NISOURCE INC. CONTINGENT STOCK AGREEMENT
NISOURCE INC.
1994 LONG-TERM INCENTIVE PLAN
This Agreement is made as of the ___ day of ___, between NiSource Inc. (the
“Company”) and ___ (the “Grantee”). In consideration of the agreements set forth
below, the Company and the Grantee agree as follows:
1. Grant. A contingent stock award (“Award”) of ___ shares (“Contingent
Shares”) of the Company’s common stock, par value of $.01 each (“Common Stock”), will be granted by
the Company to the Grantee, subject to the following contingencies, terms and conditions. This
Award is also subject to the provisions of the NiSource Inc. 1994 Long-Term Incentive Plan as
amended and restated effective January 1, 2005 and as amended effective January 22, 2009 (the
“Plan”), the terms of which are incorporated by reference herein, except for the dividend
reinvestment provision contained in Section 14 of the Plan. The number of Contingent Shares to be
granted pursuant to this Agreement shall be maintained as a bookkeeping entry on the books of the
Company until the Common Stock underlying the Contingent Shares is delivered. No funds shall be
set aside or earmarked for any Contingent Share. The right of the Grantee or his or her
beneficiary to receive a distribution hereunder shall be an unsecured claim against the general
assets of the Company, and neither the Grantee nor his or her beneficiary shall have any rights in
or against any amounts credited to the books of the Company or any other specific assets of the
Company.
2. Transfer Restrictions. Neither the rights with respect to the Award nor the
Contingent Shares shall be sold, assigned, pledged or otherwise transferred, voluntarily or
involuntarily, by the Grantee prior to the lapse of the “Performance Restrictions” and the
“Employment Restriction” (as set forth in Section 3 of this Agreement), and until permitted
pursuant to the terms of the Plan.
3. Lapse of Restrictions.
(a) Upon Grantee’s continued employment through January 31, 2012 (the “Employment
Restriction”) and the lapse of the Performance Restrictions, the Grantee shall receive a total of
___ shares of Common Stock. The Performance Restrictions shall lapse on the date the Officer
Nomination and Compensation Committee of the Board of Directors of the Company certifies the
following:
(i) With respect to one-third of the Award, the Performance Restrictions shall lapse
if cumulative “net operating earnings” per share of Common Stock for the two year
period beginning January 1, 2009, and ending December 31, 2010 (the “Performance
Period”), equal or exceed $2.13. To the extent the cumulative “net operating
earnings” per share of Common Stock for the Performance Period exceed $2.13, these
shares of Common Stock shall be increased as follows:
| Cumulative Net | Increase | |||
| Operating Earnings | In | |||
| Per Share | Award | |||
$2.15 |
10 | % | ||
$2.17 |
20 | % | ||
$2.19 |
30 | % | ||
$2.21 |
40 | % | ||
$2.23 |
50 | % | ||
(ii) With respect to one-third of the Award, the Performance Restrictions shall
lapse if cumulative “funds from operations” for the Performance Period equal or
exceed $1,950 million. To the extent cumulative “funds from operations” for the
Performance Period exceed $1,950 million, these shares of Common Stock under this
subsection shall be increased as follows:
| Cumulative Net | Increase | |||
| Funds from | In | |||
| Operations | Award | |||
$1,975 million |
10 | % | ||
$2,000 million |
20 | % | ||
$2,025 million |
30 | % | ||
$2,050 million |
40 | % | ||
$2,075 million |
50 | % | ||
(iii) With respect to one-third of the Award, the Performance Restrictions shall
lapse if the Company’s total debt as of December 31, 2010 does not exceed $7.45
billion. In calculating the Company’s cumulative debt, the Company’s board of
directors, in its discretion, may adjust the total debt calculation for significant
movement in natural gas prices or for any board of director’s decisions to “prefund”
debt or make capital investments beyond the financial plan approved at the time of
this Award.
An Award of all shares of Common Stock granted in accordance with this Section 3 will be
delivered to the Grantee no later than March 15, 2012.
