Document:

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                                                                    Exhibit 10.4

                   CHANGE IN CONTROL AND TERMINATION AGREEMENT

      NiSource Inc., a Delaware corporation ("Employer") and _________
("Executive") entered into a Change in Control and Termination Agreement as of
____________________ ("Agreement"), and Employer and Executive hereby enter into
an amendment and restatement of the Agreement, effective _______ __, 200_, which
amended and restated Agreement is hereinafter set forth.

                                   WITNESSETH:

      WHEREAS, Executive is currently employed by Employer as its
______________;

      WHEREAS, Employer desires to provide security to Executive in connection
with Executive's employment with Employer in the event of a Change in Control
affecting Employer; and

      WHEREAS, Executive and Employer desire to enter into this Agreement
pertaining to the terms of the security Employer is providing to Executive with
respect to his employment in the event of a Change in Control;

      NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:

      1.    Term. The term of this Agreement shall be the period beginning on
the date hereof and terminating on the date 36 months after such date (the
"Term"), provided that for each day from and after the date hereof the Term will
automatically be extended for an additional day, unless either Employer or
Executive has given written notice to the other party of its or his election to
cease such automatic extension, in which case the Term shall be the 36-month
period beginning on the date such notice is received by such other party.
<PAGE>
      2.    Definitions. For purposes of this Agreement:

            (a)   "Affiliate" or "Associate" shall have the meaning set
      forth in Rule 12b-2 under the Securities Exchange Act of 1934.

            (b)   "Base Salary" shall mean Executive's monthly base salary
      at the rate in effect on the date of a reduction for purposes of paragraph
      (g) of this Section, or on the date of a termination of employment under
      circumstances described in subsections 3(a) or (b) below, whichever is
      higher; provided, however, that such rate shall in no event be less than
      the highest rate in effect for Executive at any time during the Term.

            (c) "Beneficiary" shall mean the person or entity designated by
      Executive, by written instrument delivered to Employer, to receive the
      benefits payable under this Agreement in the event of his death. If
      Executive fails to designate a Beneficiary, or if no Beneficiary survives
      Executive, such death benefits shall be paid:

                  (i)   to his surviving spouse; or

                  (ii)  if there is no surviving spouse, to his living
                        descendants per stirpes; or

                  (iii) if there is neither a surviving spouse nor
                        descendants, to his duly appointed and qualified
                        executor or personal representative.

            (d)   "Bonus" shall mean Executive's target annual incentive bonus
      compensation for the calendar year in which the date of a termination of
      employment under circumstances described in subsection 3(a) below occurs,
      under the incentive bonus compensation plan then maintained by Employer;
      provided, however, that such target annual incentive bonus compensation
      shall in no event be less than the highest target annual incentive bonus
      compensation of Executive under any such incentive bonus compensation plan
      for any calendar year commencing during the Term.

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<PAGE>
            (e)   A "Change in Control" shall be deemed to take place on the
      occurrence of any of the following events:

                  (1)   The acquisition by an entity, person or group (including
            all Affiliates or Associates of such entity, person or group) of
            beneficial ownership, as that term is defined in Rule 13d-3 under
            the Securities Exchange Act of 1934, of capital stock of Employer
            entitled to exercise more than 30% of the outstanding voting power
            of all capital stock of Employer entitled to vote in elections of
            directors ("Voting Power");

                  (2)   The effective time of (i) a merger or consolidation of
            Employer with one or more other corporations as a result of which
            the holders of the outstanding Voting Power of Employer immediately
            prior to such merger or consolidation (other than the surviving or
            resulting corporation or any Affiliate or Associate thereof) hold
            less than 50% of the Voting Power of the surviving or resulting
            corporation, or (ii) a transfer of 30% of the Voting Power, or a
            Substantial Portion of the Property, of Employer other than to an
            entity of which Employer owns at least 50% of the Voting Power; or

                  (3)   The election to the Board of Directors of Employer of
            candidates who were not recommended for election by the Board of
            Directors of Employer in office immediately prior to the election,
            if such candidates constitute a majority of those elected in that
            particular election.

Notwithstanding the foregoing, a Change in Control shall not be deemed to take
place by virtue of any transaction in which Executive is a participant in a
group effecting an acquisition of Employer and, after such acquisition,
Executive holds an equity interest in the entity that has acquired Employer.

            (f)   "Good Cause" shall be deemed to exist if, and only if:

                  (1)   Executive engages in acts or omissions constituting
                  dishonesty, intentional breach of fiduciary obligation or

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                  intentional wrongdoing or malfeasance, in each case that
                  results in substantial harm to Employer or any Affiliate; or

                  (2)   Executive is convicted of a criminal violation involving
                  fraud or dishonesty.

            (g)   "Good Reason" shall be deemed to exist if, and only if:

                  (1)   there is a significant change in the nature or the scope
                  of Executive's authorities or duties;

                  (2)   there is a significant reduction in Executive's monthly
                  rate of Base Salary, his opportunity to earn a bonus under an
                  incentive bonus compensation plan maintained by Employer or
                  his benefits; or

                  (3)   Employer changes by 100 miles or more the principal
                  location in which Executive is required to perform services.

            (h)   "Pension Plan" shall mean any Retirement Plan that is a
      defined benefit plan as defined in Section 3(35) of the Employee
      Retirement Income Security Act of 1974, as amended ("ERISA").

            (i)   "Retirement Plan" shall mean any qualified or supplemental
      employee pension benefit plan, as defined in Section 3(2) of ERISA,
      currently or hereinafter made available by Employer in which Executive is
      eligible to participate.

            (j)   "Severance Period" shall mean the period beginning on the date
      Executive's employment with Employer terminates under circumstances
      described in subsection 3(a) and ending on the date 36 months thereafter.

            (k)   "Substantial Portion of the Property of Employer" shall mean
      50% of the aggregate book value of the assets of Employer and its
      Affiliates and Associates as set forth on the most recent balance sheet of
      Employer, prepared on a consolidated basis, by its regularly employed,
      independent, certified public accountants.

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            (l)   "Welfare Plan" shall mean any health and dental plan,
      disability plan, survivor income plan or life insurance plan, as defined
      in Section 3(1) of ERISA, currently or hereafter made available by
      Employer in which Executive is eligible to participate.

