FILED PURSUANT TO RULE 424(B)(3)
REG. NO. 333-33896-01
PROSPECTUS
NISOURCE INC.
52,000 Common Shares, $.01 Par Value
NIPSCO INDUSTRIES, INC. LONG-TERM INCENTIVE PLAN
This Prospectus relates to common shares of NiSource Inc.
which may be offered and sold under the NIPSCO Industries, Inc. 1994
Long-Term Incentive Plan (the "Plan") to Plan participants who ceased
to be employees of NiSource Inc. and its subsidiaries on or prior
to November 1, 2000.
Our common shares are traded on the New York Stock Exchange under
the symbol "NI". On October 26, 2000, the closing sale price of the
common shares on the New York Stock Exchange was $24 per share.
The mailing address and telephone number of NiSource's
principal executive offices are: 801 East 86th Avenue, Merrillville,
Indiana 46410, telephone number (219) 853-5200.
This Prospectus should be retained for future reference.
__________________________________________
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
__________________________________________
The date of this Prospectus is November 2, 2000
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
You should rely only on the information provided or incorporated by
reference in this Prospectus. The information in this Prospectus is
accurate as of the date on these documents, and you should not assume
that it is accurate as of any other date.
TABLE OF CONTENTS
PAGE
----
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
WHERE YOU CAN FIND MORE INFORMATION . . . . . . . . . . . . . . . 6
NIPSCO INDUSTRIES, INC. LONG-TERM INCENTIVE PLAN PROSPECTUS . . . 8
NIPSCO INDUSTRIES, INC. LONG-TERM INCENTIVE PLAN SUPPLEMENTAL
INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 8
MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
GENERAL DESCRIPTION OF THE PLAN . . . . . . . . . . . . . . 8
SHARES SUBJECT TO AWARDS UNDER THE PLAN . . . . . . . . . . 9
RIGHTS UNSECURED . . . . . . . . . . . . . . . . . . . . . . 9
FEDERAL INCOME TAX OBLIGATIONS . . . . . . . . . . . . . . . 9
REPORTS TO GRANTEES . . . . . . . . . . . . . . . . . . . . 11
NIPSCO INDUSTRIES, INC. LONG-TERM INCENTIVE PLAN . . . . . . . . 12
1. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2. ADMINISTRATION AND DELEGATION . . . . . . . . . . . . . . . . . . 12
3. REVIEW AND APPROVAL . . . . . . . . . . . . . . . . . . . . 12
4. SHARES SUBJECT TO PLAN . . . . . . . . . . . . . . . . . . . 13
5. PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . 13
6. AWARDS UNDER THE PLAN . . . . . . . . . . . . . . . . . . . 13
7. NONQUALIFIED STOCK OPTIONS . . . . . . . . . . . . . . . . . 13
(a) OPTION PRICE . . . . . . . . . . . . . . . . . . . . . 13
(b) EXERCISE AT OPTION . . . . . . . . . . . . . . . . . . 13
(c) PAYMENT FOR SHARES . . . . . . . . . . . . . . . . . . 14
(d) TRANSFERABILITY . . . . . . . . . . . . . . . . . . . . 14
(e) RIGHTS UPON TERMINATION AT EMPLOYMENT . . . . . . . . . 15
8. INCENTIVE STOCK OPTIONS . . . . . . . . . . . . . . . . . . 15
(a) OPTION PRICE . . . . . . . . . . . . . . . . . . . . . 15
(b) EXERCISE OF OPTION . . . . . . . . . . . . . . . . . . 15
(c) PAYMENT FOR SHARES . . . . . . . . . . . . . . . . . . 16
(d) TRANSFERABILITY . . . . . . . . . . . . . . . . . . . . 17
(e) RIGHTS UPON TERMINATION OF EMPLOYMENT . . . . . . . . . 17
9. STOCK APPRECIATION RIGHTS . . . . . . . . . . . . . . . . . 17
(a) AWARD . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) TERM . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . 18
2
10. PERFORMANCE UNITS . . . . . . . . . . . . . . . . . . . . . 18
(a) PERFORMANCE PERIOD . . . . . . . . . . . . . . . . . . 18
(b) VALUATION OF UNITS . . . . . . . . . . . . . . . . . . 19
(c) PERFORMANCE TARGETS . . . . . . . . . . . . . . . . . . 19
(d) ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . 19
(e) PAYMENTS OF UNITS . . . . . . . . . . . . . . . . . . . 19
(f) TERMINATION OF EMPLOYMENT . . . . . . . . . . . . . . . 19
(g) OTHER TERMS . . . . . . . . . . . . . . . . . . . . . . 20
11. RESTRICTED STOCK AWARDS . . . . . . . . . . . . . . . . . . 20
(a) RESTRICTION PERIOD . . . . . . . . . . . . . . . . . . 20
(b) RESTRICTIONS UPON TRANSFER . . . . . . . . . . . . . . 20
(c) CERTIFICATES . . . . . . . . . . . . . . . . . . . . . 20
(d) LAPSE OF RESTRICTIONS . . . . . . . . . . . . . . . . . 21
(e) TERMINATION PRIOR TO LAPSE OF RESTRICTIONS . . . . . . 21