(b) As soon as practicable after the end of the Performance Period, the Committee will certify
in writing whether the Performance Restrictions have been met for the Performance Period and
determine the number of shares of Common Stock, if any, that will be payable to Grantees that are
employed with the Company through the lapsing of the Employment Restriction in accordance with
Section 3(a) of this Agreement; provided, however, that if the Committee certifies that the
Performance Restrictions have been met, the Committee may, in its
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sole discretion, adjust the number of shares of Common Stock payable to the Grantee with respect to
the Award to reflect the effect of extraordinary events upon the Performance Restrictions. The
date of the Committee’s certification under this Section 3(b) shall hereinafter be referred to as
the “Certification Date”. The Company will notify the Grantee (or the executors or administrators
of the Grantee’s estate, if appropriate) of the Committee’s certification following the
Certification Date (such notice being the “Determination Notice”). The Determination Notice shall
specify (i) the Company’s cumulate net operating earnings per share, cumulative funds from
operations and total debt for the Performance Period and (ii) the number of shares of Common Stock
payable in accordance with the Committee’s certification.
(c) Except as otherwise provided herein, if the Grantee’s employment terminates for any reason
before January 31, 2012, the Award shall automatically terminate and the Grantee shall not be
entitled to receive any shares of Common Stock under this Agreement. If, however, before the lapse
of the Performance Restrictions, the Grantee terminates employment with the Company and its
Affiliates (1) due to retirement, with having attained age 55 and completed 10 years of Service,
(2) due to disability (as defined in Internal Revenue Code Section 409A and the regulations
promulgated thereunder (“Code Section 409A”), or (3) due to death with less than or equal to 12
months remaining in the Performance Period, the Grantee shall receive a pro rata distribution of
shares of Common Stock after the Certification Date, provided that the Committee actually certifies
that the Performance Restrictions for the Performance Period have been met. Such pro rata grant of
Common Stock shall be determined using a fraction, where the numerator shall be the number of full
or partial calendar months elapsed between the Date of Award and the date the Grantee terminates
employment, and the denominator shall be the number of full or partial calendar months between the
Date of Award and the Employment Restriction date. Additionally, if before the lapse of the
Performance Restrictions, the Grantee terminates employment with the Company and its Affiliates due
to death with more than 12 months remaining in the Performance Period, the Grantee shall receive,
as soon as practicable after the date of termination, a pro rata distribution of shares of Common
Stock equal to the number of shares of Common Stock that the Grantee otherwise would have received
had the Performance Restrictions been met for the Performance Period. The Grantee will not be
entitled to any additional shares provided in Section 3(a) of this Agreement for exceeding the
Performance Restrictions. Such pro rata grant of Common Stock shall be determined using a
fraction, where the numerator shall be the number of full or partial calendar months elapsed
between the Date of Award and the date the Grantee terminates employment, and the denominator shall
be the number of full or partial calendar months between the Date of Award and the Employment
Restriction date. For purposes of this Agreement, “Service” has the same meaning used in the
NiSource Inc. and Northern Indiana Public Service Company Pension Plan or such other pension plan
in which the Grantee is a Participant.
4. Change in Control. Notwithstanding the provisions of Section 3 above, in the event
of a Change in Control of the Company, as defined in the Plan, all Performance Restrictions and the
Employment Restriction applicable to the Contingent Shares shall lapse on the fifth business day
prior to the date such Change in Control is consummated. Grantees will not be entitled to an
increased number of shares (as provided in Section 3 of the Plan) upon such Change in Control even
if the target Performance Restrictions are exceeded.
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5. Forfeiture. All of the Contingent Shares with respect to which the Performance
Restrictions have not lapsed shall be forfeited to the Company upon the date the Board of Directors
of the Company determines that performance triggers described in Section 3 above have not been met.
All of the Contingent Shares not forfeited pursuant to the preceding sentence, and with respect to
which the Employment Restrictions have not lapsed, shall be forfeited to the Company upon the
Grantee’s termination of employment with the Company and its affiliates for any reason other than
those identified in Section 3 above.
6. Issuance of Certificates. Certificates of Common Stock relating to any of the
Contingent Shares shall be issued in Grantee’s name and delivered to the Grantee as soon as
practicable after the Certification Date. However, notwithstanding any provision to the contrary,
if, in the reasonable determination of the Company, a Grantee is a “specified employee” for
purposes of Code Section 409A, then, if necessary to avoid the imposition on the Grantee of excise
tax and interest under Code Section 409A, the Company shall not deliver the Common Stock otherwise
payable upon the Grantee’s termination and separation of service until a date that is as soon as
practicable after 6 months following the Grantee’s termination and separation of service from the
Company.
