-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VZTgq8/pbYdx4ec/pBdFtmgR6Q8/TAYqNhUMDloeq5NhPrtpeu+c2KqgIWkWhv6S Mll02OnLo9j2k4aVlaqdag== 0000895813-99-000207.txt : 19990421 0000895813-99-000207.hdr.sgml : 19990421 ACCESSION NUMBER: 0000895813-99-000207 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19990420 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NIPSCO INDUSTRIES INC CENTRAL INDEX KEY: 0000823392 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 351719974 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-76645 FILM NUMBER: 99597653 BUSINESS ADDRESS: STREET 1: 801 E 86TH AVENUE CITY: MERRILLVILLE STATE: IN ZIP: 46410 BUSINESS PHONE: 2198535200 MAIL ADDRESS: STREET 1: 5265 HOHMAN AVENUE CITY: HAMMOND STATE: IN ZIP: 46320-1775 S-3 1 As filed with the Securities and Exchange Commission on April 20, 1999. Registration No. 333 - ====================================================================== SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________ FORM S-3 Registration Statement Under The Securities Act of 1933 _______________________ NISOURCE INC. (Exact name of registrant as specified in its charter) Indiana 35-1719974 (State or other jurisdiction of (I.R.S employer of incorporation or organization) identification number) 801 East 86th Avenue Merrillville, Indiana 46410 (219) 853-5200 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Stephen P. Adik NISOURCE INC. 801 East 86th Avenue Merrillville, Indiana 46410 (219) 647-6012 (Name, address, including zip code, and telephone number, including area code, of agent for service) With a copy to: Lauralyn G. Bengel Susan J. Lynch Schiff Hardin & Waite 7200 Sears Tower Chicago, Illinois 60606-6473 (312) 258-5500 _____________________________ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [x] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE ------------------------------- Proposed Proposed Amount maximum maximum Title of each class to be offering price aggregate Amount of of securities to be registered registered per share (1) offering price (1) registration fee ------------------------------ ---------- ------------- ------------------ --------------- Common Shares, without par value (including 14,000 $27.03 $378,420 $106 associated preferred share purchase rights)
(1) Estimated solely for the purpose of calculating the registration fee on the basis of the average of the high and low sales prices of the Common Shares reported on the New York Stock Exchange on April 14, 1999 pursuant to Rule 457(c) of the Securities Act of 1933, as amended. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement will thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine. SUBJECT TO COMPLETION - Dated April 20, 1999 PROSPECTUS NISOURCE INC. 14,000 Shares Common Shares, Without Par Value BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES This Prospectus relates to up to 14,000 Common Shares, without par value (including associated preferred share purchase rights), of NiSource Inc., formerly NIPSCO Industries, Inc. (hereinafter referred to as "NIPSCO"), which may be offered and sold pursuant to participants in the Bay State Gas Company Savings Plan for Operating Employees. The Common Shares are traded on the New York Stock Exchange, the Chicago Stock Exchange and the Pacific Stock Exchange under the symbol "NI." On April 14, 1999 the closing sale price of the Common Shares on the NYSE was $26 7/8 per share. Each purchase or sale of Common Shares under the Plan will be made at the market price for the Common Shares on the NYSE at time of such purchase or sale. 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 April __, 1999 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 IT 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 DATES ON THESE DOCUMENTS, AND YOU SHOULD NOT ASSUME THAT IT IS ACCURATE AS OF ANY OTHER DATE. TABLE OF CONTENTS ----------------- Page ---- NIPSCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . 2 THE BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES . . 3 General . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 3 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . 4 Your Contributions . . . . . . . . . . . . . . . . . . . . . . 5 Company Contributions . . . . . . . . . . . . . . . . . . . . 7 Annual Contributions and Compensation Maximums . . . . . . . . 7 Investment Funds and Investment Instructions . . . . . . . . . 8 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Participant Loans . . . . . . . . . . . . . . . . . . . . . . 12 Withdrawals While You Are an Employee . . . . . . . . . . . . 15 Distributions After You Terminate Employment with the Company or After You Attain Age 70-1/2. . . . . . . . . 17 Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . 20 Reemployment with the Company . . . . . . . . . . . . . . . . 20 Federal Tax Consequences of Participation in the Plan . . . . 21 Income Tax Withholding . . . . . . . . . . . . . . . . . . . . 22 Future of the Plan . . . . . . . . . . . . . . . . . . . . . . 23 i Plan Administration Issues . . . . . . . . . . . . . . . . . . 23 Other Things You Should Know . . . . . . . . . . . . . . . . . 24 Plan Directory . . . . . . . . . . . . . . . . . . . . . . . . 27 Instructions at a Glance . . . . . . . . . . . . . . . . . . . 29 AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 30 INFORMATION INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . 32 LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . 32 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . 32 PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . 33 DESCRIPTION OF COMMON SHARES . . . . . . . . . . . . . . . . . . . 33 EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 ii NIPSCO NIPSCO is an energy and utility-based holding company that provides natural gas, electricity, water and related services for residential, commercial and industrial uses through a number of wholly-owned regulated and non-regulated subsidiaries. NIPSCO operates primarily in Indiana and, with the acquisition of Bay State Gas Company ("Bay State"), New England. NIPSCO distributes natural gas to approximately 739,000 customers in Northern Indiana through three wholly-owned utility subsidiaries: Northern Indiana Public Service Company ("Northern Indiana"), Kokomo Gas and Fuel Company ("Kokomo Gas") and Northern Indiana Fuel and Light Company, Inc. ("NIFL"). Northern Indiana, Kokomo Gas and NIFL operate in 41 counties across Northern Indiana, serving an area of about 13,865 square miles with a population of approximately 2.4 million. Bay State distributes natural gas to more than 300,000 customers in the areas of Brockton, Lawrence and Springfield, Massachusetts, Lewiston and Portland, Maine and Portsmouth, New Hampshire. Bay State operates in 12 counties in New England, serving an area of about 2,152 square miles with a population of approximately 1.8 million. Based on total throughput, NIPSCO is the tenth largest local gas distribution company in the United States. NIPSCO's wholly-owned subsidiary, Crossroads Pipeline Company ("Crossroads" and, together with Northern Indiana, Kokomo Gas and NIFL, the "Energy Utilities"), owns and operates an interstate pipeline extending from the northwestern corner of Indiana (near the border with Chicago) eastward into Ohio. In addition, NIPSCO and Bay State collectively own a 19% share of Portland Natural Gas Transmission System ("PNGTS"), a 292-mile pipeline being built to bring Canadian gas from New Brunswick into Maine, New Hampshire and Massachusetts in order to increase the gas supply to the region. NIPSCO generates and distributes electricity to the public primarily through its largest subsidiary, Northern Indiana. Through its Primary Energy, Inc. ("Primary Energy") subsidiary, NIPSCO also is active in developing unregulated power projects. Northern Indiana provides electric services 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. At September 30, 1998, Northern Indiana provided approximately 419,000 customers with electricity. For the twelve months ended September 30, 1998, industrial customers accounted for approximately 42% of Northern Indiana's electric energy revenues, with residential customers providing approximately 30% and commercial customers contributing approximately 28%. NIPSCO operates the sixth largest investor-owned water utility business in the United States, serving approximately 252,200 customers through the utility subsidiaries of IWC Resources Corporation ("IWCR"). These companies supply water for residential, commercial and industrial uses and for fire protection services in Indianapolis 1 and the surrounding areas. The territory served by the water utilities covers an area of approximately 309 square miles in six counties of central Indiana. IWCR also manages the municipal water system for Lawrence, Indiana, and participates in partnerships that operate municipal wastewater treatment facilities in Indianapolis and Gary, Indiana. In addition to the activities of Primary Energy described above, NIPSCO provides non-regulated energy services through its wholly-owned subsidiaries, NI Energy Services, Inc. ("NESI") and Energy USA, Inc. NESI provides a variety of energy-related services, including gas marketing, power generation, gas transmission, supply and storage and energy efficiency design services. EnergyUSA markets products and services, such as propane, energy advisory services and home security services, to customers of local utilities in 22 states. These products and services are branded and operated either under the local utility's label or with the EnergyUSA name. NIPSCO also provides non-regulated utility-related services, including installation, repair and maintenance of underground pipelines used in gas, water and sewer transmission and distribution systems and underground utility locating and marking services. PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this Prospectus. It is not a complete summary of all the information contained in this Prospectus. Participants should therefore read this Prospectus in its entirety. Purpose of the Plan ------------------- The Plan is for the benefit of eligible employees and former employees of Bay State and affiliated companies and their beneficiaries. The purpose of the Plan is to provide such eligible employees a profit-sharing and 401(k) plan designed to help accumulate savings for retirement and achieve future financial goals. The Plan offers these advantages: * Participants choose how much to save, up to 15% of their eligible pay, through convenient payroll deduction; * Participants may save on current taxes, since contributions and earnings are not subject to current federal and, in most cases, state income taxes. The Plan offers flexibility: * Participants choose how to invest their Accounts among the investment funds offered. 2 * Participants may borrow or withdraw from their Accounts (subject to certain conditions and terms). * Participants have easy access to Account information by telephone. THE BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES General ------- The following is a description of the Plan. It is intended to constitute a "summary plan description" pursuant to the Employee Retirement Income Security Act of 1974, as amended (ERISA). This description summarizes certain material provisions of the Plan, and as such, it does not purport to be complete and is qualified in its entirety by reference to the Plan. Terms used herein and not otherwise defined shall have the respective meanings set forth in the Plan. Introduction ------------ Effective January 1, 1988, Bay State Gas Company (the "Company") established the Bay State Gas Company Savings Plan for Operating Employees (the "Plan"). Effective as of February 12, 1999, the Company was merged into NIPSCO Industries, Inc. and became a wholly owned subsidiary of NIPSCO. Effective April 15, 1999, NIPSCO Industries, Inc. changed its name to NiSource Inc. (hereinafter referred to as "NIPSCO"). As a result of the merger, all of the shares of common stock of Bay State have been converted into the right to receive cash or shares of common stock of NIPSCO (the "Common Shares") and amounts held under the Plan that are subsequently transferred into or contributed to the Common Stock Fund will be invested in Common Shares. Notwithstanding the corporate merger, the Plan continues to be maintained by the Company. The Plan is governed by the official text of the Plan and Trust Agreement. The purpose of this Summary Plan Description is to provide a simplified description of how the Plan works. If the meaning of the Plan and Trust Agreement differs from that of the Summary Plan Description in any way, the official text of the Plan and Trust Agreement will govern in administering the Plan. References to the Company generally mean Bay State Gas Company, and, if applicable, its affiliated companies participating in the Plan as the context requires, except, that with regard to issues related to service credit, termination of employment or reemployment, references to Bay State shall also include any affiliated companies not participating in the Plan. With regard to primarily administrative matters, however, references to Bay State mean Bay State Gas Company, the Plan Sponsor and Plan Administrator. 3 Eligibility ----------- WHO IS ELIGIBLE? All employees of the Company who are covered by one of the following collective bargaining agreements are eligible: * Lawrence Division, International Brotherhood of Electrical Workers, Local 326 (a "Local 326-Lawrence Employee"); * Brockton Division, Utility Workers' Union of America, AFL- CIO, Local 273 (a "Local 273 Operating Brockton Employee"); * Northern Utilities, Inc., Portland Division, Brotherhood of Utility Workers of New England, Incorporated, Local No. 341 (a "Local 341-Portland Employee"); * Granite State Gas Transmission, Inc., Brotherhood of Utility Workers of New England, Incorporated, Local No. 341 (a "Local 341-Granite State Employee"); * Springfield Division, United Steel Workers of America, AFL- CIO, Local No. 12026 (a "Local 12026-Springfield Employee"); * Springfield Division, International Brotherhood of Electrical Workers, Local No. 486 (a "Local 486-Springfield Employee"); * Brockton Division, Utility Workers Union of America, AFL, CIO, Local 273, Clerical / Technical Unit (a "Local 273, C/T Brockton Employee"); * Northern Utilities, Inc., Portsmouth Division, United Steelworkers of America, AFL-CIO-CLC, Local No. 14930 (a "Local 14930-Portsmouth Employee"); * Brockton Propane, Oil, Chemical and Atomic Workers International Union, Quincy Local 8-366 (a "Local 8-366- Brockton Propane Employee"); * Northern Utilities, Inc., Salem Propane, United Steelworkers of America, AFL-CIO-CLC, Local No. 14930, (a "Local 14930- Salem Propane Employee"). WHEN DOES PARTICIPATION BEGIN? If you are an eligible employee, you may participate after you have completed 12 months of service, if you have worked at least 1,000 hours during that period. Your participation will then begin on the first day of the next month following the date you complete these requirements. However, if provided by your collective bargaining agreement, for purposes of Employee Pre-tax 4 Contributions only, you may participate on the first day of the next month after you have completed sixty (60) days of service. HOURS OF SERVICE Hours of service are used in determining your eligibility to participate. You earn one hour of service for each hour you are paid by the Company (including any back pay you may be awarded). This includes hours when you do not actually work but receive pay (such as vacation, holiday, jury duty, sickness or incapacity, including disability). You receive credit for non-paid Company time, such as a Company-approved leave of absence, military DUTY or a temporary layoff. Service earned while you are not actively at work is based on your normally scheduled weekly hours. If you are a salaried employee, or there are no accurate records of your working hours, you will be credited with a set number of hours for each pay period in which you are paid for at least one hour. The rates of hours credited for each pay period are: 45 hours per weekly pay period, 90 hours per biweekly pay period, 95 hours per semi- monthly pay period and 190 hours per monthly pay period. To enroll, refer to Section entitled Instructions At A Glance. Your Contributions ------------------ You may elect to contribute regularly through payroll deductions once you are eligible to participate. Your contributions are based on your eligible pay. Eligible pay for this purpose is straight time wages, exclusive of all daily or weekly overtime, bonuses, supplementary compensation payments, retirement benefits and other forms of non- recurring compensation, but inclusive of shift differentials, Saturday/Sunday premiums, compensation paid at an alternative rate (not including compensation paid at an alternative rate if you are a salesperson) and seventy-five percent of sales commissions paid to you by the Company while you are a participant in the Plan. Your eligible pay includes pre-tax contributions you make to this Plan and other plans sponsored by the Company. To elect to contribute, refer to Section entitled INSTRUCTIONS AT A GLANCE. EMPLOYEE PRE-TAX CONTRIBUTIONS You may choose to save pre-tax dollars by electing in writing to contribute any whole percentage, up to 15%, of your eligible pay, subject to an annual contribution maximum. Refer to item (a) of Section entitled ANNUAL CONTRIBUTION AND COMPENSATION MAXIMUMS. If you are a highly compensated employee, as defined by the Internal Revenue Code and related regulations, you may be limited to a percentage that is less than 15%. Refer to item (b) of 5 Section entitled ANNUAL CONTRIBUTION AND COMPENSATION MAXIMUMS. If you are limited to a percentage that is less than 15%, you will be notified. Your Employee Pre-Tax contributions are deposited into your Employee Pre-Tax Account.<1> CHANGING, DISCONTINUING OR RESUMING YOUR CONTRIBUTIONS You may change your contribution percentage election as of the first day of any month. Your payroll deductions will change the first time you are paid after your written request has been processed. You may discontinue contributions at any time. Your payroll deductions will stop the first time you are paid after your written request has been processed. You may resume contributions as of the first day of any month. Your payroll deductions will resume the first time you are paid after your written request has been processed. If you discontinue contributions more than once in a twelve month period, the Plan Administrator reserves the right to require a longer waiting period before you can resume contributions. To change your contribution percentage election or to discontinue or resume contributions, refer to Section entitled INSTRUCTIONS AT A GLANCE. ROLLOVER CONTRIBUTIONS FROM ANOTHER QUALIFIED PLAN If you receive a distribution eligible for rollover from another employer's qualified plan (or a qualified plan of the Company) or if you have a "rollover IRA," you may "roll over" all or part of that amount into this Plan if you are an eligible employee, even if you have not yet met the Plan's eligibility requirements. By making a Rollover contribution, you defer the tax liability on your distribution and take advantage of the investments offered in this Plan. Your Rollover contributions are deposited into your Rollover Account.