Document:

exv10w3

 

Exhibit 10.3

NISOURCE INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

Effective January 1, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	 	 	 	 	 	 	 	 
	ARTICLE I	 	PURPOSE; EFFECTIVE DATE
	 	 	1	 
	 	 	 	 	 	 	 	 	 
	 	 	1.1	 	Purpose
	 	 	1	 
	 	 	1.2	 	Effective Date
	 	 	1	 
	 	 	 	 	 	 	 	 	 
	ARTICLE II	 	DEFINITIONS
	 	 	2	 
	 	 	 	 	 	 	 	 	 
	 	 	2.1	 	Account
	 	 	2	 
	 	 	2.2	 	Beneficiary
	 	 	2	 
	 	 	2.3	 	Bonus
	 	 	2	 
	 	 	2.4	 	Code
	 	 	2	 
	 	 	2.5	 	Committee
	 	 	2	 
	 	 	2.6	 	Company
	 	 	2	 
	 	 	2.7	 	Compensation
	 	 	3	 
	 	 	2.8	 	Deferral Commitment
	 	 	3	 
	 	 	2.9	 	Deferral Period
	 	 	3	 
	 	 	2.10	 	Determination Date
	 	 	3	 
	 	 	2.11	 	Discretionary Contribution
	 	 	3	 
	 	 	2.12	 	Election Form
	 	 	3	 
	 	 	2.13	 	Employer
	 	 	3	 
	 	 	2.14	 	Participant
	 	 	3	 
	 	 	2.15	 	Plan
	 	 	3	 
	 	 	2.16	 	Post-2004 Account
	 	 	4	 
	 	 	2.17	 	Pre-2005 Account
	 	 	4	 
	 	 	2.18	 	Retirement Committee
	 	 	4	 
	 	 	2.19	 	Severe Financial Hardship
	 	 	4	 
	 	 	2.20	 	Unforeseeable Emergency
	 	 	4	 
	 	 	2.21	 	Gender and Number
	 	 	5	 
	 	 	 	 	 	 	 	 	 
	ARTICLE III	 	MERGER OF NISOURCE PLAN AND OTHER PLANS
	 	 	5	 
	 	 	 	 	 	 	 	 	 
	 	 	3.1	 	Bay State Plan
	 	 	5	 
	 	 	3.2	 	Columbia Plan
	 	 	5	 
	 	 	 	 	 	 	 	 	 
	ARTICLE IV	 	PARTICIPATION AND DEFERRAL COMMITMENTS
	 	 	5	 
	 	 	 	 	 	 	 	 	 
	 	 	4.1	 	Eligibility and Participation
	 	 	5	 
	 	 	4.2	 	Form and Amount of Deferral
	 	 	7	 
	 	 	4.3	 	Deferral Options
	 	 	7	 
	 	 	4.4	 	Modification of Deferral Commitment
	 	 	8	 
	 	 	4.5	 	Change in Employment Status
	 	 	8	 
	 	 	 	 	 	 	 	 	 
	ARTICLE V	 	DEFERRED COMPENSATION ACCOUNT
	 	 	8	 
	 	 	 	 	 	 	 	 	 
	 	 	5.1	 	Account
	 	 	8	 
	 	 	5.2	 	Timing of Credits; Withholding
	 	 	8	 
	 	 	5.3	 	Discretionary Contributions
	 	 	9	 
	 	 	5.4	 	Determination of Account
	 	 	9	 
	 	 	5.5	 	Vesting of Account
	 	 	9	 
	 	 	5.6	 	Statement of Account
	 	 	10	 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	 	 	 	 	 	 	 	 
	ARTICLE VI	 	INVESTMENTS
	 	 	10	 
	 	 	 	 	 	 	 	 	 
	 	 	6.1	 	Investment Options
	 	 	10	 
	 	 	6.2	 	Special Investment Option for Former Participants in the Bay State Plan
and Participants in the Plan
	 	 	10	 
	 	 	6.3	 	Special Investment Option for Former Participants in the Columbia Plan
	 	 	11	 
	 	 	 	 	 	 	 	 	 
	ARTICLE VII	 	PLAN BENEFITS
	 	 	12	 
	 	 	 	 	 	 	 	 	 
	 	 	7.1	 	Distributions Prior to Separation From Service
	 	 	12	 
	 	 	7.2	 	Distributions Following Separation from Service
	 	 	13	 
	 	 	7.3	 	Form of Benefit Payment
	 	 	14	 
	 	 	7.4	 	Valuation and Settlement
	 	 	14	 
	 	 	7.5	 	Modification of Distribution
	 	 	16	 
	 	 	7.6	 	Distribution Provisions Applicable to a Transferred Bay State Account
	 	 	17	 
	 	 	7.7	 	Withholding for Taxes
	 	 	18	 
	 	 	7.8	 	Payment to Guardian
	 	 	19	 
	 	 	 	 	 	 	 	 	 
	ARTICLE VIII	 	BENEFICIARY DESIGNATION
	 	 	19	 
	 	 	 	 	 	 	 	 	 
	 	 	8.1	 	Beneficiary Designation
	 	 	19	 
	 	 	8.2	 	Changing Beneficiary
	 	 	19	 
	 	 	8.3	 	Community Property
	 	 	20	 
	 	 	8.4	 	No Beneficiary Designation
	 	 	21	 
	 	 	 	 	 	 	 	 	 
	ARTICLE IX	 	ADMINISTRATION
	 	 	21	 
	 	 	 	 	 	 	 	 	 
	 	 	9.1	 	Committee; Duties
	 	 	21	 
	 	 	9.2	 	Agents
	 	 	22	 
	 	 	9.3	 	Binding Effect of Decisions
	 	 	22	 
	 	 	9.4	 	Indemnity of Retirement Committee
	 	 	22	 
	 	 	 	 	 	 	 	 	 
	ARTICLE X	 	CLAIMS PROCEDURE
	 	 	22	 
	 	 	 	 	 	 	 	 	 
	 	 	10.1	 	Claim
	 	 	22	 
	 	 	10.2	 	Review of Claim
	 	 	22	 
	 	 	10.3	 	Notice of Denial of Claim
	 	 	23	 
	 	 	10.4	 	Reconsideration of Denied Claim
	 	 	23	 
	 	 	10.5	 	Employer to Supply Information
	 	 	24	 
	 	 	 	 	 	 	 	 	 
	ARTICLE XI	 	AMENDMENT AND TERMINATION OF PLAN
	 	 	25	 
	 	 	 	 	 	 	 	 	 
	 	 	11.1	 	Amendment
	 	 	25	 
	 	 	11.2	 	Employer’s Right to Terminate
	 	 	25	 
	 	 	 	 	 	 	 	 	 
	ARTICLE XII	 	MISCELLANEOUS
	 	 	26	 
	 	 	 	 	 	 	 	 	 
	 	 	12.1	 	Unfunded Plan
	 	 	26	 
	 	 	12.2	 	Company and Employer Obligations
	 	 	26	 
	 	 	12.3	 	Unsecured General Creditor
	 	 	26	 
	 	 	12.4	 	Trust Fund
	 	 	27	 

ii

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	 	 	 	 	 	 	 	 
	 	 	12.5	 	Nonassignability
	 	 	27	 
	 	 	12.6	 	Not a Contract of Employment
	 	 	28	 
	 	 	12.7	 	Protective Provisions
	 	 	28	 
	 	 	12.8	 	Governing Law
	 	 	28	 
	 	 	12.9	 	Validity
	 	 	28	 
	 	 	12.10	 	Notice
	 	 	28	 
	 	 	12.11	 	Successors
	 	 	29	 
	 	 	12.12	 	Tax Savings Clause
	 	 	29	 
	 	 	 	 	 	 	 	 	 
	EXHIBIT A	 	 	A-1	 

iii

 

NISOURCE INC.

EXECUTIVE DEFERRED COMPENSATION PLAN

ARTICLE I

PURPOSE; EFFECTIVE DATE

     1.1 Purpose. The purpose of this Executive Deferred Compensation Plan is to provide
current tax planning opportunities as well as supplemental funds for retirement or death for
selected employees of an Employer. It is intended that the Plan will aid in attracting and
retaining employees of exceptional ability by providing them with these benefits. Effective
November 1, 2000, the Bay State Gas Company Key Employee Deferred Compensation Plan (the “Bay State
Plan”) was merged into the NIPSCO Industries, Inc. Executive Deferred Compensation Plan (the
“NIPSCO Plan”), and the NIPSCO Plan was renamed the NiSource Inc. Executive Deferred Compensation
Plan (the “Plan”). Effective January 1, 2004, the Columbia Energy Group Deferred Compensation Plan
(the “Columbia Plan”) was merged into the Plan. Effective January 1, 2005, the Plan is hereby
amended and restated to comply with Code Section 409A, and guidance and regulations thereunder.
Deferred Compensation, Discretionary Contributions, and earnings thereon, earned and vested prior
to January 1, 2005 shall be administered without giving effect to Code Section 409A, and guidance
and regulations thereunder.

     1.2 Effective Date. The Plan is effective as of January 1, 2005.

 

 

ARTICLE II

DEFINITIONS

     For the purposes of the Plan, the following terms shall have the meanings indicated, unless
the context clearly indicates otherwise:

     2.1 Account. “Account” means the device used by an Employer to measure and determine
the amount to be paid to a Participant under the Plan. Each Account shall be divided into a
Pre-2005 Account containing contributions to the Plan earned and vested prior to January 1, 2005, a
Post-2004 Account containing contributions to the Plan earned and/or vested on or after January 1,
2005, and, if applicable, a Transferred Bay State Account containing any amount transferred from
the Bay State Plan or a Transferred Columbia Account containing any amount transferred from the
Columbia Plan.

     2.2 Beneficiary. “Beneficiary” means the person, persons or entity entitled under
Article VIII to receive any Plan benefits payable after a Participant’s death.

     2.3 Bonus. “Bonus” means an incentive award paid to a Participant during the calendar
year, before reduction for amounts deferred under the Plan or any other salary reduction program.

     2.4 Code. “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

     2.5 Committee. “Committee” means the Officer Nomination and Compensation Committee of
the Board of Directors of the Company.

     2.6 Company. “Company” means NiSource Inc., a Delaware corporation.

2

 

     2.7 Compensation. “Compensation” means base salary and incentive awards paid to a
Participant during the calendar year, before reduction for amounts deferred under the Plan or any
other salary reduction program. Compensation earned on or after January 1, 2005 shall not include
a Bonus. Compensation does not include expense reimbursements, any form of noncash compensation,
or benefits. Compensation does not include lump severance payments or lump sum vacation payouts.

     2.8 Deferral Commitment. “Deferral Commitment” means a commitment made by a
Participant to defer a Bonus and/or Compensation pursuant to Article IV.

     2.9 Deferral Period. “Deferral Period” means each calendar year.

     2.10 Determination Date. “Determination Date” means each business day.

     2.11 Discretionary Contribution. “Discretionary Contribution” means the Employer
contribution credited to a Participant’s Account under Section 5.3.

     2.12 Election Form. “Election Form” means the agreement submitted by a Participant to
the Retirement Committee prior to the beginning of a Deferral Period, with respect to a Deferral
Commitment made for such Deferral Period.

     2.13 Employer. “Employer” means the Company and any subsidiary or affiliate of the
Company designated by the Committee to participate in the Plan.

     2.14 Participant. “Participant” means any eligible individual who has elected to
defer a Bonus and/or Compensation under the Plan.

     2.15 Plan. “Plan” means the NiSource Inc. Executive Deferred Compensation Plan, as
set forth herein and as amended from time to time.

3

 

     2.16 Post-2004 Account. “Post-2004 Account” means the excess of (1) the balance of
the Participant’s Account determined as of a Participant’s date of separation from service with all
Employers after December 31, 2004 over (2) his Pre-2005 Account, to which the Participant would be
entitled under the Plan if he voluntarily separated from service without cause as of such date and
received a full payment of benefits from the Plan on the earliest possible date allowed under the
Plan following his separation from service.

