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EXHIBIT 10.08
BAY STATE GAS COMPANY
KEY EMPLOYEE LONG-TERM INCENTIVE PLAN
1. Purposes of Plan
The purposes of the Bay State Gas Company Key Employee
Long-Term Incentive Plan (the "Plan") are to provide long-term
incentives for and to increase the opportunity for ownership in
Bay State Gas Company (the "Company") by those employees who are
directly responsible for the management, growth and success of
the Company's business.
2. Administration of Plan
The plan shall be administered by the Compensation Committee
(the "Committee") appointed by the Board of Directors of the
Company, which shall consist of two or more members of the Board
who qualify as disinterested persons, within the meaning of Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and as outside directors, within
the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). No member of the Committee shall
be eligible to receive an award under the Plan.
The Committee shall act by a majority of its members, without
the necessity of a meeting. The Committee shall have full
power, discretion and authority to interpret and administer the
Plan, and any interpretation or other determination made, and
any action taken, by the Committee shall be conclusive and
binding on all persons having an interest under the Plan, except
as otherwise determined by the Board of Directors.
3. Participation
Each executive or management employee of the Company or an
affiliated company of Grade 35 or above and any other employee
designated by the Board of Directors of the Company who holds a
position which, by virtue of its scope, may have a material
effect on the performance of the Company or who is a significant
contributor to a specific project which is anticipated to have a
material effect on the Company's performance shall be eligible
to participate in the Plan.
4. Performance Shares
The maximum number of performance shares ("Performance Shares")
which may be awarded under the Plan is 500,000. Each
Performance Share shall, upon vesting in accordance with the
provisions of the Plan, be exchangeable for one share of the
Company's common stock, par value $3.33 1/3 per share ("Common
Stock") and a cash payment equal to the dividends paid on a
share of Common Stock during the performance period, as defined
below. The award of Performance Shares shall not entitle a
participant to any rights as a shareholder of the Company. Any
Performance Shares awarded under the Plan which are forfeited or
canceled may again be awarded under the Plan.
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5. Grant of Awards
The Committee may grant awards of Performance Shares to
eligible employees, who shall then become participants in the
Plan, as of October 1 of each year from 1994 through 2003,
inclusive. The Committee shall recommend and the Board of
Directors approve the eligible employees to whom awards are to
be granted and the amount of the award for each employee, except
that Performance Shares awarded to any one employee shall not
exceed 100,000 in the aggregate or the period the Plan is in
effect.
6. Vesting
A participant shall become entitled to payment of all or a
portion of the Performance Shares awarded to him or her in any
year at the end of the three-consecutive year period beginning
on the date the award is granted (a "Performance Period"), as
determined in accordance with Schedule A, depending on the
Compay's total return to shareholders for the Performance
Period.
Except as otherwise provided in Section 7, if a participant
terminates employment with the Company and its affiliates,
voluntarily or involuntarily, he or she shall forfeit all
Performance Shares awarded for the Performance Period in which
the termination of employment occurs.
7. Retirement, Disability or Death of Participant
In the event a participant terminates employment by reason of
retirement, disability or death, the participant shall be
entitled to payment of a portion of the Performance Shares
awarded to him or her for the Performance Period in which the
termination occurs. Such portion shall be equal to the award
determined under Section 6, based on the Company's total return
to shareholders for the Performance Period to the date of the
participant's termination of employment, multiplied by a
fraction equal to the portion of the Performance Period for
which the employee was employed by the Company or an affiliate.
A participant may designate a beneficiary, or revoke a
beneficiary designation, under the Plan at any time. However,
no designation or revocation shall be effective prior to its
receipt by the Committee.
For purposes of the Plan, disability means the complete and
permanent inability of an employee to perform his or her duties
under the terms of his or her employment. The determination of
disability shall be made by the Committee, in its sole
discretion, on the basis of evidence, including medical
examination and reports, satisfactory to the Committee.
8. Change of Control
In the event of a change of control of the Company, as defined
in this Section 8, each Participant shall be entitled to payment
of 50 percent of the Performance Shares awarded to him or her
for the Performance Period in which the change of control
occurs. A change of control shall be considered to have
occurred if:
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(a) any person, entity or group of persons (other than the
Company or any wholly-owned subsidiary of the Company), within
the meaning of sections 13(d) or 14(d) of the Exchange Act,
becomes the beneficial owner, within the meaning of Rule 13d-3
promulgated under such Act, directly or indirectly, of 25
percent of more of the Company's then outstanding shares of
commone stock, par value $3.33 1/3 per share ("Common Stock");
(b) any person, entity or group of persons (other than the
Company or any wholly-owned subsidiary of the Company), after
purchasing Common Stock of the Company in a tender or exchange
offer, becomes the beneficial owner, directly or indirectly, of
25 percent or more of the Common Stock;
(c) the shareholders of the Company approve (i) a merger or
consolidation of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which the
shares of Common Stock would be converted into cash, securities
or other property, or (ii) any sale, lease, exchange or other
transfer of all or substantially all of the Company's assets; or
(d) there is a change in the majority of the members of the
Company's Board of Directors within a 25-month period, unless
such change has been approved by two-thirds of the Directors
then still in office who were in office at the beginning of the
25-month period.
9. Payment of Awards
Payment of Performance Shares shall be made by the issuance of
the Company of an equal number of shares of Common Stock.