12. SUPPLEMENTAL CASH PAYMENTS . . . . . . . . . . . . . . . . . 21
13. GENERAL RESTRICTIONS . . . . . . . . . . . . . . . . . . . . 21
14. RIGHTS OF A SHAREHOLDER . . . . . . . . . . . . . . . . . . 22
15. RIGHT TO TERMINATE EMPLOYMENT . . . . . . . . . . . . . . . 22
16. WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . . . 22
17. NON-ASSIGNABILITY . . . . . . . . . . . . . . . . . . . . . 23
18. NON-UNIFORM DETERMINATIONS . . . . . . . . . . . . . . . . . 23
19. ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . 23
20. AMENDMENT OR TERMINATION . . . . . . . . . . . . . . . . . . 24
21. EFFECT ON OTHER PLANS . . . . . . . . . . . . . . . . . . . 24
22. DURATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . 24
LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . 24
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . 24
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . 25
DESCRIPTION OF COMMON SHARES . . . . . . . . . . . . . . . . . . 25
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3
THE COMPANY
On November 1, 2000, New NiSource Inc. (the "Company"), a new
company formed by NiSource Inc. ("NiSource"), completed the
acquisition by merger of Columbia Energy Group ("Columbia").
Effective November 1, 2000, the Company changed its name to "NiSource
Inc." Upon completion of the merger, Columbia became a wholly-owned
subsidiary of the Company, and the Company continues the businesses
conducted by NiSource and Columbia prior to the merger. The fiscal
year of the Company will end on December 31 of each year. The Company
is a Delaware corporation with its corporate headquarters in
Merrillville, Indiana.
The Company is a super-regional energy and utility-based holding
company that provides natural gas, electricity, water, and energy
related services for residential, commercial and industrial uses
through a number of regulated and non-regulated subsidiaries. The
Company has over 3.6 million gas and electric customers located
primarily in nine states and is the leading gas competitor within the
key energy corridor between the Gulf Coast and the Northeast. The
Company is a registered holding company under the Public Utility
Holding Company Act of 1935. The Company's principal executive
offices are located at 801 East 86th Avenue, Merrillville, Indiana
46410, and its telephone number is (219) 853-5200.
NATURAL GAS. The Company's gas business is comprised of
regulated gas utilities and gas transmission companies that operate in
nine states. The Company is the largest gas company east of the
Rockies based on customers, and has the nation's second largest volume
of gas sales with 911 million cubic feet per day.
Through its wholly-owned subsidiary, Columbia Energy Group, the
Company owns five distribution subsidiaries that provide natural gas
services to nearly 2.1 million residential commercial and industrial
customers in Ohio, Pennsylvania, Virginia, Kentucky and Maryland. The
Company also distributes natural gas to approximately 751,000
customers in northern Indiana through three subsidiaries: Northern
Indiana Public Service Company, Kokomo Gas and Fuel Company and
Northern Indiana Fuel and Light Company, Inc. Additionally, the
Company's subsidiaries, Bay State Gas Company and Northern Utilities,
Inc. distribute natural gas to more than 320,000 customers in the
areas of Brockton, Lawrence and Springfield, Massachusetts, Lewiston
and Portland, Maine, and Portsmouth, New Hampshire.
The Company's subsidiaries Columbia Gas Transmission Corporation
and Columbia Gulf Transmission Company own and operate an interstate
pipeline network of approximately 16,250 miles extending from offshore
in the Gulf of Mexico to Lake Erie, New York and the eastern seaboard.
Together, Columbia Gas Transmission and Columbia Gulf serve customers
in 15 northeastern, mid-Atlantic, midwestern, and southern states and
the District of Columbia. In addition, Columbia Gas Transmission
operates one of the nation's largest underground natural gas storage
4
systems. Columbia Gas Transmission is also participating in the
proposed 442-mile Millennium Pipeline Project that has been submitted
to the FERC for approval. As proposed, the project will transport
approximately 700,000 Mcf of natural gas per day from the Lake Erie
region to eastern markets.