     2.17 Pre-2005 Account. "Pre-2005 Account” means the balance of a Participant’s
Account determined as of December 31, 2004, adjusted to reflect earnings credited to such balance
from and after such date.

     2.18 Retirement Committee. “Retirement Committee” means a committee consisting of the
Senior Vice President of Human Resources and the Vice President, Total Rewards of the Company.

     2.19 Severe Financial Hardship. “Severe Financial Hardship” means a financial
hardship to the Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent of the Participant, or loss of the Participant’s property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.

     2.20 Unforeseeable Emergency. “Unforeseeable Emergency” means a severe financial
hardship to the Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, or a dependent (as defined in Code Section 152(a)) of the Participant, loss
of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant.

4

 

     2.21 Gender and Number. Except when otherwise required by the context, any masculine
terminology in this document shall include the feminine, and any singular terminology shall include
the plural.

ARTICLE III

MERGER OF NISOURCE PLAN AND OTHER PLANS

     3.1 Bay State Plan. As of November 1, 2000, the Bay State Plan was merged into the
Plan. The balance of the account of each Bay State Plan participant, determined as of November 1,
2000, was transferred to the Plan and became the initial balance in such Participant’s Transferred
Bay State Account in the Plan. A Participant’s Transferred Bay State Account shall be held,
administered, invested, and distributed pursuant to the terms of the Plan.

     3.2 Columbia Plan. As of January 1, 2004, the Columbia Plan was merged into the Plan.
The balance of the account of each Columbia Plan participant, determined as of December 31, 2003,
was transferred to the Plan and became the initial balance in such Participant’s Transferred
Columbia Account in the Plan. A Participant’s Transferred Columbia Account shall be held,
administered, invested, and distributed pursuant to the terms of the Plan.

ARTICLE IV

PARTICIPATION AND DEFERRAL COMMITMENTS

     4.1 Eligibility and Participation.

     (a) Eligibility. Any employee who was eligible to participate in the Bay State
Plan or the NIPSCO Plan as of October 31, 2000 remained eligible to participate in the Plan
as of November 1, 2000. Any employee eligible to participate in the Columbia Plan or the
Plan as of December 31, 2003 remained eligible to participate in the Plan as of January 1,
2004. Any employee eligible to participate in the Plan as of December 31,

5

 

2004 shall be eligible to participate in the Plan as of the Effective Date. From and
after the Effective Date, eligibility to participate in the Plan for a Deferral Period shall
be limited to (1) an employee in job scope level D2 or above, and (2) any other key employee
of an Employer who is designated from time to time by the Committee.

     (b) Participation. An eligible individual may elect to become a Participant in
the Plan with respect to a Bonus and Compensation for services performed in any Deferral
Period by submitting an Election Form to the Retirement Committee during the annual
enrollment period, established by the Retirement Committee, last preceding the beginning of
such Deferral Period.

            Notwithstanding the preceding paragraph, an election to defer a performance-based
Bonus, as defined in Code Section 409A, and guidance and regulations thereunder, may be made
no later than six months before the end of the 12 month performance period during which the
services related to the Bonus are performed.

     (c) Part-Year Participation. When an individual first becomes eligible to
become a Participant during a Deferral Period, an Election Form may be submitted to the
Retirement Committee within 30 days after the Retirement Committee notifies the individual
of eligibility to participate; provided that such Participant shall not be considered first
eligible if, on the date he becomes a Participant, he participates in any other nonqualified
account balance plan that is subject to Code Section 409A, maintained by the Company or any
affiliate. Such Election Form shall be effective beginning with a Bonus and Compensation
earned after such election and as soon as practicable following submission of such Election
Form to the Retirement Committee.

6

 

     4.2 Form and Amount of Deferral. A Participant may elect Deferral Commitments in the
Election Form as follows:

     (a) Compensation Deferral Commitment. A Compensation Deferral Commitment for a
Deferral Period shall be related to the Compensation earned by a Participant and payable by
an Employer to a Participant during that Deferral Period. The amount to be deferred shall
be stated as a whole percentage of Compensation from 5% to 80%.

     (b) Bonus Deferral Commitment. Except as set forth in Section 4.1(b) with
respect to a performance-based Bonus, a Bonus Deferral Commitment for a Deferral Period
shall be related to the Bonus earned by a Participant during the Deferral Period preceding
the Deferral Period for which such Bonus Deferral Commitment is made. A Bonus Deferral
Commitment with respect to a performance-based Bonus for a Deferral Period shall be related
to the Bonus earned by a Participant during that Deferral Period, provided that such
Deferral Commitment is made no later than six months prior to the end of that Deferral
Period. The amount to be deferred shall be stated as a whole percentage of the Bonus from
5% to 100%.

     No Deferral Commitment shall be made subsequent to the date of a Participant’s separation from
service with all Employers.

     4.3 Deferral Options. A Participant shall make an election in his Election Form as to
the time and form of payment of the Deferral Commitment for each Deferral Period. A Participant
shall not be required to designate the same time and form of payment for each Deferral Period.
Each Deferral Commitment with respect to a calendar year shall specify the date on which the
applicable deferred amount and earnings thereon shall be distributed. Such

7

 

date shall be the first to occur of (1) the date of the Participant’s separation from service
with all Employers; and (2) a date selected by the Participant, provided that a selected date must
be at least one year after the date the deferred amount would have been paid to the Participant in
cash in the absence of the election to make the deferral.

     4.4 Modification of Deferral Commitment. Except as provided in Sections 7.1(a) and
7.5 below, Deferral Commitments shall be irrevocable.

     4.5 Change in Employment Status. If the Committee determines that a Participant’s
performance is no longer at a level that deserves reward through participation in the Plan, but
does not terminate the Participant’s employment with an Employer, the Participant’s existing
Deferral Commitment shall terminate at the end of the current Deferral Period, and no new Deferral
Commitment may be made by such Participant for any Deferral Period beginning after notice of such
determination is given by the Committee.

ARTICLE V

DEFERRED COMPENSATION ACCOUNT

     5.1 Account. The Compensation deferred by a Participant under the Plan, any
Discretionary Contributions and earnings thereon shall be credited to the Participant’s Account.
Separate subaccounts may be maintained to reflect different forms of distribution, investment
options, levels of vesting, and forms of payment. The Account shall be a bookkeeping device
utilized for the sole purpose of determining the benefits payable under the Plan and shall not
constitute a separate fund of assets.

     5.2 Timing of Credits; Withholding. A Participant’s deferred Bonus and Compensation
shall be credited to the Participant’s Account at the time it would have been payable to the
Participant. Any withholding of taxes or other amounts with respect to deferred

8

 

Compensation that is required by federal, state or local law shall be withheld from the
Participant’s nondeferred Bonus and Compensation to the maximum extent possible and any remaining
amount shall reduce the amount credited to the Participant’s Account.

     5.3 Discretionary Contributions. An Employer may make Discretionary Contributions to
a Participant’s Account. Discretionary Contributions shall be credited at such times and in such
amounts as the Committee in its sole discretion shall determine.

     5.4 Determination of Account. Each Participant’s Account as of each Determination
Date shall consist of the balance of the Account as of the immediately preceding Determination
Date, adjusted as follows:

     (a) New Deferrals. The Account shall be increased by any deferred Bonus and
Compensation credited since such preceding Determination Date.

     (b) Discretionary Contributions. The Account shall be increased by any
Discretionary Contributions credited since such preceding Determination Date.

     (c) Distributions. The Account shall be reduced by any benefits distributed
from the Account to the Participant since such preceding Determination Date.

     (d) Valuation of Account. The Account shall be increased or decreased by the
aggregate earnings, gains and losses on such Account since such preceding Determination
Date.

     5.5 Vesting of Account. Each Participant shall be vested in the amounts credited to
such Participant’s Account and earnings thereon as follows:

9

 

     (a) Amounts Deferred. A Participant shall be 100% vested at all times in the
amount of Bonus and Compensation elected to be deferred under the Plan, and earnings
thereon.

     (b) Discretionary Contributions. A Participant’s Discretionary Contributions,
and earnings thereon, shall become vested as determined by the Committee.

     (c) Transferred Account. A Participant shall be 100% vested at all times in
the balance of his Transferred Bay State Account or Transferred Columbia Account, if any.

     5.6 Statement of Account. The Retirement Committee shall give to each Participant a
statement showing the balance in the Participant’s Account on a quarterly basis and at such other
times as may be determined by the Retirement Committee.

ARTICLE VI

INVESTMENTS

     6.1 Investment Options. Amounts credited hereunder to the Account of a Participant
shall be invested as such Participant elects among the investment choices set forth on Exhibit A or
available pursuant to Sections 6.2 and 6.3. No election of a Deferral Commitment by a Participant
shall be effective until such time as the Participant submits his initial investment election to
the Company. Such investment election shall continue to apply to subsequent Deferral Commitments
made by the Participant until changed by the Participant.

     6.2 Special Investment Option for Former Participants in the Bay State Plan and
Participants in the Plan. Former participants in the Bay State Plan who became Participants in
the Plan, or Participants in the Plan on November 1, 2000, shall have an additional special

10

 

investment option applicable solely to their Transferred Bay State Account balances, or their
Account balances in the Plan, valued as of November 1, 2000, and any subsequent amounts contributed
to such Participant’s Account. Such Participants may invest their Transferred Bay State Account
balances, or their Account balances in the Plan as of November 1, 2000, and any subsequent amounts
contributed to such Participant’s Account, in a subaccount which shall be credited with earnings
equal to one percentage point higher than the effective annual yield of the average of the Moody’s
Average Corporate Bond Yield Index for the previous calendar month as published by Moody’s Investor
Services, Inc. (or any successor publisher thereto), or, if such index is no longer published, a
substantially similar index selected by the Committee. A Participant’s Transferred Bay State
Account balance, or his Account balance in the Plan on November 1, 2000, shall be invested pursuant
to this special investment option from and after November 1, 2000 and until such time as another
investment choice is designated by him pursuant to Section 6.1 with respect to all or a portion of
his Transferred Bay State Account, or his Account balance in the Plan on November 1, 2000.
Subsequent amounts contributed to any such Participant’s Account may be invested pursuant to this
option as designated by the Participant pursuant to Section 6.1. However, any portion of a
Transferred Bay State Account, or an Account balance in the Plan, subsequently transferred from the
investment option described in this Section 6.2 to another investment option may not be reinvested
under this Section 6.2.

     6.3 Special Investment Option for Former Participants in the Columbia Plan. Former
participants in the Columbia Plan who become Participants in the Plan on January 1, 2004 shall have
an additional special investment option applicable solely to their Transferred Columbia Account
balances, valued as of January 1, 2004. Such Participants may invest all or any portion of their
Transferred Columbia Account balances in a subaccount that shall be

11

 

credited each day with earnings equal to the prime rate of interest in effect as of such
business day, as listed in The Wall Street Journal. All or the designated portion of a
Participant’s Transferred Columbia Account balance shall be invested pursuant to this special
investment option from and after January 1, 2004 and until such time as another investment choice
is designated by him pursuant to Section 6.1 with respect to all or a portion of his Transferred
Columbia Account. Any portion of a Transferred Columbia Account subsequently transferred from the
investment option described in this Section 6.3 to another investment option may not be reinvested
under the investment option described in this Section 6.3. Amounts contributed to any such
Participant’s Account on or after January 1, 2004 shall not be eligible for the investment option
described in this Section 6.3.

ARTICLE VII

PLAN BENEFITS

     7.1 Distributions Prior to Separation From Service. A Participant’s Account may be
distributed to the Participant prior to separation from service as follows:

     (a) Hardship Distributions.

     (i) Upon a finding that a Participant has suffered a Severe Financial Hardship,
the Retirement Committee may, in its sole discretion, make distributions from the
Participant’s Pre-2005 Account (including his Transferred Bay State Account or
Transferred Columbia Account, if applicable). The amount of such a distribution
shall be limited to the amount reasonably necessary to meet the Participant’s needs
resulting from the Severe Financial Hardship. Any distribution pursuant to this
Section 7.1(a)(i) shall be payable in a lump sum. The distribution shall be paid within 30 days after the determination of a Severe
Financial Hardship.