      3.    Benefits Upon Termination of Employment. (a) The following
provisions will apply if a Change in Control occurs during the Term, and (i) at
any time during the 24 months after the Change in Control occurs (whether during
or after the expiration of the Term), the employment of Executive with Employer
is terminated by Employer for any reason other than Good Cause, or Executive
terminates his employment with Employer for Good Reason, or (ii) at any time
during the seventh month after the Change in Control occurs (whether during or
after the expiration of the Term), Executive terminates his employment with
Employer for any reason:

            (1)   Employer shall pay Executive an amount equal to 36 times the
      sum of (a) Executive's Base Salary plus (b) one-twelfth of his Bonus. Such
      amount shall be paid to Executive in a lump sum within 180 days after his
      date of termination of employment; provided, however, Executive, by
      written notice to Employer, may elect to receive such payment on any date
      that is no earlier than the later to occur of (i) the date 10 days after
      the date of termination, and (ii) the date 10 days after receipt of such
      notice.

            (2)   Employer shall pay Executive an amount equal to the pro rata
      portion of Executive's target annual incentive bonus compensation for the
      calendar year in which the date of termination of employment occurs, under
      the incentive bonus compensation plan then maintained by Employer, that is
      applicable to the period commencing on the first day of such calendar year
      and ending on the date of termination. Such amount shall be paid to
      Executive in a lump sum within 180 days after his date of termination of
      employment; provided, however, Executive, by written notice to Employer,
      may elect to receive such payment on any date that is no earlier than the
      later

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<PAGE>
      to occur of (i) the date 10 days after the date of termination, and (ii)
      the date 10 days after receipt of such notice.

            (3)   Executive shall receive any and all benefits accrued under any
      Retirement Plan, Welfare Plan or other plan or program in which he
      participates at the date of termination of employment, to the date of
      termination of employment, the amount, form and time of payment of such
      benefits to be determined by the terms of such Retirement Plan, Welfare
      Plan and other plan or program, and Executive's employment shall be deemed
      to have terminated by reason of retirement, and without regard to vesting
      limitations in all such Plans and other plans or programs not subject to
      the qualification requirements of Section 401 (a) of the Internal Revenue
      Code of 1986 as amended ("Code"), under circumstances that have the most
      favorable result for Executive thereunder for all purposes of such Plans
      and other plans or programs. Payment shall be made at the earliest date
      permitted under any such Plan or other plan or program that is not funded
      with a trust agreement.

            (4)   (A) Employer shall pay to Executive a monthly Supplemental
      Pension Benefit in an amount equal to the amount determined pursuant to
      clause (i) below less the amount determined pursuant to clause (ii) below:

                  (i)   the aggregate monthly amount of the pension benefit
            ("Pension") that would have been payable to Executive under all
            Pension Plans if that Pension were computed (A) by treating the
            Severance Period as service for all purposes of the Pension Plans
            and (B) by considering his compensation during the Severance Period
            to be his Base Salary and one-twelfth of his Bonus for all purposes
            of the Pension Plans;

                  (ii)  the aggregate monthly amount of any Pension actually
            paid to Executive under all Pension Plans.

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                  (B)   The Supplemental Pension Benefit payable to Executive
      hereunder shall be paid (i) commencing at the later to occur of the last
      day of the Severance Period or the date payment of his Pension commences
      under the Pension Plans; and (ii) in the same form as is applicable to the
      Pension payable to Executive under the Pension Plans.

                  (C)   If Executive dies prior to commencement of payment to
      him of his Pension under the Pension Plans, under circumstances in which a
      death benefit under the Pension Plans is payable to his surviving spouse
      or other beneficiary, then Employer shall pay a monthly Supplemental Death
      Benefit to Executive's surviving spouse or other beneficiary entitled to
      receive the death benefit payable with respect to Executive under the
      Pension Plans in an amount equal to the amount determined pursuant to
      clause (i) below less the amount determined pursuant to clause (ii) below:

                  (i)   the aggregate monthly amount of the death benefit that
            would have been payable to the surviving spouse or other beneficiary
            of Executive under the Pension Plans if that death benefit were
            computed (A) by treating the Severance Period as service for all
            purposes of the Pension Plans and (B) by considering his
            compensation during the Severance Period to be his Base Salary and
            one-twelfth of his Bonus for all purposes of the Pension Plans;

                  (ii)  the aggregate monthly amount of any death benefit
            actually paid to the surviving spouse or other beneficiary of
            Executive under the Pension Plans.

                  (D)   The Supplemental Death Benefit payable with respect to
      Executive hereunder shall be payable at the same time, in the same form,
      and to the same persons as is applicable to the death benefit payable with
      respect to Executive under the Pension Plans.

                  (E)   Notwithstanding the foregoing provisions, the total of
      the actual years of service of Executive for purposes of each of the
      Pension Plans

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<PAGE>
      and the years of service for which credit is given pursuant to
      subparagraphs (3)(A) and (C) shall not exceed the maximum number of years
      of service, if any, that can be considered pursuant to the terms of such
      Pension Plan.

                  (F)   Any actuarial adjustments made under the Pension Plans
      with respect to the form or time of payment of a Pension or death benefit
      to Executive or his surviving spouse or other beneficiary under the
      Pension Plans shall also be applicable to the Supplemental Pension Benefit
      or Supplemental Death Benefit payable hereunder and shall be based upon
      the same actuarial assumptions as those specified in the Pension Plans.

            (5)   If upon the date of termination of Executive's employment
      Executive holds any options with respect to stock of Employer, all such
      options will immediately become exercisable upon such date and will be
      exercisable for 200 days thereafter. Any restrictions on stock of Employer
      owned by Executive on the date of termination of his employment will lapse
      on such date.

            (6)   During the Severance Period Executive and his spouse and other
      dependents will continue to be covered by all Welfare Plans maintained by
      Employer in which he and his spouse and other dependents were
      participating immediately prior to the date of his termination as if he
      continued to be an employee of Employer and Employer will continue to pay
      the costs of coverage of Executive and his spouse and other dependents
      under such Welfare Plans on the same basis as is applicable to active
      employees covered thereunder; provided that, if participation in any one
      or more of such Welfare Plans is not possible under the terms thereof,
      Employer will provide substantially identical benefits. Coverage under any
      such Welfare Plan will cease if and when Executive obtains employment with
      another employer during the Severance Period, and becomes eligible for
      coverage under any substantially similar Welfare Plan provided by his new
      employer.