<2> <1>If you are a former participant of the Bay State Gas Company Employee Savings Plan, your Employee pre-Tax Account may include amounts transferred on your behalf from the Bay State Gas Company Employee Savings Plan designated as "Employee Pre-Tax Account" amounts under that plan. <2>If you are a former participant of the Bay State Gas Company Employee Savings Plan, your Rollover Account may include amounts transferred on your behalf from the Bay State Gas Company Employee Savings Plan designated as "Rollover Account" amounts under that plan. 6 To make a Rollover contribution, refer to Section entitled INSTRUCTIONS AT A GLANCE. SEPARATE ACCOUNTS Separate Accounts will be maintained for your contributions as described above. If you are a former participant of the Bay State Gas Company Employee Savings Plan, your Accounts may also include a Prior After-Tax Account for amounts transferred on your behalf from the Bay State Gas Company Employee Savings Plan designated as "Prior After-Tax Accounts" amounts under that plan. Company Contributions --------------------- EMPLOYER CONTRIBUTIONS Your eligibility for Employer contributions and the amount the Company contributes are determined under the terms of your governing collective bargaining agreement. If your collective bargaining agreement calls for Employer contributions, the Employer contributions are based on your Employee Pre-Tax contributions and are deposited to your Account each time you contribute. Employer contributions made on your behalf, if any, are deposited into your Employer Account.<3> Annual Contribution and Compensation Maximums ---------------------------------------------- The Internal Revenue Code and related regulations require that a number of limitations be applied to the Plan. These include (1) maximum amounts which may be contributed by you or on your behalf in any year and (2) a maximum amount of your eligible pay that may be taken into account for purposes of contributions. These limitations are briefly described below: (a) MAXIMUM PRE-TAX CONTRIBUTION DOLLAR LIMIT. Your maximum pre-tax contribution dollar limit (including any pre-tax contributions you may make to any other 401(k) plan maintained by any other employer) is $10,000 per calendar year, and may be adjusted periodically as announced by the Internal Revenue Service. <3>If you are a former participant of the Bay State Gas Company Employee Savings Plan, your Employer Account may include amounts transferred on your behalf from the Bay State Gas Company Employee Savings Plan designated as "Employer Match Account" amounts under the plan. 7 If you make pre-tax contributions to more than one 401(k) plan during the calendar year and the combination of your pre-tax contributions to the plans exceeds the maximum pre- tax contribution dollar limit, you should notify the Plan Administrator of this Plan or the plan administrator of the other plan that an excess has occurred and request that the excess amount be returned to you no later than April 15 of the following year. If the excess amount is not returned to you by April 15 of the following year, the excess amount will be taxable to you in the year the amount was contributed and the year the amount is distributed. (b) MAXIMUM ALLOWABLE CONTRIBUTION PERCENTAGE LIMIT. If you are a highly compensated employee, your maximum Employee Pre-Tax contribution percentage may be limited to a percentage that is less than the percentage described in Section entitled YOUR CONTRIBUTIONS, as determined by a factor based on the average Employee Pre-Tax contribution amount for non-highly compensated employees. Highly compensated employees generally include employees who earn more than $80,000 per year, and may be adjusted periodically as announced by the Internal Revenue Service. If you are a highly compensated employee and you exceed this limit at any time, you will be notified and your future contributions may be reduced or stopped, and any excess may be refunded to you. (c) MAXIMUM ANNUAL ADDITION LIMIT. The maximum amount that may be contributed by you (excluding rollover contributions) or on your behalf to this Plan or any other Qualified defined contribution plan sponsored by the Company is the lesser of (1) 25% of your W-2 taxable income or (2) $30,000. The $30,000 amount may be adjusted periodically as announced by the Internal Revenue Service. (d) MAXIMUM ELIGIBLE PAY LIMIT. The maximum amount of your eligible pay that may be taken into account per Plan Year for purposes of contributions is $150,000, and may be adjusted periodically as announced by the Internal Revenue Service ($160,000 for the Plan Year ending December 31, 1999). The $150,000 threshold was set in 1994. Investment Funds and Investment Instructions -------------------------------------------- WHO MAKES THE INVESTMENT DECISIONS? You make your own investment decisions. When you enroll in the Plan you may elect the percentage of your Account you want invested in each investment fund. However, the Plan 8 Administrator reserves the right to set a maximum percentage of the total election that you may direct into any specific investment fund. The Company has selected a variety of daily valued investment funds with different risk and return characteristics. Investment fund information sheets and prospectuses provide information about the investment options. If you have not received this information or would like updated information, you may obtain this information by telephoning 1- 800-776-4015 and speaking with a participant services representative (or if you are hearing impaired, telephone 1-800- 772-6009). If you need any additional information regarding the investment alternatives, or if you have any questions about your ERISA rights, you may contact: Bay State Gas Company, Benefits Committee, 300 Friberg Parkway, Westborough, Massachusetts 01581. Each of the investment funds has specific investment objectives for both risk and expected return. The specific investment funds available to you may be changed from time to time. You should make your investment choices based on your investment goals and your willingness to assume investment risk in order to realize potentially higher returns. Investment risk is defined as a measure of how much the investment returns can vary, either up or down, from period to period. If you do not specify an investment fund or funds for the investment of your contributions, your contributions will be invested in a default investment fund specified by the Plan Administrator. The Plan Administrator may change the designation of the default investment fund from time to time. The Plan is intended to be a participant directed individual account plan as described in Section 404(c) of ERISA and the regulations found in 29 C.F.R. Section 2550.404c-1. Accordingly, fiduciaries of the Plan may be relieved of liability for any losses which are the direct and necessary result of investment instructions given by a participant or beneficiary. INVESTMENT IN COMPANY STOCK FUND The investment funds include a Company Stock Fund, which invests in NIPSCO Common Shares. Previous investments in Bay State Gas Company common stock prior to the merger of Bay State Gas Company into a wholly-owned subsidiary of NIPSCO have been converted into Common Shares. For liquidity purposes, a portion of the Company Stock Fund will also be invested in money market type assets. INVESTMENT FUNDS The value of Accounts invested in an investment fund other than the Common Stock Fund will be net of any investment manager fees that may be charged with respect to that particular fund. The prospectus for each Fund describes the fees and expenses associ- 9 ated with investing in that fund. You will not be charged any fees or expenses with respect to investments in the Common Stock Fund. Purchases of Common Shares will normally be made as soon as practicable after the receipt by the Trustee of contributions which are to be invested in the Common Stock Fund. Purchases or sales of Common Shares will also normally be made as soon as practicable after the receipt of an election by you to transfer amounts to or from the Common Stock Fund. Each such purchase or sale will be made at the market price for Common Shares on the New York Stock Exchange at the time of such purchase or sale. You may upon request obtain additional information about each Investment Fund (e.g., each Fund's operating expenses, the prospectus and financial statements of each Fund and a list of assets comprising each Fund). If you need additional information regarding the investment alternatives, or if you have any questions about your ERISA rights, you may contact: Bay State Gas Company, Benefits Committee, 300 Friberg Parkway, Westborough, Massachusetts 01581. PERFORMANCE OF INVESTMENT FUNDS TOTAL RETURN PERFORMANCE BASED ON NET ASSET VALUE (NET OF ALL FEES AND EXPENSES) WITH ALL DISTRIBUTIONS Name of Fund 1997 1996 1995 ------------ ---- ---- ---- Stable Value Fund 6.19 % 5.80 % 6.65 % Masterworks S&P 500 33.07 % 22.62 % 37.15 % AIM Constellation Fund 18.86 % 11.26 % 33.43 % Templeton Foreign Fund 6.65 % 18.00 % 11.15 % Masterworks Life Path 2000 Fund 10.71 % 6.33 % 17.38 % Masterworks Life Path 2010 Fund 16.60 % 10.74 % 23.98 % Masterworks Life Path 2020 Fund 21.20 % 13.57 % 27.51 % Masterworks Life Path 2030 Fund 24.50 % 15.62 % 31.15 % Masterworks Life Path 2040 Fund 26.85 % 18.65 % 32.54 % The following table provides information concerning the performance of the Common Shares in the preceding fiscal years. Participants are 10 advised that past performance is not necessarily indicative of the future performance of Common Shares. In addition, NIPSCO Industries, Inc. conducted a 2-for-1 stock split in February, 1998. Therefore, the stock prices for dates prior to 1998 in the following table are provided prior to the stock split. The returns provided below also include the dividend granted in each year, if any. NIPSCO INDUSTRIES, INC. COMMON SHARES PERFORMANCE Stock Price 12/30/94 $29.750 Stock Price 12/29/95 $38.250 RETURN 1995 33.8 % Stock Price 12/29/95 $38.250 Stock Price 12/31/96 $39.625 RETURN 1996 8.0 % Stock Price 12/31/96 $39.625 Stock Price 12/31/97 $49.438 Return 1997 29.3 % Stock Price 12/31/97 $49.438 Stock Price 12/31/98 $30.438* RETURN 1998 27.0 % * Reflects stock split HOW MAY I OBTAIN INVESTMENT FUND PERFORMANCE INFORMATION? You may obtain recent investment fund performance information by telephoning 1-800-776-4015 (or if you are hearing impaired, telephone 1-800-772-6009). HOW MAY I CHANGE MY INVESTMENT INSTRUCTIONS AND WHEN DO MY NEW INVESTMENT INSTRUCTIONS TAKE EFFECT? You may change your investment instructions for future contributions to your Account, for all or any portion of your existing Account balance, or for both, at any time. You may make 10 investment changes each year at no charge. Your Account will be charged a fee for each additional change. Currently, this fee is $10.00 and may be changed from time to time. You will see these fees on your quarterly statement. If you telephone on a business day before the close of the New York Stock Exchange (4 p.m. Eastern time), your investment change will be processed that day. Otherwise it will be processed the next business day. For this purpose, a business day is a day on 11 which the stock markets are open for trading. A written confirmation of your investment instruction change will be sent within five business days after you make the change by telephone. To change your investment instructions, refer to Section entitled INSTRUCTIONS AT A GLANCE. INFORMATION REGARDING VOTING AND TENDERING COMPANY SHARES You will be entitled to instruct the Plan Trustee as to the voting or tendering of any whole and fractional shares of Company Shares held on your behalf in the Company Stock Fund. The Company will be responsible for the timely distribution of proxy solicitation or other material to you in connection with any shareholder vote or tender decision, including a form for you to complete to instruct the Trustee with regard to voting or tendering. The Trustee is responsible for tabulating and complying with the voting or tendering instructions it receives from participants. The Trustee will hold your instructions in confidence and will not divulge or release specific information regarding such instructions, on an individual basis, to any person, including officers or employees of the Company, except to the extent required by law. If you do not instruct the Trustee with regard to a shareholder vote or tender decision, your Common Shares will be voted or tendered as instructed by the Committee for the Plan. Vesting ------- Vesting is a term used to describe the portion of your Account which you own. Your balance in each of your Accounts is fully vested at all times. Participant Loans ----------------- MAY I BORROW FROM MY ACCOUNT? You may borrow from all of your Accounts. You may have two loans outstanding at a time. HOW MUCH MAY I BORROW? The minimum loan amount is $1,000. The maximum you may borrow is 50% of your vested Account balance or, if less, $50,000. The $50,000 amount is reduced by your highest outstanding balance on all loans during the preceding 12 months. For purposes of this paragraph, all of the Company's 12 Qualified plans are considered as part of this Plan to the extent the maximum loan amount would be decreased. You may obtain information about the amount you may borrow or do "modeling" to help you decide on the terms of the loan by telephoning 1-800-776-4015 (or if you are hearing impaired, telephone 1-800-772-6009). WHAT IS THE LOAN INTEREST RATE? The interest rate is fixed at the time you borrow and shall be a reasonable rate of interest, determined by the Plan Administrator, which provides the Plan with a return commensurate with the prevailing interest rate charged by persons in the business of lending money for loans which would be made under similar circumstances. The interest rate may be changed from time to time. You may obtain information about the current interest rate by telephoning 1-800-776-4015 (or if you are hearing impaired, telephone 1-800- 772-6009). WHAT IS THE LOAN REPAYMENT TERM? The loan repayment term may be for a period not to exceed five years. HOW DO I MAKE LOAN PAYMENTS AND HOW ARE THE PAYMENTS INVESTED? Loan payments, consisting of principal and interest, are made through convenient payroll deduction (or by check during any period you are temporarily ineligible for payroll deduction), and each payment is credited to your Account. You may make additional loan payments at any time by check or pay off the remaining balance of your loan at any time by cashier's check, certified check or money order. You may obtain your loan payoff amount by telephoning 1-800-776-4015 (or if you are hearing impaired, telephone 1-800-772-6009). Loan payments credited to your Account are invested in accordance with your current investment instructions for future contributions to your Account at the time the loan payment is deposited into your Account. WHAT HAPPENS IF MY EMPLOYMENT TERMINATES? Your outstanding loan balance is due should your employment with the Company terminate for any reason. Your outstanding loan balance is due upon the earlier of the date you request a distribution from your Account or 90 days after you terminate employment with the Company. If you do not repay your loan balance before you request a distribution from your account or within 90 days from your termination of employment, the Plan 13 Administrator will send you a written notice of default and a demand for past due amounts. You have 30 days from receipt of the written notice of default in which to repay the remaining loan balance before the default becomes final. Upon default, the unpaid balance will become a taxable distribution to you, except to the extent any portion of the unpaid balance represents a return of after-tax contributions. HOW IS MY LOAN SECURED? Your loan will be evidenced by a promissory note, secured by the portion of your Account from which the loan is made. The Plan shall have a lien on this portion of your Account. A suspension of loan payments may be authorized for up to 12 months if you are on leave of absence without pay. During the suspension period interest on your outstanding loan balance will continue to accrue. All past due amounts will be due at the end of the suspension period unless otherwise authorized. A loan is treated as in default if scheduled loan payments are more than 90 days late. You will have 30 days from the time you receive written notice of a default and demand for past due amounts to correct the default before it becomes final. In the event the default becomes final, the default will be treated as a taxable distribution to you, except to the extent any portion of the unpaid balance represents a return of after-tax contributions. However, your promissory note will not be distributed and interest will continue to accrue on your outstanding loan balance, until such time as you are otherwise eligible for an in-service withdrawal or a distribution from your Account. WHAT HAPPENS TO MY LOAN IF I FILE FOR BANKRUPTCY? Under federal law, the Plan is generally not allowed to accept your loan repayments while you are in bankruptcy. Once your bankruptcy is discharged, if your loan is not in default you may restart you loan payments. A loan is treated as in default if scheduled loan payments are not made for more than 90 days. You will have 30 days from the time you receive written notice of a default and demand for past due amounts to correct the default before it becomes final. If your bankruptcy is not discharged within this period of time, your loan will be in default. The default will be treated as a taxable distribution to you, except to the extent any portion of the unpaid balance represents a return of after-tax contributions. However, your promissory note will not be distributed and interest will continue to accrue on your outstanding loan balance, until such time as you are otherwise eligible for an in-service withdrawal or a distribution from your Account. 14 ARE THERE ANY LOAN FEES? A loan maintenance fee of $3.50 will be assessed to your Account for each month your Account has a loan balance. The fee will be charged quarterly to your Account. You will see these fees on your quarterly statement. WHAT HAPPENS WHEN I REQUEST A LOAN? Upon processing of your request, your investments will be redeemed as needed to fund your loan. Within each Account used for funding your loan, amounts will be redeemed from your investment funds in direct proportion to the value of your interest in each investment fund as of the date the loan is processed. As the Plan's investment funds are daily valued investment funds, your investments are redeemed based on the value of each such investment on the day your loan is processed. Your check and loan documents are generally issued within three business days thereafter. To request a loan, refer to Section entitled Instructions At A Glance. Withdrawals While You Are an Employee ------------------------------------- UNDER WHAT CIRCUMSTANCES MAY I MAKE A WITHDRAWAL FROM THE PLAN WHILE I AM AN EMPLOYEE? Withdrawals while you are an employee are permitted as described below and after attainment of age 70-1/2 (refer to Section entitled DISTRIBUTIONS AFTER YOU TERMINATE EMPLOYMENT WITH THE COMPANY OR AFTER YOU ATTAIN AGE 70-1/2). These withdrawals are referred to as in-service withdrawals. There is no minimum amount for any type of in-service withdrawal. * HARDSHIP WITHDRAWAL You may make an in-service withdrawal in certain cases of financial hardship. You may withdraw from all of your Accounts, except for any earnings credited to your Employee Pre-Tax Account after the start of the first Plan Year beginning after December 31, 1988. The amount you may withdraw may be no greater than the amount necessary to satisfy your financial need including amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the withdrawal. For this purpose, hardship is a financial need to: 15 * Purchase your principal residence. * Pay unreimbursable medical expenses incurred or to be incurred by you, your spouse or dependents. * Pay unreimbursable tuition, related educational fees and room and board for up to the next 12 months of post-secondary education for you, your spouse or dependents. * Pay amounts necessary to prevent losing your principal residence through eviction or foreclosure on your mortgage. You may qualify for a Hardship Withdrawal by first borrowing and withdrawing all other available amounts from this Plan (and from any other plan maintained by the Company), other than hardship withdrawals. You will be ineligible to contribute to the Plan for 12 months from the date of your Hardship Withdrawal. A special limitation may reduce the maximum amount of Employee Pre-Tax contributions you may contribute in the calendar year following the calendar year of your Hardship Withdrawal. * PRIOR AFTER-TAX ACCOUNT WITHDRAWAL You may make a Prior After-Tax Account Withdrawal once in any 12-month period. * ROLLOVER ACCOUNT WITHDRAWAL You may make a Rollover Account Withdrawal once in any 12- month period. * OVER AGE 59-1/2 WITHDRAWAL Once you have attained age 59-1/2, you may make an Over Age 59-1/2 Withdrawal once in any 12-month period. You may withdraw from all of your Accounts. If you have a Prior After-Tax Account, you will need to designate whether you want to withdraw from this Account first as part of your Over Age 59-1/2 Withdrawal. * PRIOR COMPANY ACCOUNT PLUS WITHDRAWAL You may make a Prior Company Account Plus Withdrawal once in any 12- month period. You may withdraw from your Prior After-Tax, Rollover and Prior Company Accounts. 