The Company's wholly-owned subsidiary, Crossroads Pipeline
Company, owns and operates a 201-mile, 20 inch diameter interstate
pipeline extending from the northwestern corner of Indiana (near the
border with Chicago) eastward into Ohio. Another wholly-owned Company
subsidiary, Granite State Transmission, owns and operates a 105-mile,
6 to 12 inch diameter interstate pipeline that extends from Haverhill,
Massachusetts in a northeasterly direction to Maine. In addition to
the Crossroads and Granite State pipelines, the Company owns a 19%
share of Portland Natural Gas Transmission System, a 292-mile pipeline
built to bring Canadian gas from New Brunswick into Maine, New
Hampshire and Massachusetts in order to increase the gas supply to the
region.
ELECTRICITY. The Company generates and distributes electricity
to the public through its subsidiary Northern Indiana Public Service
Company. Northern Indiana provides electric service to approximately
426,000 customers in 30 counties in the northern part of Indiana, with
an area of approximately 12,000 square miles and a population of
approximately 2.2 million. In addition, the Company develops
unregulated power projects through its subsidiary, Primary Energy,
Inc. Primary Energy works with industrial customers in managing the
engineering, construction, operation and maintenance of "inside the
fence" cogeneration plants that provide cost-effective, long-term
sources of energy for energy-intensive facilities.
WATER. Through its wholly-owned subsidiary IWC Resources
Corporation and its subsidiaries, the Company supplies water to
residential, commercial and industrial customers and for fire
protection service in Indianapolis, Indiana and surrounding areas.
NON-REGULATED ENERGY SERVICES. The Company provides non-
regulated energy services through its wholly-owned subsidiary Energy
USA, Inc. Through its subsidiaries and investments, Energy USA
provides to customers in 22 states a variety of energy-related
services, including gas marketing and asset management services,
pipeline construction and underground utility locating and marking
services. The Company expanded its gas marketing and trading
operations with the April 1999 acquisition of TPC Corporation, now
renamed Energy USA-TPC Corp., a natural gas asset management company.
Through Columbia, it also owns Columbia Energy Resources, Inc., an
exploration and production subsidiary that explores for, develops,
gathers and produces natural gas and oil in Appalachia and Canada. In
addition, the Company has invested in a number of distributed
generation technologies, including fuel cells and microturbine
ventures.
5
In the merger, NiSource shareholders received one share of common
stock of the Company, par value $.01 per share, ("Common Shares") for
each of their NiSource common shares. Accordingly, each share issuable
with respect to any award under the Plan has been converted into one
Common Share of the Company.
ALL REFERENCES IN THE PLAN AND THE PROSPECTUS TO NISOURCE ARE
NOW REFERENCES TO THE COMPANY, AND ALL REFERENCES IN THE PLAN AND THE
PROSPECTUS TO NISOURCE COMMON SHARES ARE NOW REFERENCES TO COMPANY
COMMON SHARES. EXCEPT AS DESCRIBED BELOW, ALL OF THE TERMS OF THE
PLAN WILL CONTINUE TO APPLY.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy any
document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference
rooms. Our SEC filings are also available to the public at the SEC's
web site at HTTP://WWW.SEC.GOV.
The SEC allows us to "incorporate by reference" into this
prospectus the information we file with it, which means that we can
disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to
be part of this prospectus, and later information that we file with
the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future
filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until our offering is completed:
1. The Annual Report on Form 10-K of NiSource for the fiscal year
ended December 31, 1999;
2. The Annual Report on Form 10-K and Form 10-K/A of Columbia for
the fiscal year ended December 31, 1999;
3. The Quarterly Reports on Form 10-Q of NiSource for the quarterly
periods ended March 31, 2000, June 30, 2000 and September 30, 2000;
4. The Quarterly Reports on Form 10-Q of Columbia for the quarterly
periods ended March 31, 2000, June 30, 2000 and September 30, 2000;
5. The Current Reports on Form 8-K of NiSource dated February 14,
2000, February 24, 2000, March 3, 2000, April 3, 2000, April 25,
2000, June 13, 2000, September 1, 2000 and September 13, 2000;
6. The Current Reports on Form 8-K of Columbia dated January 25,
2000, April 13, 2000, May 3, 2000, May 12, 2000, May 22, 2000,
June 2, 2000, June 15, 2000 and July 14, 2000;
7. The Current Reports on Form 8-K of the Company dated November 1,
2000 and November 3, 2000;
6
8. The description of our Common Shares contained in our Joint Proxy
Statement / Prospectus dated April 24, 2000;
9. The description of our Rights contained in our Joint Proxy
Statement / Prospectus dated April 24, 2000; and
10. The description of our SAILS contained in our Joint Proxy
Statement / Prospectus dated April 24, 2000.
