminal charges brought by the Government related to the allegations in the CMA Criminal Information, the Event, or CMA and NiSource’s restoration work in the Merrimack Valley following
the Event, except to the extent to which such a defense would have been available had charges been brought on or before the date on which this Agreement is executed. 

NISOURCE’S OBLIGATIONS 

7. NiSource acknowledges that, based on the allegations in the CMA Criminal Information, the Government has sufficient basis to allege that
NiSource is responsible for CMA’s conduct alleged in the CMA Criminal Information. NiSource will not, through any person authorized to speak on its behalf, make any public statement, in litigation or otherwise, contradicting in whole or in part
NiSource’s acknowledgement set forth above. 
 8. NiSource agrees that it will use reasonable best efforts to sell CMA or CMA’s gas
distribution business to a qualified third-party buyer consistent with the requirements of M.G.L. c. 164, § 96 and Interlocutory Order on Standard of Review, D.P.U. 10-170, and, upon the completion of any such sale, NiSource will cease and
desist any and all gas pipeline and distribution activities in the District of Massachusetts. 

  
 3 

 9. In the event of a sale of CMA or CMA’s gas distribution business following the
execution of a definitive purchase and sale agreement within the three (3) year period of probation under the terms of the CMA Plea Agreement, within thirty (30) days of the later of the sale becoming final or the date on which
post-closing adjustments to the purchase price are finally determined in accordance with the agreement to sell CMA or its gas distribution business, NiSource will forfeit and pay a monetary penalty equal to the total amount of any profit or gain
from the sale of CMA or its gas distribution business. 
 10. Upon request of the Government, NiSource will also promptly provide any and all
records regarding the sale including but not limited to audited financial statements and income tax returns of NiSource, to the extent required to verify the accuracy of any profit, gain or loss amount that resulted from the sale of CMA or
CMA’s gas distribution business. 
 11. NiSource also agrees, as to each of its subsidiaries involved in the distribution of gas through
pipeline facilities in Massachusetts, Indiana, Ohio, Pennsylvania, Maryland, Kentucky and Virginia to implement and adhere to each of the recommendations from the National Transportation Safety Board (“NTSB”) related to NTSB Accident ID
PLD18MR003 regarding the Event. 
 GOVERNMENT’S OBLIGATIONS AND RIGHTS 

12. If NiSource fully complies with all of its obligations under this Agreement, the Government will not file any criminal charges against
NiSource related in any way to the allegations in the CMA Criminal Information, the Event, or CMA’s and NiSource’s restoration work in the Merrimack Valley following the Event currently known to the Government. 

  
 4 

 13. If, however, during the Term of this Agreement, NiSource (1) commits any felony
under U.S. federal law including, but not limited to, any felony violation of the Pipeline Safety Act; (2) gives deliberately false, incomplete, or misleading testimony or information to the Government or to the Court; or (3) otherwise
fails to perform or fulfill each of NiSource’s obligations under this Agreement, NiSource will thereafter be subject to prosecution for any federal criminal violation of which the Government has knowledge, including, but not limited to, federal
criminal violations related to the conduct alleged in the CMA Criminal Information, the Event, or CMA’s and NiSource’s restoration work in the Merrimack Valley following the Event. 

14. The Government, in its sole discretion, will determine whether NiSource has breached the Agreement and whether, as a result, the Government
will pursue prosecution of NiSource and any such prosecution may be premised on information provided by NiSource. 
 15. NiSource also agrees
that, in the event that the Government determines, in its sole discretion, that NiSource has violated any provision of this Agreement, an extension of the Term of the Agreement may be imposed by the Government, in its sole discretion, for up to a
total additional time period of twelve (12) months. Any extension of the Agreement extends all terms of this Agreement throughout the extension period. 

16. In the event the Government determines that NiSource has breached this Agreement, the Government agrees to provide NiSource with written
notice of such breach prior to instituting any prosecution resulting from such breach. Within thirty (30) days of receipt of such notice, or within any longer period of time the Government agrees to in writing, NiSource may respond to the
Government in writing to present its position regarding whether a breach has in fact occurred; whether any breach was material; whether any breach was knowingly or willfully committed; and any other facts and circumstances that NiSource submits are
relevant to the Government’s determination of breach. The Government agrees to consider NiSource’s written submission in determining whether a breach occurred and, if so, whether to institute a prosecution of NiSource. 

  
 5 

 17. In the event the Government institutes a prosecution due to its determination that
NiSource has breached this Agreement: (a) all statements made by or on behalf of NiSource or CMA to the Government or to the Court and any testimony given by or on behalf of NiSource before a grand jury, a court, or any tribunal, or at any
legislative hearings, whether before or after this Agreement, will be admissible in any criminal proceedings brought by the Government against NiSource; and (b) NiSource will not assert any claim under Rule 11(f) of the Federal Rules of
Criminal Procedure; Rule 410 of the Federal Rules of Evidence; or any other federal rule that any such statements or testimony made by or on behalf of NiSource or CMA before or after this Agreement, are inadmissible. 

18. NiSource acknowledges that the Government has made no representations, assurances, or promises concerning what sentence may be imposed by
the Court if NiSource breaches this Agreement, the Government pursues criminal charges, and this matter proceeds to judgment. NiSource further acknowledges that any such sentence is solely within the discretion of the Court and that nothing in this
Agreement binds or restricts the Court in the exercise of its discretion. 
 19. NiSource also agrees that in the event that CMA’s
guilty plea is not accepted by the Court or is withdrawn for any reason, or if CMA should fail to perform an obligation under the CMA Plea Agreement prior to the sale of CMA or its gas distribution business, the Government may, at its sole option,
render this Agreement null and void. 

  
 6 

 20. This Agreement is between NiSource and the United States Attorney’s Office for the
District of Massachusetts. This Agreement does not bind any other federal, state, or local prosecuting authorities. Furthermore, this Agreement does not prohibit the United States, any agency thereof, or any third party from initiating or
prosecuting any civil or administrative proceedings directly or indirectly involving NiSource, including, but not limited to, proceedings by the Internal Revenue Service relating to potential civil tax liability. 

21. Any notice, certification, resolution, or report to the Government under this Agreement will be given by personal delivery, overnight
delivery by a recognized delivery service, or registered or certified mail, addressed to: 
 Chief, Public Corruption and
Special Prosecutions Unit 
 U.S. Attorney’s Office for the District of Massachusetts 

John Joseph Moakley Federal Courthouse 

One Courthouse Way, Suite 9200 

Boston, MA 02210 

22. Any notice to NiSource under this Agreement will be given by personal delivery, overnight delivery by a recognized delivery service, or
registered or certified mail, addressed to: 
 Alejandro N. Mayorkas, Esq. 

WilmerHale LLP 

1875 Pennsylvania Avenue NW 

Washington, DC 20006 

Carrie J. Hightman 

Chief Legal Officer 

801 East 86th Avenue 

Merrillville, IN 46410 

23. Notice will be effective upon actual receipt by the Government or NiSource. 

24. The Government’s acceptance of delivery of any notice, certification, resolution, or report referenced in this Agreement, or the
absence of any response thereto, is not, and will not be construed as, evidence of compliance with this Agreement or any other applicable laws, policies, or procedures. 

  
 7 

 25. This Agreement, to become effective, must be signed by all of the parties listed below.
No promises, agreements, terms, or conditions other than those set forth in this Agreement will be effective unless memorialized in writing and signed by all parties or confirmed on the record before the Court. 

 

			
	FOR THE UNITED STATES
		
		 	ANDREW E. LELLING
		 	UNITED STATES ATTORNEY
		
	    By:	 	 /s/ Neil J. Gallagher, Jr.

		 	Neil J. Gallagher, Jr.
		 	Evan Gotlob
		 	Assistant United States Attorneys
	
	FOR NISOURCE, INC.
		
	    By:	 	 /s/ Joseph Hamrock

		 	Joseph Hamrock
		 	Chief Executive Officer
		 	NiSource, Inc.
		
	    By:	 	 /s/ Carrie J. Hightman

		 	Carrie J. Hightman
		 	Executive Vice President and Chief Legal Officer
		 	NiSource, Inc.
		
	    By:	 	 /s/ Alejandro N. Mayorkas, Esq.

		 	Alejandro N. Mayorkas, Esq.
		 	WilmerHale, LLP
		 	Counsel for NiSource, Inc.

  
 8 

 UNITED STATES DISTRICT COURT 

DISTRICT OF MASSACHUSETTS 
  

					
	 UNITED STATES OF AMERICA
  

v.
  

BAY STATE GAS COMPANY, doing business as (“d/b/a”) Columbia Gas of Massachusetts,

 
 Defendant
	  	 )
 )

)
 )

)
 )

)
 )

)
 )

)
 )
	  	  
 Criminal No.

 
 Violation:
  

Count One: Failure to Prepare and Follow a Procedure for the Starting Up and Shutting Down of a Pipeline Designed to Assure Operation within the Maximum
Allowable Operating Pressure
 (49 U.S.C. §§ 60123(a),60118(a); 49 C.F.R. §§ 192.605(a), 192.605(b)(5))

 INFORMATION 

At all times relevant to this Information: 

General Allegations 
 1.
Bay State Gas Company, d/b/a Columbia Gas of Massachusetts (“CMA”), was a Massachusetts corporation that supplied natural gas to approximately 325,000 customers in Massachusetts in and around Springfield, Brockton, and three Merrimack
Valley communities in Lawrence, Andover, and North Andover. CMA was a wholly-owned subsidiary of NiSource, Inc. (“NiSource”), a publically traded company based in Merrillville, Indiana. 

2. CMA engaged in the transportation of natural gas, was an operator of a gas pipeline system as well as a gas distributor operator
(“Operator”), and was subject to the jurisdiction of the U.S. Department of Transportation (“US DOT”) as well as state and local regulations. 

  
 1 

 CMA’s Low-Pressure Gas Distribution System in South Lawrence 

3. CMA owned and operated a network of gas pipeline systems for the transportation and delivery of natural gas that included a series of
approximately 25 different low-pressure (“LP”) gas distribution systems in Massachusetts. Among these systems, CMA owned and operated a LP gas distribution system in the area of South Lawrence (“the South Lawrence LP System”).

 4. The South Lawrence LP System used fourteen (14) regulator stations (“Reg. Stations”) to supply natural gas to main
distribution lines (“mains”) and control downstream pressure. The Reg. Stations were belowground and contained “regulators” that monitored and controlled downstream gas pressure. 

5. Natural gas came into the South Lawrence LP System at high pressure, about 77 pounds per square inch gauge (“psig”). The
regulators decreased pressure to approximately 0.5 psig or 14 inches of water column (“w/c”), a more refined pressure measurement. The Reg. Stations supplied mains with gas through an outlet pipe. Mains, in turn, supplied gas to individual
houses and businesses through service lines at roughly the same pressure, 0.5 psig or 14 inches w/c. 
 6. The fourteen (14) Reg.
Stations that were part of the South Lawrence LP System controlled and regulated pressure in an automated manner. Based on the pressure the regulator sensed downstream, the regulator valve opened or closed to control downstream pressure at a pre-set
limit called a “set-point” to ensure that the pressure in the system did not exceed the Maximum Allowable Operating Pressure (“MAOP”) and become unsafe. Although it varied, the MAOP for the South Lawrence LP System was generally
14 inches w/c. 

  
 2 

 7. Each regulator was equipped with a “regulator control line” also called a
“control line,” “sensing line,” or “static line” (“control line”). A control line was generally a 3⁄4 inch steel pipe that
connected the regulator to the main downstream. Without a control line connected from the regulator to the downstream gas main, the regulators in the South Lawrence LP System could not properly function. 

8. Each Reg. Station in the South Lawrence LP System had at least two regulators, a “worker regulator” and a “monitor
regulator,” each with a control line that sensed downstream pressure and connected back to the regulator, thereby enabling the regulator to regulate system pressure. The worker regulator was the primary regulator that maintained system
pressure. The monitor regulator was the redundant backup in case the worker regulator was damaged or malfunctioned. If both control lines malfunctioned or failed to read any downstream pressure, the worker regulator would automatically and
continually increase the pressure resulting in an “over-pressurization” of the LP system. 
 Background of the Pipeline Safety
Act 
 9. Congress first established minimum safety standards for the transportation of natural gas and other gases by pipeline in the
Natural Gas Pipeline Safety Act of 1968 (“NGPSA”) and directed the Secretary of the US DOT to issue regulations to protect against risks to life and property posed by pipeline transportation and pipeline facilities. 

10. In 1970, in accordance with NGPSA, the Secretary of the US DOT issued regulations codified in Part 192 of Title 49 of the Federal Code of
Regulations, Subparts A through M (“Part 192”). 

  
 3 

 11. In 1979, Congress amended the NGPSA to add criminal penalties for knowing and willful
violations of any Part 192 regulation as part of the Hazardous Liquid Pipeline Safety Act of 1979 (“HLPSA”). 
 12. In 1994,
Congress enacted the Pipeline Safety Act (“PSA”), 49 U.S.C. § 60101 et seq. The PSA combined and re-codified, without substantive changes, the two then existing pipeline safety statutes, NGPSA and HLPSA. The purpose of the PSA
was to “provide adequate protection against risks to life and property posed by pipeline transportation and pipeline facilities.” 49 U.S.C. § 60102(a)(1).  

13. In 2004, Congress amended the PSA by enacting the Norman Y. Mineta Research and Special Programs Improvement Act of 2004 to create the
Pipeline and Hazardous Materials Safety Administration (“PHMSA”), an agency within the US DOT. 
 14. In 2006, Congress enacted the
the Pipeline Inspection, Protection, Enforcement and Safety Act (“PIPES”) which directed PHMSA to “prescribe minimum standards for integrity management programs for distribution pipelines.” 49 U.S.C. § 60109(e). 

