Exhibit 10.5
NISOURCE INC.
NONEMPLOYEE DIRECTOR
STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2002)
TABLE OF CONTENTS
PAGE
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ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION...................... 1
1.1 Establishment of the Plan...................................... 1
1.2 Purpose of the Plan............................................ 2
1.3 Duration of the Plan........................................... 2
ARTICLE 2. DEFINITIONS............................................... 2
2.1 "Award"........................................................ 2
2.2 "Award Agreement".............................................. 3
2.3 "Beneficial Owner"............................................. 3
2.4 "Board" or "Board of Directors"................................ 3
2.5 "Change in Control"............................................ 3
2.6 "Code"......................................................... 3
2.7 "Company"...................................................... 3
2.8 "Committee".................................................... 3
2.9 "Director"..................................................... 3
2.10 "Disability"................................................... 3
2.11 "Effective Date"............................................... 3
2.12 "Employee"..................................................... 4
2.13 "Exchange Act"................................................. 4
2.14 "Fair Market Value"............................................ 4
2.15 "Nonemployee Director"......................................... 4
2.16 "Nonqualified Stock Option" or "NQSO".......................... 4
2.17 "Option"....................................................... 4
2.18 "Participant".................................................. 4
2.19 "Period of Restriction"........................................ 4
2.20 "Restricted Stock"............................................. 4
2.21 "Restricted Stock Unit"........................................ 5
2.22 "Shares"....................................................... 5
ARTICLE 3. ADMINISTRATION............................................ 5
3.1 Committee...................................................... 5
3.2 Administration by the Committee................................ 5
3.3 Decisions Binding.............................................. 5
ARTICLE 4. SHARES AND RESTRICTED STOCK UNITS SUBJECT TO THE PLAN..... 5
4.1 Number of Shares and Restricted Stock Units.................... 5
4.2 Lapsed Awards.................................................. 6
4.3 Adjustments in Authorized Shares and Restricted Stock Units.... 6
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TABLE OF CONTENTS
(continued)
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ARTICLE 5. ELIGIBILITY AND PARTICIPATION............................. 7
5.1 Eligibility.................................................... 7
5.2 Actual Participation........................................... 7
ARTICLE 6. RESTRICTED STOCK.......................................... 7
6.1 Initial Grant of Restricted Stock.............................. 7
6.2 Future Grants of Restricted Stock.............................. 7
6.3 Restricted Stock Award Agreement............................... 8
6.4 Other Restrictions............................................. 8
6.5 Certificate Legend............................................. 8
6.6 Vesting........................................................ 8
6.7 Voting Rights.................................................. 9
6.8 Dividends and Other Distributions.............................. 9
ARTICLE 7. NONQUALIFIED STOCK OPTIONS................................ 10
7.1 Potential Grants of Options.................................... 10
7.2 Option Award Agreement......................................... 10
7.3 Option Price................................................... 10
7.4 Duration of Options............................................ 10
7.5 Vesting of Shares Subject to Option............................ 11
7.6 Payment........................................................ 11
7.7 Restrictions on Share Transferability.......................... 12
ARTICLE 8. RESTRICTED STOCK UNITS.................................... 12
8.1 Initial Grant of Restricted Stock Units........................ 12
8.2 Special Grant of Restricted Stock Units........................ 12
8.3 Future Grants of Restricted Stock Units........................ 13
8.4 Restricted Stock Unit Account.................................. 13
8.5 Dividend on Restricted Stock Units............................. 14
8.6 Maturity of Restricted Stock Units............................. 14
8.7 Payment........................................................ 15
8.8 Voting and Stock Ownership Rights.............................. 15
ARTICLE 9. CHANGE IN CONTROL......................................... 15
ARTICLE 10. AMENDMENT, MODIFICATION AND TERMINATION................... 16
10.1 Amendment, Modification and Termination........................ 16
10.2 Awards Previously Granted...................................... 16
ARTICLE 11. GENERAL PROVISIONS........................................ 16
11.1 Additional Awards.............................................. 16
11.2 Gender and Number.............................................. 17
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TABLE OF CONTENTS
(continued)
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11.3 Severability................................................... 17
11.4 Indemnification................................................ 17
11.5 Beneficiary Designation........................................ 18
11.6 Termination of Directorship.................................... 18
11.7 Nontransferability of Options.................................. 19
11.8 No Right of Nomination......................................... 21
11.9 Shares Available............................................... 21
11.10 Additional Compensation........................................ 21
11.11 Successors..................................................... 21
11.12 Requirements of Law............................................ 21
11.13 Governing Law.................................................. 21
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NONEMPLOYEE DIRECTOR
STOCK INCENTIVE PLAN
NISOURCE INC.