12

 

     (ii) Upon a finding that a Participant has suffered an Unforeseeable Emergency,
the Retirement Committee may, in its sole discretion, make distributions from the
Participant’s Post-2004 Account and/or allow a Participant to suspend his Deferred
Commitment entirely. The amount of such distribution shall be limited to the amount
necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay
taxes reasonably anticipated as a result of the distribution, after taking into
account the extent to which such hardship is or may be relieved through
reimbursement or compensation by insurance or otherwise or by liquidation of the
Participant’s assets (to the extent the liquidation of such assets would not itself
cause severe financial hardship). Any distribution pursuant to this Section
7.1(a)(ii) shall be payable in a lump sum. The distribution shall be paid within 30
days after the determination of an Unforeseeable Emergency.

     (b) Deferral to Designated Year. The Employer shall pay the Participant an
amount of a Deferral Commitment and earnings thereon not paid pursuant to Section 7.1(a) in
the year designated by the Participant in such Deferral Commitment. Such amount shall be
payable in the manner provided in Sections 7.3 and 7.6 and at the time provided in Section
7.4.

     7.2 Distributions Following Separation from Service. Upon a Participant’s separation
from service with an Employer for any reason, the Employer shall pay the Participant, or, in the
case of death, the Participant’s Beneficiary, an amount equal to the balance in the
Participant’s Account. Such amount shall be payable in the manner provided in Sections 7.3
and 7.6 and at the time provided in Section 7.4.

13

 

     7.3 Form of Benefit Payment.

     (a) Subject to Section 8.3(c), the amount of a Deferral Commitment and earnings thereon
not paid pursuant to Section 7.1(a) shall be paid (1) in the year designated by the
Participant in such Deferral Commitment, or (2) following separation from service, as
applicable, to the Participant (or to his Beneficiary in the case of his death) in the form
selected by the Participant in his Election Form at the time of the Deferral Commitment.
Options include:

     (i) A lump sum payment.

     (ii) Equal annual installments over a period of not more than 15 years.

     (b) In the event a Participant’s Pre-2005 Account balance at the time distribution
begins, or following a distribution pursuant to subsection (a)(ii) above, is $15,000 or
less, that balance shall be paid to the Participant or his Beneficiary in a lump sum on the
next annual installment distribution date notwithstanding any form of benefit payment
elected by the Participant.

     7.4 Valuation and Settlement.

     (a) Lump Sum in Designated Year. The amount of a lump sum payment in a
designated year pursuant to Section 7.1(b) shall be based on the value of the Participant’s
Account, or a Deferral Commitment and earnings thereon, as of the March 15th of such
designated year. The distribution date shall be March 31st of such year, or, if later,
within such timeframe permitted under Code Section 409A, and guidance and regulations
thereunder.

14

 

     (b) Lump Sum Following Separation From Service. The amount of a lump sum
payment following separation from service pursuant to Section 7.2 shall be based on the
value of the Participant’s Account, or a Deferral Commitment and earnings thereon, on the
date of separation. The distribution date shall be within 45 days after the Participant’s
date of separation from service, or, if later, within such timeframe permitted under Code
Section 409A, and guidance and regulations thereunder; provided, however, that in no event
will distribution of a Participant’s Post-2004 Account begin earlier than six months
following separation from service, unless due to such Participant’s death, if the
Participant was a Specified Employee of any Employer, at a time during which the Company’s
capital stock or capital stock of an Employer is publicly traded on an established
securities market, in the calendar year of his separation from service.

            A Participant shall be deemed to be a Specified Employee for purposes of this paragraph
(b) if he is in job category C2 or above with respect to any Employer that employs him;
provided that if at any time the total number of Employees in job category C2 and above is
less than 50, a Specified Employee shall include any person who meets the definition of a
Key Employee set forth in Code Section 416(i) without reference to paragraph (5). A
Participant shall be deemed to be a Specified Employee with respect to a calendar year if he
is a Specified Employee on September 30th of the preceding calendar year. If a Specified
Employee will receive payments hereunder in the form of installments, the first payment made
as of the date six months after the date of the Participant’s separation from service with
the Company and all Affiliated Companies

15

 

shall be a lump sum, paid as soon as practicable after the end of such six-month
period, that includes all payments that would otherwise have been made during such six-month
period. From and after the end of such six-month period, any such installment payments
shall be made pursuant to the terms of the applicable installment form of payment.

     (c) Installments. The amount of an installment payment, pursuant to Section
7.1(b) or 7.2, shall be based on the value of the Participant’s Account, or a Deferral
Commitment and earnings thereon, as of the March 15th preceding distribution of each such
installment. The distribution date shall be each subsequent March 31st, or, if later,
within such timeframe permitted under Code Section 409A, and guidance and regulations
thereunder.

     7.5 Modification of Distribution.

     (a) Pre-2005 Account. Notwithstanding any other provision of the Plan, a
Participant may modify his election as to the form or time of distribution of his entire
Pre-2005 Account, and earnings thereon, by a writing filed with the Retirement Committee at
any time prior to the commencement of payment. A Participant’s modification of his election
as to the form or time of commencement of payment shall be ineffective, unless (1) the
modification election is filed with the Retirement Committee more than 12 months prior to
the time of commencement of payment, or (2) a Participant elects by written instrument
delivered to the Company prior to the time of commencement of payment to have his Pre-2005
Account reduced by 10%. This reduction shall be forfeited and used by the Plan to reduce
expenses of administration. This reduction is intended to discourage a Participant from
modifying his election as to the form or time of commencement of payment within the period
set forth in clause (1) above and prevent him from being deemed in constructive receipt of his Pre-2005 Account
prior to its actual payment to him.

16

 

     (b) Post-2004 Account.

     (i) A Participant may modify his election as to the form or time of
distribution of his entire Post-2004 Account, and earnings thereon, or of any
Post-2004 Deferral Commitment under the Plan and earnings thereon, if (1) such
election does not take effect until at least 12 months after the date on which the
election is made, (2) the first payment with respect to which such election is made
is deferred for a period of not less than five years from the date on which such
payment would otherwise have been made, and (3) any election related to a payment to
be made at a specified date is made at least 12 months prior to the date of the
first scheduled payment.

     (ii) Notwithstanding any other provision of this Section 7.5, a Participant may
change an election with respect to the time and form of payment of a Post-2004
Benefit, without regard to the restrictions imposed under paragraph (i) next above,
on or before December 31, 2006; provided that such election (1) applies only to
amounts that would not otherwise be payable in calendar year 2006, and (2) shall not
cause an amount to be paid in calendar year 2006 that would not otherwise be payable
in such year

     7.6 Distribution Provisions Applicable to a Transferred Bay State Account.
Notwithstanding any other provision in the Plan, the following provisions shall apply to the form
and time of payment of the balance of a Transferred Bay State Account:

17

 

     (a) The portion of a Transferred Bay State Account not paid pursuant to paragraph (a)
of Section 7.1 shall be paid to a Participant following his separation from service, or to
his Beneficiary in the case of death, in the form selected by the Participant, by written
instrument delivered to the Retirement Committee before November 1, 2000. If no form is
selected by the Participant, payment shall be made in a lump sum. The provisions of
Sections 7.3 and 7.5 shall apply with respect to the election of the form of payment of a
Transferred Bay State Account and the modification of such election.

     (b) Any former employee of Bay State Gas Company who (1) was a participant in the Bay
State Plan immediately prior to November 1, 2000, (2) terminated employment with Bay State
Gas Company prior to November 1, 2000 for any reason other than Retirement, death or
Disability (as such terms were defined in the Bay State Plan immediately prior to November
1, 2000), and (3) as of November 1, 2000, had not commenced payment of his Account shall not
commence payment of his Transferred Bay State Account until the earlier of the Participant’s
attainment of age 65, Disability or death. Notwithstanding the preceding sentence, the
Retirement Committee may, in its sole discretion, vary the manner and time of making the
payment of a Participant’s Transferred Bay State Account to such former Bay State employee,
and may make such distributions over a longer or shorter period of time or in a lump sum.

     7.7 Withholding for Taxes. To the extent required by the law in effect at the time
payments are made, an Employer shall withhold from the payments made hereunder any taxes required
to be withheld by the federal or any state or local government, including any amounts which the
Employer determines is reasonably necessary to pay any generation-skipping transfer

18

 

tax which is or may become due. A Beneficiary, however, may elect not to have withholding of
federal income tax pursuant to Code Section 3405(a)(2).

     7.8 Payment to Guardian. The Retirement Committee may direct payment to the duly
appointed guardian, conservator or other similar legal representative of a Participant or
Beneficiary to whom payment is due. In the absence of such a legal representative, the Retirement
Committee may, in its sole and absolute discretion, make payment to a person having the care and
custody of a minor, incompetent or person incapable of handling the disposition of property upon
proof satisfactory to the Retirement Committee of incompetency, minority or incapacity. Such
distribution shall completely discharge the Company from all liability with respect to such
benefit.

ARTICLE VIII

BENEFICIARY DESIGNATION

     8.1 Beneficiary Designation. Subject to Section 8.3, each Participant shall have the
right, at any time, to designate one or more persons or an entity as Beneficiary (both primary as
well as secondary) to whom benefits under the Plan shall be paid in the event of the Participant’s
death prior to complete distribution of the Participant’s Account. Each Beneficiary designation
shall be in a written form prescribed by the Retirement Committee and shall be effective only when
filed with the Retirement Committee during the Participant’s lifetime.

     8.2 Changing Beneficiary. Subject to Section 8.3, any Beneficiary designation may be
changed by a Participant without the consent of the previously named Beneficiary by the filing of a
new designation with the Retirement Committee. The filing of a new designation shall cancel all
designations previously filed.

19

 

     8.3 Community Property. If the Participant resides in a community property state, the
following rules shall apply:

     (a) Designation by a married Participant of a Beneficiary other than the Participant’s
spouse shall not be effective unless the spouse executes a written consent that acknowledges
the effect of the designation, or it is established that the consent cannot be obtained
because the spouse cannot be located.

     (b) A married Participant’s Beneficiary designation may be changed by a Participant
with the consent of the Participant’s spouse as provided for in Section 8.3(a) by the filing
of a new designation with the Retirement Committee.

     (c) If the Participant’s marital status changes after the Participant has designated a
Beneficiary, the following shall apply:

     (i) If the Participant is married at the time of death but was unmarried when
the designation was made, the designation shall be void unless the spouse has
consented to it in the manner prescribed in Section 8.3(a).

     (ii) If the Participant is unmarried at the time of death but was married when
the designation was made:

     (A) The designation shall be void if the spouse was named as
Beneficiary, unless the designation is reaffirmed when the Participant is
unmarried.

     (B) The designation shall remain valid if a nonspouse Beneficiary was
named.

20

 

     (iii) If the Participant was married when the designation was made and is
married to a different spouse at death, the designation shall be void unless the new
spouse has consented to it in the manner prescribed above.

     8.4 No Beneficiary Designation. If any Participant fails to designate a Beneficiary
in the manner provided above, if the designation is void or if the Beneficiary designated by a
deceased Participant dies before the Participant or before complete distribution of the
Participant’s benefits, the Participant’s Beneficiary shall be the person in the first of the
following classes in which there is a survivor:

     (a) The Participant’s spouse;

     (b) The Participant’s children in equal shares, except that if any of the children
predeceases the Participant but leaves issue surviving, then such issue shall take, by right
of representation, the share the parent would have taken if living;

     (c) The Participant’s estate.

ARTICLE IX

ADMINISTRATION

     9.1 Committee; Duties. The Plan shall be administered by the Retirement Committee.
The Retirement Committee shall have the authority to make, amend, interpret, and enforce all
appropriate rules and regulations for the administration of the Plan and decide or resolve any and
all questions, including interpretations of the Plan, as may arise in such administration. Members
of the Retirement Committee may be Participants under the Plan.