You may request a copy of these filings at no cost, by writing to
or telephoning us at the following address:
NiSource Inc.
801 East 86th Avenue
Merrillville, Indiana 46410
(219) 853-5200
You should rely only on the information included or incorporated
by reference in this prospectus. We have not authorized anyone else
to provide you with different information. We are not making an offer
of these securities in any state where the offer is not permitted.
You should not assume that the information is this prospectus is
accurate as of any date other than the date on the front of the
document.
7
NISOURCE INC. LONG-TERM INCENTIVE PLAN PROSPECTUS
The prospectus includes (i) the Supplemental Information to the
NiSource Inc. Long-Term Incentive Plan, and (ii) the NiSource Inc.
Long-Term Incentive Plan document.
NOTE: REFERENCES IN THE PROSPECTUS TO NISOURCE AND NISOURCE COMMON
SHARES NOW REFER TO THE COMPANY AND THE COMPANY'S COMMON SHARES.
NIPSCO INDUSTRIES, INC. LONG-TERM INCENTIVE PLAN
SUPPLEMENTAL INFORMATION
The NIPSCO Industries, Inc. Long-Term Incentive Plan (the
"Plan"), attached hereto, and the Supplemental Information set forth
below constitute part of a Prospectus covering securities that have
been registered under the Securities Act of 1933.
MERGER
------
On November 1, 2000, New NiSource Inc. (the "Company"), a new
company formed by NiSource Inc. ("NiSource") completed the
acquisition by merger of Columbia Energy Group ("Columbia").
Effective November 1, 2000, the Company changed its name to "NiSource
Inc." Upon completion of the merger, Columbia became a wholly-owned
subsidiary of the Company, and the Company continues the businesses
conducted by NiSource and Columbia prior to the merger. The fiscal
year of the Company will end on December 31 of each year. The Company
is a Delaware corporation with its corporate headquarters in
Merrillville, Indiana. All references in the Plan and the Summary
Plan Description to NiSource common shares are now references to
common shares of the Company, par value $.01 per share ("Common
Shares"). Except as described below, all of the terms of the Plan
will continue to apply.
In the merger, each NiSource common share was converted into the
right to receive one Common Share of the Company. According, each
outstanding NiSource stock option has been converted into an option to
purchase a number of the Company's Common Shares equal to the number of
NiSource common shares that would have been obtained before the merger
upon the exercise of the option. The exercise price per share of each
Company option after the merger is equal to the exercise price per share
of each NiSource option before the merger. For example, if following
the merger a participant exercises an option granted under the Plan prior
to the merger for 100 NiSource common shares, then upon payment of the
exercise price, the participant will receive 100 Company Common Shares.
All of the other terms of the option, including the exercise schedule,
will continue to apply following the merger.
Each restricted share has been converted into a restricted share
of the Company as a result of the merger. All of the terms of the
restricted share continue to apply, including the applicable lapse of
restrictions schedule. Each contingent stock award was converted into
a contingent stock award of the Company. The terms of each contingent
stock award remain unchanged following the merger.
8
Except as described below, all of the terms of the Plan will
continue to apply.
GENERAL DESCRIPTION OF THE PLAN
-------------------------------
The Plan is a stock based plan providing for the grant of
incentive stock options and nonqualified stock options ("Options"),
stock appreciation rights ("SARs"), restricted shares, performance
units and contingent stock awards to officers and other key executive
employees of the Company. The purpose of the Plan is to further the
earnings of the Company and its subsidiaries by providing long-term
incentives to those officers and key employees who make substantial
contributions to the Company by their ability, loyalty, industry and
invention, thereby facilitating the securing, retaining and motivating
of management employees of high caliber and potential.
The Plan is not qualified under Section 401(a) of the Internal
Revenue Code and is not subject to the provisions of the Employee
Retirement Income Security Act of 1974.
Additional information about the Plan and its administrators is
available upon request from the Director, Compensation and Benefits,
NiSource Inc., 801 East 86th Avenue, Merrillville, Indiana 46410
(Telephone: (219) 853-5200).