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<PAGE>
            (7)   During the Severance Period, Executive shall not be entitled
      to reimbursement for fringe benefits, including without limitation, dues
      and expenses related to club memberships, automobile expenses, expenses
      for professional services and other similar perquisites.

      (b)   If the employment of Executive with Employer is terminated by
Employer or Executive other than under circumstances set forth in subsection
3(a), Executive's Base Salary shall be paid through the date of his termination,
and Employer shall have no further obligation to Executive or any other person
under this Agreement. Such termination shall have no effect upon Employee's
other rights, including but not limited to, rights under the Retirement Plans
and the Welfare Plans.

      (c)   Notwithstanding anything herein to the contrary, (1) in the event
Employer shall terminate the employment of Executive for Good Cause hereunder,
Employer shall give Executive at least thirty (30) days prior written notice
specifying in detail the reason or reasons for Executive's termination, and (2)
in the event Executive terminates his employment for Good Reason hereunder,
Executive shall give Employer at least thirty (30) days prior written notice
specifying in detail the reason or reasons for Executive's termination.

      (d)   This Agreement shall have no effect, and Employer shall have no
obligations hereunder, if Executive's employment terminates for any reason at
any time other than during the 24 months following a Change in Control.

      4.    Excise Tax. (a) In the event that a Change in Control shall occur,
and a final determination is made by legislation, regulation, ruling directed to
Executive or Employer, by court decision, or by independent tax counsel
described in subsection (b) next below, that the aggregate amount of any payment
made to Executive (1) hereunder, and (2) pursuant to any plan, program or policy
of Employer in connection with, on account of, or as a result of, such Change in
Control ("Total Payments") will be subject to the excise tax provisions of
Section 4999 of the Code, or any successor section thereof, Executive shall be
entitled to receive from Employer, in addition to any other amounts payable
hereunder, a lump sum payment

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(the "Gross-Up Payment"), sufficient to cover the full cost of such excise taxes
and Executive's federal, state and local income and employment taxes on this
additional payment so that the net amount retained by Executive, after the
payment of all such excise taxes on the Total Payments, and all federal, state
and local income and employment taxes and excise taxes on the Gross-Up Payment,
shall be equal to the Total Payments. The Total Payments, however, shall be
subject to any federal, state and local income and employment taxes thereon. For
this purpose, Executive shall be deemed to be in the highest marginal rate of
federal, state and local taxes. The Gross-Up Payment shall be made at the same
time as the payments described in subsections 3(a)(1) and (2) above.

      (b)   Employer and Executive shall mutually and reasonably determine the
amount of the Gross-Up Payment to be made to Executive pursuant to the preceding
subsection. Prior to the making of any such Gross-Up Payment, either party may
request a determination as to the amount of such Gross-Up Payment. If such a
determination is requested, it shall be made promptly, at Employer's expense, by
independent tax counsel selected by Executive and approved by Employer (which
approval shall not unreasonably be withheld), and such determination shall be
conclusive and binding on the parties. Employer shall provide such information
as such counsel may reasonably request, and such counsel may engage accountants
or other experts at Employer's expense to the extent that they deem necessary or
advisable to enable them to reach a determination. The term "independent tax
counsel," as used herein, shall mean a law firm of recognized expertise in
federal income tax matters that has not previously advised or represented either
party. It is hereby agreed that neither Employer nor Executive shall engage any
such firm as counsel for any purpose, other than to make the determination
provided for herein, for three years following such firm's announcement of its
determination.

      (c)   In the event the Internal Revenue Service subsequently adjusts the
excise tax computation made pursuant to subsections 4(a) and (b) above, Employer
shall pay to Executive, or Executive shall pay to Employer, as the case may be,
the

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full amount necessary to make either Executive or Employer whole had the excise
tax initially been computed as subsequently adjusted, including the amount of
any underpaid or overpaid excise tax, and any related interest and/or penalties
due to the Internal Revenue Service.

      5.    Setoff. No payments or benefits payable to or with respect to
Executive pursuant to this Agreement shall be reduced by any amount Executive or
his spouse or Beneficiary, or any other beneficiary under the Pension Plans, may
earn or receive from employment with another employer or from any other source,
except as expressly provided in subsection 3(a)(6).

      6.    Death. If Executive's employment with Employer terminates under
circumstances described in subsections 3(a) or (b), then upon Executive's
subsequent death, all unpaid amounts payable to Executive under subsections
3(a)(1), (2) or (3) or 3(b), or Section 4, if any, shall be paid to his
Beneficiary, all amounts payable under subsection 3(a)(4) shall be paid pursuant
to the terms of said subsection to his spouse or other beneficiary under the
Pension Plans, and if subsection 3(a) applies, his spouse and other dependents
shall continue to be covered under all applicable Welfare Plans during the
remainder of the Severance Period, if any, pursuant to subsection 3(a)(6).

      7.    No Solicitation of Representatives and Employees. Executive agrees
that he shall not, during the Term or the Severance Period, directly or
indirectly, in his individual capacity or otherwise, induce, cause, persuade, or
attempt to do any of the foregoing in order to cause, any representative, agent
or employee of Employer or any of its Affiliates to terminate such person's
employment relationship with Employer or any of its Affiliates, or to violate
the terms of any agreement between said representative, agent or employee and
Employer or any of its Affiliates.

      8.    Confidentiality. Executive acknowledges that preservation of a
continuing business relationship between Employer or its Affiliates and their
respective customers, representatives, and employees is of critical importance
to the continued business success of Employer and its Affiliates and that it is
the active

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policy of Employer and its Affiliates to guard as confidential certain
information not available to the public and relating to the business affairs of
Employer and its Affiliates. In view of the foregoing, Executive agrees that he
shall not during the Term and at any time thereafter, without the prior written
consent of Employer, disclose to any person or entity any such confidential
information that was obtained by Executive in the course of his employment by
Employer or any of its Affiliates. This section shall not be applicable if and
to the extent Executive is required to testify in a legislative, judicial or
regulatory proceeding pursuant to an order of Congress, any state or local
legislature, a judge, or an administrative law judge or is otherwise required by
law to disclose such information.