16 WHAT ARE MY IN-SERVICE WITHDRAWAL PAYMENT OPTIONS? Your in-service withdrawal will be paid in a single lump sum, in cash. WHAT ARE MY IN-SERVICE WITHDRAWAL METHODS? You may choose to have all or a portion of your in-service withdrawal that is eligible for rollover be made payable directly to an IRA, another employer's qualified plan or to you. The portion of your in-service withdrawal representing a return of after-tax contributions is not eligible for rollover and will be made payable to you. Regarding the portion of your in-service withdrawal that is eligible for rollover and that is made payable to you, the law requires that, except for hardship withdrawals, 20% of that amount be withheld for federal taxes. Your actual tax liability may be more or less depending on your personal tax situation. WHAT HAPPENS WHEN I REQUEST AN IN-SERVICE WITHDRAWAL? An IRS Tax Notice is required to be provided to you no more than 90 days before your in-service withdrawal is made. The IRS Tax Notice summarizes the rules related to rollovers, income tax and penalties that may apply to your in-service withdrawal. You should review the IRS Tax Notice prior to requesting an in- service withdrawal. Upon processing of your request, your investments will be redeemed as needed to fund your in-service withdrawal. Within each Account used for funding your in- service withdrawal, amounts will be redeemed from your investment funds in direct proportion to the value of your interest in each investment fund as of the date the in-service withdrawal is processed. As the Plan's investment funds are daily valued investment funds, your investments are redeemed based on the value of each such investment on the day your in-service withdrawal is processed. Your check is generally issued within three business days thereafter. To request an in-service withdrawal, refer to Section entitled INSTRUCTIONS AT A GLANCE. Distributions After You Terminate Employment with the Company or After You Attain Age 70-1/2 ---------------------------------------------------------------------- WHAT ARE MY DISTRIBUTION PAYMENT OPTIONS? If your vested Account balance is $5,000 or less, and if your vested Account balance at the time of any prior in-service withdrawal or distribution did not exceed $5,000, your distribution payment options are limited to a single lump sum. 17 Otherwise, you may choose to have your vested Account balance distributed as follows: * paid in a single lump sum, * a portion paid in a lump sum, and the remainder paid later, or * paid in periodic installments over a period not to exceed the life expectancy of you and your beneficiary. Your distribution will be paid in cash, except to the extent of the distribution of your outstanding loan balance, if any, and except (if your Account is distributed in a lump sum) to the extent you choose to receive the portion of your distribution attributable to your Account balance invested in the Company Stock Fund in the form of whole shares of Company Shares and cash in lieu of fractional shares. WHAT ARE MY DISTRIBUTION METHODS? You may choose to have all or a portion of your distribution that is eligible for rollover be made payable directly to an IRA, another employer's qualified plan or to you. The portion of your distribution representing a return of after-tax contributions is not eligible for rollover and will be made payable to you. If your vested Account balance is $5,000 or less, and if your vested Account balance at the time of any prior in-service withdrawal or distribution did not exceed $5,000 if you do not request a distribution, your vested Account balance may be distributed to you without your consent in a check made payable to you. Regarding the portion of your distribution that is eligible for rollover and that is made payable to you, the law requires that 20% of that amount be withheld for federal taxes. Your actual tax liability may be more or less depending on your personal tax situation. If you elect distribution in periodic installments, your Account will be charged a fee for each installment payment. You will see these fees on your quarterly statement. Currently, this fee is $3.00 per check and may be changed from time to time. WHEN ARE DISTRIBUTIONS MADE? You may generally choose when to take a distribution of your vested Account balance at any time following your termination of employment with the Company on or before age 65. However, if your vested Account balance is $5,000 or less, and if at the time of any prior inservice withdrawal or distribution your vested Account balance did not exceed $5,000, you should request a distribution of your vested Account balance at the time you terminate employment with the Company or shortly thereafter. If 18 you do not request a distribution, your vested Account balance may be distributed to you without your consent in a check made payable to you. Mandatory 20% federal tax withholding will apply as described above. The law requires that you start taking distributions from your Account by April 1 of the calendar year following the later of either: (1) the calendar year in which you reach age 70-1/2, or (2) the calendar year in which you retire. As a result, you are not required to start taking distributions by April 1 of the calendar year in which you reach age 70-1/2 if you are still working for the Company at that time. Your Account will continue to be invested as you direct until it is distributed to you. WHAT HAPPENS WHEN I REQUEST A DISTRIBUTION AFTER I TERMINATE OR AFTER I ATTAIN AGE 70-1/2? An IRS Tax Notice is required to be provided to you no more than 90 days before your distribution is made. The IRS Tax Notice summarizes the rules related to rollovers, income tax and penalties that may apply to your distribution. You should review the IRS Tax Notice prior to requesting a distribution. Upon processing of your request, your investments will be redeemed as needed to fund your distribution. Within each Account used for funding your distribution, amounts will be redeemed from your investment funds in direct proportion to the value of your interest in each investment fund as of the date the distribution is processed. As the Plan's investment funds are daily valued investment funds, your investments are redeemed based on the value of each such investment on the day your distribution is processed. Your check is generally issued within three business days thereafter. If you choose to receive the portion of your distribution attributable to your Account balance in the Company Stock Fund in the form of whole shares of Company Shares and cash in lieu of fractional shares, your stock certificate will be issued within a few weeks thereafter. To request a distribution upon termination of employment with the Company or a distribution after attainment of age 70-1/2, refer to Section entitled INSTRUCTIONS AT A GLANCE. WHAT ARE THE TAX TREATMENTS, TAXES AND PENALTIES FOR DISTRIBUTIONS? The IRS Tax Notice summarizes the rules related to rollovers, TAX treatments, income tax and penalties that may apply to your distribution. 19 Death Benefits -------------- WHAT HAPPENS TO MY PLAN BENEFIT IF I DIE? Upon your death, your Account becomes payable to your beneficiary(ies). If you die while an employee, your Account will become fully vested, if not otherwise fully vested. In general, your beneficiary has the same options as you do regarding when and how to receive payment, except that a distribution to your beneficiary may only be eligible for rollover if your beneficiary is your spouse. Your beneficiary should contact Culture Development for further instructions. HOW MAY I DESIGNATE MY BENEFICIARY? When you become eligible to participate in the Plan or, if earlier, at the time you make a Rollover Contribution, complete and file a Beneficiary Designation Form stating who is to receive your Account balance if you die. You may change your beneficiary(ies) at any time by completing and filing a new Beneficiary Designation Form. The change takes effect on the date your new completed Beneficiary Designation Form is on file with Culture Development If you are married, your spouse is automatically your sole primary beneficiary. To designate someone in addition to or other than your spouse as a primary beneficiary, you must obtain your spouse's written consent to your designation and your spouse's signature must be witnessed by a Plan representative or Notary Public. If you complete and file a Beneficiary Designation Form and later become married or remarry, your earlier Beneficiary Designation Form will not be valid. You will need to complete and file a new Beneficiary Designation Form. If you fail to complete and file a Beneficiary Designation Form before you die, your benefit upon death will be paid to the individual(s) in the first of the following categories in which there is at least one survivor: your spouse; your children, (in equal shares) by right of representation; or your estate. Reemployment with the Company ----------------------------- WHEN CAN I RESUME MY PARTICIPATION? If you were a Plan participant before your employment with the Company terminated and you are rehired by the Company, you may resume participation on the date of your rehire as an eligible employee. If you were not a participant when your employment with the Company terminated, you will enter the Plan as described in Section entitled ELIGIBILITY, but no earlier than the date you 20 would have entered the Plan if you had not terminated your employment with the Company. Federal Tax Consequences of Participation in the Plan ----------------------------------------------------- The Plan is operated as a qualified plan under Sections 401(a) and 401(k) of the Internal Revenue Code. As a result, the amount of your pay which you elect to defer under the Plan through Employee Pre-Tax contributions, your Rollover contributions and Employer Contributions, if any, and any earnings on, or appreciation of, your Account balance are not subject to Federal income taxes until such amounts are withdrawn or distributed to you or your beneficiary. The amount of your Employee Pre-Tax contributions will, however, be included in your income in the year in which such amounts are earned for purposes of Social Security taxes. Distributions and withdrawals generally become taxable in the year in which you receive them. A distribution or withdrawal may be rolled over to a qualified retirement plan of another employer or to an individual retirement account or individual retirement annuity ("IRA") if the distribution is an "eligible rollover distribution" as defined in the Internal Revenue Code. In such event, the amount rolled over and earnings thereon are not subject to income tax until subsequently distributed to you or your beneficiary. Any amount of an "eligible rollover distribution" that is not rolled over may be subject to a mandatory 20% withholding requirement (see "Income Tax Withholding" below). If a lump sum distribution includes Common Shares, the excess, if any, of the fair market value of such Common Shares over the cost of the Common Shares to the Trustee is not subject to federal income tax at the time of distribution but generally will be subject to federal income tax when such Common Shares are subsequently sold. To the extent provided by the Internal Revenue Code, you may elect not to defer the tax on net unrealized appreciation in Common Shares until the year of disposition of such Common Shares, thus subjecting the entire distribution to federal income tax at the time of distribution. An additional 10% excise tax will be imposed on any distribution or withdrawal received by you before you reach age 59-1/2 unless such distribution or withdrawal is (i) rolled over to another qualified plan or an IRA, (ii) made to a beneficiary after your death, (iii) made on account of your retirement due to disability (as defined in the Plan), (iv) made after separation from service after attainment of age 55, (v) made to you for payment of medical expenses that could be deducted on your tax return or (vi) made to an alternate payee pursuant to a qualified domestic relations order. 21 Amounts that are included in taxable income may qualify for 5- year forward averaging tax treatment if you receive the amount in a lump sum distribution prior to January 1, 2000 but after you reach age 59-1/2 and you actively participated in the Plan for at least five years prior to the year in which the lump sum is distributed to you. Under a transitional rule, if you reached age 50 before January 1, 1986, you may make one election, without regard to the age 59-1/2 requirement, to use either 5-year forward averaging (using current tax rates) or 10-year forward averaging (using the 1986 tax rates) with respect to the lump sum distribution, if otherwise eligible. Five year forward averaging will not be available for distributions received on or after January 1, 2000. Employee Pre-Tax contributions and Employer Contributions, if any, made to the Plan by the Company on your behalf are deductible by the Company in the year in which the contributions are made. The rules governing the Federal income taxation of a distribution are complex and are subject to change. Accordingly, you should seek the advice of a personal tax advisor in connection with a distribution. Income Tax Withholding ---------------------- Most Plan distributions and withdrawals are subject to mandatory federal income tax withholding. The Trustee is required to withhold 20% of any "eligible rollover distribution", unless you elect to have the Trustee make a direct rollover of such distribution into another employer's qualified retirement plan that accepts rollovers or to an individual retirement account or an individual retirement annuity. A distribution or withdrawal is not an "eligible rollover distribution", and thus may not be rolled over, if it is (i) a series of substantially equal periodic installments over more than ten years, or over your life expectancy or the joint life expectancies of you and your beneficiary, (ii) a distribution of after-tax contributions, (iii) a required distribution due to attaining age 70-1/2 (or if later, due to retiring) or (iv) a distribution made to a nonspousal beneficiary. If you request a distribution from the Common Stock Fund in the form of Common Shares rather than cash, the portion of your Account in the Common Stock Fund will not be liquidated to pay the withholding tax; however, the applicable taxes will be withheld from any cash portion of the distribution. A distribution or withdrawal that is not an "eligible rollover distribution" is subject to voluntary federal income tax withholding, which means that you can request that no withholding tax be deducted from your distribution. 22 Future of the Plan ------------------ The Company intends for the Plan to be a permanent part of your total benefits program. However, the Company reserves the right to terminate the Plan at any time. If the Plan is terminated all Accounts will become fully vested, if not otherwise fully vested, and payable as determined by the Plan Administrator. The Company reserves the right to amend the Plan at any time if it becomes desirable or necessary. You will be notified within 210 days after the end of the Plan Year of any relevant Plan amendment. The Plan (including any amendments) is subject to approval by the IRS. From time to time, changes in the details of the Plan may be required by the IRS. However, no Plan amendment may take away any benefits you have earned. As the Plan benefits are provided by fully funded individual participant Accounts, benefits under this Plan are not insured by the Pension Benefit Guaranty Corporation (PBGC). PBGC insurance does not apply to this type of plan. Plan Administration Issues -------------------------- ACCOUNT STATEMENTS AND ACCOUNT INFORMATION You will receive statements four times each year. They will normally be sent to you within three weeks after the end of each quarter of the Plan Year. You have easy access to information regarding your Account at any time. To obtain information regarding your Account, refer to Section entitled INSTRUCTIONS AT A GLANCE. PLAN ADMINISTRATOR The Company is the Plan Administrator. The Company may appoint an administrative committee and delegate to it all or part of its duties to oversee the Plan's operations. As a Plan fiduciary, the Company acts on your behalf to see that the Plan is administered fairly according to standards outlined in the law and the terms of the Plan and Trust Agreement. Plan records are maintained on a Plan Year basis. The Plan Year ends on December 31. 23 AGENT FOR SERVICE OF LEGAL PROCESS Service of legal process may be made upon the Company, as Plan Administrator, or Plan Trustee at the address listed in Section entitled PLAN DIRECTORY. TYPE OF PLAN This Plan is a profit sharing plan with a pre-tax salary deferral (401(k)) feature. TOP HEAVY CONTRIBUTION PROVISIONS The Plan includes provisions which apply only if the Plan is "top heavy." A plan is top heavy if more than 60% of the total plan assets belong to "key employees." Key employees include certain officers, shareholders and owners. If the plan is top heavy, contributions may not be made by or on behalf of key employees, other than a Rollover contribution, unless the Company makes a minimum contribution to all eligible employees. Other Things You Should Know ---------------------------- TRUST FUND All of the Plan's assets are held in a trust fund which is the sole source of all benefit payments. The trust fund is a separate and distinct legal entity, and is not part of the Company. The assets of the trust fund are not commingled with Company assets. Generally, no part of the trust fund can be attached by creditors of any Plan participant or of the Company. Assets of the trust fund are held exclusively to pay Plan benefits and expenses, and cannot revert to or be paid to the Company, except under certain limited circumstances permitted by law. The Plan Trustee holds the Plan's assets, executes all of the investments, maintains the financial records relating to the trust, and makes all benefit payments as directed by the Plan Administrator. PLAN FEES AND EXPENSES The Company pays all administrative fees and expenses related to maintaining the Plan as a whole. The Company may, at a later date, choose to have all or a portion of such fees and expenses paid by participants. The Company will notify you in advance of any such change. If changed, an administrative fee will be assessed to your Account each month and charged quarterly to your Account, except that no fee may reduce your Account balance below zero. 24 You will pay any special fees related to your own Account, such as loan fees, fees for installment payments and for change of your investment instructions more than 10 times per year. You will see these fees on your quarterly statement. PLAN PARTICIPATION PURSUANT TO A COLLECTIVE BARGAINING AGREEMENT The Plan is maintained pursuant to one or more collective bargaining agreements. You may obtain a copy of each such collective bargaining agreement by contacting the Plan Administrator or Culture Development. CLAIM REVIEW PROCEDURES As the Plan Administrator, the Company is responsible for determining and informing you of your entitlement to a benefit and of any amounts payable to you. If you disagree with a decision, you or your authorized representative may ask for a review by submitting a written request to Culture Development. Your request should include the issues and comments you feel are important. You also have the right to review pertinent documents. The review process sets the following limits on the amount of time you may take to make your request and for the Company to respond: Days To Respond Action From Prior Action ------ ----------------- Company sends you a benefit statement . . . . . . -- You request an initial review . . . . . . 