(AS AMENDED AND RESTATED EFFECTIVE JULY 1, 2002)
WHEREAS, NiSource Inc. (the "Company") adopted the NiSource Inc.
Nonemployee Director Stock Incentive Plan (formerly the NIPSCO Industries, Inc.
Nonemployee Director Stock Incentive Plan), effective February 1, 1992, as last
amended effective December 16, 1997 and February 1, 1998 ("Plan");
WHEREAS, the Company adopted the NiSource Inc. Nonemployee Director
Restricted Stock Unit Plan (formerly the NIPSCO Industries, Inc. Nonemployee
Director Restricted Stock Unit Plan) effective January 1, 1999 ("Stock Unit
Plan") and
WHEREAS, pursuant to Section 10.1 of the Plan and Section 14 of the Stock
Unit Plan, the Company wishes to amend the Plan and the Stock Unit Plan in
certain respects, and merge the Stock Unit Plan into the Plan and restate the
merged Plan in a single document;
NOW THEREFORE, the Plan is hereby amended and restated, effective July 1,
2002, as follows:
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1 Establishment of the Plan. NiSource Inc. established an incentive
compensation plan known as the "NiSource Inc. Nonemployee Director Stock
Incentive Plan" (the "Plan"), as set forth in this document. The Plan permits
the grant of Restricted Stock, Nonqualified Stock Options and Restricted Stock
Units to Nonemployee Directors, subject to the terms and provisions set forth
herein.
Upon approval by the Board of Directors of the Company, subject to
ratification within twelve (12) months by an affirmative vote of a majority of
Shares present and entitled to
vote at the May 20, 2003 annual shareholders meeting at which a quorum is
present, the Plan, as amended and restated herein, shall become effective as of
July 1, 2002, and shall remain in effect as provided in Section 1.3 herein. All
grants of Awards made under the Plan from and after July 1, 2002 and prior to
the date of such approval shall be conditioned upon such shareholder approval
and shall be null and void if such approval is not obtained by May 20, 2003.
Effective July 1, 2002, the Stock Unit Plan shall be merged into and
become a part of the Plan as amended and restated herein.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the
achievement of long-term objectives of the Company by linking the personal
interests of Nonemployee Directors to those of Company shareholders, enhancing
the interest of Nonemployee Directors in the growth and success of the Company,
and attracting and retaining Nonemployee Directors of outstanding competence.
1.3 Duration of the Plan. The Plan, as amended and restated herein,
effective July 1, 2002 and shall remain in effect, subject to the right of the
Committee to terminate the Plan at any time pursuant to Article 10 herein, until
all Shares subject to it shall have been purchased or acquired according to the
Plan's provisions. However, in no event may an Award be granted under the Plan
on or after June 30, 2012.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial letter
of the word is capitalized:
2.1 "Award" means, individually or collectively, a grant of Restricted
Stock, Nonqualified Stock Options or Restricted Stock Units under the Plan.
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2.2 "Award Agreement" means an agreement entered into by and between the
Company and a Nonemployee Director, setting forth the terms and provisions
applicable to an Award granted under the Plan.
2.3 "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
2.4 "Board" or "Board of Directors" means the Board of Directors of the
Company, and includes any committee of the Board of Directors designated by the
Board to administer part or all of the Plan.
2.5 "Change in Control" of the Company shall be deemed to have occurred
if any one of the occurrences of "Change in Control" set forth in the Change in
Control and Termination Agreements between the Company and certain executive
officers thereof shall have been satisfied.
2.6 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
2.7 "Company" means NiSource Inc., a Delaware corporation, or any
successor thereto as provided in Section 11.11 herein.
2.8 "Committee" means the Nominating and Compensation Committee of the
Board.
2.9 "Director" means any individual who is a member of the Board of
Directors of the Company.
2.10 "Disability" means any physical or mental condition of a permanent
nature which, in the sole judgment of the Committee, based upon the advice of a
competent medical professional selected by the Committee, prevents a Director
from performing his or her duties as a member of the Board.
2.11 "Effective Date" means February 1, 1992.