21

 

     9.2 Agents. The Retirement Committee may, from time to time, employ agents and
delegate to them such administrative duties as it sees fit, and may from time to time consult with
counsel who may be counsel to the Company.

     9.3 Binding Effect of Decisions. The decision or action of the Retirement Committee
with respect to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations promulgated hereunder
shall be final, conclusive and binding upon all persons having any interest in the Plan.

     9.4 Indemnity of Retirement Committee. The Company shall indemnify and hold harmless
the members of the Retirement Committee against any and all claims, loss, damage, expense, or
liability arising from any action or failure to act with respect to the Plan on account of such
person’s service on the Retirement Committee, except in the case of gross negligence or willful
misconduct.

ARTICLE X

CLAIMS PROCEDURE

     10.1 Claim. The Retirement Committee shall establish rules and procedures to be
followed by Participants and Beneficiaries in filing claims for benefits, and for furnishing and
verifying proof necessary to establish the right to benefits in accordance with the Plan,
consistent with the remainder of this Article. Such rules and procedures shall require that claims
and proofs be made in writing and directed to the Retirement Committee.

     10.2 Review of Claim. The Retirement Committee shall review all claims for benefits.
Upon receipt by the Retirement Committee of such a claim, it shall determine all facts that are
necessary to establish the right of the claimant to benefits under the provisions of the Plan and
the amount thereof as herein provided within 90 days of receipt of such claim. If prior

22

 

to the expiration of the initial 90 day period, the Retirement Committee determines additional
time is needed to come to a determination on the claim, the Retirement Committee shall provide
written notice to the Participant, Beneficiary or other claimant of the need for the extension, not
to exceed a total of 180 days from the date the application was received.

     10.3 Notice of Denial of Claim. In the event that any Participant, Beneficiary or
other claimant claims to be entitled to a benefit under the Plan, and the Retirement Committee
determines that such claim should be denied in whole or in part, the Retirement Committee shall, in
writing, notify such claimant that the claim has been denied, in whole or in part, setting forth
the specific reasons for such denial. Such notification shall be written in a manner reasonably
expected to be understood by such claimant and shall refer to the specific sections of the Plan
relied on, shall describe any additional material or information necessary for the claimant to
perfect the claim and an explanation of why such material or information is necessary, and, where
appropriate, shall include an explanation of how the claimant can obtain reconsideration of such
denial.

     10.4 Reconsideration of Denied Claim.

     (a) Within 60 days after receipt of the notice of the denial of a claim, such claimant
or duly authorized representative may request, by mailing or delivery of such written notice
to the Retirement Committee, a reconsideration by the Retirement Committee of the decision
denying the claim. If the claimant or duly authorized representative fails to request such
a reconsideration within such 60 day period, it shall be conclusively determined for all
purposes of the Plan that the denial of such claim by the Retirement Committee is correct.
If such claimant or duly authorized representative requests a reconsideration within such 60
day period, the claimant or duly authorized

23

 

representative shall have 30 days after filing a request for reconsideration to submit
additional written material in support of the claim, review pertinent documents and submit
issues and comments in writing.

     (b) After such reconsideration request, the Retirement Committee shall determine within
60 days of receipt of the claimant’s request for reconsideration whether such denial of the
claim was correct and shall notify such claimant in writing of its determination. The
written notice of decision shall be in writing and shall include specific reasons for the
decision, written in a manner calculated to be understood by the claimant, as well as
specific references to the pertinent Plan provisions on which the decision is based. In the
event of special circumstances determined by the Retirement Committee, the time for the
Retirement Committee to make a decision may be extended by an additional 60 days upon
written notice to the claimant prior to the commencement of the extension. If such
determination is favorable to the claimant, it shall be binding and conclusive. If such
determination is adverse to such claimant, it shall be binding and conclusive unless the
claimant or his duly authorized representative notifies the Retirement Committee within 90
days after the mailing or delivery to the claimant by the Retirement Committee of its
determination that claimant intends to institute legal proceedings challenging the
determination of the Retirement Committee and actually institutes such legal proceedings
within 180 days after such mailing or delivery.

     10.5 Employer to Supply Information. To enable the Retirement Committee to perform
its functions, each Employer shall supply full and timely information to the Retirement Committee
of all matters relating to the retirement, death or other cause for separation from
service of all Participants, and such other pertinent facts as the Retirement Committee may
require.

24

 

ARTICLE XI

AMENDMENT AND TERMINATION OF PLAN

     11.1 Amendment. The Committee may at any time amend the Plan by written instrument,
notice of which is given to all Participants, and to Beneficiaries receiving installment payments.
Notwithstanding the preceding sentence, no amendment shall reduce the amount accrued in any Account
prior to the date such notice of the amendment is given.

     11.2 Employer’s Right to Terminate. The Committee may at any time partially or
completely terminate the Plan if, in its judgment, the tax, accounting or other effects of the
continuance of the Plan, or potential payments thereunder, would not be in the best interests of
the Employers.

     (a) Partial Termination. The Committee may partially terminate the Plan by
instructing the Retirement Committee not to accept any additional Deferral Commitments. If
such a partial termination occurs, the Plan shall continue to operate and be effective with
regard to Deferral Commitments entered into prior to the effective date of such partial
termination.

     (b) Complete Termination. The Committee may completely terminate the Plan by
instructing the Retirement Committee not to accept any additional Deferral Commitments, and
by terminating all ongoing Deferral Commitments. If such a complete termination occurs, the
Plan shall cease to operate and the Employers shall pay out each Pre-2005 Account in equal
monthly installments over the following period, based on the Pre-2005 Account balance:

25

 

	 	 	 
	Account Balance	 	Payout Period
	Less than $50,000

	 	Lump Sum
	$50,000 but less than $100,000

	 	3 Years
	More than $100,000

	 	5 Years

Payments shall commence within 65 days after the Committee terminates the Plan, and earnings shall
continue to be credited on the unpaid Account balance. Employers shall pay out each Post-2004
Account in the manner and at the time described in Articles IV and VII.

ARTICLE XII

MISCELLANEOUS

     12.1 Unfunded Plan. The Plan is an unfunded plan maintained primarily to provide
deferred compensation benefits for a select group of “management or highly-compensated employees”
within the meaning of Sections 201, 301 and 401 of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”), and therefore is exempt from the provisions of Parts 2, 3 and 4 of
Title I of ERISA.

     12.2 Company and Employer Obligations. The obligation to make benefit payments to any
Participant under the Plan shall be a joint and several liability of the Company and the Employer
that employed the Participant.

     12.3 Unsecured General Creditor. Participants and Beneficiaries shall be unsecured
general creditors, with no secured or preferential right to any assets of the Employer or any other
party for payment of benefits under the Plan. Any life insurance policies, annuity contracts or
other property purchased by the Employer in connection with the Plan shall remain its general,
unpledged and unrestricted assets. The Employer’s obligation under the Plan shall be an unfunded
and unsecured promise to pay money in the future.

26

 

     12.4 Trust Fund. Subject to Section 12.3, the Company may establish separate
subtrusts for deferrals by employees of each Employer, pursuant to a trust agreement entered into
with such trustees as the Committee may approve, for the purpose of providing for the payment of
benefits owed under the Plan. At its discretion, each Employer may contribute deferrals under the
Plan for its employees to the subtrust established with respect to such Employer under such trust
agreement. To the extent any benefits provided under the Plan are paid from any such subtrust, the
Employer shall have no further obligation to pay them. If not paid from a subtrust, such benefits
shall remain the obligation of the Employer. Although such subtrusts may be irrevocable, their
assets shall be held for payment of all the Company’s general creditors in the event of insolvency
or bankruptcy.

     12.5 Nonassignability. Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber,
transfer, hypothecate, or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof or rights to, which are expressly declared to be unassignable and
nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony, or separate maintenance
owed by a Participant or any other person, nor be transferable by operation of law in the event of
a Participant’s or any other person’s bankruptcy or insolvency.

     Notwithstanding the preceding paragraph, the Account of any Participant shall be subject to
and payable in the amount determined in accordance with any qualified domestic relations order, as
that term is defined in Section 206(d)(3) of ERISA. The Retirement Committee shall provide for
payment in a lump sum from a Participant’s Account to an alternate payee (as defined in Code
Section 414(p)(8)) as soon as administratively practicable following receipt of

27

 

such order. Any federal, state or local income tax associated with such payment shall be the
responsibility of the alternate payee. The balance of an Account that is subject to any qualified
domestic relations order shall be reduced by the amount of any payment made pursuant to such order.

     12.6 Not a Contract of Employment. The Plan shall not constitute a contract of
employment between an Employer and the Participant. Nothing in the Plan shall give a Participant
the right to be retained in the service of an Employer or to interfere with the right of an
Employer to discipline or discharge a Participant at any time.

     12.7 Protective Provisions. A Participant shall cooperate with his Employer by
furnishing any and all information requested by the Employer in order to facilitate the payment of
benefits hereunder, and by taking such physical examinations as the Employer may deem necessary and
taking such other action as may be requested by the Employer.

     12.8 Governing Law. The provisions of the Plan shall be construed and interpreted
according to the laws of the State of Indiana, except as preempted by federal law.

     12.9 Validity. In case any provision of the Plan shall be held illegal or invalid for
any reason, said illegality or invalidity shall not affect the remaining parts hereof, but the Plan
shall be construed and enforced as if such illegal and invalid provision had never been inserted
herein.

     12.10 Notice. Any notice required or permitted under the Plan shall be sufficient if
in writing and hand delivered or sent by registered or certified mail. Such notice shall be deemed
as given as of the date of delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification. Mailed notice to the Retirement
Committee shall be directed to the Company’s address. Mailed notice to a Participant or
Beneficiary shall be directed to the individual’s last known address in the applicable
Employer’s records.

28

 

     12.11 Successors. The provisions of the Plan shall bind and inure to the benefit of
the Employers and their successors and assigns. The term successors as used herein shall include
any corporate or other business entity that shall, whether by merger, consolidation, purchase, or
otherwise, acquire all or substantially all of the business and assets of an Employer, and
successors of any such corporation or other business entity.

     12.12 Tax Savings Clause. Notwithstanding anything to the contrary contained in the
Plan, (1) in the event that the Internal Revenue Service prevails in its claim that amounts
contributed to the Plan for the benefit of a Participant, and/or earnings thereon, constitute
taxable income under Code Section 409A, and guidance and regulations thereunder, to the Participant
or his Beneficiary for a taxable year prior to the taxable year in which such contributions and/or
earnings are distributed to him, or (2) in the event that legal counsel satisfactory to the
Company, and the applicable Participant or his Beneficiary, renders an opinion that the Internal
Revenue Service would likely prevail in such a claim, the Post-2004 Account, to the extent
constituting such taxable income, shall be immediately distributed to the Participant or his
Beneficiary. For purposes of this Section, the Internal Revenue Service shall be deemed to have
prevailed in a claim if such claim is upheld by a court of final jurisdiction, or, if based upon an
opinion of legal counsel satisfactory to the Company and the Participant or his Beneficiary, the
Plan fails to appeal a decision of the Internal Revenue Service, or a court of applicable
jurisdiction, with respect to such claim to an appropriate Internal Revenue Service appeals
authority or to a court of higher jurisdiction within the appropriate time period.

29

 

     IN WITNESS WHEREOF, the Company has caused the Plan to be executed in its name by its duly
authorized officer this 2nd day of December, 2005, effective as of the 1st day of
January, 2005.

	 	 	 	 	 
	 	NISOURCE INC.