7. No Rights as Stockholder. Until Common Stock has been issued, the Grantee shall
not have any rights as a stockholder of the Company with respect to the Contingent Shares.
8. Section 162(m) Limitation on Contingent Shares. Notwithstanding Sections 3 and 4,
during any calendar year with respect to which the Grantee is a “covered employee” (as defined in
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code), or any successor
section, and regulations issued thereunder), the Employment Restrictions shall lapse only
with respect to such number of Contingent Shares whose aggregate fair market value (calculated with
reference to the closing price of Common Stock on the New York Stock Exchange Composite
Transactions on the date such Employment Restrictions would, but for this Section 8 lapse), when
added to the Grantee’s “applicable employee remuneration” (as defined in Section 162(m) of the Code
or any successor section regulations thereunder) for the applicable calendar year that does not
constitute “qualified performance-based compensation” (as defined in Section 162(m) of the Code or
any successor section and regulations thereunder), would not exceed the aggregate amount of
$999,999.00 for the applicable calendar year (“Limitation”).
To the extent the restrictions on any Contingent Shares do not lapse due to the application of
this Section 8, the restrictions on such Contingent Shares shall lapse on the first to occur of:
(a) the last business day of any subsequent calendar year or years to the extent that the
Limitation is not exceeded for such year or years;
(b) the date next following the Grantee’s termination of employment with the Company and its
affiliates for any reason other than for Cause, or
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(c) the first business day of the year next following the year with respect to which the
Grantee ceases to be a “covered employee” (as defined in Section 162(m) of the Code or any
successor section and regulations thereunder).
“Cause means the Grantee’s conviction for the commission of a felony, or the Grantee’s fraud
or dishonesty which has resulted in or is likely to result in material economic damage to the
Company or any affiliate.
9. Government Regulations. Notwithstanding anything contained herein to the contrary,
the Company’s obligation to issue or deliver certificates evidencing Common Stock 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.
10. Withholding Taxes. The Company shall have the right to require the Grantee to
remit to the Company, or to withhold from other amounts payable to the Grantee, as compensation or
otherwise, an amount sufficient to satisfy all federal, state and local withholding tax
requirements as provided in the Plan.
11. Governing Law. This Agreement shall be construed under the laws of the State of
Indiana.
12. Securities Law Compliance. The delivery of all or any of the Common Stock
relating to Contingent Shares shall only be effective at such time that the issuance of such Common
Stock will not violate any state or federal securities or other laws. The Company is under no
obligation to effect any registration of Common Stock under the Securities Act of 1933 or to effect
any state registration or qualification of the Common Stock issued under this Agreement. The
Company may, in its sole discretion, delay the delivery of Common Stock or place restrictive
legends on Common Stock in order to ensure that the issuance of any Common Stock will be in
compliance with federal or state securities laws and the rules of any exchange upon which the
Company’s Common Stock is traded. If the Company delays the delivery of Common Stock in order to
ensure compliance with any state or federal securities or other laws, the Company shall deliver the
Common Stock at the earliest date at which the Company reasonably believes that such delivery will
not cause such violation, or at such other date that may be permitted under Code Section 409A.
13. Entire Agreement; Code Section 409A Compliance. This Agreement and the Plan
contain the terms and conditions with respect to the subject matter hereof and supersede any
previous agreements, written or oral, relating to the subject matter hereof. This Agreement shall
be interpreted in accordance with Code Section 409A. This Agreement shall be deemed to be modified
to the maximum extent necessary to be in compliance with Code Section 409A’s rules. If the Grantee
is unexpectedly required to include in the Grantee’s current year’s income any amount of
compensation relating to the Contingent Shares because of a failure to meet the requirements of
Code Section 409A, then to the extent permitted by Code Section 409A, the Grantee may receive a
distribution of Common Stock in an amount not to exceed the amount required to be included in
income as a result of the failure to comply with Code Section 409A.
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IN WITNESS WHEREOF, the company has caused this Award to be granted, and the Grantee has
accepted this Award, as of the date first above written.
| NISOURCE INC. | ||||||
| By: | ||||||
| Participant | ||||||
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