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2.12 "Employee" means any full-time, nonunion, salaried employee of the
Company. For purposes of the Plan, an individual whose only employment
relationship with the Company is as a Director shall not be deemed to be an
Employee.
2.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
2.14 "Fair Market Value" means the average of the highest and lowest
quoted selling prices for Shares on the relevant date, or (if there were no
sales on such date) the weighted average of the mean between the highest and
lowest quoted selling prices on the nearest day before the nearest day after the
relevant date, as reported in The Wall Street Journal or a similar publication
selected by the Committee.
2.15 "Nonemployee Director" means any individual who is a member of the
Board of Directors of the Company, but who is not otherwise an Employee of the
Company.
2.16 "Nonqualified Stock Option" or "NQSO" means an option to purchase
Shares, granted under Article 7 herein.
2.17 "Option" means a Nonqualified Stock Option granted under the Plan.
2.18 "Participant" means a Nonemployee Director of the Company who has
outstanding a viable Award granted under the Plan.
2.19 "Period of Restriction" means the period during which the transfer
of Shares of Restricted Stock is limited in some way, and the Shares are subject
to a substantial risk of forfeiture, as provided in Article 6 herein.
2.20 "Restricted Stock" means an Award granted to a Nonemployee Director
pursuant to Article 6 herein.
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2.21 "Restricted Stock Unit" means an Award granted to a Nonemployee
Director pursuant to Article 8 herein.
2.22 "Shares" means the common shares of NiSource Inc., without par value.
ARTICLE 3. ADMINISTRATION
3.1 Committee. The Plan shall be administered by the Committee, subject
to the restrictions set forth in the Plan.
3.2 Administration by the Committee. The Committee shall have the full
power, discretion and authority to interpret and administer the Plan in a manner
which is consistent with the Plan's provisions. However, except as otherwise set
forth in Section 11.1, in no event shall the Committee have the power to
determine Plan eligibility, or to determine the number, the value, the vesting
period, or the timing, of Awards to be made under the Plan (all such
determinations are automatic pursuant to the provisions of the Plan).
Notwithstanding the preceding sentence, the Committee shall have the authority
to designate whether an upcoming grant of Awards shall consist of Restricted
Stock, Nonqualified Stock Options or Restricted Stock Units.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan, and all related orders or
resolutions of the Committee, shall be final, conclusive and binding on all
persons, including the Company, its stockholders, employees, Participants, and
their estates and beneficiaries.
ARTICLE 4. SHARES AND RESTRICTED STOCK UNITS SUBJECT TO THE PLAN
4.1 Number of Shares and Restricted Stock Units. Subject to adjustment as
provided in Section 4.3 herein, the total number of Shares available for grant
as Awards under the Plan
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may not exceed an aggregate of 500,000. The total number of Restricted Stock
Units that may be awarded under the Plan may not exceed an aggregate of 100,000.
4.2 Lapsed Awards. If any Share of Restricted Stock, Share under an
Option, or Restricted Stock Unit granted under the Plan terminates, expires or
lapses for any reason, any such Shares of Restricted Stock, any Shares subject
to purchase pursuant to such Option and any such Restricted Stock Unit again
shall be available for grant under the Plan. Awards shall be subject to such
terms and conditions, in addition to the terms and conditions set forth in the
Plan, as the Committee shall determine.
4.3 Adjustments in Authorized Shares and Restricted Stock Units.
(a) Appropriate adjustments in the aggregate number of Shares and
Restricted Stock Units issuable pursuant to the Plan, the number of Shares and
Restricted Stock Units subject to each outstanding Award granted under the Plan
and the option price with respect to Options, shall be made to give effect to
any increase or decrease in the number of issued Shares resulting from a
subdivision or consolidation of shares, whether through recapitalization, stock
split, reverse stock split, spin-off, spinout or other distribution of assets to
stockholders, stock distributions or combinations of shares, payment of stock
dividends, other increase or decrease in the number of such Shares outstanding
effected without receipt of consideration by the Company, or any other
occurrence for which the Committee determines an adjustment is appropriate.
(b) In the event of any merger, consolidation or reorganization of
the Company with any other corporation or corporations, or an acquisition by the
Company of the stock or assets of any other corporation or corporations, there
shall be substituted on an equitable basis, as determined by the Committee in
its sole discretion, for each Share then subject to the Plan, and for each Share
then subject to an Award granted under the Plan, the number and kind of shares
of stock, other securities, cash or other property to which the holders of
Shares of the Company are entitled pursuant to such transaction.