15. On December 4, 2009, PHMSA promulgated the regulations codified in Subpart P of Part 192, entitled “Gas Distribution Pipeline
Integrity Management (IM).” Subpart P requires an Operator to “develop and implement” an IM Program by no later than August 2, 2011. 49 C.F.R. § 192.1005. 

Regulations Regarding Pipeline Operations and Over-Pressurization 

16. Subpart L of Part 192 prescribes the minimum requirements for safe pipeline operations and states that “no person may operate a
segment of pipeline unless it is operated in accordance with this subpart.” 49 C.F.R. § 192.603(a). 

  
 4 

 17. Part 192 defines the Maximum Allowable Operating Pressure (“MAOP”) as
“the maximum pressure at which a pipeline or segment of a pipeline may be operated[.]” 49 C.F.R. § 192.3. It also defines a “low-pressure distribution system” as a “distribution system in which the gas pressure in
the main is substantially the same as the pressure provided to the customer.” 49 C.F.R. § 192.3. Subpart L further mandates that “[n]o person may operate a low-pressure distribution system at a pressure high enough to make unsafe
the operation of any connected and properly adjusted low-pressure gas burning equipment” (referring to gas appliances). 49 C.F.R. § 192.623(a). 

18. Under Part 192, “[e]ach operator shall prepare and follow for each pipeline, a manual of written procedures for conducting operations
and maintenance activities,” otherwise known as an operation and maintenance manual (“O&M Manual”). Among other requirements, § 192.605(b)(5) requires that the O&M Manual include a procedure for “starting up and
shutting down any part of a pipeline in a manner designed to assure operation within the MAOP limits prescribed by this part” in order “to provide safety during maintenance and operations.” 

19. Subpart L also requires an operator to “keep records necessary to administer the procedures under § 192.605.” 49 C.F.R.
§ 192.603. Among the records required to be kept, and made available to operating personnel include, “construction records, maps and operating history.” 49 C.F.R. § 192.605(b)(3). 

The September 13, 2018 Over-Pressurization Event 

20. On or about September 13, 2018, beginning at approximately 4:00 p.m., a series of fires and explosions resulted from an
over-pressurization of the South Lawrence LP System (“the Event”). By approximately 4:07 p.m., the actual operating pressure of the South Lawrence LP System increased to more than 35 inches of w/c and ultimately increased until the actual
operating pressure was approximately 13 times greater than the MAOP. 

  
 5 

 21. The over-pressurization of the South Lawrence LP System caused multiple fires and
explosions including inside house-hold appliances and residences. The resulting fires and explosions caused substantial damage to approximately 131 residential and commercial structures in the communities of Lawrence, Andover, and North Andover,
including the total destruction of three houses in Lawrence, injured 22 people, killed one individual in Lawrence and severely disabled another. 

Operational Notice 15-05 

22. By at least September 2015, CMA’s employees in the Lawrence Division from Field Engineering, Construction, and Measurement and
Regulation (“M&R”), as well as Senior Field Engineering Management in CMA were aware of the particular dangers associated with belowground control lines. In particular, these employees and CMA knew that a faulty, damaged, or
unaccounted for control line on a Reg. Station in a LP system could lead to a dangerous over-pressurization of the system resulting in fires and explosions in a populated area. 

23. On or about September 2, 2015, NiSource and CMA internally disseminated Operational Notice (“ON”) 15-05, entitled
“Below Grade Regulator Control Lines: Caution When Excavating Near Regulator Stations or Regulator Buildings.” The impetus for ON 15-05 was a “near miss” experience involving another NiSource company outside of
Massachusetts where a construction crew, excavating to repair a gas leak near a Reg. Station, came close to hitting a control line and was unaware of its purpose and importance. 

  
 6 

 24. The stated objective of ON 15-05 was two-fold: “1. Bring awareness to Company
and Contractor employees regarding the existence and importance of regulator control lines . . . that help to provide critical sensing information for the accurate monitoring and control of outlet pressure into the Company’s piping systems . .
..” and “2. Set forth required actions for future Company excavations.” 
 25. ON 15-05 described what Reg. Station
control lines did, and said control lines: 
 . . . sense the outlet pressure of the regulator. Based on the pressure sensed through the
control line, the regulator valve will open or close to control the downstream pressure at the set point of the regulator. 
 26. ON 15-05
further warned that a broken or disrupted control line could lead to a “catastrophic event:” 
 If a control line breaks,
the regulator will sense a pressure loss, causing the valve to open further, resulting in an over pressurization of the downstream piping system, which may lead to a catastrophic event. The same result occurs if the flow through the control line is
otherwise disrupted (e.g., control line valve shut off, control line isolated from the regulator it is controlling). 
 27. Finally, the
“Required Action” from ON 15-05 to the Company’s employees was that: 
 any Company excavations within the footprint of
a [Reg. Station] and/or within 25 feet of a station building or fence shall only proceed with M&R standing by throughout the excavation . . . 

28. While over-pressurization that could result in a “catastrophic event” was a known risk, CMA never prepared or implemented any
written procedure to ensure that belowground control lines were accounted for, and, if necessary, removed or relocated. Instead, CMA relied upon an informal practice of encouraging verbal communication among members of Field Engineering,
Construction and M&R when excavation took place within the footprint of a Reg. Station. 

  
 7 

 CMA’s Gas System Enhancement Program (“GSEP”) 

29. An Act Relative to Gas Leaks, Massachusetts General Law, Chapter 164, Section 145), effective October 1, 2014 (“Section
145”), provided Massachusetts gas utility companies with a financial incentive to replace or improve aging or leaking gas infrastructure. Under Section 145, a gas distribution company was permitted to submit a Gas System Enhancement
Program (“GSEP”) plan to the Massachusetts Department of Public Utilities (“MA DPU”). Among other requirements, the overall GSEP plan had to include a timeline for the removal of all leak-prone infrastructure within 20 years.

 30. If accepted by the MA DPU, Section 145 permitted a gas distribution company “to begin recovery of the estimated costs of
[pipe replacement] projects included in the plan on May 1 of the year following the initial filing and collect any revenue requirement, including property taxes and return associated with the plan.” More broadly, Section 145 permitted
a gas company to more quickly recover its capital costs associated with its yearly forecasted pipeline replacement through the rates the MA DPU permitted the Company to charge its customers. 

31. On or about October 31, 2014, CMA submitted its first annual GSEP plan and thereafter in 2015, 2016 and 2017. In the 2014 GSEP plan,
CMA proposed to replace 44 miles of leak-prone mains and recover approximately $2.6 million in related costs. In its later GSEP plans submitted to the MA DPU, CMA sought to recover approximately $9 million in costs for 2016, approximately $16.8
million in 2017 and approximately $26.8 million in 2018. 
 32. In total, between 2015 and 2018, as part of the GSEP program, CMA earned a
total of approximately $49.3 million in accelerated capital cost recovery and, after costs, realized a total profit of approximately $26.5 million. 

  
 8 

 The South Union Street Project 

33. In or about August 2016, CMA began construction on a GSEP pipe replacement project in the South Lawrence LP System called the “South
Union Street Project” (“the South Union Project”). The Field Engineering Department in Lawrence selected the South Union Project in part due to a pending City of Lawrence water-main project that would encroach upon the two aging
cast-iron (“CI”) mains on South Union Street. 
 34. The South Union Project sought to replace two CI mains from the intersection
of Market Street to Winthrop Avenue on South Union Street, measuring approximately 6 inches and 8 inches in diameter, with one plastic main. Once installed, the new plastic main would be “tied-in” and connected to the pipes on the side
streets that supplied gas to customers through service lines. As typical in pipe replacement projects, upon completion of the project, the two CI mains on South Union Street would be completely disconnected from the LP system and abandoned in the
ground. 
 35. The scope of the South Union Street project included the replacement of the CI mains near a belowground Reg. Station located
at the intersection of Winthrop Avenue and South Union Street (the “Winthrop Reg. Station”), one of the fourteen (14) different regulator stations that monitored and controlled downstream pressure in the South Lawrence LP System. 

36. From in or about September 2015 and continuing up until the time of the Event, two control lines connected the Winthrop Reg. Station to the
two CI mains on South Union Street. 

  
 9 

	A.	 The Control Lines at the Winthrop Avenue Reg. Station 

37. In or about early September 2015, two CMA M&R technicians conducting an annual inspection of the Winthrop Reg. Station discovered that
one of the control lines on the Winthrop Reg. Station failed to read any downstream pressure. Under CMA’s O&M Manual, each belowground Reg. Station was required to have at least two functional control lines (one for the “worker”
regulator, one for the “monitor” regulator) that connected the Reg. Station to the mains to monitor and regulate downstream pressure. 

38. Further investigation by the M&R technicians revealed that the control line reading zero pressure had been erroneously left on the CI
main on Winthrop Avenue sometime in 2015, near the intersection of South Union Street, during an earlier pipe replacement project known as the “Parker Street Project.” Having only one functional control line was a violation of CMA’s
O&M procedures and created a significant risk of an over-pressurization event had the second control line also failed. 
 39. Following
the discovery of the control line erroneously left on the abandoned pipe, on or about September 21, 2015, a CMA Construction Leader (“Construction Leader-1”) coordinated the installation of a new control line for the Winthrop Reg.
Station. Instead of connecting to the abandoned main on Winthrop Avenue, the new control line connected the Winthrop Reg. Station to the 8-inch CI main on South Union Street approximately 39 feet from the Winthrop Reg. Station, a distance further
than the 25 feet parameter in ON 15-05. 

  
 10 

 40. Following the installation of the new control line, a CMA inspector created a hand-drawn
“as-built” drawing to document the location of the new control line. Although not foreseen as part of the construction in the Parker Street Project, records of the installation of the new control line from the Winthrop Reg. Station became
part of CMA’s records relating to the Parker Street Project. As a result of the installation, a darkened asphalt trench with spray-painted markings remained visible on the street from the Winthrop Reg. Station across South Union Street to the
location of the CI mains up through the day of the Event. 
 41. Less than a year later, on or about May 13, 2016, a third party
construction crew conducted an additional pressure test of the same newly installed control line from the Winthrop Reg. Station. As part of the process, the construction crew, with a CMA inspector onsite, excavated and removed a portion of the new
control line and re-attached the control line again to the 8-inch South Union CI main. 
  

	B.	 CMA’s Records of Control Lines in Lawrence 

42. Prior to the Event, CMA did not maintain consistent and reliable records of control lines. Instead of mapping control lines into their main
computerized mapping system, Geographic Information System (“GIS”), records of control lines were primarily located in a patchwork of multiple locations, including records of completed construction projects known as the “Work Done
Files” and “Capital Close-Out” Files; a paper notebook of the location of critical valves known as the “Critical Valve Book” (“CVB”); and in a binder of documents that M&R personnel kept in their CMA trucks.

 43. As employees from CMA Engineering, Construction and M&R in Lawrence knew, the records regarding the location of control lines were
often outdated, incomplete and thus unreliable. Records of the locations of the control lines for the Winthrop Reg. Station were first located in the CVB, a binder that contained hard copies of maps that depicted the location of “critical
valves,” valves designated by both state and federal code as critical. The Lawrence 

  
 11 

 
Engineering Department kept and maintained the CVB, but did not regularly or consistently update information about the location of control lines. For example, for the Winthrop Regulator Station,
the CVB had the location of the control lines as they existed in approximately May 2010, but when the new control line was installed in or about September 2015, the CVB was never updated to reflect the change. 

44. A second location for records of control lines was the Work-Done and Capital Close-Out Files. Following the completion of a construction
job, CMA Construction inspectors completed hand-drawn “as-built” drawings to record the location of pipes and new infrastructure. In the case of the Winthrop Reg. Station, while the Work-Done and Capital Close-Out File for the Parker
Street Project included the “as-built” drawing for the September 2015 installation of the new control line, the drawing did not depict the location of the second control line from the Winthrop Reg. Station to the CI main on South Union
Street. 
 45. A third location for records of control lines were the binders of documents and hand-drawn diagrams often referred to as
“bibles” that M&R personnel kept in their trucks that were not maintained in a centralized location. With regards to the Winthrop Reg. Station, the M&R book contained two diagrams with information about the location of the control
lines in approximately 2000 and 2010, but did not reflect the location of the newly installed control line from September 2015. 
 46. While
GIS, CMA’s most readily available and centralized record of their pipeline system, depicted the location of the Reg. Stations and the outlet pipes, it generally did not include any information about the control lines. Furthermore, despite
concerns that CMA engineers raised about control lines not being consistently mapped in GIS, CMA deliberately chose to not include consistent and reliable information about the location of control lines in GIS and instead relied upon the patchwork
of records described above that were often outdated and unreliable. 

  
 12 

 47. For example, on or about April 24, 2017, a NiSource engineer in Gas Systems
Planning (“GSP”) working with CMA Field Engineers scheduled a telephonic meeting entitled “Feasibility discussion of mapping reg station control lines in GIS” with the Leader of GIS Capital Closeout and a Leader of Field
Engineering (“FE Leader”). During the meeting, GSP Engineer expressed concerns that control lines were not included in GIS and was adversely affecting the accuracy of gas pressure models for Field Engineers. 

48. Despite this concern, CMA deliberately chose not to change its practice and failed to include the location of control lines into GIS
because of the substantial cost involved in proactively locating and mapping control lines. Instead, the primary use and utility of GIS continued to be the accounting of the replacement and abandonment of CI pipe for capital recapture in the GSEP
program, a financial benefit for CMA. 
  

	C.	 The Responsibility for Control Lines 

49. Without any clear direction and implementation of a procedure to address the dangers associated with control lines, and despite the known
risk, employees in CMA’s Lawrence Division in Engineering, M&R and Construction frequently ignored and shifted the responsibility for locating and accounting for control lines to other Departments. For example, while employees in the Field
Engineering Department in Lawrence considered the control lines to be an M&R responsibility (because they were associated with Reg. Stations), M&R personnel considered control lines to be an Engineering responsibility because the control
line pipes extended outside the boundaries of the Reg. Station. 