      9.    Forfeiture. If Executive shall at any time violate any obligation of
his under Sections 7 or 8 in a manner that results in material damage to the
Employer or its business, he shall immediately forfeit his right to any benefits
under this Agreement, and Employer shall thereafter have no further obligation
hereunder to Executive or his spouse, Beneficiary or any other person.

      10.   Executive Assignment. No interest of Executive, his spouse or any
Beneficiary, or any other beneficiary under the Pension Plans, under this
Agreement, or any right to receive any payment or distribution hereunder, shall
be subject in any manner to sale, transfer, assignment, pledge, attachment,
garnishment, or other alienation or encumbrance of any kind, nor may such
interest or right to receive a payment or distribution be taken, voluntarily or
involuntarily, for the satisfaction of the obligations or debts of, or other
claims against, Executive or his spouse, Beneficiary or other beneficiary,
including claims for alimony, support, separate maintenance, and claims in
bankruptcy proceedings.

      11.   Benefits Unfunded. Except as otherwise provided in Section 13, all
rights under this Agreement of Executive and his spouse, Beneficiary or other
beneficiary under the Pension Plans, shall at all times be entirely unfunded,
and no provision shall at any time be made with respect to segregating any
assets of Employer for payment of any amounts due hereunder. None of Executive,
his

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spouse, Beneficiary or any other beneficiary under the Pension Plans shall have
any interest in or rights against any specific assets of Employer, and Executive
and his spouse, Beneficiary or other beneficiary shall have only the rights of a
general unsecured creditor of Employer. Except as otherwise provided in Section
13, and notwithstanding the preceding provisions of this Section, the Nominating
and Compensation Committee of the Board of Directors of Employer, in its
discretion, shall have the right, at any time and from time to time, to cause
amounts payable to Executive or his Beneficiary hereunder to be paid to the
trustee of the NIPSCO Industries, Inc. Umbrella Trust For Management established
effective January 1, 1991, as amended from time to time, or any similar trust at
any time established by Employer ("Trust").

      12.   Waiver. No waiver by any party at any time of any breach by the
other party of, or compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of any other
provisions or conditions at the same time or at any prior or subsequent time.

      13.   Litigation Expenses. Employer shall pay Executive's reasonable
attorneys' fees and legal expenses in connection with any judicial proceeding to
enforce this Agreement, or to construe or determine the validity of this
Agreement or otherwise in connection therewith, whether or not Executive is
successful in such litigation. Within 10 days following the occurrence of a
Potential Change in Control (as defined in the Trust described in Section 11),
the Nominating and Compensation Committee of the Board of Directors of Employer
shall cause Employer to contribute the sum of $100,000 to the Trust to be
applied in satisfaction of Employer's obligations under this Section. The
Nominating and Compensation Committee shall cause Employer to contribute
additional amounts to the Trust, at such time or times as the Committee deems
appropriate, to the extent the aggregate of (1) the aforementioned sum of
$100,000, plus Trust earnings thereon, and (2) any additional Employer
contributions to the Trust, plus Trust earnings thereon, is not sufficient to
satisfy in full Employer's obligations under this Section.

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      14.   Applicable Law. This Agreement shall be construed and interpreted
pursuant to the laws of Indiana.

      15.   Entire Agreement. This Agreement contains the entire Agreement
between the Employer and Executive and supersedes any and all previous
agreements; written or oral; between the parties relating to the subject matter
hereof. No amendment or modification of the terms of this Agreement shall be
binding upon the parties hereto unless reduced to writing and signed by Employer
and Executive.

      16.   No Employment Contract. Nothing contained in this Agreement shall be
construed to be an employment contract between Executive and Employer.

      17.   Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original.

      18.   Severability. In the event any provision of this Agreement is held
illegal or invalid, the remaining provisions of this Agreement shall not be
affected thereby.

      19.   Successors. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, representatives and
successors.

      20.   Employment with an Affiliate. For purposes of this Agreement, (A)
employment or termination of employment of Executive shall mean employment or
termination of employment with Employer and all Affiliates, (B) Base Salary and
Bonus shall include remuneration received by Executive from Employer and all
Affiliates, and (C) the terms Pension Plan, Retirement Plan and Welfare Plan
maintained or made available by Employer shall include any such plans of any
Affiliate of Employer.

      21.   Notice. Notices required under this Agreement shall be in writing
and sent by registered mail, return receipt requested, to the following
addresses or to such other address as the party being notified may have
previously furnished to the other party by written notice:

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      If to Employer:   NiSource Inc.
                        801 E. 86th Avenue
                        Merrillville, Indiana 46410

                        Attention: Gary L. Neale

      If to Executive:

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     IN WITNESS WHEREOF, Executive has hereunto set his hand, and Employer has
caused these presents to be executed in its name on its behalf, all on the ___
day of ___________, 200_, effective ___________ __, 200_.

                                    NISOURCE INC.

                                    By:  _________________________

                              Title:   ___________________________

                              ________________________________________________
                                                        , Executive

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               Schedule of Parties to Change of Control Agreements

      The following NiSource executives have entered into amended Change in
Control and Termination Agreements with NiSource: Gary L. Neale, Stephen P.
Adik, Patrick J. Mulchay, Jeffrey W. Yundt, Mark D. Wyckoff, Michael W.
O'Donnell, S. LaNette Zimmerman, and Jeffrey W. Grossman.

      The contracts are substantially identical in all material respects except
as to the parties, the execution dates, the amount of time following a change of
control that the termination provisions of the agreement apply (from 7-24
months), the monthly base payout (24 to 36 months), and whether or not the
executive's payout is grossed up for taxes. In addition, Mr. Adik's and Mr.
Neale's agreements provide that if a change of control occurs during the term of
the agreement, they may terminate their employment within 24 months for any
reason; and Mr. Neale's agreement provides that he will receive termination
benefits during the term of the agreement (regardless of whether a change of
control has occurred) if he is terminated for any reason other than for good
cause, if he terminates his employment for good reason or if his employment
terminates due to death or disability.

                                       17<PAGE>
                                                                    Exhibit 10.5

                                  NISOURCE INC.