(c) Without limiting the generality of the foregoing provisions of
this section, any such adjustment shall be deemed to have prevented any dilution
or enlargement of a Participant's rights, if such Participant receives in any
such adjustment, rights that are substantially similar (after taking into
account the fact that the Participant has not paid the applicable Option price)
to the rights the Participant would have received had he exercised his
outstanding Award and become a shareholder of the Company immediately prior to
the event giving rise to such adjustment. Adjustments under this paragraph shall
be made by the Committee, whose decision as to the amount and timing of any such
adjustment shall be conclusive and binding on all persons.
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ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. Persons eligible to participate in the Plan are limited
to Nonemployee Directors who are serving on the Board on the date of each grant
under the Plan.
5.2 Actual Participation. All eligible Nonemployee Directors shall
receive grants of Restricted Stock, Options and Restricted Stock Units pursuant
to the terms and provisions set forth in Articles 6, 7 and 8 herein.
ARTICLE 6. RESTRICTED STOCK
6.1 Initial Grant of Restricted Stock. Each person who was a Nonemployee
Director on the Effective Date was then granted two hundred fifty (250) Shares
of Restricted Stock for each year of service as a Nonemployee Director of the
Company or its predecessor (the number of years of service was determined as of
the date of the first annual meeting of shareholders of the Company following
the Effective Date).
6.2 Future Grants of Restricted Stock.
(a) Upon each election, reelection or appointment, as applicable,
of a Nonemployee Director to serve on the Board, on and after July 1, 2002, such
Nonemployee Director shall be granted twenty-six hundred (2,600) Shares of
Restricted Stock, subject to the terms of the Plan. Each such grant shall be
made as of the first day of the Board term of the newly-elected, reelected or
appointed, as applicable, Nonemployee Director, which begins immediately
following such election, reelection or appointment, as applicable.
(b) In the event that the Committee properly designates (pursuant
to Section 3.2 herein) that a scheduled Award grant will consist of Options
rather than Restricted Stock, then such grant shall be governed by the terms and
provisions of Article 7 or 8 herein, as applicable, which shall in such event
completely supersede and replace the terms and provisions of this Section 6.2.
(c) Notwithstanding the preceding provisions of this Section, each
Nonemployee Director who is a member of the Board on April 29, 2002, and who has
been nominated for reelection to the Board at the annual meeting of shareholders
of the Company to be held on May 21, 2002, shall be granted 2,600 Shares of
Restricted Stock on April 29, 2002. In the event that any such Nonemployee
Director is not reelected to serve on the Board at the Annual Meeting of
Shareholders on May 21, 2002, the grant of Shares of Restricted Stock to him or
her pursuant to the preceding sentence shall be null and void and of no effect.
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6.3 Restricted Stock Award Agreement. Each Restricted Stock grant under
the Plan shall be evidenced by a Restricted Stock Award Agreement that shall
specify the Period(s) of Restriction, the number of Restricted Stock Shares
granted and such other provisions as the Committee shall determine consistent
with the Plan.
6.4 Other Restrictions. The Committee shall impose such other
restrictions on any Shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable, including restrictions imposed under Section 7.7 hereof.
Any restriction imposed on Shares of Restricted Stock shall be included in a
legend appearing on the certificates representing Shares of Restricted Stock.
6.5 Certificate Legend. In addition to any legends placed on certificates
pursuant to Section 6.4 herein, each certificate representing Shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:
"The sale or other transfer of the Shares of stock represented by this
certificate, whether voluntary, involuntary or by operation of law, is
subject to certain restrictions on transfer as set forth in the
NiSource Inc. Nonemployee Director Stock Incentive Plan, and in a
Restricted Stock Award Agreement. A copy of the Plan and such
Restricted Stock Award Agreement may be obtained from the Secretary of
NiSource Inc."
6.6 Vesting. Except as otherwise provided in the Plan, all Shares of
Restricted Stock granted under the Plan shall vest and become freely
transferable by the Participant according to the following schedule:
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Annual Cumulative
Anniversary Percentage of Percentage of
of Grant Date Shares Which Vest Shares Which are Vested
- ------------- ----------------- -----------------------
1 20% 20%
2 20% 40%
3 20% 60%
4 20% 80%
5 20% 100%
Regardless of the vesting schedule set forth above, all Shares of
Restricted Stock held by a Participant shall immediately become one hundred
percent (100%) vested upon the first to occur of the following: (a) The
completion of the vesting schedule set forth above;
(a) The completion of the vesting schedule set forth above;
(b) The death of the Participant;
(c) The Disability of the Participant;
(d) The retirement of the Participant from service on the Board
prior to death or Disability and after attaining the age of seventy (70) years;
or
(e) The effective date of a Change in Control of the Company.