60 days Company sends you its initial decision . . . . . . 90 days You request a final review . . . . . . 60 days Company sends you its final decision . . . . . . 60 days The Company will either approve your claim or explain why your claim is being denied (by referring to specific Plan provisions) and how applications are reviewed. In special circumstances, the Company may notify you and take up to an additional 90 days for its initial review and 60 days for its final review. NO ASSIGNMENT OF YOUR ACCOUNT IS PERMITTED Under this Plan, you may not assign, sell, transfer or use your Account as collateral, other than for a loan from your Account as described in Section entitled PARTICIPANT LOANS. In addition, creditors may not attach your Account as a means of collecting debts. However, the Plan Administrator will comply with a "qualified domestic relations order" (QDRO). This is an order or judgment from a state court directing that a participant's Account, or portion thereof, be paid to an Alternate Payee 25 (spouse, former spouse, child or other dependent of the participant) as child support, alimony or part of a division of marital property rights, provided that the order meets certain requirements of federal law. NO EMPLOYMENT RIGHTS Your participation in the Plan does not give you any employment rights with the Company. YOUR RIGHTS UNDER FEDERAL LAW As a participant of this Plan you are entitled to certain rights and protection under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). ERISA provides that all Plan participants shall be entitled to: * Examine, without charge, at the Plan Administrator's office, all Plan documents and copies of all documents filed by the Plan with the U.S. Department of Labor, such as annual reports; * Obtain copies of all Plan documents and information upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies; * Receive a summary of the Plan's annual financial report. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report; and * Obtain a statement telling you the amount of your Account balance, the portion of your Account balance you currently have a right to and when you will have the right to receive payment. If you do not have a right to a benefit, the statement will tell you how many years you have to work to get this right. This statement must be requested in writing and is not required to be given more than once a year. The Plan Administrator must provide the statement free of charge. In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate your Plan, called "fiduciaries" of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries. No one, including your employer or any other person, may terminate you or otherwise discriminate against you in any way to prevent you from obtaining a benefit or exercising your rights under ERISA. 26 If your claim for a benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have the Plan Administrator review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request written materials from the Plan Administrator and do not receive them within 30 days, you may file suit in federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $100 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for a benefit which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay the costs and fees if, for example, it finds your claim is frivolous. If you have any questions about your Plan, you should contact Culture Development. If you have any questions about this statement of your rights under ERISA, you should contact the nearest Area Office of the Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Pension and Welfare Benefits Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington D.C. 20210. PLAN DIRECTORY * OFFICIAL PLAN NAME -- Bay State Gas Company Savings Plan for Operating Employees * EMPLOYER AND PLAN NUMBER -- Employer's Identification Number (EIN) is 04-2548120 Plan Identification Number (PIN) 011 * OTHER PARTICIPATING COMPANIES -- Northern Utilities, Inc. Granite State Gas Transmission, Inc. Energy USA * PLAN YEAR -- January 1 through December 31 27 * PLAN SPONSOR -- Bay State Gas Company 300 Friberg Parkway Westborough, Massachusetts 01581 (508) 836-7114 * INITIAL EFFECTIVE DATE -- January 1, 1988 * NAME OF PLAN ADMINISTRATIVE COMMITTEE Benefits Committee Bay State Gas Company * Plan Trustee -- Merrill Lynch Group Employee Services P.O. Box 6610 9603 Meridian Boulevard B3-GES-CS Englewood, CO 80155-6610 (800) 776-4015 28 INSTRUCTIONS AT A GLANCE IF YOU WANT TO YOU NEED TO DO THE FOLLOWING Enroll In The Plan And Elect To Make Contributions: Complete a Plan Enrollment Form and Beneficiary Designation Form. Return the forms to Culture Development for processing. Your Enrollment Form will be forwarded to Merrill Lynch for processing of your Investment Fund instructions. You will receive a Personal Identification Number (PIN) for the Bay State Gas Company Savings Plan for Operating Employees in a secured envelope as a separate mailing. Make A Rollover Contribution: Request a Rollover Contribution Form from Culture Development. Complete and return the form to Culture Development Department for approval and forwarding to Merrill Lynch for processing. Change Your Contribution Percentage Election Or Discontinue Or Resume Your Contributions: Request a Contribution Change Form from Culture Development. Complete and return the form to Culture Development for processing. Change Your Investment Telephone Merrill Lynch at 1-800-776-4015 (or Instructions: if you are hearing impaired telephone 1-800- 772-6009). Request A Participant Loan: Telephone Merrill Lynch at 1-800-776-4015 (or if you are hearing impaired telephone 1-800- 772-6009). Request An In- Service Withdrawal: Telephone Merrill Lynch at 1-800-776-4015 (or if you are hearing impaired telephone 1-800- 772-6009). If you have not already received an IRS Tax Notice within the last 90 days, an IRS Tax Notice will be provided to you. 29 IF YOU WANT TO YOU NEED TO DO THE FOLLOWING If you are requesting a Hardship Withdrawal, Merrill Lynch will send you a Hardship Withdrawal Request Form. Upon completion, return the form to Culture Development for approval and forwarding to Merrill Lynch for processing. Request A Distribution Upon Termination: Telephone Merrill Lynch at 1-800-776-4015 (or if you are hearing impaired telephone 1-800- 772-6009). If you have not already received an IRS Tax Notice within the last 90 days, an IRS Tax Notice will be provided to you. Request An Age 70-1/2 Or Over Distribution Required By Law: Request an Age 70-1/2 Distribution Packet from Culture Development. The packet will include instructions for processing and an IRS Tax Notice. Obtain Information Regarding Your Account, Investment Fund Prices, Loan Interest Rate Etc.: Telephone * Merrill Lynch at 1-800-776-4015 (or if you are hearing impaired telephone 1-800- 772-6009). _____________________________ * ALL OR A PORTION OF THE CALLS ARE TAPE RECORDED FOR YOUR PROTECTION. The EVA operates 24 hours a day, 7 days a week. If the information you need or the transaction you want to perform is not available through EVA, or if you prefer to speak to a participant services representative, press "0" as soon as EVA answers. If you have a rotary phone, simply stay on the line. PARTICIPANT SERVICES REPRESENTATIVES ARE AVAILABLE ON ANY BUSINESS DAY BETWEEN 8 A.M. AND 8 P.M. (EASTERN TIME). AVAILABLE INFORMATION NIPSCO files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). You may read and copy any of these reports, proxy statements and other infor- mation at the Commission's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the 30 operation of the Public Reference Room by calling the Commission at 1- 800-SEC-0030. The Commission also maintains a site on the World Wide Web that contains reports, proxy statements and other information regarding NIPSCO. The address of the Commission's Web site is http://www.sec.gov. Information about NIPSCO is also available at http://www.nipsco.com; that information, however, it not a part of this Prospectus except to the extent it is specifically incorporated by reference in this Prospectus. NIPSCO has filed with the Commission a Registration Statement on Form S-3 (including any amendments thereto, the "Registration Statement") under the Securities Act of 1933 (the "Securities Act") with respect to the securities offered hereby. This Prospectus, which constitutes a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement. For further information about NIPSCO and the Common Shares offered hereby, reference is made to the Registration Statement and the exhibits thereto, which may be inspected at the Commission's Public Reference Room or through the Commission's Web site. 31 INFORMATION INCORPORATED BY REFERENCE The following documents previously filed by NIPSCO with the Commission are incorporated by reference into this Prospectus: (1) NIPSCO's Annual Report on Form 10-K and Form 10-KA for the year ended December 31, 1998; (2) NIPSCO's Current Report on Form 8-K dated February 8, 1999 and filed February 9, 1999; (3) The description of NIPSCO's Common Shares contained in NIPSCO's Registration Statement on Form 8-B filed with the Commission on November 25, 1987; and (4) Bay State's Annual Report on Form 10-K for the year ended September 30, 1998. All documents filed by NIPSCO with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this Prospectus and prior to the termination of the offering of the Common Shares under the Plan, shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document, which is also deemed to be incorporated by reference modifies or replaces such statement. NIPSCO WILL PROVIDE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED BY REFERENCE HEREIN (OTHER THAN EXHIBITS NOT SPECIFICALLY INCORPORATED BY REFERENCE INTO THE TEXTS OF SUCH DOCUMENTS). REQUESTS FOR SUCH DOCUMENTS SHOULD BE DIRECTED TO SHAREHOLDER SERVICES, NISOURCE INC., 5265 HOHMAN AVENUE, HAMMOND, INDIANA 46320 (TELEPHONE: 1-800-348-6466). LIMITATION OF LIABILITY Neither NIPSCO, Bay State, nor any of its agents (including Bay State or NIPSCO 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 Because the Plan is maintained in accordance with Section 401 et seq. of the Internal Revenue Code of 1986, as amended and the Employee 32 Retirement Income Security Act of 1974, as amended and because it is intended that all purchases of Common Shares will be made on the open market by the Trustee of the Plan, NIPSCO does not intend to have any net proceeds from the sale of the Common Shares offered under the terms of the Plan. PLAN OF DISTRIBUTION The Common Shares being offered are offered pursuant to the Plan, the terms of which provide for the purchase of Common Shares. DESCRIPTION OF COMMON SHARES NIPSCO's certificate of incorporation authorizes the issuance of 400,000,000 Common Shares, without par value, of which 117,525,257 were issued and outstanding on October 31, 1998. The description of the Common Shares is incorporated by reference into this Prospectus. See "Incorporation of Information by Reference" for information on how to obtain a copy of this description. EXPERTS The consolidated financial statements and schedules of NIPSCO and its subsidiaries incorporated by reference in this Prospectus from NIPSCO's Annual Report on Form 10-K for the year ended December 31, 1998, and the Current Report on Form 8-K dated February 8, 1999, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are incorporated herein in reliance upon the authority of such firm as experts in giving said reports. The consolidated financial statements and schedule of Bay State and subsidiaries as of September 30, 1998 and 1997, and for each of the years in the three-year period ended September 30, 1998, have been incorporated by reference herein and in the registration statement in reliance upon the reports of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The reports of KPMG Peat Marwick LLP covering the September 30, 1998 financial statements contains an explanatory paragraph that states that Bay State changed its method of accounting for postretirement benefit plans during the year ended September 30, 1998. LEGAL MATTERS Certain legal matters in connection with the Common Shares offered hereby have been passed upon for NIPSCO by Schiff Hardin & Waite, Chicago, Illinois. 33 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The estimated expenses in connection with the offering are as follows: Registration fee under the Securities Act . . . . . . $ 106 Legal fees and expenses . . . . . . . . . . . . . . . 25,000 Accounting fees and expenses . . . . . . . . . . . . . 15,000 Miscellaneous . . . . . . . . . . . . . . . . . . . . 7,500 ------ $ 47,606 Total . . . . . . . . . . . . . . . . . $ ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The By-Laws of NIPSCO provide for indemnification by NIPSCO of each of its directors and officers to the fullest extent permitted by law for liability of such director or officer arising by reason of his or her status as a director or officer of NIPSCO or its subsidiaries. Under NIPSCO's By-Laws as well as the Indiana Business Corporation Law (the "Indiana BCL"), NIPSCO is required to indemnify its directors and officers against expenses, judgments, decrees, fines, penalties and settlements actually and reasonably incurred by such person in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative, to which such person is a party by reason of his or her connection with NIPSCO, provided that such person acted in good faith and in a manner he or she reasonably believed to be in the best interest of NIPSCO, or, with respect to a criminal proceeding, has no reasonable cause to believe that his or her conduct was unlawful. The By-Laws of NIPSCO provide that, except where a director or officer is substantially and finally successful on the merits, NIPSCO may not indemnify a director or officer (unless ordered by a court) until after a determination has been made that indemnification of the director or officer is permissible because he or she met the applicable standards of conduct. NIPSCO also may not advance expenses prior to the disposition of an action, suit or proceeding until: (a) the director or officer provides NIPSCO with a written affirmation of his or her good faith belief that he or she has met the applicable standards of conduct and an undertaking to repay the advance if it is ultimately determined that he or she did not meet the applicable standards of conduct, and (b) a determination has been made, that, based on the facts then known to those making the determination, the director or officer met the applicable standards of conduct. The determination that a director or officer has met the applicable standards of conduct may be made by a majority vote of a quorum consisting of disinterested directors, a majority vote of a committee designated by the board of directors consisting of two or more disinterested directors (only if a quorum of the board cannot be II-1 obtained), special legal counsel or a majority vote of disinterested shareholders. As authorized under NIPSCO's By-Laws and the Indiana BCL, NIPSCO and its subsidiaries have insurance which insures directors and officers for acts committed as such directors or officers which are determined not to be indemnifiable under NIPSCO's indemnity provisions. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of NIPSCO pursuant to the foregoing provisions, or otherwise, NIPSCO has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by NIPSCO of expenses incurred or paid by a director, officer or controlling person of NIPSCO in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, NIPSCO will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 16. EXHIBITS. The Exhibits filed herewith are set forth on the Exhibit Index filed as part of this Registration Statement. ITEM 17. UNDERTAKINGS. (a) NIPSCO hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be II-2 reflected in the form of prospectus filed with the Commission pursuant to Rule 242(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by NIPSCO pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorpo- rated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post- effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) NIPSCO hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of NIPSCO's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15 (d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of NIPSCO pursuant to the foregoing provisions, or otherwise, NIPSCO has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by NIPSCO of expenses incurred or paid by a director, officer or controlling person of NIPSCO in the successful defense of any action, suit or proceeding) is asserted by such director, officer or II-3 controlling person in connection with the securities being registered, NIPSCO will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Merrillville, State of Indiana, on December 1, 1998. NIPSCO INDUSTRIES, INC. (Registrant) By: /s/ Gary L. Neale ------------------------------- Gary L. Neale Chairman and President POWER OF ATTORNEY Each person whose signature appears below hereby constitutes and appoints Stephen P. Adik the true and lawful attorney-in-fact and agent of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Gary L. Neale Chairman, President and Director December 1, 1998 ----------------------------------- (Principal Executive Officer) Gary L. Neale /s/ Stephen P. Adik Executive Vice President (Principal December 1, 1998 ----------------------------------- Financial Officer and Principal Stephen P. Adik Accounting Officer) SIGNATURE TITLE DATE --------- ----- ---- /s/ Steven C. Beering Director December 1, 1998 ----------------------------------- Steven C. Beering /s/ Arthur J. Decio Director December 1, 1998 ----------------------------------- Arthur J. Decio /s/ James T. Morris Director December 1, 1998 ----------------------------------- James T. Morris /s/ Denis E. Ribordy Director December 1, 1998 ----------------------------------- Denis E. Ribordy /s/ Ian M. Rolland Director December 1, 1998 ----------------------------------- Ian M. Rolland /s/ John W. Thompson Director December 1, 1998 ----------------------------------- John W. Thompson /s/ Robert J. Welsh Director December 1, 1998 ----------------------------------- Robert J. Welsh /s/ Carolyn Y. Woo Director December 1, 1998 ----------------------------------- Carolyn Y. Woo ----------------------------------- Director Roger A. Young /TABLE INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION ------ ----------- 4.1 Form of Bay State Gas Company Savings Plan for Operating Employees. 4.2* Amended and Restated Agreement and Plan of Merger dated as of December 18, 1997, and amended and restated as of March 4, 1998, and further amended as of November 16, 1998, among NIPSCO Industries, Inc., Bay State Gas Company and Acquisition Gas Company, Inc. contained in Bay State's Current Report on Form 8-K filed with the Commission on November 25, 1998. 4.3* The description of NIPSCO's Common Shares contained in NIPSCO's Registration Statement on Form 8-B filed with the Commission on November 25, 1987. 