 	 
	 	By:  	/s/ Michael W. O’Donnell	 
	 	 	Michael W. O’Donnell	 
	 	 	 	 
	 

30

 

EXHIBIT A

Investment Options

	 	 	 	 	 
	Fidelity Based Funds

	Contra Fund

	 	Equity Income Fund
	 	Growth & Income Fund
	Growth Company Fund

	 	Magellan Fund
	 	Small Cap Independence Fund
	Managed Income Portfolio

	 	Overseas Fund
	 	Money Market Fund
	Freedom 2010 Fund

	 	Freedom 2020 Fund
	 	Freedom 2030 Fund
	Freedom 2040 Fund

	 	Freedom Income Fund
	 	Balanced Fund
	Intermediate Bond Fund

	 	Spartan U.S. Equity Index Fund	 	 

	 	 	 	 	 
	Non Fidelity Funds

	 

	 	American Funds EuroPacific Growth Fund	 	 
	 

	 	Dreyfus Emerging Leaders Fund	 	 
	 

	 	Janus Small Cap Value Inst. Fund	 	 
	 

	 	Morgan Stanley IFT U.S. Small Cap Core Fund	 	 
	 

	 	PIMCO Long Term Gov’t Fund	 	 
	 

	 	PIMCO Low Duration Fund	 	 
	 

	 	PIMCO Total Return Fund Inst.	 	 
	 

	 	PIMCO StocksPLUS Fund Inst.	 	 

A-1exv10w4

 

Exhibit 10.4

NISOURCE INC.

1994 LONG-TERM INCENTIVE PLAN

As Amended and Restated Effective January 1, 2005

 

 

NISOURCE INC.

1994 LONG-TERM INCENTIVE PLAN

As Amended and Restated Effective January 1, 2005

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	1.	 	Purpose	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	2.	 	Administration	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	3.	 	Common Stock Subject to the Plan	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Aggregate Shares
	 	 	2	 
	 

	 	(b)
	 	Adjustment to Number of Shares
	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	4.	 	Participants	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	5.	 	Awards Under the Plan	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	6.	 	Section 162(m) Limitations	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	7.	 	NonQualified Stock Options	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Option Price
	 	 	4	 
	 

	 	(b)
	 	Exercise of Option
	 	 	4	 
	 

	 	(c)
	 	Payment for Common Stock
	 	 	4	 
	 

	 	(d)
	 	Transferability
	 	 	5	 
	 

	 	(e)
	 	Rights Upon Termination of Employment
	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	8.	 	Incentive Stock Options	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Option Price
	 	 	5	 
	 

	 	(b)
	 	Exercise of Option
	 	 	6	 
	 

	 	(c)
	 	Payment for Common Stock
	 	 	6	 
	 

	 	(d)
	 	Transferability
	 	 	7	 
	 

	 	(e)
	 	Rights Upon Termination of Employment
	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	9.	 	Stock Appreciation Rights	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Awards
	 	 	7	 
	 

	 	(b)
	 	Term
	 	 	8	 
	 

	 	(c)
	 	Payment
	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	10.	 	Performance Units	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Performance Period
	 	 	8	 
	 

	 	(b)
	 	Valuation of Units
	 	 	8	 
	 

	 	(c)
	 	Performance Targets
	 	 	8	 
	 

	 	(d)
	 	Adjustments
	 	 	9	 

i

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 
	 

	 	(e)
	 	Payments of Units
	 	 	9	 
	 

	 	(f)
	 	Termination of Employment
	 	 	9	 
	 

	 	(g)
	 	Other Terms
	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	11.	 	Restricted Stock Awards	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Restriction Period
	 	 	10	 
	 

	 	(b)
	 	Restrictions Upon Transfer
	 	 	10	 
	 

	 	(c)
	 	Certificates
	 	 	10	 
	 

	 	(d)
	 	Lapse of Restrictions
	 	 	10	 
	 

	 	(e)
	 	Termination Prior to Lapse of Restrictions
	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	12.	 	Contingent Stock Awards	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Restriction Period
	 	 	11	 
	 

	 	(b)
	 	Lapse of Restrictions
	 	 	11	 
	 

	 	(c)
	 	Termination Prior to Lapse of Restrictions
	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	13.	 	Fair Market Value	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	14.	 	Dividend Equivalents	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	15.	 	General Restrictions	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	16.	 	Rights as a Shareholder	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	17.	 	Employment Rights	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	18.	 	Tax Withholding	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	19.	 	Change in Control	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	Effect of Change in Control
	 	 	14	 
	 

	 	(b)
	 	Definition of Change in Control
	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	20.	 	Disability	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	21.	 	Amendment or Termination	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	22.	 	Effect on Other Plans	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	23.	 	Assumption of Options	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	24.	 	Duration of the Plan	 	 	18	 

ii

 

NISOURCE INC.

1994 Long-Term Incentive Plan

(As Amended and Restated Effective January 1, 2004)

          WHEREAS, NiSource Inc. (formerly NIPSCO Industries, Inc.) (the “Company”) adopted the NIPSCO
Industries, Inc. 1994 Long-Term Incentive Plan effective April 13, 1994, as amended and restated
effective April 14, 1999, and now known as the NiSource Inc. 1994 Long-Term Incentive Plan (the
“Plan”);

          WHEREAS, the Company further amended and restated the Plan effective January 1, 2000, and
again amended and restated the Plan effective January 1, 2004; and

          WHEREAS, pursuant to Section 21 of the Plan, the Company wishes to further amend and restate
the Plan, effective January 1, 2005, as set forth below, to comply with Section 409A of the
Internal Revenue Code of 1986, as amended (“Code”) with respect to benefits earned under the Plan
from and after January 1, 2005. Benefits under the Plan earned and vested prior to January 1, 2005
shall be administered without giving effect to Code Section 409A, and guidance and regulations
thereunder.

          NOW THEREFORE, the Plan is hereby amended and restated, effective January 1, 2005, as follows:

	1.	 	Purpose. The purpose of the NiSource Inc. 1994 Long-Term Incentive Plan (the “Plan”) is to
further the earnings of NiSource Inc. (the “Company”) and its subsidiaries. The Plan provides
long-term incentives to those officers and key executives who make substantial contributions
by their ability, loyalty, industry and invention. The Company intends that the Plan will
thereby facilitate securing, retaining, and motivating management employees of high caliber
and potential.
	 
	2.	 	Administration. The Plan shall be administered by the Officer Nomination and Compensation
Committee (the “Committee”) of the Board of Directors of the Company (the “Board”). The
Committee shall be composed of not fewer than two members of the Board who are “nonemployee
directors” of the Company within the meaning of Rule 16b-3 under the Securities Exchange Act
of 1934, as amended (the “1934 Act”), and “outside directors” of the Company within the
meaning of Code Section 162(m), and the regulations thereunder. Subject to the express
provisions of the Plan, the Committee may interpret the Plan, prescribe, amend and rescind
rules and regulations relating to it, determine the terms and provisions of awards to officers
and other key executive employees under the Plan (which need not be identical), and make such
other determinations as it deems necessary or advisable for the administration of the Plan.
The decisions of the Committee under the Plan shall be conclusive and binding. No member of
the Board or of the Committee shall be liable for any action taken, or determination made,
hereunder in good faith. Service on the Committee shall constitute service as a

 

 

	 	 	director of the Company so that members of the Committee shall be entitled to
indemnification and reimbursement as directors of the Company, pursuant to its by-laws.
	 
	3.	 	Common Stock Subject to the Plan.

	 	(a)	 	Aggregate Shares. Subject to the provisions of subsection 3(b), the shares
that may be issued, or may be the measure of stock appreciation rights granted, under
the Plan shall not exceed in the aggregate 43,000,000 shares of common stock, $0.01 par
value per share, of the Company (the “Common Stock”), any or all of which may be
allocated to incentive stock options. Such shares may be authorized and unissued
shares or treasury shares. Except as otherwise provided herein, any shares subject to
an option or right which for any reason expires or is terminated, unexercised as to
such shares, shall again be available under the Plan.
	 
	 	(b)	 	Adjustment to Number of Shares.

	 	(i)	 	Appropriate adjustments in the aggregate number of shares of
Common Stock issuable pursuant to the Plan, the number of shares of Common
Stock subject to each outstanding award granted under the Plan, the option
price with respect to options and connected stock appreciation rights, the
specified price of stock appreciation rights not connected to options, and the
value for performance units, shall be made to give effect to any increase or
decrease in the number of issued shares of Common Stock resulting from a
subdivision or consolidation of shares, whether through recapitalization, stock
split, reverse stock split, spin-off, spin-out or other distribution of assets
to stockholders, stock distributions or combinations of shares, payment of
stock dividends, other increase or decrease in the number of such shares of
Common Stock outstanding effected without receipt of consideration by the
Company, or any other occurrence for which the Committee determines an
adjustment is appropriate.
	 
	 	(ii)	 	In the event of any merger, consolidation or reorganization of
the Company with any other corporation or corporations, or an acquisition by
the Company of the stock or assets of any other corporation or corporations,
there shall be substituted on an equitable basis, as determined by the
Committee in its sole discretion, for each share of Common Stock then subject
to the Plan, and for each share of Common Stock then subject to an award
granted under the Plan, the number and kind of shares of stock, other
securities, cash or other property to which the holders of Common Stock of the
Company are entitled pursuant to such transaction.
	 
	 	(iii)	 	Without limiting the generality of the foregoing provisions of
this paragraph, any such adjustment shall be deemed to have prevented any
dilution or enlargement of a participant’s rights, if such participant receives
in any such adjustment, rights that are substantially similar (after

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	 	 	 	taking into account the fact that the participant has not paid the
applicable option price) to the rights the participant would have received
had he exercised his outstanding award and become a shareholder of the
Company immediately prior to the event giving rise to such adjustment.
Adjustments under this paragraph shall be made by the Committee, whose
decision as to the amount and timing of any such adjustment shall be
conclusive and binding on all persons.

	4.	 	Participants. Persons eligible to participate shall be limited to those officers and other
key executive employees of the Company and its subsidiaries who are in positions in which
their decisions, actions and counsel significantly impact upon profitability. Directors who
are not otherwise officers or employees shall not be eligible to participate in the Plan.
	 
	5.	 	Awards Under the Plan. Awards under the Plan may be in the form of stock options (both
options designed to satisfy statutory requirements necessary to receive favorable tax
treatment pursuant to any present or future legislation and options not designed to so
qualify), incentive stock options, stock appreciation rights, performance units, restricted
Common Stock, contingent stock awards, or such combinations of the above as the Committee may
in its discretion deem appropriate. Except in accordance with equitable adjustments as
provided in subsection 3(b), no stock option granted under the Plan shall at any time be
repriced or subject to cancellation and replacement.
	 
	6.	 	Section 162(m) Limitations. Subject to subsection 3(b) of the Plan, the maximum number of
stock options and stock appreciation rights that may be granted to any person who qualifies as
an executive officer named from time to time in the summary compensation table in the
Company’s annual meeting proxy statement and who is employed by the Company on the last day of
the taxable year (the “SCT Executives”) shall be 600,000 options and stock appreciation rights
with respect to shares of Common Stock per year and 3,000,000 options and stock appreciation
rights with respect to shares of Common Stock during the term of the Plan. The maximum number
of performance units that may be granted to any SCT Executive shall be 400,000 units per year,
provided that no more than 800,000 units may be granted in any three year period and the
maximum number of units that may be granted to any SCT Executive during the term of the Plan
shall be 1,500,000. The maximum number of restricted stock awards that may be granted to any
SCT Executive shall be 400,000 shares of Common Stock per year, provided that no more than
800,000 shares of restricted Common Stock may be granted in any three year period, and that
the maximum number of shares of restricted Common Stock that may be granted to any SCT
Executive during the term of the Plan shall be 1,500,000. The maximum number of contingent
stock awards that may be granted to any SCT Executive shall be 400,000 shares of Common Stock
per year, provided that no more than 800,000 shares of Common Stock may be subject to
contingent stock awards granted in any three year period and the maximum number of shares of
Common Stock subject to contingent stock awards that may be granted to any SCT Executive
during the term of the Plan shall be 1,500,000. The limitations set forth in this Section 6
shall relate

3

 

only to years or other periods of time in which such awards constitute “applicable employee
remuneration” under Code Section 162(m).