However, in no event may any Shares of Restricted Stock
granted under the Plan become vested in a Participant prior to six (6) months
following the date of its grant. Following vesting, each Participant shall be
entitled to have the legend required by Section 6.4 and/or Section 6.5 removed
from his or her Share certificate.
6.7 Voting Rights. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to such Shares.
6.8 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
such Shares while they are so held. If any such
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dividends or distributions are paid in Shares, the Shares shall be subject to
the same restrictions on transferability and forfeitability as the Shares of
Restricted Stock with respect to which they were paid.
ARTICLE 7. NONQUALIFIED STOCK OPTIONS
7.1 Potential Grants of Options. In the event that the Committee properly
designates (pursuant to Section 3.2 herein) that a scheduled Award will consist
of Options rather than Restricted Stock, then each eligible Nonemployee Director
shall be granted an Option to purchase seven thousand eight hundred (7,800)
Shares, on and after July 1, 2002, subject to the terms and provisions of the
Plan. A Nonemployee Director shall be deemed to be eligible for such an Option
grant if the Director is elected, reelected or appointed, as applicable, to
serve on the Board pursuant to the shareholder vote for which such Award grant
is applicable. Each such grant shall be made as of the first day of the Board
term of the newly-elected, reelected or appointed, as applicable, Nonemployee
Director, which begins immediately following such election, reelection or
appointment, as applicable).
7.2 Option Award Agreement. Each Option grant shall be evidenced by an
Option Award Agreement that shall specify the Option Price, the duration of the
Option, the number of Shares available for purchase under the Option, and such
other provisions as the Committee shall determine.
7.3 Option Price. The purchase price per Share available for purchase
under an Option shall equal the Fair Market Value of a Share on the date the
Option is granted.
7.4 Duration of Options. Each Option shall expire on the tenth (10th)
anniversary date of its grant.
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7.5 Vesting of Shares Subject to Option. Subject to Section 11.6,
Participants shall be entitled to exercise Options at any time and from time to
time, but no sooner than the time period beginning six (6) months after the
grant of the Option and ending ten (10) years after the grant of the Option, and
according to the following vesting schedule:
Annual Cumulative
Anniversary Percentage of Percentage of
of Grant Date Options Which Vest Options Which are Vested
- ------------- ------------------ ------------------------
1 20% 20%
2 20% 40%
3 20% 60%
4 20% 80%
5 20% 100%
Regardless of the vesting schedule set forth above, all Options held by a
Participant shall immediately become one hundred percent (100%) vested upon the
first to occur of the following:
(a) The completion of the vesting schedule set forth above;
(b) The death of the Participant;
(c) The Disability of the Participant;
(d) The retirement of the Participant from service on the Board
prior to death or Disability and after attaining the age of seventy (70) years;
or
(e) The effective date of a Change in Control of the Company.
7.6 Payment. Options shall be exercised by the delivery of a written
notice of exercise to the Secretary of the Company, setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by full
payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the
Company in full either: (i) in cash or its equivalent, or (ii) by tendering
previously acquired Shares having a Fair Market Value at the time of exercise
equal to the total Option Price of the Shares for which
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the Option is being exercised (provided that the Shares tendered upon Option
exercise have been held by the Participant for at least six (6) months prior to
their tender to satisfy the Option Price), or (iii) by a combination of (i) and
(ii). The proceeds from such a payment shall be added to the general funds of
the Company and shall be used for general corporate purposes.
As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased pursuant to the exercise of the Option.
7.7 Restrictions on Share Transferability. The Committee shall impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities laws, under the requirements of
any stock exchange or market upon which such Shares are then listed and/or
traded, and under any blue sky or state securities laws applicable to such
Shares.
ARTICLE 8. RESTRICTED STOCK UNITS
8.1 Initial Grant of Restricted Stock Units. Each person who was a
Nonemployee Director on April 14, 1999 was then granted five hundred (500)
Restricted Stock Units.