  
 13 

	D.	 Early Planning Stages of the South Union Project 

50. In and around 2015, CMA Field Engineering in Lawrence was understaffed and consisted only of two Field Engineers: a more junior Field
Engineer (“Field Engineer-1”) whom CMA hired in approximately July 2015 with no prior professional engineering experience and a more senior Field Engineer ( “Field Engineer-2”). Because of Field Engineer-2’s workload, in or
about late 2015, Field Engineer-2 gave the South Union Project to Field Engineer-1. In terms of size, complexity and budget, the South Union Project, at a projected cost of over $1.4 million, was the largest project on which Field Engineer-1 had
ever worked to date. 
 51. In or about February 2016, Field Engineer-1 finalized an initial Proposed Drawing (“Pro-Drawing”) for
the South Union Project that included maps derived from GIS that depicted the location of the existing gas main to be abandoned and the proposed location of the new plastic main. The Pro-Drawing also depicted the location of the Winthrop Reg.
Station and outlet pipes, but because CMA did not include information about control lines in GIS, the Pro-Drawing also did not include any information about control lines. 

52. While Field Engineer-1 and others members of Field Engineering knew the precise danger associated with control lines, throughout the
duration of the project from approximately late 2015 and continuing until the day of the Event, Field Engineer-1 never took any action to locate the control lines associated with the Winthrop Reg. Station. Moreover, despite the high probability of a
catastrophic over-pressurization of a LP system that would result if a Reg. Station’s control lines were left connected to a main that was then replaced and abandoned, CMA and CMA’s Field Engineering Department never implemented any formal
written procedure to ensure the necessary relocation of control lines. 

  
 14 

 53. Instead, CMA followed an informal practice of encouraging verbal communication and
collaboration among members of Field Engineering, Construction and M&R involved in a particular project including through a process called “Constructability Reviews.” 

54. For example, on or about March 1, 2016, Construction Leader-1 and Field Engineer-1 engaged in the first of three
“Constructability Reviews” on the South Union Project, a discussion between Field Engineering and Construction that followed a two-page checklist entitled “Constructability/Safety Review.” The two-page checklist, from a
CMA template, was required documentation for a pipe replacement project, but made no reference to control lines and did not require a formal discussion with M&R. 

55. Despite the fact that Construction Leader-1 knew that in September 2015, a new control line had been installed from the Winthrop Reg.
Station to the CI main on South Union Street that was now planned for abandonment in the South Union Project, Construction Leader-1 never discussed with or identified to Field Engineer-1 the need to relocate the control line on the South Union
Street CI main. Instead, Construction Leader-1 encouraged Field Engineer-1 to discuss with then-Leader of M&R (“M&R Leader-1”) the type and size of the valve needed for a new outlet pipe that would connect the Winthrop Reg. Station
to the new plastic main on South Union Street. 

  
 15 

 56. While Field Engineer-1 generally discussed the South Union Project with M&R
Leader-1, Field Engineer-1 did not have a meaningful conversation about the control lines or the necessity to relocate the control lines at the end of the project with M&R Leader-1. Instead, Field Engineer-1 assumed that nothing further was
needed from Engineering even though Field Engineer-1 knew that nothing had been done to plan for, or actually relocate, the control lines before the final abandonment of the CI mains on South Union Street. In doing so, CMA recklessly disregarded a
known and certain risk of a catastrophic over-pressurization. 
  

	E.	 Approval of the South Union Street Project 

57. In or about March 2016, Field Engineer-1 submitted the South Union Project for approval first to the Leader of FE and then to the Manager
of Field Engineering for CMA (“FE Manager”). Among the materials that Field Engineer-1 submitted through the company’s Work Management System were a scope map of the project, specific tie-in and abandonment procedures for the various
stages of the project, and a Project Budget Request (“PBR”) that indicated that the total cost of the project was approximately $1.4 million, but which would ultimately result in the retirement of approximately 7,500 feet of CI main pipe
for the GSEP Program. 
 58. The PBR also made clear that the project involved the ultimate abandonment of a substantial portion of CI mains
but not their entirety “due to the regulator station at the intersection of S. Union Street and Winthrop Ave and that the LP system in this area depends on the stretch of LP mains on S. Union St.” The documents that Field Engineer-1
submitted through WMS Docs to senior Engineering Management did not include any procedure for the relocation of the control lines before the final abandonment of the CI mains. 

  
 16 

 59. Even though Field Engineering was ultimately responsible for the design and procedures
for the execution of the South Union Project, and Engineering Management knew that the South Union Project was Field Engineer-1’s largest and most difficult project to-date, members of Field Engineering Management never addressed the need to
relocate, or account for, the control lines on the Winthrop Reg. Station to prevent an over-pressurization event. Instead, Field Engineering Management focused its’ project review on cost and budget issues. Both the FE Leader and FE Manager
approved the project for release to the construction phase without any discussion about control lines or concerns about over-pressurization. 

Construction of the South Union Project in 2016 

60. In or about July 2016, construction of the South Union Project began with a third-party contractor construction crew and one of three CMA
inspectors onsite. From in or about August 2016 through the remainder of 2017, a third-party contractor (“CMA Inspector-1”) served as the project’s primary inspector. On at least two different occasions in 2016, the construction crew,
with a CMA inspector onsite conducted work in and around the Winthrop Reg. Station. 
 61. First, on or about August 9, 2016, the
construction crew excavated in the area of the Winthrop Reg. Station in order to install the new plastic main directly under the two control lines that connected the Winthrop Reg. Station to the CI main’s on South Union Street. Even though a
CMA inspector was onsite during the work, CMA did not document or record the location of the control lines. 
 62. Second, on or about
October 17, 2016, the construction crew installed an outlet pipe from the Winthrop Reg. Station to the newly installed plastic main. The same day, in an email at approximately 9:09 p.m., Construction Leader-1 informed M&R Leader-1 that
construction was “working on the low pressure outlet [at the Winthrop Reg. Station] . . . and eventually moving the static lines to the new outlet piping.” 

  
 17 

 63. On or about October 27, 2016, CMA was required to discontinue construction on the
South Union Project due to a citywide moratorium from the City of Lawrence on all gas, water and sewer construction projects in Lawrence. Thereafter, from in or about 2017 until in or about early 2018, the City of Lawrence discontinued authorizing
permits for all but a limited number of public utility construction projects due to a concern about a lack of coordination and communication about ongoing construction projects. 

64. While originally planned for completion by the end of 2016, due to the citywide moratorium, in late 2016 the project was placed on hold. By
in or about October 2016, the construction crew installed and “energized” the new plastic main on South Union Street by feeding the main with gas from the Winthrop Reg. Station. The construction crew, however, was unable to begin any of
the “tie-in” and abandonment procedures to “tie-in” or connect the side-streets to the new plastic main and thus was also unable to abandon the CI mains on South Union Street. 

65. By December 2016, CMA Inspector 1’s notes on the tie-in procedures to Field Engineering made clear that the regulator at the Winthrop
Reg. Station was still connected to the old CI-mains on South Union Street and were “NOT CUT-OFF AS OF 12-9-16,” meaning that gas from the Winthrop Reg. Station was still feeding the two CI mains on South Union Street. 

66. Around the same time, Construction Leader-1 and CMA Inspector-1 had discussions about the need to eventually move the control lines, but
neither took any material action to ensure that the controls lines were moved at the appropriate time to prevent a catastrophic over-pressurization event. Moreover, by the completion of the project in 2018, Construction Leader-1 was working in a new
position and CMA Inspector-1 was working on different construction projects. 

  
 18 

 67. As a result, though it was originally planned to be one of three “carry-over
projects” that was at first scheduled for 2017, the continued construction of the South Union Project was ultimately delayed until approximately May 2018. 

The Project Cost Review of the South Union Project in 2017 

68. On or about January 16, 2017, Field Engineer-1 submitted an updated PBR for the “carry-over” South Union Project to Field
Engineering Management. In contrast to the first PBR submitted for the South Union Project on March 9, 2016, the updated PBR had an estimated total additional cost of more than $1.1 million with a projected completion date of the fall of 2017,
though no construction took place in 2017. 
 69. As a result of the increased costs related to the South Union Project, the FE Manager
scheduled a “Project Cost Review” to take a closer look at the South Union Project “due to its’ size and the financial impact to the budget.” 

70. The Project Cost Review for the South Union Project took place on or about February 17, 2017 and included a presentation from Field
Engineer-1 and Construction Leader-1 to the FE Manager. The presentation was focused on cost and included a slide entitled “Work Completed in 2016 (what did we get for our money).” The presentation also addressed the construction
involving the Winthrop Reg. Station and made clear was still feeding both old CI mains as well as the new plastic main on South Union Street. The presentation also included a timeline of events that emphasized the fact that “City of Lawrence
shut down all work” on October 17, 2016 as the primary reason for the “extended contracting costs.” 

  
 19 

 71. While over three consecutive years in 2016, 2017 and 2018 both the FE Manager and FE
Leader participated in the approval of the South Union Project and a more detailed Project Cost Review in February 2017, no one from Field Engineering involved in the project ever specifically addressed the need to account for the control lines on
the Winthrop Reg. Station to prevent a known risk of catastrophic over-pressurization. Instead, CMA and Field Engineering’s evaluation of risk focused on the actual occurrence of prior events affecting pipeline integrity and the fact that,
despite a 2015 “near-miss” involving control lines within NiSource, CMA had never previously had a serious over-pressurization event involving control lines. 

Field-Engineering’s Focus on GSEP Goals and Company Earnings 

72. While CMA Field Engineering was ultimately responsible for the design and written procedures relating to pipeline replacement projects,
the focus of the FE Manager’s position was the management and administration of CMA’s Capital Expenditure and GSEP Program, and promoting the achievement of the company’s financial objectives. Following the initiation of the GSEP
Program in or about 2015, CMA dictated yearly mileage goals under the GSEP program that increased annually. The FE Manager made clear to CMA employees that meeting GSEP mileage goals was directly connected to company earnings. 

73. For example, on or about January 6, 2017, following the completion of the first full year of GSEP in 2016, the FE Manager emailed
Engineering, Construction and Senior Management in CMA to tout the booking of approximately $67.3 million in capital expenditures as a “huge milestone” and stated that their meeting “the GSEP targets is contributing to the
earnings of CMA.” 

  
 20 

 74. In addition, during monthly Capital Program Management Meetings, the FE Manager
frequently encouraged CMA employees from Construction and Engineering to timely execute and close-out capital GSEP projects and connected the completion of these projects to company earnings. In April 2016, the FE Manager’s presentation
included a graphic linking the terms “Concept,” “Execute,” and “Close Out” to promote the timely completion of projects. By April 2018, the FE Manager added the term “Earnings” to flow directly from the
“Close Out” or completion of GSEP projects to emphasize the point that company earnings derived directly from completed GSEP projects. 

75. In addition to touting success, the FE Manager also frequently expressed dissatisfaction directly to subordinates and direct reports about
the failure to meet GSEP goals for the retirement of “priority pipe.” For example, on or about November 16, 2017, the FE Manager emailed that “failing to meet a goal of retiring 234,000 ft will be severely frowned upon. (think
Game of Thrones . . . :-).” 
 76. On or about March 12, 2018, after CMA had reported the retirement of only 43 miles of pipe,
the FE Manager emailed that, “We better have retired more than 43 miles of priority pipe! More like 53 miles.” 
 77. On or
about September 7, 2018, following an email from the leader of the Capital Closeout that CMA was approximately 14 miles behind its goal for the retirement of priority pipe, the FE Manager emailed a group of subordinates, “For CMA we are 14
miles behind. My question to the group, is anyone concerned that we will not meet our target for the year? If so, what can we do to mitigate the risk?” referring to the risk of failing to meet the GSEP goal rather than any particular risk of
pipeline integrity or safety. 

  
 21 

 The M&R Department in Lawrence 

78. Between approximately 1988 and January 2018, CMA’s M&R Department in Lawrence was primarily responsible for maintaining the Reg.
Stations and ensuring compliance with state and federal regulations as well as the company’s internal Gas Standards that were based on state and federal regulations, primarily Part 192. During the same period of time, among other
responsibilities, M&R was also responsible for maintaining and staffing a Liquefied Natural Gas (“LNG”) and Liquid Propane Gas (“LPG”) Plant in the Lawrence area that provided additional supplies of gas for winter. 

79. In or about 2017, CMA Senior Management proposed a structural change to the Lawrence M&R Department, already in place in the Brockton
and Springfield M&R Departments, that would divide the responsibility for M&R and the LNG/LPG Plant into two separate departments. By no later than mid-2017, M&R Leader-1 complained to CMA’s Vice President and Operations Center
Manager (“OCM-1”) that the change would be a bad decision, resulting in a lack of resources to manage not only the LNG/LPG Plant, but the area Reg. Stations. 

80. Specifically, because the six total qualified employees in M&R could not shift responsibility between Plants and M&R as needed,
only two M&R personnel would be left to manage all the Reg. Stations in Lawrence, Andover and North Andover. Around the same time, CMA Senior Management also knew that CMA needed more use of its LNG/LPG Plant, particularly in winter, due to the
recent defeat of a proposed transmission pipeline in Northern Massachusetts, requiring four M&R Technicians to work 12-hours shifts to operate the Plant around-the-clock with a minimum staff of two employees per shift. According to an October
2017 email regarding M&R Leader-1’s concern, “That leaves no time to respond to regulator station issues or the like.” 