                              NONEMPLOYEE DIRECTOR
                              STOCK INCENTIVE PLAN

                (AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2002)

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----

<S>                                                                         <C>
ARTICLE 1.       ESTABLISHMENT, PURPOSE, AND DURATION......................    1

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

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

     2.1    "Award"........................................................    2
     2.2    "Award Agreement"..............................................    3
     2.3    "Beneficial Owner".............................................    3
     2.4    "Board" or "Board of Directors"................................    3
     2.5    "Change in Control"............................................    3
     2.6    "Code".........................................................    3
     2.7    "Company"......................................................    3
     2.8    "Committee"....................................................    3
     2.9    "Director".....................................................    3
     2.10   "Disability"...................................................    3
     2.11   "Effective Date"...............................................    3
     2.12   "Employee".....................................................    4
     2.13   "Exchange Act".................................................    4
     2.14   "Fair Market Value"............................................    4
     2.15   "Nonemployee Director".........................................    4
     2.16   "Nonqualified Stock Option" or "NQSO"..........................    4
     2.17   "Option".......................................................    4
     2.18   "Participant"..................................................    4
     2.19   "Period of Restriction"........................................    4
     2.20   "Restricted Stock".............................................    4
     2.21   "Restricted Stock Unit"........................................    5
     2.22   "Shares".......................................................    5

ARTICLE 3.       ADMINISTRATION............................................    5

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

ARTICLE 4.       SHARES AND RESTRICTED STOCK UNITS SUBJECT TO THE PLAN.....    5

     4.1    Number of Shares and Restricted Stock Units....................    5
     4.2    Lapsed Awards..................................................    6
     4.3    Adjustments in Authorized Shares and Restricted Stock Units....    6
</TABLE>

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                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
ARTICLE 5.       ELIGIBILITY AND PARTICIPATION.............................    7

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

ARTICLE 6.       RESTRICTED STOCK..........................................    7

     6.1    Initial Grant of Restricted Stock..............................    7
     6.2    Future Grants of Restricted Stock..............................    7
     6.3    Restricted Stock Award Agreement...............................    8
     6.4    Other Restrictions.............................................    8
     6.5    Certificate Legend.............................................    8
     6.6    Vesting........................................................    8
     6.7    Voting Rights..................................................    9
     6.8    Dividends and Other Distributions..............................    9

ARTICLE 7.       NONQUALIFIED STOCK OPTIONS................................   10

     7.1    Potential Grants of Options....................................   10
     7.2    Option Award Agreement.........................................   10
     7.3    Option Price...................................................   10
     7.4    Duration of Options............................................   10
     7.5    Vesting of Shares Subject to Option............................   11
     7.6    Payment........................................................   11
     7.7    Restrictions on Share Transferability..........................   12

ARTICLE 8.       RESTRICTED STOCK UNITS....................................   12

     8.1    Initial Grant of Restricted Stock Units........................   12
     8.2    Special Grant of Restricted Stock Units........................   12
     8.3    Future Grants of Restricted Stock Units........................   13
     8.4    Restricted Stock Unit Account..................................   13
     8.5    Dividend on Restricted Stock Units.............................   14
     8.6    Maturity of Restricted Stock Units.............................   14
     8.7    Payment........................................................   15
     8.8    Voting and Stock Ownership Rights..............................   15

ARTICLE 9.       CHANGE IN CONTROL.........................................   15

ARTICLE 10.      AMENDMENT, MODIFICATION AND TERMINATION...................   16

     10.1   Amendment, Modification and Termination........................   16
     10.2   Awards Previously Granted......................................   16

ARTICLE 11.      GENERAL PROVISIONS........................................   16

     11.1   Additional Awards..............................................   16
     11.2   Gender and Number..............................................   17
</TABLE>

                                       ii
<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
     11.3   Severability...................................................   17
     11.4   Indemnification................................................   17
     11.5   Beneficiary Designation........................................   18
     11.6   Termination of Directorship....................................   18
     11.7   Nontransferability of Options..................................   19
     11.8   No Right of Nomination.........................................   21
     11.9   Shares Available...............................................   21
     11.10  Additional Compensation........................................   21
     11.11  Successors.....................................................   21
     11.12  Requirements of Law............................................   21
     11.13  Governing Law..................................................   21
</TABLE>

                                      iii
<PAGE>

                              NONEMPLOYEE DIRECTOR
                              STOCK INCENTIVE PLAN

                                  NISOURCE INC.

                (AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2002)

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

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

     WHEREAS, pursuant to Section 10.1 of the Plan and Section 14 of the Stock
Unit Plan, the Company wishes to amend the Plan and the Stock Unit Plan in
certain respects, and merge the Stock Unit Plan into the Plan and restate the
merged Plan in a single document;

     NOW THEREFORE, the Plan is hereby amended and restated, effective July 1,
2002, as follows:

                 ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION

     1.1   Establishment of the Plan. NiSource Inc. established an incentive
compensation plan known as the "NiSource Inc. Nonemployee Director Stock
Incentive Plan" (the "Plan"), as set forth in this document. The Plan permits
the grant of Restricted Stock, Nonqualified Stock Options and Restricted Stock
Units to Nonemployee Directors, subject to the terms and provisions set forth
herein.

           Upon approval by the Board of Directors of the Company, subject to
ratification within twelve (12) months by an affirmative vote of a majority of
Shares present and entitled to

<PAGE>

vote at the May 20, 2003 annual shareholders meeting at which a quorum is
present, the Plan, as amended and restated herein, shall become effective as of
July 1, 2002, and shall remain in effect as provided in Section 1.3 herein. All
grants of Awards made under the Plan from and after July 1, 2002 and prior to
the date of such approval shall be conditioned upon such shareholder approval
and shall be null and void if such approval is not obtained by May 20, 2003.

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

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

     1.3   Duration of the Plan. The Plan, as amended and restated herein,
effective July 1, 2002 and shall remain in effect, subject to the right of the
Committee to terminate the Plan at any time pursuant to Article 10 herein, until
all Shares subject to it shall have been purchased or acquired according to the
Plan's provisions. However, in no event may an Award be granted under the Plan
on or after June 30, 2012.

                             ARTICLE 2. DEFINITIONS

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

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

                                       2

<PAGE>

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

     2.3   "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

     2.4   "Board" or "Board of Directors" means the Board of Directors of the
Company, and includes any committee of the Board of Directors designated by the
Board to administer part or all of the Plan.

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

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

     2.7   "Company" means NiSource Inc., a Delaware corporation, or any
successor thereto as provided in Section 11.11 herein.