8.2 Special Grant of Restricted Stock Units. Each Nonemployee Director
participating in the NiSource Inc. Nonemployee Director Retirement Plan (the
"Retirement Plan") on December 31, 2001 shall make an irrevocable election, by
written instrument delivered to the Committee between May 1, 2002 and June 30,
2002, to: (i) continue his or her participation in the Retirement Plan on and
after July 1, 2002 or (ii) terminate his or her participation in the Retirement
Plan as of June 30, 2002 and have the present value of his or her retirement
benefit under Section 5 of the Retirement Plan, determined as of June 30, 2002,
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converted to Restricted Stock Units of comparable value and granted to him or
her under the Plan on July 1, 2002. Any Restricted Stock Units granted to a
Nonemployee Director pursuant to this Section 8.2 who has fewer than five (5)
Years of Service shall fully vest in such Restricted Stock Units upon the
completion of his or her fifth Year of Service. "Year of Service" means the
12-month period commencing with the first day of the calendar month in which
each annual meeting of the shareholders of the Company takes place, and
throughout which a Nonemployee Director served on the Board as a Nonemployee
Director.
8.3 Future Grants of Restricted Stock Units. Upon each election,
reelection or appointment, as applicable, of a Nonemployee Director to serve on
the Board, on and after January 1, 2002, such Nonemployee Director shall be
granted six hundred (600) Restricted Stock Units, subject to the terms of the
Plan. Each such grant shall be made as of the first day of the Board term of the
newly-elected, reelected or appointed, as applicable, Nonemployee Director,
which begins immediately following such election, reelection or appointment, as
applicable.
8.4 Restricted Stock Unit Account. Restricted Stock Units granted to a
Nonemployee Director under the Plan shall be credited to a Restricted Stock Unit
Account (the "Account") established and maintained for such Nonemployee
Director. The Account of a Nonemployee Director shall be the record of
Restricted Stock Units granted to him or her under the Plan. The Account is
solely for accounting purposes and shall not require a segregation of any assets
of the Company. Each Restricted Stock Unit shall be valued by the Committee, in
the manner provided in Section 8.7, as of the date of grant thereof. Each grant
of Restricted Stock Units under the Plan to a Nonemployee Director and the value
of such Restricted Stock Units as of the date of grant shall be communicated by
the Committee in writing to the Nonemployee Director within thirty (30) days
after the date of grant.
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8.5 Dividend on Restricted Stock Units. Additional Restricted Stock Units
shall be credited to each Participant's Account with respect to Restricted Stock
Units included in such Account from time to time, to reflect dividends paid to
stockholders of the Company with respect to Shares. These additional Restricted
Stock Units shall be granted at such time or times and shall be subject to such
terms and conditions, in addition to the terms and conditions set forth in the
Plan, as the Committee shall determine.
8.6 Maturity of Restricted Stock Units. Except as set forth in Section
8.2, Restricted Stock Units granted to a Participant shall vest according to the
following schedule:
Annual Cumulative
Anniversary Percentage of Restricted Percentage of Restricted
of Grant Date Stock Units Which Vest Stock Units Which are Vested
- ------------- ------------------------ ----------------------------
1 20% 20%
2 20% 40%
3 20% 60%
4 20% 80%
5 20% 100%
Regardless of the vesting schedule set forth above, all Restricted Stock Units
credited to a Participant's Account shall immediately become one hundred percent
(100%) vested upon the first to occur of the following:
(a) The completion of the vesting schedule set forth above (or in
Section 8.2, if applicable);
(b) The death of the Participant;
(c) The Disability of the Participant;
(d) The retirement of the Participant from service on the Board
prior to death or Disability and after attaining the age of seventy (70) years;
or
(e) The effective date of a Change in Control of the Company.
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8.7 Payment.
(a) Except as provided in paragraph (b) next below, upon a
Participant's termination of service on the Board for any reason other than for
Cause (as defined in Section 11.6), the Participant shall be entitled to receive
from the Company, with respect to each then vested Restricted Stock Unit in the
Participant's Account, a number of Shares with an aggregate Fair Market Value on
the date of payment equal to the aggregate Fair Market Value of such vested
Restricted Stock Units. Payment to a Participant of the amount set forth in the
paragraph next above for Restricted Stock Units shall be made in Shares within
sixty (60) days after the date of termination of the Participant's service on
the Board. Except as provided in paragraph (b) below, a Participant will not be
entitled to receive any earnings on the value of his or her Restricted Stock
Units with respect to the period between his termination of service on the Board
and the receipt of payment under the Plan.