	7.	 	NonQualified Stock Options. Options shall be evidenced by stock option agreements in such
form and not inconsistent with the Plan as the Committee shall approve from time to time,
which agreements shall contain in substance the following terms and conditions:

	 	(a)	 	Option Price. The purchase price per each share of Common Stock deliverable
upon the exercise of an option shall not be less than 100% of the Fair Market Value of
a share of Common Stock on the day the option is granted, as determined by the
Committee.
	 
	 	(b)	 	Exercise of Option. Each stock option agreement shall state the period or
periods of time within which the option may be exercised by the optionee, in whole or
in part, which shall be such period or periods of time as may be determined by the
Committee, provided that the option exercise period shall not end later than ten years
after the date of the grant of the option. The Committee shall have the power to
permit in its discretion an acceleration of the previously determined exercise terms,
within the terms of the Plan, under such circumstances and upon such terms and
conditions as it deems appropriate.
	 
	 	(c)	 	Payment for Common Stock. Except as otherwise provided in the Plan, or in any
stock option agreement, the optionee shall pay the purchase price of the Common Stock
upon the exercise of any option (i) in cash, (ii) in cash received from a broker-dealer
to whom the optionee has submitted an exercise notice consisting of a fully endorsed
option (however in the case of an optionee subject to Section 16 of the 1934 Act, this
payment option shall only be available to the extent such payment procedures comply
with Regulation T issued by the Federal Reserve Board), (iii) by delivering Common
Stock owned by the optionee for at least six months prior to the date of exercise
having an aggregate Fair Market Value on the date of exercise equal to the option
exercise price, (iv) by such other medium of payment as the Committee in its discretion
shall authorize at the time of grant, or (v) by any combination of (i), (ii), (iii) and
(iv). In the case of an election pursuant to (i) or (ii) above, cash shall mean cash
or check issued by a federally insured bank or savings and loan association and made
payable to NiSource Inc. In the case of payment pursuant to (ii) or (iii) above, the
optionee’s election must be made on or prior to the date of exercise and shall be
irrevocable. In lieu of a separate election governing each exercise of an option, an
optionee may file a blanket election with the Committee, which shall govern all future
exercises of options until revoked by the optionee. The Company shall issue, in the
name of the optionee, stock certificates representing the total number of shares of
Common Stock issuable pursuant to the exercise of any option as soon as reasonably
practicable after such exercise, provided that any Common Stock purchased by an
optionee through a broker-dealer pursuant to clause (ii) above, shall be delivered to
such broker-dealer in accordance with 12 C.F.R. § 220.3(e)(4), or other applicable
provision of law.

4

 

	 	(d)	 	Transferability. Each stock option agreement shall provide that the option
subject thereto is not transferable by the optionee otherwise than by will or the laws
of descent or distribution. Notwithstanding the preceding sentence, an optionee, at
any time prior to his death, may assign all or any portion of the option to (i) his
spouse or lineal descendant, (ii) the trustee of a trust for the primary benefit of his
spouse or lineal descendant, or (iii) a tax-exempt organization as described in Code
Section 501(c)(3). In such event the spouse, lineal descendant, trustee or tax-exempt
organization shall be entitled to all of the rights of the optionee with respect to the
assigned portion of such option, and such portion of the option shall continue to be
subject to all of the terms, conditions and restrictions applicable to the option as
set forth herein, and in the related stock option agreement, immediately prior to the
effective date of the assignment. Any such assignment shall be permitted only if (i)
the optionee does not receive any consideration therefore, and (ii) the assignment is
expressly approved by the Committee or its delegate. Any such assignment shall be
evidenced by an appropriate written document executed by the optionee, and a copy
thereof shall be delivered to the Committee or its delegate on or prior to the
effective date of the assignment. This paragraph shall apply to all nonqualified stock
options granted under the Plan at any time.
	 
	 	(e)	 	Rights Upon Termination of Employment. In the event that an optionee ceases to
be an employee for any reason other than death, Disability or retirement, the optionee
shall have the right to exercise the option during its term within a period of thirty
days after such termination to the extent that the option was exercisable at the date
of such termination of employment, or during such other period and subject to such
terms as may be determined by the Committee. In the event that an optionee dies,
retires, or becomes Disabled prior to termination of his option without having fully
exercised his option, the optionee or his successor shall have the right to exercise
the option during its term within a period of three years after the date of such
termination due to death, Disability or retirement, to the extent that the option was
exercisable at the date of termination due to death, Disability or retirement, or
during such other period and subject to such terms as may be determined by the
Committee. For purposes of the Plan, the term “retirement” shall mean retirement as
defined in the Company’s pension plan.

	8.	 	Incentive Stock Options. Incentive stock options shall be evidenced by stock option
agreements in such form and not inconsistent with the Plan as the Committee shall approve from
time to time, which agreements shall contain in substance the following terms and conditions:

	 	(a)	 	Option Price. Except as otherwise provided in subsection 8(b), the purchase
price per share of stock deliverable upon the exercise of an incentive stock option
shall not be less than 100% of the Fair Market Value of the Common Stock on the day the
option is granted, as determined by the Committee.

5

 

	 	(b)	 	Exercise of Option. Each stock option agreement shall state the period or
periods of time within which the option may be exercised by the optionee, in whole or
in part, which shall be such period or periods of time as may be determined by the
Committee, provided that the option period shall not commence earlier than six months
after the date of the grant of the option nor end later than ten years after the date
of the grant of the option. The aggregate Fair Market Value (determined with respect
to each incentive stock option at the time of grant) of the Common Stock with respect
to which incentive stock options are exercisable for the first time by an individual
during any calendar year (under all incentive stock option plans of the Company and its
parent and subsidiary corporations) shall not exceed $100,000. If the aggregate Fair
Market Value (determined at the time of grant) of the Common Stock subject to an
option, which first becomes exercisable in any calendar year, exceeds the limitation of
this Section 8(b), so much of the option that does not exceed the applicable dollar
limit shall be an incentive stock option and the remainder shall be a nonqualified
stock option; but in all other respects, the original option agreement shall remain in
full force and effect. As used in this Section 8, the words “parent” and “subsidiary”
shall have the meanings given to them in Code Sections 424(e) and 424(f).
Notwithstanding anything herein to the contrary, if an incentive stock option is
granted to an individual who owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of its parent or
subsidiary corporations, within the meaning of Code Section 422(b)(6), (i) the purchase
price of each share of Common Stock subject to the incentive stock option shall be not
less than one hundred ten percent (110%) of the Fair Market Value of the Common Stock
on the date the incentive stock option is granted, and (ii) the incentive stock option
shall expire, and all rights to purchase Common Stock thereunder shall cease, no later
than the fifth anniversary of the date the incentive stock option was granted.
	 
	 	(c)	 	Payment for Common Stock. Except as otherwise provided in the Plan or in any
stock option agreement, the optionee shall pay the purchase price of the Common Stock
upon the exercise of any option (i) in cash, (ii) in cash received from a broker-dealer
to whom the optionee has submitted an exercise notice consisting of a fully-endorsed
option (however, in the case of an optionee subject to Section 16 of the 1934 Act, this
payment option shall only be available to the extent such payment procedures comply
with Regulation T issued by the Federal Reserve Bank), (iii) by delivering Common Stock
owned by the optionee for at least six months prior to the date of exercise having an
aggregate Fair Market Value on the date of exercise equal to the option exercise price,
(iv) by such other medium of payment as the Committee in its discretion shall authorize
at the time of grant, or (v) by any combination of (i), (ii), (iii) and (iv). In the
case of an election pursuant to (i) or (ii), cash shall mean cash or check issued by a
federally insured bank or savings and loan association made payable to NiSource Inc.
In the case of a payment pursuant to (ii) or (iii) above, the optionee’s election must
be made on or prior to the date of exercise and shall be irrevocable. In lieu of a
separate election governing each exercise of an option, an optionee may file a

6

 

	 	 	 	blanket election with the Committee, which shall govern all future exercises of
options until revoked by the optionee. The Company shall issue, in the name of the
optionee, stock certificates representing the total number of shares of Common Stock
issuable pursuant to the exercise of any option as soon as reasonably practicable
after such exercise, provided that any Common Stock purchased by an optionee through
a broker-dealer pursuant to clause (ii) above, shall be delivered to such
broker-dealer in accordance with 12 C.F.R. § 220.3(e)(4), or other applicable
provision of law.
	 
	 	(d)	 	Transferability. Each stock option agreement shall provide that it is not
transferable by the optionee otherwise by will or the laws of descent or distribution.
	 
	 	(e)	 	Rights Upon Termination of Employment. In the event that an optionee ceases to
be an employee for any reason other than death, Disability or retirement, the optionee
shall have the right to exercise the option during its term within a period of thirty
days after such termination to the extent that the option was exercisable at the date
of such termination of employment, or during such other period and subject to such
terms as may be determined by the Committee. In the event that an optionee dies,
retires, or becomes Disabled prior to termination of his option without having fully
exercised his option, the optionee or his successor shall have the right to exercise
the option during its term within a period of three years after the date of such
termination due to death, Disability or retirement, to the extent that the option was
exercisable at the date of termination due to death, Disability or retirement, or
during such other period and subject to such terms as may be determined by the
Committee. Notwithstanding the foregoing, in accordance with Code Section 422, if an
incentive stock option is exercised more than ninety days after termination of
employment, that portion of the option exercised after such date shall automatically be
a nonqualified stock option, but, in all other respects, the original option agreement
shall remain in full force and effect.

	 	 	The provisions of this Section 8 shall be construed and applied, and (subject to the
limitations of Section 24) shall be amended from time to time so as to comply with Code
Section 422 or its successors and regulations issued thereunder.
	 
	9.	 	Stock Appreciation Rights. Stock appreciation rights shall be evidenced by stock
appreciation right agreements in such form and not inconsistent with the Plan as the Committee
shall approve from time to time, which agreements shall contain in substance the following
terms and conditions:

	 	(a)	 	Awards. A stock appreciation right shall entitle the grantee to receive upon
exercise the excess of (i) the Fair Market Value of a specified number of shares of the
Company’s Common Stock at the time of exercise over (ii) a specified price which shall
not be less than 100% of the Fair Market Value of the Common Stock at the time the
stock appreciation right was granted, or, if connected with a previously issued stock
option, not less than 100% of the Fair Market Value of

7

 

	 	 	 	Common Stock at the time such option was granted. A stock appreciation right may be
granted in connection with all or any portion of a previously or contemporaneously
granted stock option or not in connection with a stock option.
	 
	 	(b)	 	Term. Stock appreciation rights shall be granted for a period of not less than
one year nor more than ten years, and shall be exercisable in whole or in part, at such
time or times and subject to such other terms and conditions, as shall be prescribed by
the Committee at the time of grant, subject to the following:

	 	(i)	 	Stock appreciation rights shall be exercisable only during a
grantee’s employment, except that in the discretion of the Committee a stock
appreciation right may be made exercisable for up to thirty days after the
grantee’s employment is terminated for any reason other than death, Disability
or retirement. In the event that a grantee dies, retires, or becomes Disabled
without having fully exercised his stock appreciation rights, the grantee or
his successor shall have the right to exercise the stock appreciation rights
during their term within a period of three years after the date of such
termination due to death, Disability or retirement to the extent that the right
was exercisable at the date of such termination or during such other period and
subject to such terms as may be determined by the Committee.
	 
	 	(ii)	 	The Committee shall have the power to permit in its discretion
an acceleration of previously determined exercise terms, within the terms of
the Plan, under such circumstances and upon such terms and conditions as it
deems appropriate.

	 	(c)	 	Payment. Upon exercise of a stock appreciation right, payment shall be made in
cash, in the form of Common Stock at Fair Market Value, or in a combination thereof, as
the Committee may determine.

	10.	 	Performance Units. Performance Units (“Units”) shall be evidenced by performance unit
agreements in such form and not inconsistent with the Plan as the Committee shall approve from
time to time, which agreements shall contain in substance the following terms and conditions:

	 	(a)	 	Performance Period. At the time of award, the Committee shall establish with
respect to each Unit award a performance period of not less than two, nor more than
five, years.
	 