     2.8   "Committee" means the Nominating and Compensation Committee of the
Board.

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

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

     2.11  "Effective Date" means February 1, 1992.

                                       3

<PAGE>

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

     2.13  "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.

     2.14  "Fair Market Value" means the average of the highest and lowest
quoted selling prices for Shares on the relevant date, or (if there were no
sales on such date) the weighted average of the mean between the highest and
lowest quoted selling prices on the nearest day before the nearest day after the
relevant date, as reported in The Wall Street Journal or a similar publication
selected by the Committee.

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

     2.16  "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares, granted under Article 7 herein.

     2.17  "Option" means a Nonqualified Stock Option granted under the Plan.

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

     2.19  "Period of Restriction" means the period during which the transfer
of Shares of Restricted Stock is limited in some way, and the Shares are subject
to a substantial risk of forfeiture, as provided in Article 6 herein.

     2.20  "Restricted Stock" means an Award granted to a Nonemployee Director
pursuant to Article 6 herein.

                                       4

<PAGE>

     2.21  "Restricted Stock Unit" means an Award granted to a Nonemployee
Director pursuant to Article 8 herein.

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

                           ARTICLE 3. ADMINISTRATION

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

     3.2   Administration by the Committee. The Committee shall have the full
power, discretion and authority to interpret and administer the Plan in a manner
which is consistent with the Plan's provisions. However, except as otherwise set
forth in Section 11.1, in no event shall the Committee have the power to
determine Plan eligibility, or to determine the number, the value, the vesting
period, or the timing, of Awards to be made under the Plan (all such
determinations are automatic pursuant to the provisions of the Plan).
Notwithstanding the preceding sentence, the Committee shall have the authority
to designate whether an upcoming grant of Awards shall consist of Restricted
Stock, Nonqualified Stock Options or Restricted Stock Units.

     3.3   Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan, and all related orders or
resolutions of the Committee, shall be final, conclusive and binding on all
persons, including the Company, its stockholders, employees, Participants, and
their estates and beneficiaries.

        ARTICLE 4. SHARES AND RESTRICTED STOCK UNITS SUBJECT TO THE PLAN

     4.1   Number of Shares and Restricted Stock Units. Subject to adjustment as
provided in Section 4.3 herein, the total number of Shares available for grant
as Awards under the Plan

                                       5

<PAGE>

may not exceed an aggregate of 500,000. The total number of Restricted Stock
Units that may be awarded under the Plan may not exceed an aggregate of 100,000.

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

     4.3   Adjustments in Authorized Shares and Restricted Stock Units.

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

           (b)   In the event of any merger, consolidation or reorganization of
the Company with any other corporation or corporations, or an acquisition by the
Company of the stock or assets of any other corporation or corporations, there
shall be substituted on an equitable basis, as determined by the Committee in
its sole discretion, for each Share then subject to the Plan, and for each Share
then subject to an Award granted under the Plan, the number and kind of shares
of stock, other securities, cash or other property to which the holders of
Shares of the Company are entitled pursuant to such transaction.

           (c)   Without limiting the generality of the foregoing provisions of
this section, any such adjustment shall be deemed to have prevented any dilution
or enlargement of a Participant's rights, if such Participant receives in any
such adjustment, rights that are substantially similar (after taking into
account the fact that the Participant has not paid the applicable Option price)
to the rights the Participant would have received had he exercised his
outstanding Award and become a shareholder of the Company immediately prior to
the event giving rise to such adjustment. Adjustments under this paragraph shall
be made by the Committee, whose decision as to the amount and timing of any such
adjustment shall be conclusive and binding on all persons.

                                       6

<PAGE>

                    ARTICLE 5. ELIGIBILITY AND PARTICIPATION

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

     5.2   Actual Participation. All eligible Nonemployee Directors shall
receive grants of Restricted Stock, Options and Restricted Stock Units pursuant
to the terms and provisions set forth in Articles 6, 7 and 8 herein.

                          ARTICLE 6. RESTRICTED STOCK

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

     6.2   Future Grants of Restricted Stock.

           (a)   Upon each election, reelection or appointment, as applicable,
of a Nonemployee Director to serve on the Board, on and after July 1, 2002, such
Nonemployee Director shall be granted twenty-six hundred (2,600) Shares of
Restricted Stock, subject to the terms of the Plan. Each such grant shall be
made as of the first day of the Board term of the newly-elected, reelected or
appointed, as applicable, Nonemployee Director, which begins immediately
following such election, reelection or appointment, as applicable.

           (b)   In the event that the Committee properly designates (pursuant
to Section 3.2 herein) that a scheduled Award grant will consist of Options
rather than Restricted Stock, then such grant shall be governed by the terms and
provisions of Article 7 or 8 herein, as applicable, which shall in such event
completely supersede and replace the terms and provisions of this Section 6.2.

           (c)   Notwithstanding the preceding provisions of this Section, each
Nonemployee Director who is a member of the Board on April 29, 2002, and who has
been nominated for reelection to the Board at the annual meeting of shareholders
of the Company to be held on May 21, 2002, shall be granted 2,600 Shares of
Restricted Stock on April 29, 2002. In the event that any such Nonemployee
Director is not reelected to serve on the Board at the Annual Meeting of
Shareholders on May 21, 2002, the grant of Shares of Restricted Stock to him or
her pursuant to the preceding sentence shall be null and void and of no effect.

                                       7

<PAGE>

     6.3   Restricted Stock Award Agreement. Each Restricted Stock grant under
the Plan shall be evidenced by a Restricted Stock Award Agreement that shall
specify the Period(s) of Restriction, the number of Restricted Stock Shares
granted and such other provisions as the Committee shall determine consistent
with the Plan.
     6.4   Other Restrictions. The Committee shall impose such other
restrictions on any Shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable, including restrictions imposed under Section 7.7 hereof.
Any restriction imposed on Shares of Restricted Stock shall be included in a
legend appearing on the certificates representing Shares of Restricted Stock.