(b) Restricted Stock Units in the Participant's Account granted
pursuant to Section 8.2, and additional Restricted Stock Units with respect
thereto granted pursuant to Section 8.5, shall be paid to the Participants in
ten (10) equal annual installments commencing within sixty (60) days after the
date of the Participant's termination of service on the Board, and on each
anniversary of the first payment. Each such payment shall be made in the form of
a number of Shares with an aggregate Fair Market Value on the date of payment
equal to 10% of the aggregate Fair Market Value of such Restricted Stock Units
in the Participant's Account on the date of payment. Additional Restricted Stock
Units shall be granted pursuant to Section 8.5 with respect to any such
Restricted Stock Units remaining in a Participant's Account from and after the
date on which his or her service on the Board terminates. In the event of the
Participant's death, a single payment of all such Units remaining in his or her
Account shall be made pursuant to the applicable provisions of Section 11.7
within sixty (60) days after the date of his or her death.
8.8 Voting and Stock Ownership Rights. Except as set forth in Section 8.5
above, no Participant shall be entitled to any voting rights or stock ownership
rights with respect to Shares attributable to Restricted Stock Units granted
under the Plan.
ARTICLE 9. CHANGE IN CONTROL
In the event of a Change in Control of the Company, all Awards granted
under the Plan that are still outstanding and not yet vested, shall become
immediately one hundred percent (100%) vested in each Participant, as of the
effective date of the Change in Control, and shall remain as such for the
remaining life of the Award, as such life is provided herein, and within the
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provisions of the related Award Agreements. All Options that are outstanding as
of the effective date of the Change in Control shall remain exercisable for the
remaining lives of the Options.
ARTICLE 10. AMENDMENT, MODIFICATION AND TERMINATION
10.1 Amendment, Modification and Termination. Subject to the terms set
forth in this Section 10.1, the Committee may terminate, amend or modify the
Plan at any time and from time to time; provided, however, that the provisions
set forth in the Plan regarding the amount of securities to be awarded to
Nonemployee Directors, the price of securities to be awarded to Nonemployee
Directors, and the timing of awards to Nonemployee Directors, may not be amended
more than once within any six (6) month period.
Amendment or termination of the Plan may occur without the approval
of the shareholders of the Company (except as may be required by law or by any
national securities exchange or system on which the Shares are then listed or
reported, or by a regulatory body having jurisdiction with respect hereto).
10.2 Awards Previously Granted. Unless required by law, no termination,
amendment or modification of the Plan shall in any manner adversely affect any
Award previously granted under the Plan without the written consent of the
Participant holding the Award.
ARTICLE 11. GENERAL PROVISIONS
11.1 Additional Awards. In addition to any Award received pursuant to
Section 6.2 or 8.1, each Nonemployee Director who first serves on the Board on
or after January 1, 2002, and each Nonemployee Director who served on the Board
on December 31, 2001 and who elected to discontinue participation in the
NiSource Inc. Nonemployee Director Retirement Plan on and after July 1, 2002,
shall receive a grant of Shares of Restricted Stock upon each election,
reelection or appointment, as applicable, to the Board on or after July 1, 2002.
At the discretion
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of the Committee, such grant may be in any combination of Shares of Restricted
Stock, and Restricted Stock Units, as determined by the Committee. Such Award
shall have an aggregate value, as determined by the Committee, based on
information provided by the management of the Company, that ensures that the
Award, together with other compensation paid to the Nonemployee Director for
service on the Board, delivers a compensation package to the Nonemployee
Director competitive with the nonemployee director compensation packages offered
by companies in the same or similar industries as that of the Company.
11.2 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular and the singular shall include the plural.
11.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
11.4 Indemnification. Each individual who is or shall have been a member
of the Committee shall be indemnified and held harmless by the Company against
and from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf.
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The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such individuals may be entitled under
the Company's Articles of Incorporation or By-laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
11.5 Beneficiary Designation. Each Participant under the Plan may, from
time to time, name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
in the event of his or her death (and/or who may exercise the Participant's
vested Options following his or her death). Each designation will revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during his or her lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate (and, subject to the terms and provisions of the
Plan, any unexercised vested Options may be exercised by the administrator or
executor of the Participant's estate).