	 	(b)	 	Valuation of Units. At the time of award, the Committee shall establish with
respect to each such award a value for each Unit which shall not thereafter change, or
which may vary thereafter determinable from criteria specified by the Committee at the
time of award.
	 
	 	(c)	 	Performance Targets. At the time of award, the Committee shall establish
maximum and minimum performance targets to be achieved with respect to each

8

 

	 	 	 	award during the performance period. The participant shall be entitled to payment
with respect to all Units awarded if the maximum target is achieved during the
performance period, but shall be entitled to payment with respect to a portion of
the Units awarded according to the level of achievement of performance targets, as
specified by the Committee, for performance during the performance period that meets
or exceeds the minimum target but fails to meet the maximum target.
	 
	 	 	 	The performance targets established by the Committee shall relate to corporate,
division, or unit performance and may be established in terms of growth in gross
revenue, earnings per share, ratio of earnings to shareholders’ equity or to total
assets, dividend payments and total shareholders’ return. Multiple targets may be
used and may have the same or different weighting, and they may relate to absolute
performance or relative performance as measured against other institutions or
divisions or units thereof.
	 
	 	(d)	 	Adjustments. At any time prior to payment of the Units, the Committee may
adjust previously established performance targets and other terms and conditions,
including the corporation’s, or division’s or unit’s financial performance for Plan
purposes, to reflect major unforeseen events such as changes in laws, regulations or
accounting practices, mergers, acquisitions or divestitures or extraordinary, unusual
or non-recurring items or events.
	 
	 	(e)	 	Payments of Units. Following the conclusion of each performance period, the
Committee shall determine the extent to which performance targets have been attained
for such period as well as the other terms and conditions established by the Committee.
The Committee shall determine what, if any, payment is due on the Units. Payment
shall be made as soon as practicable after the end of the applicable Performance Period
in cash, in the form of Common Stock at Fair Market Value, or in a combination thereof,
as the Committee may determine.
	 
	 	(f)	 	Termination of Employment. In the event that a participant holding a Unit
award ceases to be an employee prior to the end of the applicable performance period by
reason of death, Disability or retirement, his Units, to the extent earned under the
applicable performance targets, shall be payable at the end of the performance period
in proportion to the active service of the participant during the performance period,
as determined by the Committee. Upon any other termination of employment,
participation shall terminate forthwith and all outstanding Units held by the
participant shall be canceled.
	 
	 	(g)	 	Other Terms. The Unit agreements shall contain such other terms and provisions
and conditions not inconsistent with the Plan as shall be determined by the Committee.

	11.	 	Restricted Stock Awards. Restricted stock awards under the Plan shall be in the form of
Common Stock of the Company, restricted as to transfer and subject to forfeiture, and

9

 

	 	 	shall be evidenced by restricted stock agreements in such form and not inconsistent with the
Plan as the Committee shall approve from time to time, which agreements shall contain in
substance the following terms and conditions:

	 	(a)	 	Restriction Period. Restricted Common Stock awarded pursuant to the Plan shall
be subject to such terms, conditions, and restrictions, including without limitation:
prohibitions against transfer, substantial risks of forfeiture, attainment of
performance objectives and repurchase by the Company or right of first refusal, and for
such period or periods as shall be determined by the Committee at the time of grant.
The Committee shall have the power to permit in its discretion, an acceleration of the
expiration of the applicable restriction period with respect to any part or all of the
Common Stock awarded to a participant.
	 
	 	 	 	The performance objectives established by the Committee shall relate to corporate,
division or unit performance, and may be established in terms of growth and gross
revenue, earnings per share, ratio of earnings to shareholder’s equity or to total
assets, dividend payments and total shareholders’ return. Multiple objectives may
be used and may have the same or different weighting, and they may relate to
absolute performance or relative performance as measured against other institutions
or divisions or units thereof.
	 
	 	(b)	 	Restrictions Upon Transfer. Common Stock awarded, and the right to vote such
Common Stock and to receive dividends thereon, may not be sold, assigned, transferred,
exchanged, pledged, hypothecated, or otherwise encumbered, except as herein provided,
during the restriction period applicable to such Common Stock. Subject to the
foregoing, and except as otherwise provided in the Plan or a restricted stock award
agreement, the participant shall have all the other rights of a shareholder including,
but not limited to, the right to receive dividends and the right to vote such Common
Stock.
	 
	 	(c)	 	Certificates. Each certificate issued in respect of Common Stock awarded to a
participant shall be deposited with the Company, or its designee, and shall bear the
following legend:

          “This certificate and the shares represented hereby are subject
to the terms and conditions (including forfeiture and restrictions
against transfer) contained in the NiSource Inc. 1994 Long-Term
Incentive Plan and an Agreement entered into by the registered
owner. Release from such terms and conditions shall be obtained
only in accordance with the provisions of the Plan and Agreement, a
copy of each of which is on file in the office of the Secretary of
said Company.”

	 	(d)	 	Lapse of Restrictions. A restricted stock agreement shall specify the terms
and conditions upon which any restrictions upon Common Stock awarded under the Plan
shall lapse, as determined by the Committee. Upon the lapse of such

10

 

	 	 	 	restrictions, Common Stock, free of the foregoing restrictive legend, shall be
issued to the participant or his legal representative.
	 
	 	(e)	 	Termination Prior to Lapse of Restrictions. In the event of a participant’s
termination of employment, other than due to death, Disability or retirement, prior to
the lapse of restrictions applicable to any Common Stock awarded to such participant,
all Common Stock as to which there still remains unlapsed restrictions shall be
forfeited by such participant without payment of any consideration to the participant,
and neither the participant nor any successors, heirs, assigns, or personal
representatives of such participant shall thereafter have any further rights or
interest in such Common Stock or certificates.

	12.	 	Contingent Stock Awards. Contingent stock awards under the Plan shall be in the form of the
issuance of Common Stock of the Company following the lapse of restrictions applicable to such
awards. Such awards shall be restricted as to transfer and subject to forfeiture, and shall
be evidenced by contingent stock award agreements in such form and not inconsistent with the
Plan as the Committee shall approve from time to time, which agreements shall contain in
substance the following terms and conditions:

	 	(a)	 	Restriction Period. Contingent stock awards shall be subject to such terms,
conditions and restrictions, including without limitations, prohibitions against
transfer, substantial risk of forfeiture and attainment of performance objectives, and
for such period or periods, as shall be determined by the Committee at the time of
grant. The Committee shall have the power to permit in its discretion an acceleration
of the expiration of the applicable restriction period with respect to any part or all
of a contingent stock award.
	 
	 	 	 	The performance objectives established by the Committee shall relate to corporate,
division or unit performance, and may be established in terms of growth and gross
revenue, earnings per share, ratios of earnings to shareholders’ equity or to total
assets, dividend payments and total shareholders’ return. Multiple objectives may
be used and may have the same or different weighting, and they may relate to
absolute performance or relative performance as measured against other institutions
or divisions or units thereof.
	 
	 	(b)	 	Lapse of Restrictions. A contingent stock award agreement shall specify the
terms and conditions upon which any restrictions applicable to such award shall lapse
as determined by the Committee. Upon lapse of such restrictions, Common Stock subject
to such contingent stock award shall be issued to the participant or his legal
representative. Such Common Stock, when issued to the participant or his legal
representative, shall either be free of any restrictions, or shall be subject to such
further restrictions, as the Committee shall determine. In the event that Common Stock
issued pursuant to a contingent stock award are subject to further restrictions, the
certificates issued in respect of the Common Stock awarded pursuant to the contingent
stock award shall be deposited with the Company, or its designee, and shall bear the
legend set forth in subsection 11(c) above. Upon

11

 

	 	 	 	the lapse of such restrictions, Common Stock free of such restrictive legend shall
be issued to the participant or his legal representative.
	 
	 	(c)	 	Termination Prior to Lapse of Restrictions. Except as otherwise provided in
any contingent stock award agreement, in the event of a participant’s termination of
employment, other than due to death, Disability or retirement, prior to the lapse of
restrictions applicable to any contingent stock award granted to such participant, such
award, and all Common Stock subject thereto as to which there still remain unlapsed
restrictions, shall be forfeited by such participant without payment of any
consideration to the participant and neither the participant nor any successors, heirs,
assigns or personal representatives of such participant shall have any further rights
or interests in such contingent stock awards or such Common Stock subject thereto.

	13.	 	Fair Market Value. The Fair Market Value of the Common Stock for purposes of the Plan shall
be such amount set forth in an award agreement that complies with the definition of fair
market value under Code Section 409A, and guidance and regulations thereunder. If no such
amount is set forth in the award agreement, Fair Market Value shall be the average of the high
and low prices on the New York Stock Exchange Composite Transactions on the date of grant or
on any other applicable date.
	 
	14.	 	Dividend Equivalents. From and after the date, if any, specified in an applicable incentive
stock option agreement, stock appreciation right agreement not granted in connection with a
stock option, performance unit award agreement or contingent stock award agreement, and except
as otherwise provided in such agreement, the holder of such award shall receive a distribution
of an amount equivalent to the dividends payable in cash or property (other than stock of the
Company) that would have been payable to the holder with respect to the number of shares of
Common Stock subject to such award, had the holder been the legal owner of such Common Stock
on the applicable date on which such dividend is declared by the Company on Common Stock.
Except as otherwise provided in any contingent stock award agreement, any such dividend
equivalent payable in cash or property (other than stock of the Company) shall be payable
directly to the holder of the applicable award at such time, in such form, and upon such terms
and conditions, as are applicable to the actual cash or property dividend actually declared
with respect to Common Stock. Except as otherwise provided in any contingent stock award
agreement, any participant entitled to receive a cash dividend equivalent pursuant to his
applicable award agreement may, by written election filed with the Company, at least ten days
prior to the date for payment of such dividend equivalent, elect to have such dividend
equivalent credited to an account maintained for his benefit under a dividend reinvestment
plan maintained by the Company. Appropriate adjustments with respect to awards shall be made
to give effect to the payment of stock dividends as set forth in subsection 3(b) above.
	 
	15.	 	General Restrictions. Each award under the Plan shall be subject to the requirement that, if
at any time the Committee shall determine that (i) the listing, registration or qualification
of the Common Stock subject or related thereto upon any securities

12

 

	 	 	exchange or under any state or federal law, or (ii) the consent or approval of any
government regulatory body, or (iii) an agreement by the recipient of an award with respect
to the disposition of Common Stock is necessary or desirable as a condition of, or in
connection with, the granting of such award or the issue or purchase of Common Stock
thereunder, such award may not be consummated in whole or in part unless such listing,
registration, qualification, consent, approval or agreement shall have been effected or
obtained, free of any conditions not acceptable to the Committee.
	 
	16.	 	Rights as a Shareholder. The recipient of any award under the Plan, unless otherwise
provided by the Plan, shall have no rights as a shareholder with respect thereto unless and
until certificates for Common Stock are issued to the recipient.
	 
	17.	 	Employment Rights. Nothing in the Plan or in any agreement entered into pursuant to the Plan
shall confer upon any participant the right to continue in employment with the Company or
affect any right which his employer or the Company may have to terminate the employment of
such participant. For purposes of the Plan, termination of employment shall be deemed to
occur on the date the recipient of an award last performed services for the Company or his
employer affiliated with the Company and shall not be deemed to include any period during
which the recipient is entitled to receive severance pay from the Company or any such
affiliate.
	 