5 Opinion of Schiff Hardin & Waite. 23.1 Consent of Arthur Andersen LLP. 23.2 Consent of KPMG Peat Marwick LLP. 23.3 Consent of Schiff Hardin & Waite (included in its opinion filed as Exhibit 5). 24 Powers of Attorney (as set forth in the signature pages hereto). __________ * Incorporated by reference. EX-4 2 EXHIBIT 4.1 ----------- BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES Plan and Trust Agreement As Amended and Restated Effective April 1, 1995 BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES AND TRUST AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 1995 Bay State Gas Company previously established the Bay State Gas Company Savings Plan for Operating Employees for the benefit of eligible employees of the Company and its participating affiliates. The Plan is intended to constitute a qualified profit sharing plan, as described in Code section 401(a), which includes a qualified cash or deferred arrangement, as described in Code section 401(k). The provisions of this Plan and Trust relating to the Trustee constitute the trust agreement which is entered into by and between Bay State Gas Company and Wells Fargo Bank, National Association. The Trust is intended to be tax exempt as described under Code section 501(a). The Plan constitutes an amendment and restatement of the Bay State Gas Company Savings Plan for Operating Employees effective April 1, 1995, which was originally established effective as of January 1, 1988, and its related trust agreement. The Bay State Gas Company Savings Plan for Operating Employees and Trust, as set forth in this document, is hereby amended and restated effective as of April 1, 1995. Date: January 31, 1996 Bay State Gas Company By: /s/ Charles H. Tenney III ----------------------------------------- Title: Chairman of Benfits Committee The trust agreement set forth in those provisions of this Plan and Trust which relate to the Trustee is hereby executed. Date: February 6, 1996 BZW Barclays Global Investors, National Association By: /s/ ----------------------------------------- Title: Principal Date: February 6, 1996 BZW Barclays Global Investors, National Association By: /s/ Gwyn E. Slack ----------------------------------------- Title: Principal TABLE OF CONTENTS 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1 2 ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . 9 2.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . 9 2.2 Ineligible Employees . . . . . . . . . . . . . . . . . 10 2.3 Ineligible or Former Participants . . . . . . . . . . . 10 3 PARTICIPANT CONTRIBUTIONS . . . . . . . . . . . . . . . . . 10 3.1 Employee Pre-Tax Contribution Election . . . . . . . . 10 3.2 Changing a Contribution Election . . . . . . . . . . . 10 3.3 Revoking and Resuming a Contribution Election . . . . . 11 3.4 Contribution Percentage Limits . . . . . . . . . . . . 11 3.5 Refunds When Contribution Dollar Limit Exceeded . . . . 11 3.6 Timing, Posting and Tax Considerations . . . . . . . . 12 4 ROLLOVERS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS . 12 4.1 Rollovers . . . . . . . . . . . . . . . . . . . . . . . 12 4.2 Transfers From and To Other Qualified Plans . . . . . . 13 5 EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . 13 5.1 Employer Contributions . . . . . . . . . . . . . . . . 13 6 ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . . . 14 6.1 Individual Participant Accounting . . . . . . . . . . . 14 6.2 Sweep Account is Transaction Account . . . . . . . . . 14 6.3 Trade Date Accounting and Investment Cycle . . . . . . 14 6.4 Accounting for Investment Funds . . . . . . . . . . . . 14 6.5 Payment of Fees and Expenses . . . . . . . . . . . . . 15 6.6 Accounting for Participant Loans . . . . . . . . . . . 16 6.7 Error Correction . . . . . . . . . . . . . . . . . . . 16 6.8 Participant Statements . . . . . . . . . . . . . . . . 16 6.9 Special Accounting During Conversion Period . . . . . . 16 6.10 Accounts for QDRO Beneficiaries . . . . . . . . . . . . 16 7 INVESTMENT FUNDS AND ELECTIONS . . . . . . . . . . . . . . . 17 7.1 Investment Funds . . . . . . . . . . . . . . . . . . . 17 7.2 Investment Fund Elections . . . . . . . . . . . . . . . 17 7.3 Responsibility for Investment Choice . . . . . . . . . 18 7.4 Default if No Election . . . . . . . . . . . . . . . . 18 7.5 Timing . . . . . . . . . . . . . . . . . . . . . . . . 18 7.6 Investment Fund Election Change Fees . . . . . . . . . 18 8 VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . 18 8.1 Fully Vested Contribution Accounts . . . . . . . . . . 18 9 PARTICIPANT LOANS . . . . . . . . . . . . . . . . . . . . . 19 9.1 Participant Loans Permitted . . . . . . . . . . . . . . 19 9.2 Loan Application, Note and Security . . . . . . . . . . 19 9.3 Spousal Consent . . . . . . . . . . . . . . . . . . . . 19 i 11/17/95 9.4 Loan Approval . . . . . . . . . . . . . . . . . . . . . 19 9.5 Loan Funding Limits, Account Sources and Funding Order 19 9.6 Maximum Number of Loans . . . . . . . . . . . . . . . . 20 9.7 Source and Timing of Loan Funding . . . . . . . . . . . 20 9.8 Interest Rate . . . . . . . . . . . . . . . . . . . . . 20 9.9 Loan Payment . . . . . . . . . . . . . . . . . . . . . 20 9.10 Loan Payment Hierarchy . . . . . . . . . . . . . . . . 21 9.11 Repayment Suspension . . . . . . . . . . . . . . . . . 21 9.12 Loan Default . . . . . . . . . . . . . . . . . . . . . 21 9.13 Call Feature . . . . . . . . . . . . . . . . . . . . . 21 10 IN-SERVICE WITHDRAWALS . . . . . . . . . . . . . . . . . . . 22 10.1 In-Service Withdrawals Permitted . . . . . . . . . . . 22 10.2 In-Service Withdrawal Application and Notice . . . . . 22 10.3 Spousal Consent . . . . . . . . . . . . . . . . . . . . 22 10.4 In-Service Withdrawal Approval . . . . . . . . . . . . 22 10.5 Minimum Amount, Payment Form and Medium . . . . . . . . 23 10.6 Source and Timing of In-Service Withdrawal Funding . . 23 10.7 Hardship Withdrawals . . . . . . . . . . . . . . . . . 23 10.8 Prior After-Tax Account Withdrawals . . . . . . . . . . 25 10.9 Rollover Account Withdrawals . . . . . . . . . . . . . 25 10.10 Over Age 59 1/2 Withdrawals . . . . . . . . . . . . . 26 10.11 Prior Company Account Plus Withdrawals . . . . . . . . 26 11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW . . 27 11.1 Benefit Information, Notices and Election . . . . . . . 27 11.2 Spousal Consent . . . . . . . . . . . . . . . . . . . . 28 11.3 Payment Form and Medium . . . . . . . . . . . . . . . . 28 11.4 Distribution of Small Amounts . . . . . . . . . . . . . 28 11.5 Source and Timing of Distribution Funding . . . . . . . 28 11.6 Latest Commencement Permitted . . . . . . . . . . . . . 29 11.7 Payment Within Life Expectancy . . . . . . . . . . . . 29 11.8 Incidental Benefit Rule . . . . . . . . . . . . . . . . 29 11.9 Payment to Beneficiary . . . . . . . . . . . . . . . . 30 11.10 Beneficiary Designation . . . . . . . . . . . . . . . 30 12 ADP AND ACP TESTS . . . . . . . . . . . . . . . . . . . . . 31 12.1 Contribution Limitation Definitions . . . . . . . . . . 31 12.2 ADP and ACP Tests . . . . . . . . . . . . . . . . . . . 34 12.3 Correction of ADP and ACP Tests . . . . . . . . . . . . 34 12.4 Multiple Use Test . . . . . . . . . . . . . . . . . . . 36 12.5 Correction of Multiple Use Test . . . . . . . . . . . . 36 12.6 Adjustment for Investment Gain or Loss . . . . . . . . 36 12.7 Testing Responsibilities and Required Records . . . . . 36 12.8 Separate Testing . . . . . . . . . . . . . . . . . . . 37 13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS . . . . . . . . 37 13.1 "Annual Addition" Defined . . . . . . . . . . . . . . . 37 13.2 Maximum Annual Addition . . . . . . . . . . . . . . . . 37 13.3 Avoiding an Excess Annual Addition . . . . . . . . . . 38 13.4 Correcting an Excess Annual Addition . . . . . . . . . 38 13.5 Correcting a Multiple Plan Excess . . . . . . . . . . . 38 ii 11/17/95 13.6 "Defined Benefit Fraction" Defined . . . . . . . . . . 38 13.7 "Defined Contribution Fraction" Defined . . . . . . . . 39 13.8 Combined Plan Limits and Correction . . . . . . . . . . 39 14 TOP HEAVY RULES . . . . . . . . . . . . . . . . . . . . . . 39 14.1 Top Heavy Definitions . . . . . . . . . . . . . . . . . 39 14.2 Special Contributions . . . . . . . . . . . . . . . . . 41 14.3 Adjustment to Combined Limits for Different Plans . . . 42 15 PLAN ADMINISTRATION . . . . . . . . . . . . . . . . . . . . 42 15.1 Plan Delineates Authority and Responsibility . . . . . 42 15.2 Fiduciary Standards . . . . . . . . . . . . . . . . . . 42 15.3 Company is ERISA Plan Administrator . . . . . . . . . . 43 15.4 Administrator Duties . . . . . . . . . . . . . . . . . 43 15.5 Advisors May be Retained . . . . . . . . . . . . . . . 44 15.6 Delegation of Administrator Duties . . . . . . . . . . 44 15.7 Committee Operating Rules . . . . . . . . . . . . . . . 44 16 MANAGEMENT OF INVESTMENTS . . . . . . . . . . . . . . . . . 45 16.1 Trust Agreement . . . . . . . . . . . . . . . . . . . . 45 16.2 Investment Funds . . . . . . . . . . . . . . . . . . . 45 16.3 Authority to Hold Cash . . . . . . . . . . . . . . . . 46 16.4 Trustee to Act Upon Instructions . . . . . . . . . . . 46 16.5 Administrator Has Right to Vote Registered Investment Company Shares . . . . . . . . . . . . . . . . . . . . 46 16.6 Custom Fund Investment Management . . . . . . . . . . . 46 16.7 Master Custom Fund . . . . . . . . . . . . . . . . . . 47 16.8 Authority to Segregate Assets . . . . . . . . . . . . . 48 16.9 Maximum Permitted Investment in Company Stock . . . . . 48 16.10 Participants Have Right to Vote and Tender Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . 48 16.11 Registration and Disclosure for Company Stock . . . . 48 17 TRUST ADMINISTRATION . . . . . . . . . . . . . . . . . . . . 49 17.1 Trustee to Construe Trust . . . . . . . . . . . . . . . 49 17.2 Trustee To Act As Owner of Trust Assets . . . . . . . . 49 17.3 United States Indicia of Ownership . . . . . . . . . . 49 17.4 Tax Withholding and Payment . . . . . . . . . . . . . . 50 17.5 Trust Accounting . . . . . . . . . . . . . . . . . . . 50 17.6 Valuation of Certain Assets . . . . . . . . . . . . . . 50 17.7 Legal Counsel . . . . . . . . . . . . . . . . . . . . . 51 17.8 Fees and Expenses . . . . . . . . . . . . . . . . . . . 51 17.9 Trustee Duties and Limitations . . . . . . . . . . . . 51 18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION . . . . . 51 18.1 Plan Does Not Affect Employment Rights . . . . . . . . 51 18.2 Limited Return of Contributions . . . . . . . . . . . . 52 18.3 Assignment and Alienation . . . . . . . . . . . . . . . 52 18.4 Facility of Payment . . . . . . . . . . . . . . . . . . 52 18.5 Reallocation of Lost Participant's Accounts . . . . . . 53 18.6 Claims Procedure . . . . . . . . . . . . . . . . . . . 53 18.7 Construction . . . . . . . . . . . . . . . . . . . . . 54 iii 11/17/95 18.8 Jurisdiction and Severability . . . . . . . . . . . . . 54 18.9 Indemnification by Employer . . . . . . . . . . . . . . 54 19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION . . . . . . 55 19.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . 55 19.2 Merger . . . . . . . . . . . . . . . . . . . . . . . . 56 19.3 Divestitures . . . . . . . . . . . . . . . . . . . . . 56 19.4 Plan Termination . . . . . . . . . . . . . . . . . . . 56 19.5 Amendment and Termination Procedures . . . . . . . . . 57 19.6 Termination of Employer's Participation . . . . . . . . 57 19.7 Replacement of the Trustee . . . . . . . . . . . . . . 58 19.8 Final Settlement and Accounting of Trustee . . . . . . 58 APPENDIX A - INVESTMENT FUNDS . . . . . . . . . . . . . . . . . . 59 APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES . . . . . . . . . 60 APPENDIX C - LOAN INTEREST RATE . . . . . . . . . . . . . . . . . 61 SCHEDULE A - EMPLOYER CONTRIBUTIONS LOCAL 326 - LAWRENCE EMPLOYEES . . . . . . . . . . . . . . . . . 62 SCHEDULE B - EMPLOYER CONTRIBUTIONS LOCAL 273 - BROCKTON EMPLOYEES . . . . . . . . . . . . . . . . . 63 SCHEDULE C - EMPLOYER CONTRIBUTIONS LOCAL 341 - PORTLAND EMPLOYEES . . . . . . . . . . . . . . . . . 64 SCHEDULE D - EMPLOYER CONTRIBUTIONS LOCAL 341 - GRANITE STATE EMPLOYEES . . . . . . . . . . . . . . 65 SCHEDULE D - EMPLOYER CONTRIBUTIONS LOCAL 12026 - SPRINGFIELD EMPLOYEES . . . . . . . . . . . . . . . 66 SCHEDULE E - EMPLOYER CONTRIBUTIONS LOCAL 486 - SPRINGFIELD EMPLOYEES . . . . . . . . . . . . . . . 67 SCHEDULE F - EMPLOYER CONTRIBUTIONS LOCAL 14930 - PORTSMOUTH EMPLOYEES . . . . . . . . . . . . . . . . 68 SCHEDULE G - EMPLOYER CONTRIBUTIONS LOCAL 8-366 - BROCKTON PROPANE EMPLOYEES . . . . . . . . . . . . . 69 SCHEDULE H - EMPLOYER CONTRIBUTIONS LOCAL 14930 - LEWISTON EMPLOYEES . . . . . . . . . . . . . . . . . 70 SCHEDULE I - EMPLOYER CONTRIBUTIONS LOCAL 14930 - SALEM PROPANE EMPLOYEES . . . . . . . . . . . . . . 71 iv 11/17/95 1 DEFINITIONS When capitalized, the words and phrases below have the following meanings unless different meanings are clearly required by the context: 1.1 "Account". The records maintained for purposes of accounting for a Participant's interest in the Plan. "Account" may refer to one or all of the following accounts which have been created on behalf of a Participant to hold specific types of Contributions under the Plan or amounts transferred from the Bay State Gas Company Employee Savings Plan on behalf of a Participant who was a former participant in the Bay State Gas Company Employee Savings Plan: (a) "Employee Pre-Tax Account". An account created to hold Employee Pre-Tax Contributions or amounts transferred from the Bay State Gas Company Employee Savings Plan designated as "Employee Pre-Tax Account" amounts thereunder. (b) "Prior After-Tax Account". An account created to hold amounts transferred from the Bay State Gas Company Employee Savings Plan designated as "Prior After-Tax Account" amounts thereunder. (c) "Rollover Account". An account created to hold Rollover Contributions or amounts transferred from the Bay State Gas Company Employee Savings Plan designated as "Rollover Account" amounts thereunder. (d) "Employer Account". An account created to hold Employer Contributions or amounts transferred from the Bay State Gas Company Employee Savings Plan designated as "Employer Match Account" amounts thereunder. (e) "Prior Company Account". An account created to hold amounts transferred from the Bay State Gas Company Employee Savings Plan designated as "Prior Company Account" amounts thereunder. 1.2 "ACP" or "Average Contribution Percentage". The percentage calculated in accordance with Section 12.1. 1.3 "Administrator". The Company, which may delegate all or a portion of the duties of the Administrator under the Plan to a Committee in accordance with Section 15.6. 1.4 "ADP" or "Average Deferral Percentage". The percentage calculated in accordance with Section 12.1. 1 11/17/95 1.5 "Beneficiary". The person or persons who is to receive benefits after the death of the Participant pursuant to the "Beneficiary Designation" paragraph in Section 11, or as a result of a QDRO. 1.6 "Code". The Internal Revenue Code of 1986, as amended. Reference to any specific Code section shall include such section, any valid regulation promulgated thereunder, and any comparable provision of any future legislation amending, supplementing or superseding such section. 1.7 "Committee". If applicable, the committee which has been appointed by the Company to administer the Plan in accordance with Section 15.6. 1.8 "Company". Bay State Gas Company or any successor by merger, purchase or otherwise. 1.9 "Company Stock". Shares of common stock of the Company, its predecessor(s), or its successors or assigns, or any corporation with or into which said corporation may be merged, consolidated or reorganized, or to which a majority of its assets may be sold. 1.10 "Compensation". The sum of a Participant's Taxable Income and salary reductions, if any, pursuant to Code sections 125, 402(e)(3), 402(h), 403(b), 414(h)(2) or 457. For purposes of determining benefits under this Plan, Compensation is limited to $150,000, (as adjusted for the cost of living pursuant to Code sections 401(a)(17) and 415(d)) per Plan Year. For purposes of the preceding sentence, in the case of an HCE who is a 5% Owner or one of the 10 most highly compensated Employees, (i) such HCE and such HCE's family group (as defined below) shall be treated as a single employee and the Compensation of each family group member shall be aggregated with the Compensation of such HCE, and (ii) the limitation on Compensation shall be allocated among such HCE and his or her family group members in proportion to each individual's Compensation before the application of this sentence. For purposes of this Section, the term "family group" shall mean an Employee's spouse and lineal descendants who have not attained age 19 before the close of the year in question. For purposes of determining HCEs and key employees, Compensation for the entire Plan Year shall be used. For purposes of determining ADP and ACP, Compensation shall be limited to amounts paid to an Eligible Employee while a Participant. 2 11/17/95 1.11 "Contribution". An amount contributed to the Plan by the Employer or an Eligible Employee, and allocated by contribution type to Participants' Accounts, as described in Section 1.1. Specific types of contribution include: (a) "Employee Pre-Tax Contribution". An amount contributed by an eligible Participant in conjunction with his or her Code section 401(k) salary deferral election which shall be treated as made by the Employer on an eligible Participant's behalf. (b) "Rollover Contribution". An amount contributed by an Eligible Employee which originated from another employer's or an Employer's qualified plan. (c) "Employer Contribution". An amount contributed by the Employer on an eligible Participant's behalf based upon the amount contributed by the eligible Participant, except that for certain periods prior to the Effective Date "and allocated on a pay based formula" shall be substituted for the preceding reference to "based upon the amount contributed by the eligible Participant". 1.12 "Contribution Dollar Limit". The annual limit placed on each Participant's Employee Pre-Tax Contributions, which shall be $7,000 per calendar year (as adjusted for the cost of living pursuant to Code sections 402(g)(5) and 415(d)). For purposes of this Section, a Participant's Employee Pre- Tax Contributions shall include (i) any employer contribution made under any qualified cash or deferred arrangement as defined in Code section 401(k) to the extent not includible in gross income for the taxable year under Code section 402(e)(3) or 402(h)(1)(B) (determined without regard to Code section 402(g)), and (ii) any employer contribution to purchase an annuity contract under Code section 403(b) under a salary reduction agreement (within the meaning of Code section 3121(a)(5)(D)). 1.13 "Conversion Period". The period of converting the prior accounting system of the Plan and Trust, if such Plan and Trust were in existence prior to the Effective Date, or the prior accounting system of any plan and trust which is merged into this Plan and Trust subsequent to the Effective Date, to the accounting system described in Section 6. 1.14 "Direct Rollover". An Eligible Rollover Distribution that is paid directly to an Eligible Retirement Plan for the benefit of a Distributee. 1.15 "Disability". A Participant's total and permanent, mental or physical disability resulting in termination of 3 11/17/95 employment as evidenced by presentation of medical evidence satisfactory to the Administrator. 