SHARES SUBJECT TO AWARDS UNDER THE PLAN
---------------------------------------
The Company has registered 52,000 Common Shares for issuance
under the Plan after the merger date to Plan participants who ceased
to be employees of NiSource Inc. and its subsidiaries on or prior to
November 1, 2000. Such shares may be either authorized but unissued
shares or treasury shares.
RIGHTS UNSECURED
----------------
No person or entity shall have any right to receive a benefit or
award under the Plan except in accordance with the Plan. The right
of a grantee or his or her beneficiary to receive a distribution under
the Plan is an unsecured claim against the general assets of the
Company and neither a grantee nor his or her beneficiary has any
rights against any specific assets of the Company.
FEDERAL INCOME TAX OBLIGATIONS
------------------------------
The following discussion of federal income tax obligations of
persons receiving awards under the Plan is based on the federal income
tax laws currently in effect.
9
OPTIONS
-------
Under federal income tax law as currently in effect, neither
incentive stock options nor nonqualified stock options without an
ascertainable fair market value require a grantee to recognize income
at the time of grant. However, upon the exercise of a nonqualified
stock option, the grantee will recognize ordinary income in an amount
equal to the excess of the fair market value of the Common Shares
(i.e., the closing price of the Common Shares on the New York Stock
Exchange on the trading day immediately preceding the exercise date)
over the aggregate exercise price. For this purpose, the date as of
which income is recognized is the date of exercise.
With respect to an incentive stock option, no income is recognized
by the grantee in connection with the exercise, although the excess of
the fair market value of the Common Shares at exercise over the aggre-
gate exercise price is a tax preference item and may lead to alternative
minimum tax liability for the grantee. The grantee will be subject to
taxation at the time shares of Common Shares acquired with an incentive
stock option are sold. If the sale occurs at least two years after the
date the incentive stock option was granted and at least one year after
the date it was exercised, the grantee will recognize capital gain in an
amount equal to the excess of the proceeds of the sale over the aggregate
exercise price of the Common Shares sold. If these holding period
requirements are not met, the grantee will recognize ordinary income.
The Company's tax consequences will also depend upon whether an
Option is an incentive stock option or a nonqualified stock option.
In the case of a nonqualified stock option, the Company will be entitled
to a deduction in connection with the grantee's exercise in an amount
equal to the income recognized by the grantee, provided that the Company
complies with applicable withholding requirements. If the Option is an
incentive stock option, however, the Company will not be entitled to a
deduction if the grantee satisfies the holding period requirements and
recognizes capital gain. If those requirements are not satisfied, the
Company will be entitled to a deduction corresponding to the ordinary
income recognized by the grantee.
The conversion of a NiSource option to a Company option as a
result of the merger does not result in a taxable event to the grantee,
or change the status of the option as an incentive stock option or a
nonqualified stock option.
SARS
----
SARs likewise do not require a grantee to recognize income at the
time of grant. Upon exercise of an SAR, the grantee will recognize
ordinary income in an amount equal to the excess of the fair market
value of the Common Shares on the date of exercise over the related
10
Option price (or the price specified in the SAR, in the case of a
"non-tandem" SAR). The Company will be entitled to a deduction in an
amount equal to the income recognized by the grantee, provided that
the Company complies with applicable withholding requirements.
RESTRICTED SHARES
-----------------
At the date of a grant of restricted shares, the grantee will not
recognize income, and the Company will not be entitled to a deduction.
The grantee will realize ordinary income equal to the fair market value
of the Common Shares received when the restrictions on the Common Stock
lapse and the grantee's interest in the Common Shares is no longer sub-
ject to a substantial risk of forfeiture. The Company may be entitled
to a deduction with respect to the ordinary income realized by the
grantee, subject to the limitations of Section 162(m) of the Internal
Revenue Code.
PERFORMANCE UNITS
-----------------
At the date of a grant of performance units, the grantee will not
recognize income, and the Company will not be entitled to a deduction.
Upon exercise, the grantee of a performance unit will realize ordinary
income equal to the amount of cash or the fair market value of the Common
Shares received on exercise. The Company may be entitled to a deduction
with respect to the ordinary income realized by the grantee, subject to
the limitations of Section 162(m) of the Internal Revenue Code.
THE FOREGOING IS INCLUDED ONLY AS A SUMMARY OF POSSIBLE FEDERAL
INCOME TAX CONSEQUENCES. A PERSON SHOULD CONSULT HIS OR HER TAX ADVISOR
CONCERNING MATTERS COVERED BY THIS DISCUSSION AND THE POSSIBLE APPLICA-
TION OF FOREIGN, STATE AND LOCAL TAX LAWS.