	18.	 	Tax Withholding. Whenever the Company proposes or is required to issue or transfer Common
Stock to a participant under the Plan, the Company shall have the right to require the
participant to remit to the Company an amount sufficient to satisfy all federal, state and
local withholding tax requirements prior to the delivery of any certificate or certificates
for such Common Stock. If such certificates have been delivered prior to the time a
withholding obligation arises, the Company shall have the right to require the participant to
remit to the Company an amount sufficient to satisfy all federal, state or local withholding
tax requirements at the time such obligation arises and to withhold from other amounts payable
to the participant, as compensation or otherwise, as necessary. Whenever payments under the
Plan are to be made to a participant in cash, such payment shall be net of any amount
sufficient to satisfy all federal, state and local withholding tax requirements. In lieu of
requiring a participant to make a payment to the Company in an amount related to the
withholding tax requirement, the Committee may, in its discretion, provide that, at the
participant’s election, the tax withholding obligation shall be satisfied by the Company’s
withholding a portion of the Common Stock otherwise distributable to the participant, such
Common Stock being valued at its Fair Market Value at the date of exercise, or by the
participant’s delivering to the Company a portion of the Common Stock previously delivered by
the Company, such Common Stock being valued at its Fair Market Value as of the date of
delivery of such Common Stock by the participant to the Company. For this purpose, the amount
of required withholding shall be a specified rate not less than the statutory minimum federal,
state and local (if any) withholding rate, and not greater than the maximum federal, state and
local (if any) marginal tax rate applicable to the participant and to the particular
transaction. Notwithstanding any provision of the Plan to the contrary, a participant’s
election pursuant to the preceding sentences (a) must be made on or prior to the date as of

13

 

	 	 	which income is realized by the recipient in connection with the particular transaction, and
(b) must be irrevocable. In lieu of a separate election on each effective date of each
transaction, a participant may file a blanket election with the Committee, which shall
govern all future transactions until revoked by the participant.
	 
	19.	 	Change in Control.

	 	(a)	 	Effect of Change in Control. Notwithstanding any of the provisions of the Plan
or any agreement evidencing awards granted hereunder, upon a Change in Control of the
Company (as defined in subsection 19(b)), all outstanding awards shall become fully
exercisable and all restrictions thereon shall terminate in order that participants may
fully realize the benefits thereunder. Further, the Committee, as constituted before
such Change in Control, is authorized, and has sole discretion, as to any award, either
at the time such award is granted hereunder or any time thereafter, to take any one or
more of the following actions: (i) provide for the exercise of any such award for an
amount of cash equal to the difference between the exercise price and the then Fair
Market Value of the Common Stock covered thereby had such award been currently
exercisable; (ii) make such adjustment to any such award then outstanding as the
Committee deems appropriate to reflect such Change in Control; or (iii) cause any such
award then outstanding to be assumed, by the acquiring or surviving corporation, after
such Change in Control.
	 
	 	(b)	 	Definition of Change in Control. A “Change in Control” shall be deemed to take
place on the occurrence of either a “Change in Ownership,” “Change in Effective
Control” or a “Change of Ownership of a Substantial Portion of Assets,” as defined
below:

	 	(i)	 	Change in Ownership. A Change in Ownership of the
Company occurs on the date that any one person, or more than one Person Acting
as a Group (as defined below), acquires ownership of stock of the Company that,
together with stock held by such person or group, constitutes more than 50% of
the total fair market value or total voting power of the stock of the Company.
However, if any one person or more than one Person Acting as a Group, is
considered to own more than 50% of the total fair market value or total voting
power of the stock of the Company, the acquisition of additional stock by the
same person or persons is not considered to cause a Change in Ownership of the
Company, as applicable (or to cause a Change in Effective Control of the
Company). An increase in the percentage of stock owned by any one person, or
Persons Acting as a Group, as a result of a transaction in which the Company
acquires its stock in exchange for property shall be treated as an acquisition
of stock. This paragraph (i) applies only when there is a transfer of stock of
the Company (or issuance of stock of the Company) and stock in the Company
remains outstanding after the transaction.

14

 

	 	(ii)	 	Change in Effective Control. A Change in Effective
Control of the Company occurs on the date that either —

	 	(1)	 	Any one person, or more than one Person Acting
as a Group, acquires (or has acquired during the 12-month period ending
on the date of the most recent acquisition by such person or persons)
ownership of stock of the Company possessing 35% or more of the total
voting power of the stock of the Company; or
	 
	 	(2)	 	a majority of members of the Board is replaced
during any 12-month period by directors whose appointment or election
is not endorsed by a majority of the members of the Board prior to the
date of the appointment or election,

	 	 	 	In the absence of an event described in paragraph (1) or (2), a Change in
Effective Control of the Company shall not have occurred.
	 
	 	 	 	Acquisition of additional control. If any one person, or more than
one Person Acting as a Group, is considered to effectively control the
Company, the acquisition of additional control of the Company by the same
person or persons is not considered to cause a Change in Effective Control
of the Company (or to cause a Change in Ownership of the Company).
	 
	 	(iii)	 	Change of Ownership of a Substantial Portion of
Assets. A Change of Ownership of a Substantial Portion of Assets occurs on
the date that any one person, or more than one Person Acting as a Group,
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that
have a total gross fair market value equal to or more than 40% of the total
gross fair market value of all of the assets of the Company immediately prior
to such acquisition or acquisitions. For this purpose, gross fair market value
means the value of the assets of the Company, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets.
	 
	 	 	 	Transfers to a related person. There is no Change in Control when
there is a transfer to an entity that is controlled by the shareholders of
the Company immediately after the transfer. A transfer of assets by the
Company is not treated as a Change of Ownership of a Substantial Portion of
Assets if the assets are transferred to —

	 	(1)	 	A shareholder of the Company (immediately
before the asset transfer) in exchange for or with respect to its
stock;
	 
	 	(2)	 	An entity, 50% or more of the total value or
voting power of which is owned, directly or indirectly, by the Company;

15

 

	 	(3)	 	A person, or more than one Person Acting as a
Group, that owns, directly or indirectly, 50% or more of the total
value or voting power of all the outstanding stock of the Company; or
	 
	 	(4)	 	An entity, at least 50% of the total value or
voting power of which is owned, directly or indirectly, by a person
described in paragraph (3).

	 	 	 	A person’s status is determined immediately after the transfer of the
assets. For example, a transfer to a corporation in which the Company has
no ownership interest before the transaction, but which is a majority-owned
subsidiary of the Company after the transaction is not treated as a Change
of Ownership of a Substantial Portion of Assets of the Company.
	 
	 	(iv)	 	Persons Acting as a Group. Persons shall not be
considered to be acting as a group solely because they purchase or own stock of
the same corporation at the same time or as a result of the same public
offering. However, persons shall be considered to be acting as a group if they
are owners of a corporation that enters into a merger, consolidation, purchase
or acquisition of stock, or similar business transaction with the Company. If
a person, including an entity, owns stock in both corporations that enter into
a merger, consolidation, purchase or acquisition of stock, or similar
transaction, such shareholder is considered to be acting as a group with other
shareholders in a corporation prior to the transaction giving rise to the
change and not with respect to the ownership interest in the other corporation.

	20.	 	Disability. A participant has a “Disability” or becomes “Disabled” when he or she has a
condition that (a) causes the participant to be unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less
than 12 months, (b) causes the participant, by reason of any medically determinable physical
or mental impairment that can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, to receive income replacement benefits for a
period of not less than three months under an accident and health plan covering employees of
the Company or its subsidiaries or affiliates or (c) causes the participant to be eligible to
receive Social Security disability payments. The Committee, in its sole discretion, shall
determine the date of any Disability.
	 
	21.	 	Amendment or Termination. The Board or the Committee may at any time terminate, suspend or
amend the Plan without the authorization of shareholders to the extent allowed by law,
including without limitation any rules issued by the Securities and Exchange Commission under
Section 16 of the 1934 Act, insofar as shareholder approval thereof is required in order for
the Plan to continue to satisfy the requirements of Rule 16b-3 under the 1934 Act, or the
rules of any applicable stock exchange. No

16

 

	 	 	termination, suspension or amendment of the Plan shall adversely affect any right acquired by any
participant under an award granted before the date of such termination, suspension or
amendment, unless such participant shall consent; but it shall be conclusively presumed that
any adjustment for changes in capitalization as provided for herein does not adversely
affect any such right. Subject to the preceding sentence, the Plan as amended and restated
effective January 1, 2005, shall apply to all awards at any time granted hereunder.
	 
	22.	 	Effect on Other Plans. Unless otherwise specifically provided, participation in the Plan
shall not preclude an employee’s eligibility to participate in any other benefit or incentive
plan and any awards made pursuant to the Plan shall not be considered as compensation in
determining the benefits provided under any other plan.
	 
	23.	 	Assumption of Options. Pursuant to the terms of Section 5.22 of the Amended and Restated
Agreement and Plan of Merger by and among the Company, Acquisition Gas Company, Inc., a wholly
owned subsidiary of the Company, and Bay State Gas Company (“Bay State”), dated as of December
18, 1997 and amended and restated as of March 4, 1998 and further amended as of November 16,
1998 (as may be further amended, restated or supplemented, the
“Agreement”), and at the
Effective Time defined in the Agreement, each outstanding stock option issued under the Bay
State Gas Company 1989 Key Employee Stock Option Plan (“Bay State Stock Option Plan”), shall
be assumed by the Company. Each such stock option (“Assumed Option”) shall be deemed to
constitute an option to acquire Common Stock in an amount and at a purchase price determined
pursuant to Section 5.22 of the Agreement. Each Assumed Option shall be subject to all of the
terms and conditions applicable to options granted under the Plan. Notwithstanding the
preceding sentence:

	 	(a)	 	if the employment of the holder of an Assumed Option with the Company and its
subsidiaries terminates for any reason other than death, Disability, retirement or
Cause, he, or his legal representatives or beneficiary, may exercise the Assumed Option
at any time within three months immediately following such termination of employment,
but not later than the expiration of the term of such Assumed Option;
	 
	 	(b)	 	if the holder of an Assumed Option that is a non-qualified stock option
terminates employment with the Company and its subsidiaries because of death,
Disability or retirement, he, or his legal representatives or beneficiary, may exercise
the Assumed Option at any time during the term of such Assumed Option to the extent he
was entitled to exercise it at the date of death, Disability or retirement;
	 
	 	(c)	 	if the holder of an Assumed Option that is an incentive stock option terminates
employment with the Company and its subsidiaries because of death, his legal
representatives or beneficiary may exercise the Assumed Option at any time during the
term of such Assumed Option to the extent he was entitled to exercise it at the date of
death;

17

 

	 	(d)	 	if the holder of an Assumed Option that is an incentive stock option terminates
employment with the Company and its subsidiaries because of Disability or retirement,
he, or his legal representatives or beneficiary, may exercise the Assumed Option at any
time within three months immediately following such termination of employment, but not
later than the expiration of the term of such Assumed Option;
	 
	 	(e)	 	if the employment of the holder of an Assumed Option with the Company and its
subsidiaries terminates for Cause, the Assumed Option shall expire as of the date of
such termination of employment.

	 	 	For purposes of this Section, “Cause” shall have the same meaning as defined in the holder’s
severance agreement with the Company or any of its subsidiaries in effect on the date of
termination of employment. If the holder has not entered into a severance agreement with
the Company or any subsidiary that is in effect on the date of termination of employment, or
if the term “Cause” is not defined therein, Cause shall mean the holder’s conviction for the
commission of a felony, or the holder’s fraud or dishonesty which has resulted in or is
likely to result in material economic damage to the Company or any subsidiary.
	 
	 	 	Each Assumed Option shall be evidenced by an amended and restated stock option agreement
entered into as of the Effective Time by and among the Company, Bay State and the applicable
optionee.
	 
	24.	 	Duration of the Plan. The Plan shall remain in effect until all awards under the Plan have
been satisfied by the issuance of Common Stock or the payment of cash, but no award shall be
granted more than ten years after the date the Plan, as amended and restated effective January
1, 2005, was approved by the shareholders, which shall be its effective date of adoption.

          IN WITNESS WHEREOF, the Company has caused this Amendment and Restatement to be executed on
its behalf by its officer duly authorized, on this 2nd day of December, 2005.

	 	 	 	 	 
	 	NISOURCE INC.

 	 
	 	By:  	/s/ Michael W. O’Donnell	 
	 	 	Michael W. O’Donnell	 
	 	 	 	 
	 

18

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