1.16 "Distributee". An Employee or former Employee, the surviving spouse of an Employee or former Employee and a spouse or former spouse of an Employee or former Employee determined to be an alternate payee under a QDRO. 1.17 "Effective Date". The date upon which the provisions of this document become effective. This date is April 1, 1995, unless stated otherwise. ln general, the provisions of this document only apply to Participants who are Employees on or after the Effective Date. However, investment and distribution provisions apply to all Participants with Account balances to be invested or distributed after the Effective Date. 1.18 "Eligible Employee". An Employee of an Employer, whose compensation and conditions of employment are covered by a collective bargaining agreement to which an Employer is a party, which agreement calls for the Employee's participation in the Plan, which collective bargaining units as of the Effective Date are: (a) Lawrence Division, International Brotherhood of Electrical Workers, Local 326 (a "Local 326 - Lawrence Employee"); (b) Brockton Division, Utility Workers' Union of America, AFL-CIO, Local 273 (a "Local 273 - Brockton Employee"); (c) Northern Utilities, Inc., Portland Division, Brotherhood of Utility Workers of New England, Incorporated, Local No. 341 (a "Local 341 - Portland Employee"); (d) Granite State Gas Transmission, Inc., Brotherhood of Utility Workers of New England, Incorporated, Local No. 341 (a "Local 341 - Granite State Employee"); (e) Springfield Division, United Steel Workers of America, AFL-CIO, Local - No. 12026 (a "Local 12026 - Springfield Employee"); (f) Springfield Division, International Brotherhood of Electrical Workers, Local No. 486 (a "Local 486 - Springfield Employee"); (g) Northern Utilities, Inc, Portsmouth Division, United Steelworkers of America, AFL-CIO-CLC, Local No. 14930 (a "Local 14930 - Portsmouth Employee"); 4 11/17/95 (h) Brockton Propane, Oil, Chemical and Atomic Workers International Union, Quincy Local 8-366 (a "Local 8-366 - Brockton Propane Employee"); (i) Northern Utilities, Inc., Lewiston Division, United Steelworkers of America, AFL-CIO, Amalgamated Local No. 14930, formerly Local No. 13868 (a "Local 14930 - Lewiston Employee"); and (j) Northern Utilities, Inc., Salem Propane, United Steelworkers of America, AFL-CIO-CLC, Local No. 14930, (a "Local 14930 - Salem Propane Employee"). 1.19 "Eligible Retirement Plan". An individual retirement account described in Code section 408(a), an individual retirement annuity described in Code section 408(b), an annuity plan described in Code section 403(a), or a qualified trust described in Code section 401(a), that accepts a Distributee's Eligible Rollover Distribution, except that with regard to an Eligible Rollover Distribution to a surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity. 1.20 "Eligible Rollover Distribution". A distribution of all or any portion of the balance to the credit of a Distributee, excluding a distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of a Distributee or the joint lives (or joint life expectancies) of a Distributee and the Distributee's designated Beneficiary, or for a specified period of ten years or more; a distribution to the extent such distribution is required under Code section 401(a)(9); and the portion of a distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to Employer securities). 1.21 "Employee". An individual who is: (a) directly employed by any Related Company and for whom any income for such employment is subject to withholding of income or social security taxes, or (b) a Leased Employee. 1.22 "Employer". The Company and any Subsidiary or other Related Company of either the Company or a Subsidiary which adopts this Plan with the approval of the Company. 5 11/17/95 1.23 "ERISA". The Employee Retirement Income Security Act of 1974, as amended. Reference to any specific section shall include such section, any valid regulation promulgated thereunder, and any comparable provision of any future legislation amending, supplementing or superseding such section. 1.24 "HCE" or "Highly Compensated Employee". An Employee described as a Highly Compensated Employee in Section 12. 1.25 "Hour of Service". Each hour for which an Employee is entitled to: (a) payment for the performance of duties for any Related Company; (b) payment from any Related Company for any period during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, sickness, incapacity (including disability), layoff, leave of absence, jury duty or military service; (c) back pay, irrespective of mitigation of damages, by award or agreement with any Related Company (and these hours shall be credited to the period to which the agreement pertains); or (d) no payment, but is on a Leave of Absence (and these hours shall be based upon his or her normally scheduled hours per week or a 40 hour week if there is no regular schedule). The crediting of hours for which no duties are performed shall be in accordance with Department of Labor regulation sections 2530.200b-2(b) and (c). Actual hours shall be used whenever an accurate record of hours are maintained for an Employee. Otherwise, an equivalent number of hours shall be credited for each payroll period in which the Employee would be credited with at least 1 hour. The payroll period equivalencies are 45 hours weekly, 90 hours biweekly, 95 hours semimonthly and 190 hours monthly. An Employee's service with a predecessor or acquired company shall only be counted in the determination of his or her Hours of Service for eligibility and/or vesting purposes if (1) the Company directs that credit for such service be granted, or (2) a qualified plan of the predecessor or acquired company is subsequently maintained by any Employer or Related Company. 6 11/17/95 1.26 "Ineligible". The Plan status of an individual during the period in which he or she is (1) an Employee of a Related Company which is not then an Employer, (2) an Employee, but not an Eligible Employee, or (3) not an Employee. 1.27 "Investment Fund" or "Fund". An investment fund as described in Section 16.2. The Investment Funds authorized by the Administrator to be offered under the Plan as of the Effective Date are set forth in Appendix A. 1.28 "Leased Employee". An individual who is deemed to be an employee of any Related Company as provided in Code section 414(n) or (o). 1.29 "Leave of Absence". A period during which an individual is deemed to be an Employee, but is absent from active employment, provided that the absence: (a) was authorized by a Related Company; or (b) was due to military service in the United States armed forces and the individual returns to active employment within the period during which he or she retains employment rights under federal law. 1.30 "Loan Account". The record maintained for purposes of accounting for a Participant's loan and payments of principal and interest thereon. 1.31 "NHCE" or "Non-Highly Compensated Employee". An Employee described as a Non-Highly Compensated Employee in Section 12. 1.32 "Normal Retirement Date". The date of a Participant's 65th birthday. 1.33 "Owner". A person with an ownership interest in the capital, profits, outstanding stock or voting power of a Related Company within the meaning of Code section 318 or 416 (which exclude indirect ownership through a qualified plan). 1.34 "Participant". An Eligible Employee who begins to participate in the Plan after completing the eligibility requirements as described in Section 2.1. An Eligible Employee who makes a Rollover Contribution prior to completing the eligibility requirements as described in Section 2.1 shall also be considered a Participant, except that he or she shall not be considered a Participant for purposes of provisions related to Contributions, other than a Rollover Contribution, until he or she completes the 7 11/17/95 eligibility requirements as described in Section 2.1. A Participant's participation continues until his or her employment with all Related Companies ends and his or her Account is distributed or forfeited. 1.35 "Pay". The straight time wages, exclusive of all daily or weekly overtime, bonuses, supplementary compensation payments, retirement benefits and other forms of non- recurring compensation, but inclusive of shift differentials, Saturday/Sunday premiums, compensation paid at an alternative rate (not including compensation paid at an alternative rate to a salesperson) and seventy-five percent of sales commissions, paid to an Eligible Employee by an Employer while a Participant during the current period. Pay is neither increased by any salary credit or decreased by any salary reduction pursuant to Code sections 125 or 402(e)(3). Pay is limited to $150,000 (as adjusted for the cost of living pursuant to Code sections 401(a)(17) and 415(d)) per Plan Year. 1.36 "Plan". The Bay State Gas Company Savings Plan for Operating Employees set forth in this document, as from time to time amended. 1.37 "Plan Year". The annual accounting period of the Plan and Trust which ends on each December 31. 1.38 "QDRO". A domestic relations order which the Administrator has determined to be a qualified domestic relations order within the meaning of Code section 414(p). 1.39 "Related Company". With respect to any Employer, that Employer and any corporation, trade or business which is, together with that Employer, a member of the same controlled group of corporations, a trade or business under common control, or an affiliated service group within the meaning of Code sections 414(b), (c), (m) or (o), except that for purposes of Section 13 "within the meaning of Code sections 414(b), (c), (m) or (o), as modified by Code section 415(h)" shall be substituted for the preceding reference to "within the meaning of Code section 414(b), (c), (m) or (o)". 1.40 "Settlement Date". For each Trade Date, the Trustee's next business day. 1.41 "Spousal Consent". The written consent given by a spouse to a Participant's Beneficiary designation. The spouse's consent must acknowledge the effect on the spouse of the Participant's designation, and be duly witnessed by a Plan representative or notary public. Spousal Consent shall be 8 11/17/95 valid only with respect to the spouse who signs the Spousal Consent and only for the particular choice made by the Participant which requires Spousal Consent. A Participant may revoke (without Spousal Consent) a prior designation that required Spousal Consent at any time before payments begin. Spousal Consent also means a determination by the Administrator that there is no spouse, the spouse cannot be located, or such other circumstances as may be established by applicable law. 1.42 "Subsidiary". A company which is 50% or more owned, directly or indirectly, by the Company. 1.43 "Sweep Account". The subsidiary Account for each Participant through which all transactions are processed, which is invested in interest bearing deposits of the Trustee. 1.44 "Sweep Date". The cut off date and time for receiving instructions for transactions to be processed on the next Trade Date. 1.45 "Taxable Income". Compensation in the amount reported by the Employer or a Related Company as 'Wages, tips, other compensation" on Form W-2, or any successor method of reporting under Code section 6041(d). 1.46 "Trade Date". Each day the Investment Funds are valued, which is normally every day the assets of such Funds are traded. 1.47 "Trust". The legal entity created by those provisions of this document which relate to the Trustee. The Trust is part of the Plan and holds the Plan assets which are comprised of the aggregate of Participants' Accounts and any unallocated funds invested in deposit or money market type assets pending allocation to Participants' Accounts or disbursement to pay Plan fees and expenses. 1.48 "Trustee". Wells Fargo Bank, National Association. 2 ELIGIBILITY 2.1 Eligibility All Participants as of April 1, 1995 shall continue their eligibility to participate. Each other Eligible Employee shall become a Participant on the first day of the next month after the date he or she completes a 12-month eligibility period in which he or she is credited with at least 1,000 Hours of Service. The initial eligibility period begins on the date an Employee first performs an Hour 9 11/17/95 of Service. Subsequent eligibility periods begin with the start of each Plan Year beginning after the first Hour of Service is performed. 2.2 Ineligible Employees If an Employee completes the above eligibility requirements, but is Ineligible at the time participation would otherwise begin (if he or she were not Ineligible), he or she shall become a Participant on the first subsequent date on which he or she is an Eligible Employee. 2.3 Ineligible or Former Participants A Participant may not make or share in Plan Contributions, nor generally be eligible for a new Plan loan, during the period he or she is Ineligible, but he or she shall continue to participate for all other purposes. An Ineligible Participant or former Participant shall automatically become an active Participant on the date he or she again becomes an Eligible Employee. 3 PARTICIPANT CONTRIBUTIONS 3.1 Employee Pre-Tax Contribution Election Upon becoming a Participant, an Eligible Employee may elect to reduce his or her Pay by an amount which does not exceed the Contribution Dollar Limit, within the limits described in the Contribution Percentage Limits paragraph of this Section 3, and have such amount contributed to the Plan by the Employer as an Employee Pre-Tax Contribution. The election shall be made as a whole percentage of Pay in such manner and with such advance notice as prescribed by the Administrator. In no event shall an Employee's Employee Pre-Tax Contributions under the Plan and comparable contributions to all other plans, contracts or arrangements of all Related Companies exceed the Contribution Dollar 400147Limit for the Employee's taxable year beginning in the Plan Year. 3.2 Changing a Contribution Election A Participant who is an Eligible Employee may change his or her Employee Pre-Tax Contribution election as of the first day of any month in such manner and with such advance notice as prescribed by the Administrator, and such election shall be effective with the first payroll paid after such date. Participants' Contribution election percentages shall automatically apply to Pay increases or decreases. 10 11/17/95 3.3 Revoking and Resuming a Contribution Election A Participant may revoke his or her Contribution election at any time in such manner and with such advance notice as prescribed by the Administrator, and such revocation shall be effective with the first payroll paid after such date. A Participant who is an Eligible Employee may resume Contributions by making a new Contribution election at the same time in which a Participant may change his or her election in such manner and with such advance notice as prescribed by the Administrator, and such election shall be effective with the first payroll paid after such date. 3.4 Contribution Percentage Limits The Administrator may establish and change from time to time, in writing, without the necessity of amending this Plan and Trust, the minimum, if applicable, and maximum Employee Pre-Tax Contribution percentages, prospectively (for the current Plan Year), for all Participants. In addition, the Administrator may establish any lower percentage limits for Highly Compensated Employees as it deems necessary to satisfy the tests described in Section 12. As of the Effective Date, the Employee Pre-Tax Contribution maximum percentage is 15%. Irrespective of the limits that may be established by the Administrator in accordance with this paragraph, in no event shall the contributions made by or on behalf of a Participant for a Plan Year exceed the maximum allowable under Code section 415. 3.5 Refunds When Contribution Dollar Limit Exceeded A Participant who makes Employee Pre-Tax Contributions for a calendar year to this Plan and comparable contributions to any other qualified defined contribution plan in excess of the Contribution Dollar Limit may notify the Administrator in writing by the following March 1 (or as late as April 14 if allowed by the Administrator) that an excess has occurred. In this event, the amount of the excess specified by the Participant adjusted for investment gain or loss, shall be refunded to him or her by April 15 and shall not be included as an Annual Addition under Code section 415 for the year contributed. Refunds shall not include investment gain or loss for the period between the end of the applicable calendar year and the date of distribution. Excess amounts shall first be taken from unmatched Employee Pre-Tax Contributions and then from matched Employee Pre-Tax Contributions. Any Employer Contributions attributable to refunded excess Employee Pre-Tax Contributions as described 11 11/17/95 in this Section shall be forfeited and used to reduce Contributions made by an Employer as soon as administratively feasible. 3.6 Timing, Posting and Tax Considerations Participants' Contributions, other than Rollover Contributions, may only be made through payroll deduction. Such amounts shall be paid to the Trustee in cash and posted to each Participant's Account(s) as soon as such amounts can reasonably be separated from the Employer's general assets and balanced against the specific amount made on behalf of each Participant. In no event, however, shall such amounts be paid to the Trustee more than 90 days after the date amounts are deducted from a Participant's Pay. Employee Pre-Tax Contributions shall be treated as Contributions made by an Employer in determining tax deductions under Code section 404(a). 4 ROLLOVERS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS 4.1 Rollovers The Administrator may authorize the Trustee to accept a rollover contribution, within the meaning of Code section 402(c) or 408(d)(3)(A)(ii), in cash, directly from an Eligible Employee or as a Direct Rollover from another qualified plan on behalf of the Eligible Employee, even if he or she is not yet a Participant. The Employee shall be responsible for furnishing satisfactory evidence, in such manner as prescribed by the Administrator, that the amount is eligible for rollover treatment. A rollover contribution received directly from an Eligible Employee must be paid to the Trustee in cash within 60 days after the date received by the Eligible Employee from a qualified plan or conduit individual retirement account. Contributions described in this paragraph shall be posted to the applicable Employee's Rollover Account as of the date received by the Trustee. If it is later determined that an amount contributed pursuant to the above paragraph did not in fact qualify as a rollover contribution under Code section 402(c) or 408(d)(3)(A)(ii), the balance credited to the Employee's Rollover Account shall immediately be (1) segregated from all other Plan assets, (2) treated as a nonqualified trust established by and for the benefit of the Employee, and (3) distributed to the Employee. Any such nonqualifying rollover shall be deemed never to have been a part of the Plan. 12 11/17/95 4.2 Transfers From and To Other Qualified Plans The Administrator may instruct the Trustee to receive assets in cash or in kind directly from another qualified plan or transfer assets in cash or in kind directly to another qualified plan; provided that a transfer should not be directed if: (a) any amounts are not exempted by Code section 401(a)(11)(B) from the annuity requirements of Code section 417 unless, in the event of a receipt of assets, the Plan complies with such requirements or, in the event of a transfer of assets, the receiving plan complies with such requirements; or (b) any amounts include benefits protected by Code section 411(d)(6) which would not be preserved under applicable Plan provisions, in the event of a receipt of assets or, under the applicable provisions of the receiving plan, in the event of a transfer of assets. The Trustee may refuse the receipt of any transfer if: (a) the Trustee finds the in-kind assets unacceptable; or (b) instructions for posting amounts to Participants' Accounts are incomplete. Such amounts shall be posted to the appropriate Accounts of Participants as of the date received by the Trustee. 