11.6 Termination of Directorship. In the event a Participant ceases to be
a Director for any reason other than death, Disability, retirement from service
on the Board after attaining the age of seventy (70) years, or a Change in
Control of the Corporation, all Shares of Restricted Stock, all Options and all
Restricted Stock Units that have not vested on or prior to the date of the
occurrence of such event will terminate and be forfeited and neither the
Participant nor his heirs, personal representatives, successors or assigns shall
have any future rights with respect to any such Shares of Restricted Stock,
Options and Restricted Stock Units. All Options that are vested as of such date
shall remain exercisable for six (6) months following the date the
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Director's service on the Board terminates, or until their expiration date,
whichever period is shorter.
Notwithstanding any other provision of the Plan, in the event a
Participant is discharged from service on the Board for Cause, all rights to any
vested or unvested Shares of Restricted Stock and Options granted on and after
July 1, 2002, and all Restricted Stock Units, will be discontinued and
forfeited, and the Company will have no further obligation hereunder to such
Participant or any other person. For purposes of the Plan, "Cause" shall mean:
(a) the Participant's conviction of any criminal violation
involving dishonesty, fraud or breach of trust;
(b) the Participant's willful engagement in any misconduct in the
performance of his duty that materially injures the Corporation;
(c) the Participant's performance of any act which, if known to the
customers or stockholders of the Corporation, would materially and adversely
impact on the business of the Corporation; or
(d) the Participant's willful and substantial nonperformance of
assigned duties.
The Committee shall have sole discretion with respect to the
application of the provisions of subsections (a)-(d) next above, and such
exercise of discretion shall be conclusive and binding upon the Participant and
all other persons.
11.7 Nontransferability of Options. No Share of Restricted Stock (until
the end of the applicable Period of Restriction specified in the Restricted
Stock Award Agreement), Option or Restricted Stock Unit granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution. In
the event of a Participant's death, payment of any amount due under the Plan
shall be made to the duly appointed and qualified executor or other personal
representative of the Participant's estate to be distributed in accordance with
the Participant's will or applicable
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intestacy law; or in the event that there shall be no such representative duly
appointed and qualified within six (6) months after the date of death of such
deceased Participant, then to such persons as, at the date of his death, would
be entitled to share in the distribution of such deceased Participant's personal
estate under the provisions of the applicable statute then in force governing
the descent of intestate property, in the proportions specified in such statute.
All Options granted to a Participant under the Plan shall be exercisable, during
his lifetime, only by such Participant.
Notwithstanding the preceding provisions of this Section, a
Participant, at any time prior to his death, may assign all or any portion of a
Share of an Award granted to him under the Plan to (i) his spouse or lineal
descendant, (ii) the trustee of a trust for the primary benefit of his spouse or
lineal descendant or (iii) a tax-exempt organization as described in Section
501(c)(3) of the Code. In such event, the spouse, lineal descendant, trustee, or
tax-exempt organization will be entitled to all of the rights of the Participant
with respect to the assigned portion of such Award, and such portion of the
Award will continue to be subject to all of the terms, conditions and
restrictions applicable to the Award as set forth herein, and in the related
Award Agreement, immediately prior to the effective date of the assignment. Any
such assignment will be permitted only if (A) the Participant does not receive
any consideration therefor, and (B) the assignment is expressly approved by the
Committee or its delegate. Any such assignment shall be evidenced by an
appropriate written document executed by the Participant, and a copy thereof
shall be delivered to the Committee or its delegate on or prior to the effective
date of the assignment.
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11.8 No Right of Nomination. Nothing in the Plan shall be deemed to create
any obligation on the part of the Board to nominate any Director for reelection
by the Company's shareholders.
11.9 Shares Available. The Shares made available pursuant to Awards under
the Plan may be either authorized but unissued Shares, or Shares which have been
or may be reacquired by the Company, as determined from time to time by the
Committee.
11.10 Additional Compensation. Shares granted under the Plan shall be in
addition to any annual retainer, attendance fees or other compensation payable
to each Participant as a result of his or her service on the Board.
11.11 Successors. All obligations of the Company under the Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
11.12 Requirements of Law. The granting of Awards under the Plan shall be
subject to all applicable laws, rules and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.
11.13 Governing Law. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of Indiana.
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IN WITNESS WHEREOF, the Company has caused the amended and restated Plan to
July 7
be signed on this ____________________ day of ____________________________ 2002.
NISOURCE INC.
Gary L. Neale
By: ______________________________________________________
Chairman, President and CEO
Its: ________________________________________________
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