  
 22 

 81. Pursuant to a request from CMA’s Vice President, M&R Leader-1 was required to
put together “a business case” for more resources in M&R. As a result, on or about October 16, 2017, M&R Leader-1 made a presentation to CMA’s Vice President, OCM-1 and the Finance Director about the need for more
resources in M&R and the Plant. During the meeting, M&R Leader-1 described the need for more resources as “urgent” and warned that there were potential consequences for not adding the resources, including the fact that M&R
could not adequately respond if there were multiple Reg. Station concerns. While the CMA Vice President ultimately agreed to provide the additional resources that M&R Leader-1 requested, CMA did not secure more resources for M&R until after
the Event, and still divided M&R and the Plant into separate divisions. 
 82. Specifically, between in or about December 2017 and April
2018, CMA senior management shifted the responsibility for Lawrence M&R and Reg. Stations from M&R Leader-1 to the leader of M&R for Brockton and Springfield (“M&R Leader-2”) while M&R Leader-1 retained responsibility
for the Plant. By in or about May 2018, M&R Leader-1, the sole CMA employee with the most knowledge of all Lawrence Reg. Stations, abruptly retired from CMA. 

83. Around the same time, in April 2018, CMA shifted managerial responsibilities in Lawrence in order to focus on the “rate
case” before the MA DPU to increase the rates CMA could charge to CMA’s customers, based in part on the GSEP Program. According to a January 29, 2019 email from the Vice President of CMA, “After the filing [of the rate case in
April 2018], the next six to eight months are focused on the case management and the litigation process – creating a significant burden on resources.” 

  
 23 

 84. In order to shift CMA’s focus to the upcoming rate case, in late January 2018, CMA
temporarily gave the Lawrence Manager of Systems Operations (“OCM-2”) the additional responsibility of serving as the Lawrence OCM, with oversight over M&R in Lawrence even though OCM-2 had no prior experience with M&R as well as
no understanding of ON 15-05 and the importance of control lines. 
 The Continuation of the South Union Project in 2018 

85. On or about January 19, 2018, for the third consecutive year, Field Engineer-1 submitted a PBR for the South Union Project to Senior
Field Engineering Management. After several revisions to the budget and cost documents that the FE Manager directed, by on or about March 20, 2018, both the FE Leader and FE Manager again approved the continuation of the South Union Project for
construction and completion in 2018. 
 86. The managerial review of the project was again focused on cost and budget in part because the
project was delayed, over-budget, and needed to be completed in order to allow for a City of Lawrence water project to commence in the same area. Immediately following the approval, in an email on or about March 20, 2016, Field Engineer-1
informed Construction that, “This is one of the projects that needs to start as soon as the city allows us” in order to complete the project in 2018. Furthermore, unlike the previous two years, no Constructability Review took place
between Field Engineering and M&R. Instead, the South Union Project proceeded to the final construction phase without any formal or informal collaboration or planning among Field Engineering, Construction, and M&R. 

  
 24 

 87. The final stages of the South Union Project involved step-by-step “tie-in” and
abandonment procedures whereby the construction crew would “tie-in” or connect the new plastic main to the side-streets and cut-off portions of the CI mains on South Union Street. As CMA collectively contemplated and planned, the project
would be completed upon the final “tie-in” and abandonment procedure. At that time, the CI mains on South Union Street would be abandoned and completely disconnected from the flow of gas. 

88. Nevertheless, despite the fact that CMA knew that the control lines were still attached to the CI mains and that the complete abandonment
of the CI mains would cause the Winthrop Reg. Station control lines to read decreasing pressure, prompting the regulators to automatically and continually supply more gas to the South Lawrence LP System to the point of a dangerous
over-pressurization, CMA did not prepare and follow, nor even contemplate, a formal written procedure for the removal of the control lines CMA knew was needed to prevent an over-pressurization and assure operation within the MAOP. 

89. Furthermore, while CMA had encouraged an informal practice of verbal communications and collaboration among Field Engineering, CMA and
Senior Management knew that by 2018, with the exception of Field Engineer-1, each of the prior significant participants in the South Union Project – including Construction Leader-1, M&R Leader-1, CMA Inspector-1, and the 2016 construction
crew – were no longer involved in the project. Yet, CMA did nothing to manage the change in personnel or to pass on the information about the project they collectively shared. 

  
 25 

 90. For example, in early 2018, Construction Leader-1 took a new position with CMA in the
Lawrence Operations Department. Construction Leader-1 was directly involved in the installation of the new control line in 2015, and knew that CMA would have to eventually move the control lines on the Winthrop Reg. Station, but failed to inform the
new Construction Leader or the new CMA Inspector (“CMA Inspector-2’) about the need to relocate the control lines to prevent an over-pressurization. 

91. The renewed construction of the South Union Project began with a new construction crew and CMA Inspector-2 on or about May 22, 2018.
On or about June 12, 2018, the construction crew began work near the Winthrop Reg. Station. During the construction, CMA Inspector-2 contacted Field Engineer-2 and Field Engineer-1 when it was discovered that the construction crew could not
excavate in a particular area because the street had been newly paved. 
 92. As a result, Field Engineer-2 and Field Engineer-1 viewed the
construction site, and directed the construction crew to alter the procedure to “cut-and-cap” portions of the old CI mains on South Union Street, thus removing portions of the CI mains from the street. At the time of the construction, CMA
Inspector-2 noted the darkened asphalt trench—depicting the location of the control line installed in September 2015—but wrongly assumed the trench was the location of the outlet pipe. At the same time, while present at the construction
site, neither Field Engineer-2 or Field Engineer-1 ever took any steps to investigate or determine the location of the control lines or contact M&R even though the construction site was in close proximity to the Winthrop Reg. Station. 

  
 26 

 93. On or about September 13, 2018, at approximately 4:00 p.m., the construction crew
completed the final “tie-in” and abandonment procedure following the procedures CMA provided to the crew at the intersection of Salem Street and South Union Street. While not anticipated by the construction crew, the final
“tie-in” and abandonment procedure resulted in the complete abandonment of the CI mains on South Union Street. Upon the complete abandonment and isolation of the CI mains on South Union Street, the Winthrop Reg. Station - that CMA knew was
still connected to the CI mains on South Union Street - sensed a sharp decline in pressure, causing the Winthrop Reg. Station to automatically and continually feed more pressure into the South Lawrence LP System causing the catastrophic
over-pressurization event described above in paragraphs 20 and 21. 

  
 27 

 COUNT ONE 

Failure to Prepare and Follow a Procedure for the Starting Up and Shutting Down of a Pipeline 

Designed to Assure Operation within the Maximum Allowable Operating Pressure 

(49 U.S.C. §§ 60123(a), 49 U.S.C. § 60118(a); 

49 C.F.R. §§ 192.605(a), 192.605(b)(5)) 

The United States Attorney charges: 
 94. The
United States Attorney re-alleges and incorporates by reference paragraphs 1-93 of this Information. 
 95. From in or about 2015 through on
or about September 13, 2018, in in the District of Massachusetts, the defendant, 
 BAY STATE GAS COMPANY, 

d/b/a Columbia Gas of Massachusetts, 
 by and
through the actions of its employees, and through a pattern of flagrant organizational indifference, knowingly and willfully violated a minimum safety standard for the starting up and shutting of any part of a distribution pipeline, as set forth in
Title 49, Code of Federal Regulations, Section 192.605(b)(5). Specifically, BAY STATE GAS COMPANY, d/b/a Columbia Gas of Massachusetts, knowingly and willfully failed to prepare and follow procedures to remove and relocate regulator control
lines on the South Union Project to assure operation of the South Lawrence LP System within the Maximum Allowable Operating Pressure and safety during maintenance and operations. 

All in violation of Title 49, United State Code, Section 60123(a). 

  
 28 

 
			
	ANDREW E. LELLING
	United States Attorney
		
	By:	 	 /s/ Neil J. Gallagher, Jr.

		 	Neil J. Gallagher, Jr.
		 	Evan Gotlob
		 	Assistant U.S. Attorneys

 Dated: February 26, 2020 

  
 29 

			
	

	  	 U.S. Department of Justice
  

Andrew E. Lelling
 United States Attorney

District of Massachusetts

	  

		
	Main Reception: (617) 748-3100	  	John Joseph Moakley United States Courthouse
		  	1 Courthouse Way
		  	Suite 9200
		  	Boston, Massachusetts 02210
		
		  	February 25, 2020

 Alejandro N. Mayorkas, Esq. 

WilmerHale, LLP 
 1875 Pennsylvania Avenue NW 

Washington, DC 20006 
  

	 	Re:	 United States v. Bay State Gas Company, d/b/a Columbia Gas of Massachusetts 

Criminal No. 
 Dear Counsel: 

The United States Attorney for the District of Massachusetts (“the U.S. Attorney”) and your client, Bay State Gas Company, doing
business as (“d/b/a”) Columbia Gas of Massachusetts (“Defendant”), agree as follows with respect to the above-referenced case: 
  

	 	1.	 Change of Plea 

At the earliest practicable date, Defendant will waive Indictment and plead guilty to Count One of the Information, attached to this agreement
as Exhibit A, charging the Knowing and Willful Failure to Prepare and Follow a Procedure for the Starting Up and Shutting Down of a Pipeline Designed to Assure Operation within the Maximum Allowable Operating Pressure, in violation of 49
U.S.C. § 60123(a), 49 U.S.C. § 60118(a), and 49 C.F.R. §§ 192.605(a) and 192.605(b)(5). Defendant admits that it committed the crime specified in Count One and is in fact guilty. 

 

	 	2.	 Penalties 

Defendant faces the following maximum penalties: 
  

	 	a.	 A fine of not more than the greater of twice the gross gain or twice the gross loss, whichever is greater,
pursuant to 18 U.S.C. § 3571(d); 

  
 1 

	 	b.	 A term of probation of not less than one (1) year nor more than three (3) years, pursuant to 18
U.S.C. § 3561(c)(1); 

  

	 	c.	 Restitution to any victim of the offense; and 

 

	 	d.	 A mandatory special assessment of $400, pursuant to 18 U.S.C. § 3013(c)(2)(B). 

 

	 	3.	 Fed. R. Crim. P. 11(c)(1)(C) Plea  

This Plea Agreement is made pursuant to Fed. R. Crim. P. 11(c)(1)(C), and Defendant’s guilty plea will be tendered pursuant to that
provision. In accordance with Rule 11(c)(1)(C), if the District Court (“Court”) accepts this Plea Agreement, the Court must include the agreed disposition in the judgment. If the Court rejects any aspect of this Plea Agreement, the U.S.
Attorney or Defendant may deem the Plea Agreement null and void. Defendant understands and acknowledges that it may not withdraw its plea of guilty unless the Court rejects this Plea Agreement under Fed. R. Crim. P. 11(c)(5). 

 

	 	4.	 Sentencing Guidelines 

The parties agree jointly to take the following positions at sentencing under the United States Sentencing Guidelines (“USSG” or
“Guidelines”) and other applicable law. 
  

	 	a)	 No guideline under the USSG has been promulgated for the violation to which Defendant is pleading guilty,
specifically, a violation of 49 U.S.C. §§ 60123(a), and 60118(a) and 49 C.F.R. §§ 192.605(a) and 192.605(b)(5). See USSG §§ 2X5.1; 

 

	 	b)	 Pursuant to USSG § 2X5.1, the most analogous guideline for the facts and circumstances of this case is
USSG § 2Q1.2 as it pertains to the Mishandling of Hazardous or Toxic Substances. 

  

	 	c)	 Pursuant to USSG § 2Q1.2(a), Defendant’s base offense level is 8; 

 

	 	d)	 Defendant’s offense level is increased by 6 levels, because pursuant to USSG § 2Q1.2(b)(1)(A) the
offense resulted in, by analogy, an ongoing and continuous discharge of natural gas; 

  

	 	e)	 Defendant’s offense level is increased by 9 levels, because pursuant to USSG § 2Q1.2(b)(2) the
offense resulted in a substantial likelihood of death and serious bodily injury; 

  

	 	f)	 In accordance with USSG § 3E1.1, based on Defendant’s prompt acceptance of responsibility for the
offense of conviction in this case, the adjusted offense level is reduced by three, resulting in a total adjusted offense level 20. 

  
 2 

	 	g)	 Since USSG § 2Q1.2 is not covered by USSG § 8C2.1, the applicable fine is determined by USSG §
8C2.10, which provides that the Court “should determine an appropriate fine by applying the provisions of 18 U.S.C. §§ 3553 and 3572.” 

The U.S. Attorney’s agreement that the disposition set forth below is appropriate in this case is based, in part, on Defendant’s
prompt acceptance of responsibility for the offense of conviction in this case, Defendant’s voluntary payments of restitution to the victims of the offense, and Defendant’s parent company, NiSource, Inc.’s (“NiSource”),
agreement to use reasonable best efforts to sell Defendant or Defendant’s gas distribution business to a qualified third-party buyer consistent with the requirements of M.G.L. c. 164, § 96 and Interlocutory Order on Standard of
Review, D.P.U. 10-170, upon the completion of which: (1) NiSource will cease and desist any and all gas pipeline and gas distribution activities in the District of Massachusetts; and (2) NiSource
will pay a fine equal to the amount of any profit or gain NiSource realized from any such sale. 
 The U.S. Attorney may, at his sole
option, be released from his commitments under this Plea Agreement, including, but not limited to, his agreement that Paragraph 5 constitutes the appropriate disposition of this case, if at any time between Defendant’s execution of this Plea
Agreement and sentencing, Defendant: 
  

	 	(a)	 Fails to admit a complete factual basis for the plea; 

 

	 	(b)	 Fails to truthfully admit Defendant’s conduct in the offense of conviction; 

 

	 	(c)	 Falsely denies, or frivolously contests, relevant conduct for which Defendant is accountable under USSG §
1B1.3; 

  

	 	(d)	 Fails to provide truthful information about Defendant’s financial status and/or Defendant’s payments
to victims of the offense of conviction; 

  

	 	(e)	 Gives false or misleading testimony in any proceeding relating to the criminal conduct charged in this case and
any relevant conduct for which Defendant is accountable under USSG § 1B1.3; 

  

	 	(f)	 Engages in acts that form a basis for finding that Defendant has obstructed or impeded the administration of
justice under USSG § 3C1.1; 

  

	 	(g)	 Commits a crime; or 

  

	 	(i)	 Attempts to withdraw Defendant’s guilty plea. 