5 EMPLOYER CONTRIBUTIONS 5.1 Employer Contributions (a) Frequency and Eligibility. For each period for which Participants' Contributions are made, the Employer shall make Employer Contributions on behalf of each Participant who contributed during the period and is so eligible for Employer Contributions under his or her governing collective bargaining agreement as set forth in Schedules A though I. (b) Amount and Allocation Method. The Employer Contributions for each period shall be in an amount determined by and allocated in accordance with the governing collective bargaining agreement as set forth in Schedules A through I. (c) Timing, Medium and Posting. The Employer shall make each period's Employer Contribution in cash as soon as administratively feasible, and for purposes of 13 11/17/95 deducting such Contribution, not later than the Employer's federal tax filing date, including extensions. The Trustee shall post such amount to each Participant's Employer Account once the total Contribution received has been balanced against the specific amount to be credited to each Participant's Employer Account. 6 ACCOUNTING 6.1 Individual Participant Accounting The Administrator shall maintain an individual set of Accounts for each Participant in order to reflect transactions both by type of Contribution and investment medium. Financial transactions shall be accounted for at the individual Account level by posting each transaction to the appropriate Account of each affected Participant. Participant Account values shall be maintained in shares for the Investment Funds and in dollars for the Sweep and Loan Accounts. At any point in time, the Account value shall be determined using the most recent Trade Date values provided by the Trustee. 6.2 Sweep Account is Transaction Account All transactions related to amounts being contributed to or distributed from the Trust shall be posted to each affected Participant's Sweep Account. Any amount held in the Sweep Account shall be credited with interest up until the date on which it is removed from the Sweep Account. 6.3 Trade Date Accounting and Investment Cycle Participant Account values shall be determined as of each Trade Date. For any transaction to be processed as of a Trade Date, the Trustee must receive instructions for the transaction by the Sweep Date. Such instructions shall apply to amounts held in the Account on that Sweep Date. Financial transactions of the Investment Funds shall be posted to Participants' Accounts as of the Trade Date, based upon the Trade Date values provided by the Trustee, and settled on the Settlement Date. 6.4 Accounting for Investment Funds Investments in each Investment Fund shall be maintained in shares. The Trustee is responsible for determining the share values of each Investment Fund as of each Trade Date. To the extent an Investment Fund is comprised of collective investment funds of the Trustee, or any other fiduciary to the Plan, the share values shall be determined in accordance 14 11/17/95 with the rules governing such collective investment funds, which are incorporated herein by reference. All other share values shall be determined by the Trustee. The share value of each Investment Fund shall be based on the fair market value of its underlying assets. 6.5 Payment of Fees and Expenses Except to the extent Plan fees and expenses related to Account maintenance, transaction and Investment Fund management and maintenance, as set forth below, are paid by the Employer directly, such fees and expenses shall be paid as set forth below. The Employer may pay a lower portion of the fees and expenses allocable to the Accounts of Participants who are no longer Employees or who are not Beneficiaries, unless doing so would result in discrimination. (a) Account Maintenance: Account maintenance fees and expenses, may include but are not limited to, administrative, Trustee, government annual report preparation, audit, legal, nondiscrimination testing and fees for any other special services. Account maintenance fees shall be charged to Participants on a per Participant basis provided that no fee shall reduce a Participant's Account balance below zero. (b) Transaction: Transaction fees and expenses, may include but are not limited to, periodic installment payment, Investment Fund election change and loan fees. Transaction fees shall be charged to the Participant's Account involved in the transaction provided that no fee shall reduce a Participant's Account balance below zero. (c) Investment Fund Management and Maintenance: Management and maintenance fees and expenses related to the Investment Funds shall be charged at the Investment Fund level and reflected in the net gain or loss of each Fund. As of the Effective Date, a breakdown of which Plan fees and expenses shall generally be borne by the Trust (and charged to individual Participants' Accounts or charged at the Investment Fund level and reflected in the net gain or loss of each Fund) and those that shall be paid by the Employer is set forth in Appendix B and may be changed from time to time by the Administrator, in writing, without the necessity of amending this Plan and Trust. 15 11/17/95 The Trustee shall have the authority to pay any such fees and expenses, which remain unpaid by the Employer for 60 days, from the Trust. 6.6 Accounting for Participant Loans Participant loans shall be held in a separate Loan Account of the Participant and accounted for in dollars as an earmarked asset of the borrowing Participant's Account. 6.7 Error Correction The Administrator may correct any errors or omissions in the administration of the Plan by restoring any Participant's Account balance with the amount that would be credited to the Account had no error or omission been made. Funds necessary for any such restoration shall be provided through payment made by the Employer, or by the Trustee to the extent the error or omission is attributable to actions or inactions of the Trustee. 6.8 Participant Statements The Administrator shall provide Participants with statements of their Accounts as soon after the end of each quarter of the Plan Year as administratively feasible. 6.9 Special Accounting During Conversion Period The Administrator and Trustee may use any reasonable accounting methods in performing their respective duties during any Conversion Period. This includes, but is not limited to, the method for allocating net investment gains or losses and the extent, if any, to which contributions received by and distributions paid from the Trust during this period share in such allocation. 6.10 Accounts for QDRO Beneficiaries A separate Account shall be established for an alternate payee entitled to any portion of a Participant's Account under a QDRO as of the date and in accordance with the directions specified in the QDRO. In addition, a separate Account may be established during the period of time the Administrator, a court of competent jurisdiction or other appropriate person is determining whether a domestic relations order qualifies as a QDRO. Such a separate Account shall be valued and accounted for in the same manner as any other Account. (a) Distributions Pursuant to QDROs. If a QDRO so provides, the portion of a Participant's Account 16 11/17/95 payable to an alternate payee may be distributed, in a form as permissible under Section 11, to the alternate payee at the time specified in the QDRO, regardless of whether the Participant is entitled to a distribution from the Plan at such time. (b) Participant Loans. Except to the extent required by law, an alternate payee, on whose behalf a separate Account has been established, shall not be entitled to borrow from such Account. If a QDRO specifies that the alternate payee is entitled to any portion of the Account of a Participant who has an outstanding loan balance, all outstanding loans shall generally continue to be held in the Participant's Account and shall not be divided between the Participant's and alternate payee's Accounts. (c) Investment Direction. Where a separate Account has been established on behalf of an alternate payee and has not yet been distributed, the alternate payee may direct the investment of such Account in the same manner as if he or she were a Participant. 7 INVESTMENT FUNDS AND ELECTIONS 7.1 Investment Funds Except for Participants' Sweep and Loan Accounts, the Trust shall be maintained in various Investment Funds. The Administrator shall select the Investment Funds offered to Participants and may change the number or composition of the Investment Funds, subject to the terms and conditions agreed to with the Trustee. As of the Effective Date, a list of the Investment Funds offered under the Plan is set forth in Appendix A, and may be changed from time to time by the Administrator, in writing, and as agreed to by the Trustee, without the necessity of amending this Plan and Trust. 7.2 Investment Fund Elections Each Participant shall direct the investment of all of his or her Contribution Accounts. A Participant shall make his or her investment election in any combination of one or any number of the Investment Funds offered in accordance with the procedures established by the Administrator and Trustee. However, during any Conversion Period, Trust assets may be held in any investment vehicle permitted by the Plan, as directed by the Administrator, irrespective of Participant investment elections. 17 11/17/95 The Administrator may set a maximum percentage of the total election that a Participant may direct into any specific Investment Fund, which maximum, if any, as of the Effective Date is set forth in Appendix A, and may be changed from time to time by the Administrator, in writing, without the necessity of amending this Plan and Trust. 7.3 Responsibility for Investment Choice Each Participant shall be solely responsible for the selection of his or her Investment Fund choices. No fiduciary with respect to the Plan is empowered to advise a Participant as to the manner in which his or her Accounts are to be invested, and the fact that an Investment Fund is offered shall not be construed to be a recommendation for investment. 7.4 Default if No Election The Administrator shall specify an Investment Fund for the investment of that portion of a Participant's Account which is not yet held in an Investment Fund and for which no valid investment election is on file. The investment Fund specified as of the Effective Date is set forth in Appendix A, and may be changed from time to time by the Administrator, in writing, without the necessity of amending this Plan and Trust. 7.5 Timing A Participant shall make his or her initial investment election upon becoming a Participant and may change his or her investment election at any time in accordance with the procedures established by the Administrator and Trustee. Investment elections received by the Trustee by the Sweep Date shall be effective on the following Trade Date. 7.6 Investment Fund Election Change Fees A reasonable processing fee may be charged directly to a Participant's Account for Investment Fund election changes in excess of a specified number per year as determined by the Administrator. 8 VESTING 8.1 Fully Vested Contribution Accounts A Participant shall be fully vested in all Accounts at all times. 18 11/17/95 9 PARTICIPANT LOANS 9.1 Participant Loans Permitted Loans to Participants are permitted pursuant to the terms and conditions set forth in this Section. 9.2 Loan Application, Note and Security A Participant shall apply for any loan in such manner and with such advance notice as prescribed by the Administrator. All loans shall be evidenced by a promissory note, secured only by the portion of the Participant's Account from which the loan is made, and the Plan shall have a lien on this portion of his or her Account. 9.3 Spousal Consent A Participant is not required to obtain Spousal Consent in order to take out a loan under the Plan. 9.4 Loan Approval The Administrator, or the Trustee, if otherwise authorized by the Administrator and agreed to by the Trustee, is responsible for determining that a loan request conforms to the requirements described in this Section and granting such request. 9.5 Loan Funding Limits, Account Sources and Funding Order The loan amount must meet all of the following limits as determined as of the Sweep Date the loan is processed and shall be funded from the Participant's Accounts as follows: (a) Plan Minimum Limit. The minimum amount for any loan is $1,000. (b) Plan Maximum Limit, Account Sources and Funding Order. Subject to the legal limit described in (c) below, the maximum a Participant may borrow, including the outstanding balance of existing Plan loans, is 100% of the following of the Participant's Accounts which are fully vested in the priority order as follows: Employee Pre-Tax Account Employer Account Prior Company Account Rollover Account Prior After-Tax Account 19 11/17/95 (c) Legal Maximum Limit. The maximum a Participant may borrow, including the outstanding balance of existing Plan loans, is 50% of his or her vested Account balance, not to exceed $50,000. However, the $50,000 maximum is reduced by the Participant's highest outstanding loan balance during the 12 month period ending on the day before the Sweep Date as of which the loan is made. For purposes of this paragraph, the qualified plans of all Related Companies shall be treated as though they are part of this Plan to the extent it would decrease the maximum loan amount. 9.6 Maximum Number of Loans A Participant may have a maximum of two loans outstanding at any given time. 9.7 Source and Timing of Loan Funding A loan to a Participant shall be made solely from the assets of his or her own Account. The available assets shall be determined first by Account type and then within each Account used for funding a loan, amounts shall first be taken from the Sweep Account and then taken by Investment Fund in direct proportion to the market value of the Participant's interest in each Investment Fund as of the Trade Date on which the loan is processed. The loan shall be funded on the Settlement Date following the Trade Date as of which the loan is processed. The Trustee shall make payment to the Participant as soon thereafter as administratively feasible. 9.8 Interest Rate The interest rate charged on Participant loans shall be a fixed reasonable rate of interest, determined from time to time by the Administrator, which provides the Plan with a return commensurate with the prevailing interest rate charged by persons in the business of lending money for loans which would be made under similar circumstances. As of the Effective Date, the interest rate is determined as set forth in Appendix C, and may be changed from time to time by the Administrator, in writing, without the necessity of amending this Plan and Trust. 9.9 Loan Payment Substantially level amortization shall be required of each loan with payments made at least monthly, generally through payroll deduction. Loans may be prepaid in full or in part 20 11/17/95 at any time. The Participant may choose the loan repayment period, not to exceed five years. 9.10 Loan Payment Hierarchy Loan principal payments shall be credited to the Participant's Accounts in the inverse of the order used to fund the loan. Loan interest shall be credited to the Participant's Accounts in direct proportion to the principal payment. Loan payments are credited to the Investment Funds based upon the Participant's current investment election for new Contributions. 9.11 Repayment Suspension The Administrator may agree to a suspension of loan payments for up to 12 months for a Participant who is on a Leave of Absence without pay. During the suspension period interest shall continue to accrue on the outstanding loan balance. At the expiration of the suspension period all outstanding loan payments and accrued interest thereon shall be due unless otherwise agreed upon by the Administrator. 9.12 Loan Default A loan is treated as a default if scheduled loan payments are more than 90 days late. A Participant shall then have 30 days from the time he or she receives written notice of the default and a demand for past due amounts to cure the default before it becomes final. In the event of default, the Administrator may direct the Trustee to report the outstanding principal balance of the loan and accrued interest thereon as a taxable distribution. As soon as a Plan withdrawal or distribution to such Participant would otherwise be permitted, the Administrator may instruct the Trustee to execute upon its security interest in the Participant's Account by distributing the note to the Participant. 9.13 Call Feature The Administrator shall have the right to call any Participant loan once a Participant's employment with all Related Companies has terminated or if the Plan is terminated. 21 11/17/95 10 IN-SERVICE WITHDRAWALS 10.1 In-Service Withdrawals Permitted In-service withdrawals to a Participant who is an Employee are permitted pursuant to the terms and conditions set forth in this Section and as required by law as set forth in Section 11. Except to the extent as required by law as set forth in Section 11, in-service withdrawals under the Plan are limited to those in-service withdrawals described in Sections 10.7 through 10.11. 10.2 In-Service Withdrawal Application and Notice A Participant shall apply for an in-service withdrawal in such manner and with such advance notice as prescribed by the Administrator. The Participant shall be provided the notice prescribed by Code section 402(f). If an in-service withdrawal is one to which Code sections 401(a)(11) and 417 do not apply, such in-service withdrawal may commence less than 30 days after the aforementioned notice is provided, if: (a) the Participant is clearly informed that he or she has the right to a period of at least 30 days after receipt of such notice to consider his or her option to elect or not elect a Direct Rollover for all or a portion, if any, of his or her in-service withdrawal which shall constitute an Eligible Rollover Distribution; and (b) the Participant after receiving such notice, affirmatively elects a Direct Rollover for all or a portion, if any, of his or her in-service withdrawal which shall constitute an Eligible Rollover Distribution or alternatively elects to have all or a portion made payable directly to him or her, thereby not electing a Direct Rollover for all or a portion thereof. 10.3 Spousal Consent A Participant is not required to obtain Spousal Consent in order to make an in-service withdrawal under the Plan. 10.4 In-Service Withdrawal Approval The Administrator, or the Trustee, if otherwise authorized by the Administrator and agreed to by the Trustee, is responsible for determining that an in-service withdrawal request conforms to the requirements described in this Section and granting such request. 22 11/17/95 10.5 Minimum Amount, Payment Form and Medium There is no minimum amount for any type of withdrawal. The form of payment for an in-service withdrawal shall be a single lump sum and payment shall be made in cash. With regard to the portion of a withdrawal representing an Eligible Rollover Distribution, a Participant may elect a Direct Rollover for all or a portion of such amount. 10.6 Source and Timing of In-Service Withdrawal Funding An in-service withdrawal to a Participant shall be made solely from the assets of his or her own Account and shall be based on the Account values as of the Trade Date the in- service withdrawal is processed. The available assets shall be determined first by Account type and then within each Account used for funding an in-service withdrawal, amounts shall first be taken from the Sweep Account and then taken by Investment Fund in direct proportion to the market value of the Participant's interest in each Investment Fund (which excludes his or her Loan Account balance) as of the Trade Date on which the in-service withdrawal is processed. The in-service withdrawal shall be funded on the Settlement Date following the Trade Date as of which the in-service withdrawal is processed. The Trustee shall make payment as soon thereafter as administratively feasible. 