REPORTS TO GRANTEES
-------------------
The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement") with the Securities and Exchange Commission
covering up to 52,000 Common Shares, to be offered and sold under the
Plan to Plan participants who ceased to be employees of NiSource and
its subsidiaries on or prior to November 1, 2000.
The Company will provide, without charge, to each person eligible to
participate in the Plan, upon written or oral request, (i) a copy of
any of the documents which are incorporated by reference in the
Registration Statement, other than the exhibits to such documents
(unless such exhibits are specifically incorporated by reference into
the information that the Registration Statement incorporates) and (ii)
a copy of its Annual Report to Shareholders for its most recent fiscal
year. The documents incorporated by reference in the Registration
Statement are hereby specifically incorporated by reference in this
Prospectus. Requests for copies of such documents should be directed
to the Director, Compensation and Benefits, at NiSource Inc., 801
East 86th Avenue, Merrillville, Indiana 46410, telephone number (219)
853-5200.
11
NOTE: REFERENCES IN THE PLAN TO NISOURCE AND NISOURCE COMMON SHARES
NOW REFER TO THE COMPANY AND THE COMPANY'S COMMON SHARES.
NIPSCO INDUSTRIES, INC.
LONG-TERM INCENTIVE PLAN
-------------------------
(AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 1, 1998)
WHEREAS, NIPSCO Industries, Inc. (the "Company") adopted the
NIPSCO Industries, Inc. Long-Term Incentive Plan effective April 13,
1988, as last amended effective December 16, 1997; and
WHEREAS, pursuant to Section 20 of the Plan, the Company wishes
to amend the Plan in certain respects and restate it in a single
document;
NOW THEREFORE, the Plan is hereby amended and restated, effective
February 1, 1998, as follows:
1. PURPOSE. The purpose of the NIPSCO Industries, Inc., Long-
Term Incentive Plan (the "Plan") is to further the earnings of NIPSCO
Industries, Inc. (the "Company"), its subsidiaries and their
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 AND DELEGATION. The Plan shall be
administered by the Nominating and Compensation Committee
("Committee") of the Board of Directors of the Company ("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
("1934 Act"), and "outside directors" of the Company within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended, 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. REVIEW AND APPROVAL. Specific performance goals and details
for an award program shall be promulgated by the Committee after
consideration of the recommendations of the chief executive officer
12
and shall be submitted to the Board for approval by the majority vote
of directors who are not otherwise employed as officers or employees.
4. SHARES SUBJECT TO PLAN. Subject to the provisions of
section 19, the shares of common stock of the Company that may be
issued, or may be the measure of stock appreciation rights granted,
under the Plan shall not exceed in the aggregate 2,500,000 (5,000,000
after January 30, 1998) of the common shares without par value of the
Company ("Shares"). 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.
5. PARTICIPANTS. Persons eligible to participate shall be
limited to those officers and other key executive employees 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.
6. 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 future legislation and options not designed to so qualify under
any such future legislation), incentive stock options, stock
appreciation rights, performance units or Shares, and restricted
Shares or such combinations of the above as the Committee may in its
discretion deem appropriate.
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 Share deliverable
upon the exercise of an option shall not be less than 100% of the
fair market value of the Share on the day the option is granted,
as determined by the Committee. For purposes of the Plan, 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
the grant.
(b) EXERCISE AT 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 Committee shall have the power to permit in its
discretion an acceleration of the previously determined exercise
13
terms, within the terms of the Plan, under such circumstances and
upon such terms and conditions as it deems appropriate.
(c) PAYMENT FOR SHARES. Except as otherwise provided in
the Plan or in any stock option agreement, the optionee shall pay
the purchase price of the Shares 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 Shares having an aggregate fair market value on the
date of exercise equal to the option exercise price, (iv) by
directing the Company to withhold such number of Shares otherwise
issuable upon exercise of such option having an aggregate fair
market value on the date of exercise equal to the option exercise
price, (v) by such other medium of payment as the Committee, in
its discretion, shall authorize at the time of grant, or (vi) by
any combination of (i), (ii), (iii), (iv) and (v). 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 NIPSCO Industries, Inc. In
the case of payment pursuant to (ii), (iii) or (iv) 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 issuable
pursuant to the exercise of any option as soon as reasonably
practicable after such exercise, provided that any Shares
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. Section 220.3(e)(4), or other applicable
provision of law.