Nothing in this Plea Agreement affects the U.S. Attorney’s obligation to provide the Court and the U.S. Probation Office with accurate
and complete information regarding this case. 

  
 3 

	 	5.	 Agreed Disposition 

Under Fed. R. Crim. P. 11(c)(1)(C), the United States and Defendant agree that the following is a reasonable and appropriate disposition of
this case, taking into consideration all of the factors set forth in 18 U.S.C. §§ 3553(a) and 3572: 
  

	 	a.	 A criminal fine in the amount of $53,030,116 paid within thirty (30) days of sentencing, which amount
represents twice the amount of pecuniary gain of $26,515,058 that Defendant received from its Gas System Enhancement Plan (“GSEP”) in Massachusetts from 2015 through and including 2018. 

 

	 	b.	 A period of probation of three (3) years that will immediately terminate prior to the three (3) year
term upon a certification to the Court of the completion of the sale of Defendant or Defendant’s gas distribution business to a qualified third-party buyer consistent with the requirements of M.G.L. c. 164, § 96 and Interlocutory Order on
Standard of Review, D.P.U. 10-170, and formal acceptance of the sale by the Massachusetts Department of Public Utilities (“MA DPU”). 

 

	 	c.	 In addition to the mandatory conditions of probation pursuant to USSG § 8D1.3 and 18 U.S.C. §
3563(a), which includes the full payment of the fine set forth in paragraph 5(a), the period of probation shall also include the following additional conditions: 

 

	 	i.	 Defendant will implement and adhere to each of the recommendations from the National Transportation Safety
Board (“NTSB”) related to NTSB Accident ID PLD18MR003 regarding the Merrimack Valley Over-Pressurization Event on or about September 13, 2018 (the “Event”); 

 

	 	ii.	 Defendant will agree to employ at Defendant’s expense an in-house
monitor to oversee Defendant’s compliance with the recommendations of the NTSB and applicable laws and regulations. This monitor will report monthly in writing to a government committee composed of a representative from the U.S. Attorney, the
MA DPU and the Massachusetts Attorney General’s Office (“MA AGO”); 

  

	 	iii.	 In the event that Defendant enters into a definitive purchase and sale agreement for the sale of Defendant or
its gas distribution business within the three (3) year term of probation, Defendant will do the following: 

  
 4 

	 	A.	 Within three (3) business days of the execution of a definitive purchase and sale agreement with a
purchaser of Defendant or Defendant’s gas distribution business, Defendant will submit to the U.S. Attorney and the Court a filing, which if appropriate may be filed under seal, that completely and accurately details the terms of the purchase
and sale agreement including the proposed purchase price; 

  

	 	B.	 Within seven (7) business days of the execution of a definitive purchase and sale agreement with a
purchaser of Defendant or Defendant’s gas distribution business, Defendant will provide the U.S. Attorney and the Court, in the form of a declaration under 28 U.S.C. § 1746 that may be filed under seal if appropriate, a true and accurate
detailed accounting following both Generally Accepted Accounting Principles (“GAAP”) and federal income tax obligations, of the total amount of any potential gain, profit or loss that will result from the proposed sale reflected in the
filing described above in paragraph 5(c)(iii)(A) and in accordance with the formula set forth in Exhibit B; 

  

	 	C.	 Upon request from the U.S. Attorney, Defendant will promptly provide to the U.S. Attorney true and accurate
records including income tax returns, to the extent required to verify the accuracy of any potential profit, gain or loss that will result from the sale of Defendant or Defendant’s gas distribution business reflected in the filing described
above in paragraph 5(c)(iii)(A). Defendant understands and agrees that the U.S. Attorney may provide these records to an outside consultant/expert he retains to verify the accuracy of the information, provided that such consultant/expert is subject
to the terms of a confidentiality agreement; and 

  

	 	D.	 No later than three (3) business days before the completion of any sale of Defendant or its gas
distribution business, Defendant will provide the U.S. Attorney and the Court, in a filing that may submitted under seal if appropriate, any updated information about the terms of sale, and Defendant’s calculation of any gain, profit or loss
from the sale of Defendant or Defendant’s gas distribution business in accordance with the formula set forth in Exhibit B. Defendant understands and agrees that Defendant must completely and accurately report to both the Court and the
U.S. Attorney the total amount of any profit, gain or loss from the sale of Defendant or its gas distribution business. 

  
 5 

	 	d.	 Defendant understands and agrees that the U.S. Attorney reserves the right to verify and challenge the accuracy
of Defendant’s calculation of any potential profit, gain or loss from the sale of Defendant or its gas distribution business prior to the final sale and that Defendant’s failure to accurately report the information described above in
paragraph 5(c)(iii) may constitute a violation of this Plea Agreement and/or a violation of a condition of Defendant’s probation. See USSG § 8D1.4(b)(3). 

 

	 	e.	 Notwithstanding the agreed upon disposition described above, pursuant to USSG § 8F1.1, Defendant
understands and agrees that upon a finding by the Court that Defendant violated a condition of probation, including the failure to provide true and accurate information regarding any profit or gain from a sale of Defendant or its gas distribution
business as described above in paragraph 5(c)(iii), the Court may extend the term of probation up to the time of the final sale of Defendant or its gas distribution business, impose more restrictive conditions of probation, or prior to the final
sale of Defendant or its gas distribution business, revoke probation and resentence Defendant. 

  

	 	f.	 The U.S. Attorney agrees that no consequence of any breach of this Plea Agreement or of any violation of a
condition Defendant’s probation will be imposed upon a bona fide purchaser for value of Defendant or Defendant’s gas distribution business. 

  

	 	6.	 No Further Prosecution of Defendant and No Prosecution of its Ultimate Parent Company, NiSource, Inc.

 Under Fed. R. Crim. P. 11(c)(1)(A), the United States agrees that, other than the charges in the Information attached
as Exhibit A, and pursuant to the Deferred Prosecution Agreement (the “DPA”) attached as Exhibit C, the U.S. Attorney shall not prosecute Defendant or NiSource for any conduct related to the allegations in the attached
Information, the Event, or Defendant’s restoration work in the Merrimack Valley following the Event based on the facts and circumstances now known to the U.S. Attorney. 

This provision is expressly contingent on: (i) the Court’s acceptance of the guilty plea of Defendant to the attached Information;
(ii) Defendant’s agreement not to withdraw or otherwise challenge this Plea Agreement; (iii) Defendant’s performance of all of its obligations as set forth in this Plea Agreement prior to the sale of Defendant or its gas
distribution business; and (iv) NiSource’s compliance with the DPA attached as Exhibit C. If Defendant’s guilty plea is withdrawn for any reason, or if Defendant should fail to perform an obligation under this Plea Agreement
prior to the sale of Defendant or its gas distribution business, the U.S. Attorney, at his sole option, may render this Plea Agreement and the DPA attached as Exhibit C null and void. 

While based on the information currently available to him, the U.S. Attorney does not intend to criminally prosecute any individual for
violations of the Natural Gas Pipeline Safety Act, 49 U.S.C. § 60101 et seq. for the conduct related to the allegations in the attached Information, the Event, or Defendant’s and NiSource’s restoration work in the Merrimack
Valley, the U.S. Attorney nonetheless reserves the right to prosecute any individual, including but not limited to present and former officers, directors, employees, and other agents of Defendant or NiSource. 

  
 6 

	 	7.	 Waiver of Right to Appeal and to Bring Future Challenge  

 

	 	(a)	 Defendant has conferred with its attorney and understands that it has the right to challenge its conviction in
the United States Court of Appeals for the First Circuit (“direct appeal”). Defendant also understands that, in some circumstances, Defendant may be able to challenge its conviction in a future proceeding (collateral or otherwise), such as
pursuant to a motion under 28 U.S.C. § 2255 or 28 U.S.C. § 2241. Defendant waives any right to challenge Defendant’s conviction on direct appeal or in any future proceeding (collateral or otherwise). 

 

	 	(b)	 Defendant has conferred with its attorney and understands that defendants ordinarily have a right to challenge
in a direct appeal their sentences (including any orders relating to the terms and conditions of supervised release, fines, forfeiture, and restitution) and may sometimes challenge their sentences (including any orders relating to the terms and
conditions of supervised release, fines, forfeiture, and restitution) in a future proceeding (collateral or otherwise). The rights that are ordinarily available to a defendant are limited when a defendant enters into a Rule 11(c)(1)(C) agreement. In
this case, Defendant waives any rights Defendant may have to challenge the agreed-upon sentence (including any agreement relating to the terms and conditions of supervised release, fines, forfeiture, and restitution) on direct appeal and in a future
proceeding (collateral or otherwise), such as pursuant to 28 U.S.C. § 2255 and 28 U.S.C. § 2241. Defendant also waives any right Defendant may have under 18 U.S.C. § 3582(c)(2) to ask the Court to modify the sentence, even if the
USSG are later amended in a way that appears favorable to Defendant. Likewise, Defendant agrees not to seek to be resentenced with the benefit of any change to Defendant’s Criminal History Category that existed at the time of Defendant’s
original sentencing. Defendant also agrees not to challenge the sentence in an appeal or future proceeding (collateral or otherwise) even if the Court rejects one or more positions advocated by any party at sentencing. In sum, Defendant understands
and agrees that in entering into this Plea Agreement, the parties intend that Defendant will receive the benefits of the Plea Agreement and that the sentence will be final. 

 

	 	(c)	 The U.S. Attorney agrees that he will not appeal the imposition by the Court of the sentence agreed to by the
parties as set out in Paragraph 5, even if the Court rejects one or more positions advocated by either party at sentencing. 

  

	 	(d)	 Regardless of the previous subparagraphs, Defendant reserves the right to claim that: (i) Defendant’s
lawyer rendered ineffective assistance of counsel under Strickland v. Washington; or (ii) the prosecutor in this case engaged in misconduct that entitles Defendant to relief from Defendant’s conviction or sentence.

  
 7 

	 	8.	 Forfeiture 

Defendant hereby waives and releases any claims Defendant may have to any property seized by the United States, or seized by any state or local
law enforcement agency and turned over to the United States, during the investigation and prosecution of this case, and consents to the forfeiture of all such assets. 
  

	 	9.	 Civil Liability 

By entering into this Plea Agreement, the U.S. Attorney does not compromise any civil liability, including but not limited to any tax
liability, Defendant may have incurred or may incur as a result of Defendant’s conduct and plea of guilty to the charges specified in Paragraph 1 of this Plea Agreement.  

 

	 	10.	 Withdrawal of Plea by Defendant or Rejection of Plea by Court 

Should Defendant move to withdraw its guilty plea at any time, this Plea Agreement and the DPA attached as Exhibit C shall be null and
void at the option of the U.S. Attorney. In addition, should the Court reject the parties’ agreed-upon disposition of the case or any other aspect of this Plea Agreement, this Plea Agreement and the DPA attached as Exhibit C shall be
null and void at the option of either the U.S. Attorney or Defendant. In this event, Defendant agrees to waive any defenses based upon the statute of limitations, the constitutional protection against
pre-indictment delay, and the Speedy Trial Act with respect to any and all charges that could have been timely brought or pursued as of the date of this Plea Agreement. 

 

	 	11.	 Breach of Plea Agreement 

If the U.S. Attorney determines that Defendant has failed to comply with any provision of this Plea Agreement, has engaged in any of the
activities set forth in Paragraph 4(a)-(i) or has committed any crime following Defendant’s execution of this Plea Agreement, the U.S. Attorney may, at his sole option, be released from his commitments under this Plea Agreement and the DPA in
their entirety by notifying Defendant, through counsel or otherwise, in writing. The U.S. Attorney may also pursue all remedies available to him under the law, regardless whether he elects to be released from his commitments under this Plea
Agreement and/or the DPA. Further, the U.S. Attorney may pursue any and all charges which otherwise may have been brought against Defendant and/or have been, or are to be, dismissed pursuant to this Plea Agreement and/or the DPA. Defendant
recognizes that its breach of any obligation under this Plea Agreement shall not give rise to grounds for withdrawal of Defendant’s guilty plea, but will give the U.S. Attorney the right to use against Defendant before any grand jury, at any
trial or hearing, or for sentencing purposes, any statements made by Defendant and any information, materials, documents or objects provided by Defendant to the government, without any limitation, regardless of any prior agreements or
understandings, written or oral, to the contrary. In this regard, Defendant hereby waives any defense to any charges the U.S. Attorney brings that Defendant might otherwise have based upon any statute of limitations, the constitutional protection
against pre-indictment delay, or the Speedy Trial Act. 

  
 8 

	 	12.	 Who is Bound by Plea Agreement 

This Agreement is only between Defendant and the U.S. Attorney for the District of Massachusetts. It does not bind the Attorney General of the
United States or any other federal, state, or local prosecuting authorities. 
  

	 	13.	 Corporate Authorization 

Defendant shall provide to the U.S. Attorney and the Court a certified copy of a resolution of the Board of Directors of Defendant, affirming
that the Board of Directors has authority to enter into the Plea Agreement and has (1) reviewed the Information in this case and the proposed Plea Agreement; (2) consulted with legal counsel in connection with the matter; (3) voted to
enter into the proposed Plea Agreement; (4) voted to authorize Defendant to plead guilty to the charges specified in the Plea Agreement; and (5) voted to authorize Joseph Hamrock, Chief Executive Officer of NiSource, Inc., to execute the
Plea Agreement and all other documents necessary to carry out the provisions of the Plea Agreement. 
  

	 	14.	 Modifications to Plea Agreement 

This Agreement can be modified or supplemented only in a written memorandum signed by both parties, or through proceedings in open court. 