     6.5   Certificate Legend. In addition to any legends placed on certificates
pursuant to Section 6.4 herein, each certificate representing Shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:

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

     6.6   Vesting. Except as otherwise provided in the Plan, all Shares of
Restricted Stock granted under the Plan shall vest and become freely
transferable by the Participant according to the following schedule:

                                       8

<PAGE>

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

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

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

           (b)   The death of the Participant;

           (c)   The Disability of the Participant;

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

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

                 However, in no event may any Shares of Restricted Stock
granted under the Plan become vested in a Participant prior to six (6) months
following the date of its grant. Following vesting, each Participant shall be
entitled to have the legend required by Section 6.4 and/or Section 6.5 removed
from his or her Share certificate.

     6.7   Voting Rights. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to such Shares.

     6.8   Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
such Shares while they are so held. If any such

                                       9

<PAGE>

dividends or distributions are paid in Shares, the Shares shall be subject to
the same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid.

                     ARTICLE 7. NONQUALIFIED STOCK OPTIONS

     7.1   Potential Grants of Options. In the event that the Committee properly
designates (pursuant to Section 3.2 herein) that a scheduled Award will consist
of Options rather than Restricted Stock, then each eligible Nonemployee Director
shall be granted an Option to purchase seven thousand eight hundred (7,800)
Shares, on and after July 1, 2002, subject to the terms and provisions of the
Plan. A Nonemployee Director shall be deemed to be eligible for such an Option
grant if the Director is elected, reelected or appointed, as applicable, to
serve on the Board pursuant to the shareholder vote for which such Award grant
is applicable. Each such grant shall be made as of the first day of the Board
term of the newly-elected, reelected or appointed, as applicable, Nonemployee
Director, which begins immediately following such election, reelection or
appointment, as applicable).

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

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

     7.4   Duration of Options. Each Option shall expire on the tenth (10th)
anniversary date of its grant.

                                       10

<PAGE>

     7.5   Vesting of Shares Subject to Option. Subject to Section 11.6,
Participants shall be entitled to exercise Options at any time and from time to
time, but no sooner than the time period beginning six (6) months after the
grant of the Option and ending ten (10) years after the grant of the Option, and
according to the following vesting schedule:

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

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

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

           (b)   The death of the Participant;

           (c)   The Disability of the Participant;

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

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

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

           The Option Price upon exercise of any Option shall be payable to the
Company in full either: (i) in cash or its equivalent, or (ii) by tendering
previously acquired Shares having a Fair Market Value at the time of exercise
equal to the total Option Price of the Shares for which

                                       11

<PAGE>

the Option is being exercised (provided that the Shares tendered upon Option
exercise have been held by the Participant for at least six (6) months prior to
their tender to satisfy the Option Price), or (iii) by a combination of (i) and
(ii). The proceeds from such a payment shall be added to the general funds of
the Company and shall be used for general corporate purposes.

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

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

                       ARTICLE 8. RESTRICTED STOCK UNITS

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

     8.2   Special Grant of Restricted Stock Units. Each Nonemployee Director
participating in the NiSource Inc. Nonemployee Director Retirement Plan (the
"Retirement Plan") on December 31, 2001 shall make an irrevocable election, by
written instrument delivered to the Committee between May 1, 2002 and June 30,
2002, to: (i) continue his or her participation in the Retirement Plan on and
after July 1, 2002 or (ii) terminate his or her participation in the Retirement
Plan as of June 30, 2002 and have the present value of his or her retirement
benefit under Section 5 of the Retirement Plan, determined as of June 30, 2002,

                                       12

<PAGE>

converted to Restricted Stock Units of comparable value and granted to him or
her under the Plan on July 1, 2002. Any Restricted Stock Units granted to a
Nonemployee Director pursuant to this Section 8.2 who has fewer than five (5)
Years of Service shall fully vest in such Restricted Stock Units upon the
completion of his or her fifth Year of Service. "Year of Service" means the
12-month period commencing with the first day of the calendar month in which
each annual meeting of the shareholders of the Company takes place, and
throughout which a Nonemployee Director served on the Board as a Nonemployee
Director.

     8.3   Future Grants of Restricted Stock Units. Upon each election,
reelection or appointment, as applicable, of a Nonemployee Director to serve on
the Board, on and after January 1, 2002, such Nonemployee Director shall be
granted six hundred (600) Restricted Stock Units, subject to the terms of the
Plan. Each such grant shall be made as of the first day of the Board term of the
newly-elected, reelected or appointed, as applicable, Nonemployee Director,
which begins immediately following such election, reelection or appointment, as
applicable.

     8.4   Restricted Stock Unit Account. Restricted Stock Units granted to a
Nonemployee Director under the Plan shall be credited to a Restricted Stock Unit
Account (the "Account") established and maintained for such Nonemployee
Director. The Account of a Nonemployee Director shall be the record of
Restricted Stock Units granted to him or her under the Plan. The Account is
solely for accounting purposes and shall not require a segregation of any assets
of the Company. Each Restricted Stock Unit shall be valued by the Committee, in
the manner provided in Section 8.7, as of the date of grant thereof. Each grant
of Restricted Stock Units under the Plan to a Nonemployee Director and the value
of such Restricted Stock Units as of the date of grant shall be communicated by
the Committee in writing to the Nonemployee Director within thirty (30) days
after the date of grant.

                                       13

<PAGE>

     8.5   Dividend on Restricted Stock Units. Additional Restricted Stock Units
shall be credited to each Participant's Account with respect to Restricted Stock
Units included in such Account from time to time, to reflect dividends paid to
stockholders of the Company with respect to Shares. These additional Restricted
Stock Units shall be granted at such time or times and shall be subject to such
terms and conditions, in addition to the terms and conditions set forth in the
Plan, as the Committee shall determine.

     8.6   Maturity of Restricted Stock Units. Except as set forth in Section
8.2, Restricted Stock Units granted to a Participant shall vest according to the
following schedule:

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

Regardless of the vesting schedule set forth above, all Restricted Stock Units
credited to a Participant's Account shall immediately become one hundred percent
(100%) vested upon the first to occur of the following:

           (a)   The completion of the vesting schedule set forth above (or in
Section 8.2, if applicable);

           (b)   The death of the Participant;

           (c)   The Disability of the Participant;

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

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

                                       14

<PAGE>

     8.7   Payment.

           (a)   Except as provided in paragraph (b) next below, upon a
Participant's termination of service on the Board for any reason other than for
Cause (as defined in Section 11.6), the Participant shall be entitled to receive
from the Company, with respect to each then vested Restricted Stock Unit in the
Participant's Account, a number of Shares with an aggregate Fair Market Value on
the date of payment equal to the aggregate Fair Market Value of such vested
Restricted Stock Units. Payment to a Participant of the amount set forth in the
paragraph next above for Restricted Stock Units shall be made in Shares within
sixty (60) days after the date of termination of the Participant's service on
the Board. Except as provided in paragraph (b) below, a Participant will not be
entitled to receive any earnings on the value of his or her Restricted Stock
Units with respect to the period between his termination of service on the Board
and the receipt of payment under the Plan.