Shares shall be issued to the participant, or, in the event of
the participant's death, his or her beneficiary. Such shares
shall be made available from authorized and unissued shares or
treasury shares.
The participant (or beneficiary) shall also receive payment in
cash of an amount equal to the dividends paid during the
Performance Period on an equal number of shares of Common Stock.
Payment of Performance Shares and cash shall be made as soon as
practicable after the event giving rise to the participant's
entitlement to payment.
10. Nontransferability of Awards
Neither Performance Shares nor any interest of a participant
under the Plan shall be sold, transferred, pledged, assigned,
disposed of or encumbered, voluntarily or by operation of law.
11. Compliance with Securities Laws
If at any time the Company determines that the listing,
registration or qualification of Performance Shares or shares of
Common Stock issuable pursuant to an award of Performance Shares
on any securities exchange or under any federal or state law, or
the approval of any governmental entity, is necessary to the
issue or transfer of such shares, such Performance
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shares or shares of Common Stock may not be accepted unless the
listing, registration, qualification or approval is obtained.
However, the Company shall not be required to apply for or to
obtain such listing, registration, qualification or approval.
12. Forfeiture and Cancellation of Shares
Performance Shares awarded to a participant to which he or she
does not become entitled shall be forfeited and cancelled. The
Committee may also cancel Performance Shares with the written
consent of the participant to whom the Shares were awarded. In
the event of any cancellation, all rights of the participant
with respect to the cancelled Performance Shares shall
terminate, and the Shares shall be available for subsequent
award under the Plan.
13. Adjustments
In the event of any recapitalization, reclassification, stock
dividend, stock split, change in par value, merger,
consolidation or similar event involving a change in the capital
structure of the Company, the Committee may make such
adjustments in Performance Shares or awards and shares of Common
Stock available for issuance under the Plan, or the terms,
conditions or restrictions on such Performance Shares or awards,
as the Committee considers equitable.
14. Withholding
A participant or beneficiary receiving an award shall pay to
the Company the amount of any taxes required to be withheld with
respect to Common Stock issued to him or her under the Plan.
The Company may deduct from awards any taxes required to be
withheld on the cash portion of such award.
15. Amendment and Termination
The Company at any time may amend or terminate the Plan by
action of the Board of Directors. No amendment shall, without
the approval of the shareholders of the Company, cause the Plan
no longer to comply with Rule 16b-3 under the Exchange Act or
any listing requirement or no longer to be described in Section
162(m) (4) (C) of the Code. The termination or amendment of the
Plan shall not adversely affect any right or obligation with
respect to any award previously granted to a participant.
16. No Employment or Other Rights
No employee shall have any claim or right to the grant of an
award under the Plan. Neither the Plan nor any action taken by
the Company or the Committee under the Plan shall be construed
as giving any employee any right to be retained in the employ of
the Company or any affiliated company.
17. Shareholder Approval
The Plan shall be subject to the approval of the shareholders
of the Company. In the event such approval is not obtained, all
awards under the Plan shall be null and void and the Plan shall
be of no force and effect.
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18. Effective Date and Duration of Plan
Subject to Section 17, the Plan shall become effective as of
July 28, 1994. The Plan shall remain in effect for a period of
ten years commencing on such date, except that any awards
outstanding at the end of such period shall remain subject to
the terms, conditions and restrictions of the document
evidencing the award and the Plan as in effect at the date of
grant of the award.
19. Governing Law
The Plan shall be governed by the laws of the Commonwealth of
Massachusetts.
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SCHEDULE A
Performance of Bay State Gas Company Percentage of Award to
Participant
Rank Percentile
Under 16 Under 50th 0%
16 50th 50%
8 75th 75%
1 99th 100%
The performance of the Company shall be determined in relation
to the Edward D.
Jones & Co. Gas Distribution Index. For ranks and percentiles
between those listed, the percentage of an award to which a
participant becomes entitled shall be determined on the basis of
straight-line interpolation between listed values.
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BAY STATE GAS COMPANY
KEY EMPLOYEE LONG-TERM INCENTIVE PLAN
FIRST AMENDMENT
WHEREAS, Bay State Gas Company (the "Company") adopted the Bay
State Gas Company Key Employee Long-Term Incentive Plan (the
"Plan") effective as of July 28, 1994;
WHEREAS, the Company reserved the right to amend the Plan in
Section 15 thereof; and
WHEREAS, the Company desires to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended as follows,
effective April 27, 1995:
1. The second sentence of Section 7 (beginning "Such portion
shall be") is hereby deleted in its entirety and a new sentence
substituted therefor to read as follows:
"Such portion shall be equal to the award determined under
Section 6, multiplied by a fraction equal to the portion of the
Performance Period for which the employee was employed by the
Company or an affiliate, except that, in the case of a
participant's disability or death, the Company's total return to
shareholders shall be determined as of the last day of the month
in which the participant's disability or death, as the case may
be, occurs."
2. The second sentence of the last paragraph of Section 7
(beginning "The determination of disability") is hereby deleted
in its entirety and a new sentence substituted therefor to read
as follows:
"The determination of disability, and of the date of
disability, shall be made by the Committee, in its sole
discretion, on the basis of evidence, including medical
examinations and reports, satisfactory to the Committee."
IN WITNESS WHEREOF, The Company has caused its duly authorized
officer to execute this instrument as of April 27, 1995.
BAY STATE GAS COMPANY
By: /s/ Paul G. Ford
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Title: Senior Vice President