If this letter accurately reflects the agreement between the U.S. Attorney and Defendant, please have Defendant sign the Acknowledgment of
Plea Agreement below. Please also sign below as Witness. Return the original of this letter to Assistant U.S. Attorney Neil Gallagher. 
  

	
	Sincerely,
	
	ANDREW E. LELLING
	United States Attorney

  

			
	By:	 	 /s/ Fred M. Wyshak, Jr.

		 	Fred M. Wyshak, Jr.
		 	 Chief, Public Corruption and
 Special
Prosecutions Unit

		
		 	 /s/ Neil J. Gallagher, Jr.

		 	 Neil J. Gallagher, Jr.
 Evan Gotlob

Assistant U.S. Attorneys

  
 9 

 Corporate Acknowledgment of Plea Agreement 

The Board of Directors has authorized me to execute this Plea Agreement on behalf of Bay State Gas Company, doing business as
(“d/b/a”) Columbia Gas of Massachusetts (“CMA”). The Board has read this letter of Agreement in its entirety and has discussed it fully with CMA’s attorney. The Board acknowledges that this letter fully sets forth CMA’s
agreement with the U.S. Attorney. The Board further states that no additional promises or representations have been made to the Board by any officials of the United States in connection with this matter. 

 

	
	 /s/ Joseph Hamrock

	Joseph Hamrock
	Chief Executive Officer
	NiSource, Inc.
	
	 /s/ Kimberly Cuccia

	Kimberly Cuccia
	General Counsel
	Bay State Gas, d/b/a Columbia Gas of Massachusetts

  
 10 

 I certify that Defendant’s Board of Directors has authority to enter into this Plea
Agreement and has (1) reviewed the Information in this case and the proposed Plea Agreement; (2) consulted with legal counsel in connection with the matter; (3) voted to enter into the proposed Plea Agreement; (4) voted to
authorize Defendant to plead guilty to the charges specified in the Plea Agreement; and (5) voted to authorize Joseph Hamrock, Chief Executive Officer of NiSource, Inc. and Kimberly Cuccia, General Counsel for Bay State Gas, d/b/a Columbia Gas
of Massachusetts, to execute the Plea Agreement and all other documents necessary to carry out the provisions of the Plea Agreement. 
  

	
	 /s/ Alejandro N. Mayorkas, Esq.

	Alejandro N. Mayorkas, Esq.
	WilmerHale, LLP
	Attorney for Bay State Gas Company, doing business as (“d/b/a”) Columbia Gas of Massachusetts

  
 11 

 EXHIBIT C 

(Calculation of Profit, Gain or Loss) 
 For
purposes of this Agreement, any such profit or gain shall mean the amount, if any, by which the net purchase price (after related costs and expenses) received by NiSource from the sale of CMA or its gas distribution business (hereinafter
“A”), as the case may be, exceeds the total of: 
  

	 	(i)	 the book value of CMA (including any liabilities assumed by the purchaser) or the business so purchased
(excluding the book value of any CMA assets not included in the sale) (“hereinafter “B”); 

  

	 	(ii)	 the charges for impairment of goodwill and other intangible assets related to CMA (hereinafter “C”);
plus 

  

	 	(iii)	 the aggregate amount of the liabilities of CMA not included in the sale (hereinafter “D”),

 in each case specified in (i)-(iii) above, as reflected on the financial statements of NiSource as of December 31, 2019. 

Stated another way, in sum: 
  A (net
purchase price) 
 – B (book value of assets) + C (impairment of good will/intangible assets) + D (aggregate amount of
liabilities) 
 = gain or loss 
 The U.S.
Attorney reserves the right to challenge the veracity, accuracy and proper application under GAAP of each of the above described assets and liabilities in parts B, C and D of the calculation.ex_170620.htm

Exhibit 10.22

 

Michael P. Bauer

Chief Executive Officer

Libbey Inc.

 

 

[DATE]

 

[NAME]

[ADDRESS]

 

 

Dear [NAME]:

 

Libbey Inc. (“Libbey”) considers it essential to the best interests of its shareholders to foster the continuous employment of key management personnel. In that connection, Libbey’s Board of Directors (the “Board”) recognizes that, as is the case with many publicly held companies, the possibility of a change in control of Libbey may exist and that the uncertainty and questions that it may raise among management could result in the departure or distraction of management personnel to the detriment of Libbey and its shareholders.

 

The Board has decided to reinforce and encourage the continued attention and dedication of members of Libbey’s management, including you, to their assigned duties without the distraction arising from the possibility of a change in control of Libbey. In order to induce you to remain in its employ, Libbey agrees that after this letter agreement (this “Agreement”) has been fully executed, you will receive the severance benefits set forth in this Agreement if your employment with Libbey terminates under the circumstances described below in connection with a Change in Control (as defined in Section 2).

 

1.     Agreement Term. The term of this Agreement begins [DATE], and continues through December 31, 2020. Beginning January 1, 2021 and each January 1 thereafter, this Agreement’s term will extend automatically for one additional year unless Libbey gives you, not later than September 30 of the preceding calendar year, written notice that Libbey does not wish to extend this Agreement for the subsequent year. For example, if Libbey does not desire to renew this Agreement for the 2021 calendar year, Libbey must, on or before September 30, 2020, give you written notice that this Agreement will not be renewed for the 2021 calendar year. If a Change in Control occurs during the initial or any extended term of this Agreement, the term of this Agreement will continue for a period of at least 24 months beyond the month in which the Change in Control occurred.

 

2.     Change in Control. For purposes of this Agreement, a Change in Control will be deemed to occur if:

 

(a)     any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Libbey representing 30% or more of the combined voting power of Libbey’s then outstanding securities. For purposes of this Agreement, the term “Person” is used as the term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, the term “Person” does not include Libbey, any trustee or other fiduciary holding securities under an employee benefit plan of Libbey, or any corporation owned, directly or indirectly, by the shareholders of Libbey in substantially the same proportions as their ownership of stock of Libbey. For purposes of this Agreement, the term “Beneficial Owner” has the meaning given to it in Rule 13d-3 under the Exchange Act;

 

 

300 Madison Avenue ● Toledo, Ohio 43604 ● (419) 325-2000

 

 

[NAME]

[DATE]

Page 2

 

 

(b)     during any period of two consecutive years (not including any period before signing this Agreement), Continuing Directors cease for any reason to constitute at least a majority of the Board. The term “Continuing Directors” means (i) individuals who were members of the Board at the beginning of the 2-year period referred to above and (ii) any individuals elected to the Board, after the beginning of the 2-year period referred to above, by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously approved in accordance with this provision. Notwithstanding the immediately preceding sentence, an individual who is elected to the Board after the beginning of the 2-year period will not be deemed a Continuing Director if the individual was designated by a person who has entered into an agreement with Libbey to effect a transaction described in Sections 2(a), (c) or (d);

 

(c)     the consummation of a merger or consolidation of Libbey with any other corporation (or other entity), other than a merger or consolidation that would result in the voting securities of Libbey outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than two-thirds of the combined voting power of the voting securities of Libbey or the surviving entity outstanding immediately after the merger or consolidation; or

 

(d)     the consummation of a plan of complete liquidation of Libbey or an agreement for the sale or disposition by Libbey of all or substantially all of Libbey’s assets.

 

3.     Termination in Connection with Change in Control.

 

(a)     General. If, (i) during this Agreement’s term, a Change in Control occurs and Libbey terminates your employment without Cause, or you terminate your employment for Good Reason, within the 2-year period immediately following the date on which the Change in Control occurs, or (ii) during this Agreement’s term, Libbey terminates your employment without Cause, or you terminate your employment for Good Reason, and within six months thereafter a Change in Control occurs, then you will be entitled to the benefits provided in Section 4, and those benefits will be paid despite this Agreement’s subsequent expiration.

 

Despite anything to the contrary in this Agreement, you will not be entitled to any payment under Section 4 if your employment terminates as a result of your death or Permanent Disability. “Permanent Disability” means any incapacity due to physical or mental illness as a result of which you are absent from the full-time performance of your duties with Libbey for six consecutive months and do not return to the full-time performance of your duties within 30 days after Libbey gives you a Termination Notice.

 

(b)     Cause. “Cause” means any of the following events: (i) your willful and continued failure (other than as a result of your incapacity due to physical or mental illness or after you issue a Termination Notice for Good Reason) to substantially perform your duties with Libbey after the Board has delivered to you a written demand for substantial performance that specifically identifies the manner in which the Board believes that you have not substantially performed your duties; (ii) your willful and continued failure (other than as a result of your incapacity due to physical or mental illness or after you issue a Termination Notice for Good Reason) to substantially follow and comply with the Board’s specific and lawful directives, after the Board has delivered to you a written demand for substantial performance that specifically identifies the manner in which the Board believes that you have not substantially followed or complied with the Board’s directives; (iii) your commission of an act of fraud or dishonesty that causes harm to Libbey; (iv) your material failure to comply with a Libbey policy or code of conduct; (v) your material breach of any material obligation under any written agreement between you and Libbey; or (vi) your engagement in illegal conduct or gross misconduct that causes harm to Libbey. Termination of your employment will not be deemed to be for Cause unless and until Libbey delivers to you a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board specifying in reasonable detail the particulars of the conduct constituting Cause.

 

 

 

[NAME]

[DATE]

Page 3

 

 

(c)     Good Reason. “Good Reason” means the occurrence of any of the following circumstances without your consent unless such circumstances are fully corrected (if such circumstances are capable of correction) before the Termination Date specified in the applicable Termination Notice:

 

(i)      You cease to be an executive officer of the Company;

 

(ii)     Libbey’s reduction of your annual base salary and the reduction is not applied in the same or similar manner to similarly situated employees;

 

(iii)    a material reduction in your annual incentive compensation opportunity established for the position you hold and the reduction is not applied in the same or similar manner to similarly situated employees;

 

(iv)    a material reduction or elimination of an executive benefit or an employee benefit and the reduction is not applicable to similarly situated employees in the same or similar manner; or

 

(v)     Libbey’s material breach of any written agreement between Libbey and you and Libbey does not remedy it within 60 days after receiving from you written notice of the breach.

 

If you do not deliver to the Chief Executive Officer, within 90 days after the date on which you knew or should have known of the Good Reason event, written notice specifying in reasonable detail the particulars giving rise to the Good Reason Event, you will be deemed conclusively to have waived that particular Good Reason Event (but not any subsequent Good Reason Event) even if your failure to give timely notice of the Good Reason event is a result of your incapacity due to physical or mental illness. In all events, Libbey will be given a 30-day period to cure or remedy the condition giving rise to your notice.

 

(d)     Termination Notice. Any purported termination of your employment by Libbey or by you (other than termination as a result of your death, in which case your employment will terminate automatically, or as a result of resignation or retirement that is not at Libbey’s written request and is not for Good Reason) will be communicated by written Termination Notice to the other party hereto in accordance with Section 9. “Termination Notice” means a written notice that indicates the specific termination provision in this Agreement relied upon and states in reasonable detail the facts and circumstances claimed to provide a basis for terminating your employment under the provision so indicated.

 

 

 

[NAME]

[DATE]

Page 4

 

 

(e)     Termination Date, Etc. “Termination Date” means the date on which your employment with Libbey terminates. Despite any other provision of this Agreement to the contrary, if you incur a termination of employment that is not a “separation from service” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), your right to all amounts payable upon such termination of employment under Section 4 will vest on the Termination Date, but payment of any amount subject to Section 409A will be deferred until you incur a separation from service (or, if required by Section 4(b), six months thereafter).

 

4.     Compensation Upon Termination.

 

(a)     If you terminate your employment for Good Reason or Libbey terminates your employment without Cause (other than as a result of your death or Permanent Disability), in each case in accordance with Section 3(a), then you will be entitled to the benefits provided below:

 

(i)     The following accrued benefits: (A) your base salary earned through the Termination Date; (B) only to the extent required by applicable law, any earned but unpaid vacation pay as of the Termination Date; (C) reimbursement of any expenses properly incurred before the Termination Date in accordance with Libbey’s policy on business expense reimbursement; (D) any amount or benefits to which you are entitled under any pension plan, retirement savings plan, equity participation plan, stock purchase plan, medical benefit plan or other benefit plan or employment policy maintained by Libbey in accordance with the terms of the plan, policy or arrangement; and (E) any incentive compensation earned but not yet paid for a performance period ended before the Termination Date at the time it would otherwise have been paid but for the termination;

 

(ii)     In lieu of any further salary payments to you for periods after the Termination Date, Libbey will pay to you, at the time specified in Section 4(b), a lump-sum severance payment equal to the sum of the following:

 

(A)     two times your annual base salary at the rate in effect as of the date on which Termination Notice is given (but without regard to any reduction in base salary that constituted, or would have constituted, Good Reason); and

 

(B)      two times your target annual incentive compensation opportunity as in effect as of the date on which Termination Notice is given (but without regard to any reduction in incentive compensation opportunities that constituted, or would have constituted, Good Reason);

 

(iii)    With respect to the annual incentive compensation opportunity during the year in which the Termination Date occurs, you will be paid a prorated amount based on actual performance for the year. The amount payable under this clause will be paid, subject to Section 4(b), between January 1 and March 15 of the year following the year in which the Termination Date occurs;

 

(iv)    Any equity compensation awards that are subject to time vesting requirements and remain unvested at the Termination Date will become fully vested as of the Termination Date. If a Change in Control occurs within six months following a termination by Libbey without Cause or termination by you for Good Reason, then any equity compensation awards that were subject to time vesting requirements and remained unvested as of the Termination Date will become vested as of the date of the Change in Control.

 

 

 

[NAME]

[DATE]

Page 5

 

 

(v)     Executive outplacement services paid for by Libbey, with the following qualifications: (i) Libbey is not required to pay any amount for such services that exceeds 15% of your annual base salary at the time of termination (without regard to any reduction in base salary that constituted, or would have constituted, Good Reason); and (ii) you receive the services before the last day of your second taxable year following the taxable year in which your “separation from service” occurred.