           (b)   Restricted Stock Units in the Participant's Account granted
pursuant to Section 8.2, and additional Restricted Stock Units with respect
thereto granted pursuant to Section 8.5, shall be paid to the Participants in
ten (10) equal annual installments commencing within sixty (60) days after the
date of the Participant's termination of service on the Board, and on each
anniversary of the first payment. Each such payment shall be made in the form of
a number of Shares with an aggregate Fair Market Value on the date of payment
equal to 10% of the aggregate Fair Market Value of such Restricted Stock Units
in the Participant's Account on the date of payment. Additional Restricted Stock
Units shall be granted pursuant to Section 8.5 with respect to any such
Restricted Stock Units remaining in a Participant's Account from and after the
date on which his or her service on the Board terminates. In the event of the
Participant's death, a single payment of all such Units remaining in his or her
Account shall be made pursuant to the applicable provisions of Section 11.7
within sixty (60) days after the date of his or her death.

     8.8   Voting and Stock Ownership Rights. Except as set forth in Section 8.5
above, no Participant shall be entitled to any voting rights or stock ownership
rights with respect to Shares attributable to Restricted Stock Units granted
under the Plan.

                          ARTICLE 9. CHANGE IN CONTROL

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

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provisions of the related Award Agreements. All Options that are outstanding as
of the effective date of the Change in Control shall remain exercisable for the
remaining lives of the Options.

              ARTICLE 10. AMENDMENT, MODIFICATION AND TERMINATION

     10.1  Amendment, Modification and Termination. Subject to the terms set
forth in this Section 10.1, the Committee may terminate, amend or modify the
Plan at any time and from time to time; provided, however, that the provisions
set forth in the Plan regarding the amount of securities to be awarded to
Nonemployee Directors, the price of securities to be awarded to Nonemployee
Directors, and the timing of awards to Nonemployee Directors, may not be amended
more than once within any six (6) month period.

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

     10.2  Awards Previously Granted. Unless required by law, no termination,
amendment or modification of the Plan shall in any manner adversely affect any
Award previously granted under the Plan without the written consent of the
Participant holding the Award.

                         ARTICLE 11. GENERAL PROVISIONS

     11.1  Additional Awards. In addition to any Award received pursuant to
Section 6.2 or 8.1, each Nonemployee Director who first serves on the Board on
or after January 1, 2002, and each Nonemployee Director who served on the Board
on December 31, 2001 and who elected to discontinue participation in the
NiSource Inc. Nonemployee Director Retirement Plan on and after July 1, 2002,
shall receive a grant of Shares of Restricted Stock upon each election,
reelection or appointment, as applicable, to the Board on or after July 1, 2002.
At the discretion

                                       16

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of the Committee, such grant may be in any combination of Shares of Restricted
Stock, and Restricted Stock Units, as determined by the Committee. Such Award
shall have an aggregate value, as determined by the Committee, based on
information provided by the management of the Company, that ensures that the
Award, together with other compensation paid to the Nonemployee Director for
service on the Board, delivers a compensation package to the Nonemployee
Director competitive with the nonemployee director compensation packages offered
by companies in the same or similar industries as that of the Company.

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

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

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

                                       17

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

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

     11.6  Termination of Directorship. In the event a Participant ceases to be
a Director for any reason other than death, Disability, retirement from service
on the Board after attaining the age of seventy (70) years, or a Change in
Control of the Corporation, all Shares of Restricted Stock, all Options and all
Restricted Stock Units that have not vested on or prior to the date of the
occurrence of such event will terminate and be forfeited and neither the
Participant nor his heirs, personal representatives, successors or assigns shall
have any future rights with respect to any such Shares of Restricted Stock,
Options and Restricted Stock Units. All Options that are vested as of such date
shall remain exercisable for six (6) months following the date the

                                       18

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Director's service on the Board terminates, or until their expiration date,
whichever period is shorter.

           Notwithstanding any other provision of the Plan, in the event a
Participant is discharged from service on the Board for Cause, all rights to any
vested or unvested Shares of Restricted Stock and Options granted on and after
July 1, 2002, and all Restricted Stock Units, will be discontinued and
forfeited, and the Company will have no further obligation hereunder to such
Participant or any other person. For purposes of the Plan, "Cause" shall mean:

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

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

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

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

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

     11.7  Nontransferability of Options. No Share of Restricted Stock (until
the end of the applicable Period of Restriction specified in the Restricted
Stock Award Agreement), Option or Restricted Stock Unit granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution. In
the event of a Participant's death, payment of any amount due under the Plan
shall be made to the duly appointed and qualified executor or other personal
representative of the Participant's estate to be distributed in accordance with
the Participant's will or applicable

                                       19

<PAGE>

intestacy law; or in the event that there shall be no such representative duly
appointed and qualified within six (6) months after the date of death of such
deceased Participant, then to such persons as, at the date of his death, would
be entitled to share in the distribution of such deceased Participant's personal
estate under the provisions of the applicable statute then in force governing
the descent of intestate property, in the proportions specified in such statute.
All Options granted to a Participant under the Plan shall be exercisable, during
his lifetime, only by such Participant.

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

                                       20

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     11.8  No Right of Nomination. Nothing in the Plan shall be deemed to create
any obligation on the part of the Board to nominate any Director for reelection
by the Company's shareholders.

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

     11.10 Additional Compensation. Shares granted under the Plan shall be in
addition to any annual retainer, attendance fees or other compensation payable
to each Participant as a result of his or her service on the Board.

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

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

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

                                       21

<PAGE>

     IN WITNESS WHEREOF, the Company has caused the amended and restated Plan to
                         July                           7
be signed on this ____________________ day of ____________________________ 2002.

NISOURCE INC.

                Gary L. Neale
By:  ______________________________________________________

                Chairman, President and CEO
     Its:  ________________________________________________

                                       22

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