(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 Section 501(c)(3) of the Internal Revenue Code of
1986, as amended. In such event the spouse, lineal descendant,
trustee or tax-exempt organization will 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 will continue to be
subject to all of the terms, conditions and restrictions
14
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 will be permitted only if
(i) the optionee does not receive any consideration therefor, 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 AT 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 twelve months 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 "disability" shall
mean the inability of an individual to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment which is expected to result in death or
which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months. The Committee, in
its sole discretion, shall determine the date of any disability.
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. The purchase price per Share of stock
deliverable upon the exercise of an option shall not be less than
100% of the fair market value (as defined in subsection 7(a)) of
the stock on the day the option is granted, as determined by the
Committee except as provided in Section 8(b).
(b) EXERCISE OF OPTION. Each stock option agreement shall
state the period or periods of time within which the option may
15
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
Shares 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 Shares 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 Section 425(e) and 425(f) of the Internal
Revenue Code of 1986, as amended. 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 Section 422(b)(6) of the Internal Revenue
Code of 1986, as amended, (i) the purchase price of each Share
subject to the incentive stock option shall be not less than one
hundred ten percent (110%) of the fair market value of the Shares
on the date the incentive stock option is granted, and (ii) the
incentive stock option shall expire and all rights to purchase
Shares thereunder shall cease no later than the fifth anniversary
of the date the incentive stock option was granted.
(c) PAYMENT FOR SHARES. Except as otherwise provided in
the Plan or in any stock option agreement, the optionee shall pay
the purchase price of the Shares 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 Shares having an aggregate fair market value on the
date of exercise equal to the option exercise price, (iv) by
directing the Company to withhold such number of Shares otherwise
issuable upon exercise of such option having an aggregate fair
market value on the date of exercise equal to the option exercise
price, (v) by such other medium of payment as the Committee, in
its discretion, shall authorize at the time of grant, or (vi) by
any combination of (i), (ii), (iii), (iv) and (v). In the case
16
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, and made payable to NIPSCO Industries, Inc. In the
case of payment pursuant to (ii), (iii) or (iv) 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 issuable
pursuant to the exercise of any option as soon as reasonably
practicable after such exercise, provided that any Shares
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. Section 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
than 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, the
optionee (or in the case of his death, his beneficiary or
personal representative) shall have the right to exercise the
option during the term within a period of ninety days (or in the
case of termination of employment because of disability, within a
period of one year) 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.
The provisions of this section 8 shall be construed and applied, and
(subject to the limitations of section 20) shall be amended from time
to time so as to comply with Section 422 of the Internal Revenue Code
of 1986, as amended, 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) AWARD. 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 at the time of
exercise over (ii) a specified price which shall not be less than
100% of the fair market value of the Shares 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
17
market value of the Shares 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) No stock appreciation right shall be exercisable
in whole or in part, during the six month period starting
with the date of grant; and
(ii) Stock appreciation rights will 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 twelve months
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.
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 Shares 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
18
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 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 which
meets or exceeds the minimum target but fails to meet the maximum
target.
The performance targets established 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 or such
other performance standards as determined by the Committee in
its discretion. 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 in cash, in the form
of Shares at fair market value, or 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
19
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 cancelled.
(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 Shares of the Company, restricted as to
transfer and subject to forfeiture, and 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. Shares 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 Shares awarded to a
participant.
(b) RESTRICTIONS UPON TRANSFER. Shares awarded, and the
right to vote such Shares 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 Shares. Subject
to the foregoing, and except as otherwise provided in the Plan,
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 Shares.
(c) CERTIFICATES. Each certificate issued in respect of
Shares 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 NIPSCO
Industries, Inc. Long-Term Incentive Plan and an Agreement
entered into by the registered owner. Release from such terms and
conditions shall obtain only in accordance with the provisions of
20
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. The Agreement shall specify the
terms and conditions upon which any restrictions upon Shares
awarded under the Plan shall lapse, as determined by the
Committee. Upon the lapse of such restrictions, Shares, 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 or retirement, prior to the lapse of restrictions
applicable to any Shares awarded to such participant, all Shares
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 Shares or certificates.
12. SUPPLEMENTAL CASH PAYMENTS. Subject to the Company's
discretion, stock option, incentive stock option, stock appreciation
right, performance unit or restricted stock agreements may provide for
the payment of a supplemental cash payment to a participant promptly
after the exercise of an option or stock appreciation right, or, at
the time of payment of a performance unit or at the end of a
restriction period of a restricted stock award. Supplemental cash
payments shall be subject to such terms and conditions as shall be
provided by the Committee at the time of grant, provided that in no
event shall the amount of each payment exceed:
(a) In the case of an option, the excess of the fair market
value of a Share on the date of exercise over the option price
multiplied by the number of Shares for which such option is
exercised, or
(b) In the case of a stock appreciation right, performance
unit or restricted stock award, the value of the Shares and other
consideration issued in payment of such award.