 

(vi)    Continuation of your medical, prescription drug, dental and life insurance benefits (collectively, "Insurance Benefits") for 18 months following the Termination Date or until such earlier time as you receive medical or life insurance coverage through a future employer. You will continue to pay the employee portion of costs for the continued Insurance Benefits on a monthly basis.

 

(vii)   You will be entitled to financial planning services paid for by Libbey. But Libbey is not required to pay any amount for the services that exceeds $10,000.

 

(b)     The payments provided for in this Section 4 will be made not later than the fifth business day following the Termination Date or the Change in Control; provided, however, that if Libbey, in its sole discretion, determines that the Change in Control does not constitute a “change in control event” as defined in Section 409A, then all such payments that (i) Libbey determines are not “Section 409A Payments” or (ii) exceed the amount that would have been paid had the termination not occurred in connection with a Change in Control, will be paid in a lump sum and the remaining installments will be paid at the time they would have been paid had the termination not occurred in connection with a Change in Control (or, if earlier, not more than five days after a change in control event, as defined in Section 409A, occurs). “Section 409A Payments” means amounts that constitute deferred compensation subject to Section 409A. Despite any provisions of this Section 4 to the contrary, if you are a “specified employee” (within the meaning of Section 409A and determined pursuant to policies adopted by Libbey) on the Termination Date, amounts that otherwise would be payable under Section 4(c) (as well as any other payment or benefit that you are entitled to receive upon your separation from service and that would be considered a Section 409A Payment), to the extent that such amounts constitute Section 409A Payments during the six-month period immediately following the Termination Date (the “Delayed Payments”) will instead be paid or made available on the earlier of (A) the first day of the seventh month following your Termination Date and (B) your death. For purposes of this Agreement, all amounts payable under Section 4(c) will be considered 409A Payments except to the extent that Libbey, in its sole discretion, determines that such amounts satisfy an exception to Section 409A, including the exception for short-term deferrals set forth in Treasury Regulation §1.409A-1(b)(4) and the exception for certain separation pay plans set forth in Treasury Regulation §1.409A-1(b)(9)(iii), which will be applied to all installments beginning with the first installment that does not qualify as a short-term deferral until the limitation on such separation pay plans is reached. In connection with Libbey’s determination as set forth in the preceding sentence, you may furnish Libbey with a tax opinion or other evidence that an exception applies but Libbey will not be bound by any such opinion or evidence.

 

 

 

[NAME]

[DATE]

Page 6

 

 

(c)     Payment of any amount to you and the provision of any benefits to you, or on your behalf, under this Section 4 and your acceptance of such amounts will be conditioned on you executing and delivering to Libbey, no later than 60 days after the Termination Date, a general waiver and release of claims in the form attached hereto as Exhibit A or in such other form as Libbey may reasonably request to provide a complete release of all claims and causes of action you or your estate may have against Libbey, except claims and causes of action arising out of, or related to, Libbey’s obligations under this Agreement and Claims (as defined in Exhibit A) for vested benefits under any pension plan, retirement plan and savings plan, rights under any equity compensation plan and stock purchase plan and rights to continuation of medical care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 and any similar state law.

 

(d)     There will be no offset to any compensation or other benefits otherwise payable to you, or on your behalf, under Section 4 as a result of your receipt of any pension, retirement or other benefit payments (including but not limited to accrued vacation) except as provided by Section 9(m).

 

	 	
			5.

				
			Successors; Binding Agreement.

			

 

(a)     Libbey will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Libbey to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Libbey would be required to perform it if no such succession had taken place. Libbey’s failure to obtain the assumption and agreement before the effectiveness of any such succession will be a breach of this Agreement and will entitle you to terminate your employment and receive compensation from Libbey in the same amount and on the same terms to which you would be entitled hereunder if you terminate your employment for Good Reason following a Change in Control. Unless expressly provided otherwise, “Libbey” as used herein will mean Libbey as defined in this Agreement and any successor to its business and/or assets as aforesaid.

 

(b)     This Agreement will inure to the benefit of and be enforceable by you and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you die while any amount would still be payable to you hereunder had you continued to live, all such amounts, unless otherwise provided herein, will be paid in accordance with this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.

 

	 	
			6.

				
			Personal Property, Records and Confidential Data.

			

 

(a)     You acknowledge and agree that all personal property and equipment furnished to or paid for by Libbey or prepared by you in the course of or incident to your employment by Libbey belongs to Libbey and will be promptly returned to Libbey upon termination of the employment. “Personal property” includes, without limitation, all books, manuals, records, reports, notes, contracts, lists, blueprints, and other documents, or materials, or copies thereof (including computer files), all computers, lap tops, personal digital assistants, cellular phones and other electronic devices and all other proprietary information relating to the business of Libbey or any affiliate, including information stored on any non-Libbey owned or furnished device, network, storage location or media in your possession or control. Following termination of employment, you agree not to retain any written or other tangible material containing any proprietary information or Confidential Information.

 

(b)     You acknowledge that in connection with performing your duties during this Agreement’s term, Libbey will make available to you, or you will have access to, certain Confidential Information. You acknowledge and agree that any and all Confidential Information learned or obtained by you during the course of your employment by Libbey or otherwise (including, without limitation, information that you obtained through or in connection with your stock ownership in and employment by Libbey), whether developed by you alone or in conjunction with others or otherwise, will be and is Libbey’s property.

 

 

 

[NAME]

[DATE]

Page 7

 

 

(c)     You will keep all Confidential Information confidential and will not use the Confidential Information other than in connection with your discharge of your duties hereunder. You will safeguard the Confidential Information from unauthorized disclosure. This covenant is not intended to, and does not limit in any way, any of your duties or obligations to Libbey under statutory or common law not to disclose or to make personal use of the Confidential Information or trade secrets.

 

(d)     After your termination of employment, as soon as possible after Libbey’s written request, you will return to Libbey all written or electronic Confidential Information that has been provided to you, and you will destroy or return (at Libbey’s option) all copies of any analyses, compilations, studies or other documents prepared by you or for your use containing or reflecting any Confidential Information. Within ten business days of receiving such request, you will deliver to Libbey a notarized document certifying that the Confidential Information has been returned or destroyed in accordance with this Section 6(d). However, if the Confidential Information is contained on books, manuals, records, reports, notes, contracts, lists, blueprints, documents, materials and copies thereof (including computer files), computers, lap tops, personal digital assistants, cellular phones or other electronic devices belonging to Libbey, then such property with all data including Confidential Information, will be returned to Libbey.

 

(e)     For the purposes of this Agreement, “Confidential Information” means all information not generally known to the public, regardless of form or format, relating directly or indirectly to the business of Libbey or any of its corporate affiliates or subsidiaries, or any existing or prospective customer, supplier, investor, or other associated third party, or of any other person or entity that has entrusted information to Libbey in confidence. By way of illustration only and without limiting the preceding sentence, Confidential Information includes information relating to business processes, practices or methods; policies, plans, publications, manuals, records, articles or other documents; research; operations; services; strategies; techniques; agreements, contracts or terms of agreements; transactions, potential transactions, negotiations or pending negotiations; inventions, unpublished patent applications, know-how or trade secrets; computer programs, software, applications, operating systems, software design, web design, databases or information systems or any data contained in such systems; work-in-process; supplier or vendor information; financial information or results, accounting information, internal control information or accounting records; legal information; sales or marketing information, including market studies, advertising information, product plans, pricing information, customer lists or other customer information or sales forecasts; credit information; design information; staffing or personnel information, including employee lists or payroll information; and supplier or vendor lists and cost information. The above list is not exhaustive, and Confidential Information also includes other information marked or otherwise identified or treated as confidential or proprietary, or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and circumstances in which the information is known or used. Confidential Information does not lose its status under this Agreement if it is not marked as “confidential.” Confidential Information includes information developed by you in the course of your employment by Libbey as if Libbey furnished the same Confidential Information to you in the first instance. For purposes of this Agreement, the Confidential Information will not include and your obligations under this Section 6 will not extend to (i) information available in the public domain and (ii) information required to be disclosed by lawful order of a court of competent jurisdiction, provided that you give Libbey notice of the disclosure requirement and cooperate with Libbey in connection with any action by Libbey to seek a protective order or confidential treatment for the information.

 

 

 

[NAME]

[DATE]

Page 8

 

 

(f)     Despite anything in this agreement to the contrary, you will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (i) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, but solely for the purpose of reporting or investigating a suspected violation of law; or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

 

(g)     If you file a lawsuit against Libbey for retaliation for reporting a suspected violation of law, you may disclose the trade secret to your attorney and use the trade secret information in the court proceeding, if you (i) file any document containing the trade secret under seal and (ii) do not disclose the trade secret, except pursuant to court order.

 

(h)     Nothing in this Agreement limits your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission, the Financial Industry Regulatory Authority, or any other federal, state, or local governmental agency or commission (“Government Agencies”). This Agreement does not limit your ability to communicate with Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to Libbey. This Agreement does not limit your right to receive an award for information provided to any Government Agencies. Nothing in this Agreement in any way prohibits or intends to restrict or impede you from exercising protected rights under Section 7 of the National Labor Relations Act.

 

(i)     Any reference to Libbey in this Section 6 includes Libbey and its affiliates.

 

7.     Additional Covenants.

 

(a)     Non-Interference with Customer Accounts. You covenant and agree that (i) during employment and (ii) for a period of 12 months beginning on the Termination Date, except as may be required by your employment by Libbey, you will not directly or indirectly, personally or on behalf of any other person, business, corporation, or entity, contact or do business with any customer of Libbey with respect to any product, business activity or service which is competitive with any product, business, activity or service of the type sold or provided by Libbey.

 

(b)     Non-Competition. In consideration of and in connection with the benefits provided to you under this Agreement and in order to protect Libbey’s goodwill, you hereby agree that if your employment terminates under conditions giving rise to payment under Section 4, then, unless Libbey otherwise agrees in writing, for a period of 12 months beginning on the Termination Date, you will not engage in any Prohibited Activity. “Prohibited Activity” means activity in which you contribute your knowledge, directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, partner, director, stockholder, officer, volunteer, intern, or any other similar capacity, to an entity engaged in the same or similar business as Libbey, including those who sell, in competition with Libbey, the same type of products as are sold by Libbey, including without limitation glass tableware or other glass products, ceramic dinnerware, metalware and plastic supplies to the foodservice, retail (whether brick and mortar or internet) and business-to-business channels of distribution. Prohibited Activity also includes activity that may require or inevitably require disclosure of trade secrets, proprietary information, or Confidential Information. Without limiting the foregoing, Libbey regards the following business operations as its primary, but not exclusive, competitors: The Oneida Group, Inc., including Anchor Hocking and Oneida Ltd.; Arc International and its affiliates, including Cardinal International, Inc.; the glass tableware business of Owens-Illinois, Inc.; Luigi Bormioli; Bormioli Rocco Casa SpA; Durobor; Vicrila; Crilamex; the Kedaung group of companies of Indonesia; the Sisecam group of companies of Turkey including Pasabahce; Ocean Glass, Anhui DeLi Glassware Co., Ltd.; Stone Island; and any distributor of products manufactured or sold by any of the preceding competitors. Nothing in this Agreement prohibits you from purchasing or owning less than five percent (5%) of the publicly traded securities of any corporation if such ownership represents a passive investment and you are not a controlling person of, or a member of a group that controls, that corporation.

 

 

 

[NAME]

[DATE]

Page 9

 

 

(c)     No Diversion. You covenant and agree that in addition to the other covenants set forth in this Section 7, (i) during your employment and (ii) for a period of 12 months following your Termination Date, you will not divert or attempt to divert or take advantage of or attempt to take advantage of any actual or potential business opportunities of Libbey (e.g., joint ventures, other business combinations, investment opportunities, potential investors in Libbey, and other similar opportunities) of which you became aware as a result of your employment with Libbey.

 

(d)     Non-Recruitment. You acknowledge that Libbey has invested substantial time and effort in assembling its present workforce. Accordingly, you covenant and agree that during employment and for period of 12 months beginning on the Termination Date, you will not either for your own account or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venture owner or shareholder or otherwise on behalf of any other person, firm or corporation directly or indirectly entice, solicit, attempt to solicit, or seek to induce or influence any officer or employee of Libbey to leave his or her employment with Libbey or to offer employment to any person who on or during the six-month period immediately preceding the date of the solicitation or offer was an employee of Libbey. But this Section 7(d) will not be deemed to be breached with respect to an employee or former employee of Libbey who responds to a general advertisement seeking employment or who otherwise independently initiates contact for the purpose of seeking employment.

 

(e)     Non-Disparagement. You covenant and agree that during your employment and after your Termination Date, you will not denigrate or disparage Libbey or any of its directors, officers, employees, equity holders, contractors, customers or competitors (“Covered Parties”) or Libbey’s products and will not make or post any negative or critical remarks in any newspaper, electronic media, blog or other public forum concerning Libbey or the Covered Parties or their business, management or employment practices. Nothing in this paragraph will preclude you from providing truthful testimony if mandated by subpoena or court order to do so, or from cooperating fully with any valid request for information from a government agency.

 

(f)     Severability and Modification of any Unenforceable Covenant. The parties intend that each covenant in this Section 7 be read and interpreted with every reasonable inference given to its enforceability. However, the parties intend also that if any term, provision or condition of the covenants in this Section 7 is held to be invalid, void or unenforceable, the remainder of the provisions thereof will remain in full force and effect and will in no way be affected, impaired or invalidated. The parties intend also that if it is determined any covenant in this Section 7 is unenforceable because of over breadth, then the covenant will be modified so as to make it reasonable and enforceable under the prevailing circumstances.

 

 

 

[NAME]

[DATE]

Page 10

 

 

(g)     Tolling. If you breach any covenant in this Section 7, the running of the period of restriction will automatically toll and suspend for the amount of time that the breach continues and will automatically recommence when the breach is remedied so that Libbey will receive the benefit of your compliance with the covenants in this Section 7.