13. 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
Shares subject or related thereto upon any securities 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 Shares, is necessary or
desirable as a condition of, or in connection with, the granting of
such award or the issue or purchase of Shares thereunder, such award
may not be consummated in whole or in part unless such listing,
registration, qualification, consent, approval or agreement shall have
21
been effected or obtained, free of any conditions not acceptable to
the Committee.
14. RIGHTS OF 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 Shares are issued to him.
15. RIGHT TO TERMINATE EMPLOYMENT. 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 or affect any right
which his employer may have to terminate the employment of such
participant.
16. WITHHOLDING. Whenever the Company proposes or is required
to issue or transfer Shares 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 Shares. 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 Shares
otherwise distributable to the participant, such Shares being valued
at the fair market value at the date of exercise, or by the
participant's delivering to the Company a portion of the Shares
previously delivered by the Company, such Shares being valued at their
fair market value as of the date of delivery of such Shares 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 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.
22
17. NON-ASSIGNABILITY. No award under the Plan shall be
assignable or transferable by the recipient thereof except by will or
by the laws of descent and distribution or except as set forth in
subsection 7(d). During the life of the recipient, such award shall
be exercisable only by such person or by such person's guardian or
legal representative.
18. NON-UNIFORM DETERMINATIONS. The Committee's determinations
under the Plan (including, without limitation determinations of the
persons to receive awards, the form, amount and timing of such awards,
the terms and provisions of such awards and the agreements evidencing
same, and the establishment of values and performance targets) need
not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, awards under the Plan, whether or
not such persons are similarly situated.
19. ADJUSTMENTS. (i) Appropriate adjustments in the aggregate
number of Shares issuable pursuant to the Plan, the number of Shares
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 Units, 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, 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 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 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.
(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 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
23
amount and timing of any such adjustment shall be conclusive and
binding on all persons.
20. AMENDMENT OR TERMINATION. The Board or the Committee may at
any time terminate, suspend or modify the Plan without the
authorization of stockholders 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. No
termination, suspension or modification of the Plan shall adversely
affect any right acquired by any participant under an award granted
before the date of such termination, suspension or modification,
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. Any member of
the Board who is an officer or employee of the Company shall be
without a vote on any proposed amendment to the Plan, or on any other
matter which might affect that member's individual interest under the
Plan.
21. 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.
22. DURATION OF THE PLAN. The Plan shall remain in effect until
all awards under the Plan have been satisfied by the issuance of
Shares or the payment of cash, but no award shall be granted more than
ten years after the date the Plan is approved by the shareholders,
which shall be its effective date of adoption.
LIMITATION OF LIABILITY
Neither the Company, nor any of its agents (including the Company if
it is acting as such) in administering the Plan shall be liable for
any act done in good faith or for the good faith omission to act in
connection with the Plan. However, nothing contained herein shall
affect a Participant's right to bring a cause of action based on
alleged violations of federal securities laws.
USE OF PROCEEDS
Any net proceeds that the Company realizes from the issuance of its
Common Shares in connection with awards under the Plan will be used
for general corporate purposes.
24
PLAN OF DISTRIBUTION
The Common Shares being offered hereby are offered pursuant to the Plan,
the terms of which provide for the issuance of Common Shares following
satisfaction of the applicable vesting, exercise and/or lapse of
restrictions schedules applicable to stock options, stock apprciation
rights, restricted shares, performance units and contingent stock awards
granted under the Plan.
DESCRIPTION OF COMMON SHARES
The Company's certificate of incorporation authorizes the issuance of
400,000,000 Common Shares. The description of the Common Shares is
incorporated by reference into this Prospectus. See "Where You Can
Find More Information" for information on how to obtain a copy of this
description.
EXPERTS
The consolidated financial statements and schedules of NiSource
incorporated by reference herein have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports
with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said
reports.
The consolidated financial statements of Columbia incorporated in this
document by reference herein have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference herein in reliance
upon the authority of said firm as experts in giving said report.
LEGAL MATTERS
Certain legal matters in connection with the Company's Common Shares
offered hereby have been passed upon for the Company by Schiff Hardin
& Waite, Chicago, Illinois.
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