 

(h)     Any reference to Libbey in this Section 7 includes Libbey and its affiliates.

 

8.     No Assignment. This Agreement and the rights and duties hereunder are personal to you and will not be assigned, delegated, transferred, pledged or sold by you without Libbey’s prior written consent. You hereby acknowledge and agree that Libbey may assign, delegate, transfer, pledge or sell this Agreement and the rights and duties hereunder (a) to an affiliate of Libbey or (b) to any third party in connection with (i) the sale of all or substantially all of Libbey’s assets or (ii) a stock purchase, merger, or consolidation involving Libbey. This Agreement will inure to the benefit of and be enforceable by the parties hereto, and their respective heirs, personal representatives, successors and assigns.

 

9.     Miscellaneous Provisions.

 

(a)     Taxes. Except as specifically provided in this Agreement, to the extent any taxes become payable by you by virtue of any payments made or benefits conferred by Libbey, Libbey will not be liable to pay or to reimburse you for any such taxes or to make any adjustment under this Agreement. Any payments otherwise due to you under this Agreement, including but not limited to base salary and any bonus compensation, will be reduced by any required withholding for federal, state and/or local taxes and other appropriate payroll deductions.

 

(b)     Notices. All notices and other communications required or permitted to be given under this Agreement will be in writing to the addresses below and will be considered as properly given or made (i) if delivered personally or (ii) the fifth day after the date upon which the notice was mailed from within the United States by certified mail, return receipt requested, postage prepaid, (iii) upon receipt by facsimile (with written confirmation of receipt) or (iv) the second business day after the date deposited with an overnight delivery service.

 

	
			If to you:

			 

			[NAME]

			[ADDRESS]

			 

				
			If to Libbey:

			 

			Libbey Inc.

			300 Madison Avenue

			Toledo, Ohio 43604

			Facsimile: [NUMBER]

			Attention: [Secretary/Chief Executive Officer]

			

 

Any party’s address may be changed by a notice in writing given according to this provision.

 

(c)     Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable, the provision will be severed and enforced to the extent possible or modified in such a way as to make it enforceable, and the invalidity, illegality or unenforceability thereof will not affect the validity, legality or enforceability of the remainder of this Agreement.

 

 

 

[NAME]

[DATE]

Page 11

 

 

(d)     Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Ohio applicable to contracts executed in and to be performed in that state, except with respect to matters of law concerning the internal corporate affairs of any corporate entity that is a party to or the subject of this Agreement, and as to those matters, the law of the jurisdiction under which the respective entity derives its powers will govern. Further, the arbitration provision in Section 9(k) will be governed solely by the Federal Arbitration Act as will any action to compel, enforce, vacate or confirm proceedings, awards or orders under the arbitration provision. The parties irrevocably agree that all actions to enforce an arbitrator’s award under Section 9(k) of this Agreement will be instituted and litigated only in federal or state courts sitting in Toledo, Ohio, and each party hereby consents to the exclusive jurisdiction and venue of the court and waives any objection based on forum non conveniens.

 

(e)     Waiver of Jury Trial. The parties hereby waive, release and relinquish any and all rights they may have to a trial by jury with RESPECT to any provisions of this Agreement, any claim covered by Section 9(l), or to enforce AN ARBITRATOR’S AWARD UNDER SECTION 9(k) OF THIS AGREEMENT.

 

(f)     Counterparts. This Agreement may be executed in counterparts, each of which will be an original, but all of which will constitute one and the same instrument.

 

(g)    Entire Understanding. This Agreement including all Exhibits and Recitals hereto which are incorporated herein by this reference, together with the other agreements and documents being executed and delivered concurrently herewith by you, Libbey and certain of its affiliates, constitute the entire understanding among all of the parties hereto and supersedes any prior understandings and agreements, written or oral, among them respecting the subject matter within.

 

(h)     Headings. The headings, titles and subtitles herein are inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof.

 

(i)     Amendment. Except as set forth in Sections 7(f) and 9(c), this Agreement will not be changed or amended unless in writing and signed by both you and the Chairman of the Board of Directors or Chief Executive Officer or unless amended by Libbey in any manner provided that your rights and benefits will not be diminished by any amendment made by Libbey without your written consent to the amendment.

 

(j)     Advice of Counsel. You acknowledge (i) that you have consulted with or have had the opportunity to consult with independent counsel of your own choice concerning this Agreement and have been advised to do so by Libbey, and (ii) that you have read and understand this Agreement, are fully aware of its legal effect, and have entered into it freely based on your own judgment.

 

 

 

[NAME]

[DATE]

Page 12

 

 

(k)     Arbitration. The parties agree to submit to arbitration on any dispute, not contrary to law, related to this Agreement, its provisions or interpretation, any aspect of your employment relationship with Libbey and any employment-related claims you may wish to assert and agree that the arbitration process will be the exclusive, final and binding means for resolving disputes which the parties cannot themselves resolve. Any arbitration under this Agreement will be conducted in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association (“AAA”) for individual, non-aggregate claims as modified in this Agreement. Arbitration proceedings will take place in Toledo, Ohio, before a single neutral arbitrator, selected in accordance with AAA rules, who will be a lawyer. All arbitration proceedings will be confidential. Neither party will disclose any information about the evidence the other party produces in the arbitration proceeding, except in the course of judicial, regulatory, or arbitration proceedings, or as a government authority may demand. Before making any disclosure permitted by the preceding sentence, a party will give the other party reasonable advance written notice of the intended disclosure and an opportunity to prevent disclosure. Each party will have the right to depose three individuals and any expert witness designated by the other party. Additional discovery may be had only where the arbitrator so orders, upon a showing of substantial need. Only evidence that is directly relevant to the issues may be obtained in discovery. Each party bears the burden of persuasion on any claim, counterclaim or affirmative defense raised by that party. This Agreement’s arbitration provisions will not prevent Libbey from obtaining injunctive relief from a court of competent jurisdiction to enforce any obligations of this Agreement or the continuing obligations of the Agreement for which Libbey may obtain provisional relief pending a decision on the merits by the arbitrator. The arbitrator will have authority to award any remedy or relief that a court of the State of Ohio or federal court located in the State of Ohio could grant in an individual action based on applicable law and the claims actually made in the arbitration. The arbitrator may allow reasonable attorney’s fees as a part of the award where the discretion to allow such fees is provided under applicable Ohio or federal law to prevailing parties. Any arbitration award will be accompanied by a written statement summarizing the issues in controversy, describing the award, and explaining the reasons for the award. The arbitrator’s award will be final and judgment may be entered upon the award by any court. Libbey will pat the administration and arbitrator’s fees for any arbitration.

 

(l)     Attorney’s Fees. In addition to the attorneys’ fees referred to in Section 9(k), if you prevail in any arbitration or other proceeding including to enforce an arbitration award, or appeal in connection with this Agreement in which attorneys’ fees are not otherwise available to the prevailing party, Libbey will reimburse you reasonable attorneys’ fees and other costs within a reasonable time after a final award or judgment in any enforcement proceeding is rendered.

 

(m)     Coordination with Deferred Compensation Plans. If and to the extent that you have elected, under the Executive Deferred Compensation Plan (“DCP”) or any other non-qualified deferred compensation plan (the plans being referred to as “deferred compensation plans”), to defer receipt of any of compensation, including without limitation any performance-based equity compensation or other equity-based compensation (as defined in the DCP), the applicable deferred compensation plan will govern as to the events upon which compensation that is subject to a deferral election is distributed to you and the timing of any such distribution. However, this Agreement will govern as to whether (and, if so, the extent to which) amounts, including without limitation annual incentive compensation, performance-based equity compensation and other equity-based compensation, that are subject to deferral elections have been earned or deemed earned at the time of any distribution event contemplated by the relevant deferred compensation plan.

 

(n)     Section 409A Compliance. To the extent applicable, this Agreement is intended to comply with Section 409A. This Agreement will be administered consistent with this intent. References to Section 409A include any proposed, temporary or final regulation, or any other formal guidance, promulgated with respect to such section by the U.S. Department of Treasury or the Internal Revenue Service.

 

If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to Libbey the enclosed copy of this letter, which will then constitute our agreement on this subject.

 

 

 

[NAME]

[DATE]

Page 13

 

 

	
			 

				
			Sincerely,

			

			LIBBEY INC.

			 

				
			 

			
	
			 

				
			By:  

				
			 

				
			 

			
	
			 

				
			 

				
			Michael P. Bauer

				
			 

			
	
			 

				
			 

				
			Chief Executive Officer 

				
			 

			

 

Agreed and Accepted as of

[MONTH] [DAY], [YEAR]

	
			 

				
			 

				
			 

			
	
			 

			                                                              

			Name: [NAME] 

				
			 

				
			 

			

 

 

 

 

EXHIBIT A 

 

GENERAL RELEASE AND WAIVER OF CLAIMS 

 

The undersigned, __________________, resident of the State of ___ (“Releasor”), in accordance with and pursuant to the terms of Section 4(c) of the letter agreement dated [DATE], between Libbey Inc., a Delaware corporation (“Libbey”), and Releasor (the “Agreement”), and the consideration therein provided, except as set forth herein, hereby remises, releases and forever discharges and covenants not to sue, and by these presents does for Releasor and Releasor’s legal representatives, trustees, beneficiaries, heirs and assigns (Releasor and the persons referred to herein, collectively, as the “Releasing Parties”) hereby remise, release and forever discharge and covenant not to sue Libbey and its affiliates and the respective Officers, directors, employees, equity holders, agent and representatives of each of them and all of their respective successor and assigns (each a “Released Party” and collectively, the “Released Parties”), of and from any and all manner of actions, proceedings, claims, causes of action, suits, promises, damages, judgments, executions, claims and demands, of any nature whatsoever, and of every kind and description, choate and inchoate, known or unknown, at law or in equity (collectively, “Claims”), which the Releasing Parties, or any of them, now have or ever had, or hereafter can, will or may have, for, upon or by reason of any matter, cause or thing whatsoever, against the Released Parties, and each of them, from the beginning of time to the date hereof;

 

	 	
			(i)

				
			arising from Releasor’s employment, compensation, commissions, deferred compensation plans, insurance, stock ownership, stock options, employee benefits, and other terms and conditions of employment or employment practices of Libbey under federal, state or local law or regulation, including but not limited to the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended;

			

 

	 	
			(ii)

				
			relating to the termination of Releasor’s employment or the circumstances surrounding thereof based on any contract, tort, whistleblower, personal injury, retaliatory, wrongful discharge or any other theory under any federal, state or local constitution, law, regulation, common law or otherwise;

			

 

	 	
			(iii)

				
			relating to payment of any attorneys’ fees incurred by Releasor; and

			

 

	 	
			(iv)

				
			based on any alleged discrimination on the basis of race, color, religion, sex, age, national origin, handicap, disability or another category protected by any federal, state or local law or regulation, including but not limited to the Age Discrimination in Employment Act (“ADEA”), Title VII of the Civil Rights Act of 1964 (“Title VII”), the Americans with Disabilities Act (“ADA”), the Fair Labor Standards Act (“FLSA”), the Older Workers Benefit Protection Act of 1990 (“OWBPA”), or Executive Order 11246 (as any of these laws or orders may have been amended) or any other similar federal, state or local labor, employment or anti-discriminatory laws..

			

 

Notwithstanding any other provision of this General Release and Waiver of Claims, Releasor does not release or waive Releasor’s rights and Claims against Libbey arising out of, or related to, the obligations of Libbey under the Agreement, Claims for Releasor’s vested benefits under any pension plan, retirement plan and savings plan, rights under any equity participation plan and stock purchase plan and rights to continuation of medical care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and any similar state law.

 

 

 

 

Releasor represents and warrants on behalf of the Releasing Parties that there has been, and there will be, no assignment or other transfer of any right or interest in any Claims which Releasor has or may have against the Released Parties, and Releasor hereby agrees to indemnify and hold each Released Party harmless from any Claims, costs, expenses and attorney’s fees directly or indirectly incurred by any of the Released Parties as a result of any person asserting any right or interest pursuant to his, her or its assignment or transfer of any such right or interest.

 

Nothing in this General Release will foreclose Releasor’s right to consult or cooperate with any governmental agency.

 

Releasor agrees that if any Releasing Party hereafter commences, joins in, or in any manner seeks relief through any suit arising out of, based upon, or relating to any of the Claims released hereunder, or in any manner asserts against any Released Party any of the Claims released hereunder, then Releasor will pay to the Released Party, in addition to any all damages and compensation, direct or indirect, all attorney’s fees incurred in defending or otherwise responding to the suit or Claims.

 

Releasor acknowledges that (i) Releasor has received the advice of legal counsel in connection with this General Release and Waiver of Claims, (ii) Releasor has read and understands that this is a General Release and Waiver of Claims, and (iii) Releasor it intends to be legally bound by the same.

 

Releasor acknowledges that Releasor has been given the opportunity to consider this Release for 21 days and has been encouraged and given the opportunity to consult with legal counsel of Releasor’s choosing before signing it. Releasor understands that Releasor will have 7 days from the date on which Releasor executes this General Release and Waiver of Claims (as indicated by the date below his signature) to revoke Releasor’s signature and agreement to be bound hereby by providing written notice of revocation to Libbey within the 7-day period. Releasor further understands and acknowledges this Release will become effective, if not sooner revoked, on the eighth day after the execution hereof by Releasor (the “Effective Date”).

 

IN WITNESS WHEREOF, Releasor has executed and delivered this General Release and Waiver of Claims on behalf of the Releasing Parties as of the day and year set forth below.

 

 

Dated: _______, 20___.

	
			 

				
			 

				
			 

				
			 

			
	
			 

				
			 

				
			RELEASOR:

			
	
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

			
	
			 

				
			 

				
			 

			
	
			  

				
			 

				
			Name:

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