10.7 Hardship Withdrawals (a) Requirements. A Participant who is an Employee may request the withdrawal of up to the amount necessary to satisfy a financial need including amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the withdrawal. Only requests for withdrawals (1) on account of a Participant's "Deemed Financial Need", and (2) which are "Deemed Necessary" to satisfy the financial need shall be approved. (b) "Deemed Financial Need". An immediate and heavy financial need relating to: (1) the payment of unreimbursable medical expenses described under Code section 213(d) incurred (or to be incurred) by the Employee, his or her spouse or dependents; (2) the purchase (excluding mortgage payments) of the Employee's principal residence; 23 11/17/95 (3) the payment of unreimbursable tuition, related educational fees and room and board for up to the next 12 months of post-secondary education for the Employee, his or her spouse or dependents; (4) the payment of amounts necessary for the Employee to prevent losing his or her principal residence through eviction or foreclosure on the mortgage; or (5) any other circumstance specifically permitted under Code section 401(k)(2)(B)(i)(IV). (c) "Deemed Necessary". A withdrawal is "deemed necessary" to satisfy the financial need only if the withdrawal amount does not exceed the financial need and all of these conditions are met: (1) the Employee has obtained all possible withdrawals (other than hardship withdrawals) and nontaxable loans available from this Plan and all other plans maintained by Related Companies; (2) the Administrator shall suspend the Employee from making any contributions to this Plan and all other qualified and nonqualified plans of deferred compensation and all stock option or stock purchase plans maintained by Related Companies for 12 months from the date the withdrawal payment is made; and (3) the Administrator shall reduce the Contribution Dollar Limit for the Employee with regard to this Plan and all other plans maintained by Related Companies, for the calendar year next following the calendar year of the withdrawal by the amount of the Employee's Employee Pre-Tax Contributions for the calendar year of the withdrawal. (d) Account Sources and Funding Order. All available amounts must first be withdrawn from a Participant's Prior After-Tax Account. The remaining withdrawal amount shall come from the following of the Participant's fully vested Accounts, in the priority order as follows: Rollover Account Employer Account Prior Company Account Employee Pre-Tax Account 24 11/17/95 The amount that may be withdrawn from a Participant's Employee Pre-Tax Account shall not include any earnings credited to his or her Employee Pre-Tax Account after the start of the first Plan Year beginning after December 31,1988. (e) Permitted Frequency. There is no restriction on the number of Hardship withdrawals permitted to a Participant. (f) Suspension from Further Contributions. Upon making a Hardship withdrawal, a Participant may not make additional Employee Pre-Tax Contributions (or additional contributions to all other qualified and nonqualified plans of deferred compensation and all stock option or stock purchase plans maintained by Related Companies) for a period of 12 months from the date the withdrawal payment is made. 10.8 Prior After-Tax Account Withdrawals (a) Requirements. A Participant who is an Employee may withdraw from the Accounts listed in paragraph (b) below. (b) Account Sources and Funding Order. The withdrawal amount shall come from a Participant's Prior After-Tax Account. (c) Permitted Frequency. The maximum number of Prior After-Tax Account withdrawals permitted to a Participant in any 12-month period is one. (d) Suspension from Further Contributions. An Prior After- Tax Account withdrawal shall not affect a Participant's ability to make or be eligible to receive further Contributions. 10.9 Rollover Account Withdrawals (a) Requirements. A Participant who is an Employee may withdraw from the Accounts listed in paragraph (b) below. (b) Account Sources and Funding Order. The withdrawal amount shall come from a Participant's Rollover Account. (c) Permitted Frequency. The maximum number of Rollover Account withdrawals permitted to a Participant in any 12-month period is one. 25 11/17/95 (d) Suspension from Further Contributions. A Rollover Account withdrawal shall not affect a Participant's ability to make or be eligible to receive further Contributions. 10.10 Over Age 59 1/2 Withdrawals (a) Requirements. A Participant who is an Employee and over age 59 1/2 may withdraw from the Accounts listed in paragraph (b) below. (b) Account Sources and Funding Order. The withdrawal amount shall come from the following of the Participant's fully vested Accounts, in the priority order as follows, except that the Participant may instead choose to have amounts taken from his or her Prior After-Tax Account first: Rollover Account Employee Pre-Tax Account Employer Account Prior Company Account Prior After-Tax Account (c) Permitted Frequency. The maximum number of Over Age 59 1/2 withdrawals permitted to a Participant in any 12- month period is one. (d) Suspension from Further Contributions. An Over Age 59 1/2 withdrawal shall not affect a Participant's ability to make or be eligible to receive further Contributions. 10.11 Prior Company Account Plus Withdrawals (a) Requirements. A Participant who is an Employee may withdraw from the Accounts listed in paragraph (b) below. (b) Account Sources and Funding Order. The withdrawal amount shall come from the following of the Participant's fully vested Accounts, in the priority order as follows, except that the Participant may instead choose to have amounts taken from his or her Prior After-Tax Account first: Rollover Account Prior Company Account Prior After-Tax Account 26 11/17/95 (c) Permitted Frequency. The maximum number of Prior Company Plus Account withdrawals permitted to a Participant in any 12-month period is one. (d) Suspension from Further Contributions. A Prior Company Account Plus withdrawal shall not affect a Participant's ability to make or be eligible to receive further Contributions. 11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW 11.1 Benefit Information, Notices and Election A Participant, or his or her Beneficiary in the case of his or her death, shall be provided with information regarding all optional times and forms of distribution available, to include the notices prescribed by Code section 402(f) and Code section 411(a)(11). Subject to the other requirements of this Section, a Participant, or his or her Beneficiary in the case of his or her death, may elect, in such manner and with such advance notice as prescribed by the Administrator, to have his or her vested Account balance paid to him or her beginning upon any Settlement Date following the Participant's termination of employment with all Related Companies or, if earlier, at the time required by law as set forth in Section 11.6. If a distribution is one to which Code sections 401(a)(11) and 417 do not apply, such distribution may commence less than 30 days after the aforementioned notices are provided, if: (a) the Participant is clearly informed that he or she has the right to a period of at least 30 days after receipt of such notices to consider the decision as to whether to elect a distribution and if so to elect a particular form of distribution and to elect or not elect a Direct Rollover for all or a portion, if any, of his or her distribution which shall constitute an Eligible Rollover Distribution; and (b) the Participant after receiving such notices, affirmatively elects a distribution and a Direct Rollover for all or a portion, if any, of his or her distribution which shall constitute an Eligible Rollover Distribution or alternatively elects to have all or a portion made payable directly to him or her, thereby not electing a Direct Rollover for all or a portion thereof. 27 11/17/95 11.2 Spousal Consent A Participant is not required to obtain Spousal Consent in order to receive a distribution under the Plan. 11.3 Payment Form and Medium Except to the extent otherwise provided by Section 11.4, a Participant may elect to be paid in any of these forms: (a) a single lump sum, (b) a portion paid in a lump sum, and the remainder paid later, or (c) periodic installments over a period not to exceed the life expectancy of the Participant and his or her Beneficiary. Distributions shall be made in cash, except to the extent a distribution consists of a loan call as described in Section 9. Alternatively, a Participant may elect that a lump sum payment be made in the form of whole shares of Company Stock and cash in lieu of fractional shares to the extent invested in the Company Stock Fund. With regard to the portion of a distribution representing an Eligible Rollover Distribution, a Distributee may elect a Direct Rollover for all or a portion of such amount. 11.4 Distribution of Small Amounts If after a Participant's employment with all Related Companies ends, the Participant's vested Account balance is $3,500 or less, and if at the time of any prior in-service withdrawal or distribution the Participant's vested Account balance did not exceed $3,500, the Participant's benefit shall be paid as a single lump sum as soon as administratively feasible in accordance with procedures prescribed by the Administrator. 11.5 Source and Timing of Distribution Funding A distribution to a Participant shall be made solely from the assets of his or her own Accounts and shall be based on the Account values as of the Trade Date the distribution is processed. The available assets shall be determined first by Account type and then within each Account used for funding a distribution, amounts shall first be taken from the Sweep Account and then taken by Investment Fund in direct proportion to the market value of the Participant's interest in each Investment Fund as of the Trade Date on which the distribution is processed. 28 11/17/95 The distribution shall be funded on the Settlement Date following the Trade Date as of which the distribution is processed. The Trustee shall make payment as soon thereafter as administratively feasible. 11.6 Latest Commencement Permitted In addition to any other Plan requirements and unless a Participant elects otherwise, his or her benefit payments shall begin not later than 60 days after the end of the Plan Year in which he or she attains his or her Normal Retirement Date or retires, whichever is later. However, if the amount of the payment or the location of the Participant (after a reasonable search) cannot be ascertained by that deadline, payment shall be made no later than 60 days after the earliest date on which such amount or location is ascertained but in no event later than as described below. A Participant's failure to elect in such manner as prescribed by the Administrator to have his or her vested Account balance paid to him or her, shall be deemed an election by the Participant to defer his or her distribution. Benefit payments shall begin by the April 1 immediately following the end of the calendar year in which the Participant attains age 70 1/2, whether or not he or she is an Employee. If benefit payments cannot begin at the time required because the location of the Participant cannot be ascertained (after a reasonable search), the Administrator may, at any time thereafter, treat such person's Account as forfeited subject to the provisions of Section 18.5. 11.7 Payment Within Life Expectancy The Participant's payment election must be consistent with the requirement of Code section 401(a)(9) that all payments are to be completed within a period not to exceed the lives or the joint and last survivor life expectancy of the Participant and his or her Beneficiary. The life expectancies of a Participant and his or her Beneficiary, if such Beneficiary is his or her spouse, may be recomputed annually. 11.8 Incidental Benefit Rule The Participant's payment election must be consistent with the requirement that, if the Participant's spouse is not his or her sole primary Beneficiary, the minimum annual distribution for each calendar year, beginning with the year in which he or she attains age 70 1/2, shall not be less 29 11/17/95 than the quotient obtained by dividing (a) the Participant's vested Account balance as of the last Trade Date of the preceding year by (b) the applicable divisor as determined under the incidental benefit requirements of Code section 401(a)(9). 11.9 Payment to Beneficiary Payment to a Beneficiary must either: (1) be completed by the end of the calendar year that contains the fifth anniversary of the Participant's death or (2) begin by the end of the calendar year that contains the first anniversary of the Participant's death and be completed within the period of the Beneficiary's life or life expectancy, except that: (a) If the Participant dies after the April 1 immediately following the end of the calendar year in which he or she attains age 70 1/2, payment to his or her Beneficiary must be made at least as rapidly as provided in the Participant's distribution election; (b) If the surviving spouse is the Beneficiary, payments need not begin until the end of the calendar year in which the Participant would have attained age 70 1/2 and must be completed within the spouse's life or life expectancy; and (c) If the Participant and the surviving spouse who is the Beneficiary die (1) before the April immediately following the end of the calendar year in which the Participant would have attained age 70 1/2 and (2) before payments have begun to the spouse, the spouse shall be treated as the Participant in applying these rules. 11.10 Beneficiary Designation Each Participant may complete a beneficiary designation form indicating the Beneficiary who is to receive the Participant's remaining Plan interest at the time of his or her death. The designation may be changed at any time. However, a Participant's spouse shall be the sole primary Beneficiary unless the designation includes Spousal Consent for another Beneficiary. If no proper designation is in effect at the time of a Participant's death or if the Beneficiary does not survive the Participant, the Beneficiary shall be, in the order listed, the: (a) Participant's surviving spouse, 30 11/17/95 (b) Participant's children, in equal shares, (or if a child does not survive the Participant, and that child leaves issue, the issue shall be entitled to that child's share, by right of representation) or (c) Participant's estate. 12 ADP AND ACP TESTS 12.1 Contribution Limitation Definitions The following definitions are applicable to this Section 12 (where a definition is contained in both Sections 1 and 12, for purposes of Section 12 the Section 12 definition shall be controlling): (a) "ACP" or "Average Contribution Percentage". The Average Percentage calculated using Contributions allocated to Participants as of a date within the Plan Year. (b) "ACP Test". The determination of whether the ACP is in compliance with the Basic or Alternative Limitation for a Plan Year (as defined in Section 12.2). (c) "ADP" or "Average Deferral Percentage". The Average Percentage calculated using Deferrals allocated to Participants as of a date within the Plan Year. (d) "ADP Test". The determination of whether the ADP is in compliance with the Basic or Alternative Limitation for a Plan Year (as defined in Section 12.2). (e) "Average Percentage". The average of the calculated percentages for Participants within the specified group. The calculated percentage refers to either the "Deferrals" or "Contributions" (as defined in this Section) made on each Participant's behalf for the Plan Year, divided by his or her Compensation for the portion of the Plan Year in which he or she was an Eligible Employee while a Participant. (Employee Pre- Tax Contributions to this Plan or comparable contributions to plans of Related Companies which shall be refunded solely because they exceed the Contribution Dollar Limit are included in the percentage for the HCE Group but not for the NHCE Group.) (f) "Contributions" shall include Employer Contributions. In addition, Contributions may include Employee Pre-Tax Contributions, but only to the extent that (1) the Employer elects to use them, (2) they are not used or counted in the ADP Test and (3) they otherwise satisfy 31 11/17/95 the requirements as prescribed under Code section 401(m) permitting treatment as Contributions for purposes of the ACP Test. (g) "Deferrals" shall include Employee Pre-Tax Contributions. (h) "Family Member". An Employee who is, at any time during the Plan Year or Lookback Year, a spouse, lineal ascendant or descendant, or spouse of a lineal ascendant or descendant of (1) an active or former Employee who at any time during the Plan Year or Lookback Year is a more than 5% Owner (within the meaning of Code section 414(q)(3)), or (2) an HCE who is among the 10 Employees with the highest Compensation for such Year. (i) "HCE" or "Highly Compensated Employee". With respect to each Employer and its Related Companies, an Employee during the Plan Year or Lookback Year who (in accordance with Code section 414(q)): (1) Was a more than 5% Owner at any time during the Lookback Year or Plan Year; (2) Received Compensation during the Lookback Year (or in the Plan Year if among the 100 Employees with the highest Compensation for such Year) in excess of (i) $75,000 (as adjusted for such Year pursuant to Code sections 414(q)(1) and 415(d)), or (ii) $50,000 (as adjusted for such Year pursuant to Code sections 414(q)(1) and 415(d)) in the case of a member of the "top-paid group" (within the meaning of Code section 414(q)(4)) for such Year), provided, however, that if the conditions of Code section 414(q)(12)(B)(ii) are met, the Company may elect for any Plan Year to apply clause (i) by substituting $50,000 for $75,000 and not to apply clause (ii); (3) Was an officer of a Related Company and received Compensation during the Lookback Year (or in the Plan Year if among the 100 Employees with the highest Compensation for such Year) that is greater than 50% of the dollar limitation in effect under Code section 415(b)(1 )(A) and (d) for such Year (or if no officer has Compensation in excess of the threshold, the officer with the highest Compensation), provided that the number of officers shall be limited to 50 Employees (or, if less, the greater of three Employees or 10% of the Employees); or 32 11/17/95 (4) Was a Family Member at any time during the Lookback Year or Plan Year, in which case the Deferrals, Contributions and Compensation of the HCE and his or her Family Members shall be aggregated and they shall be treated as a single HCE. A former Employee shall be treated as an HCE if (1) such former Employee was an HCE when he separated from service, or (2) such former Employee was an HCE in service at any time after attaining age 55. The determination of who is an HCE, including the determinations of the number and identity of Employees in the top-paid group, the top 100 Employees and the number of Employees treated as officers shall be made in accordance with Code section 414(q). (j) "HCE Group" and "NHCE Group". With respect to each Employer and its Related Companies, the respective group of HCEs and NHCEs who are eligible to have amounts contributed on their behalf for the Plan Year, including Employees who would be eligible but for their election not to participate or to contribute, or because their Pay is greater than zero but does not exceed a stated minimum. (1) If the Related Companies maintain two or more plans which are subject to the ADP or ACP Test and are considered as one plan for purposes of Code sections 401(a)(4) or 410(b), all such plans shall be aggregated and treated as one plan for purposes of meeting the ADP and ACP Tests, provided that the plans may only be aggregated if they have the same Plan Year. (2) If an HCE, who is one of the top 10 paid Employees or a more than 5% Owner, has any Family Members, the Deferrals, Contributions and Compensation of such HCE and his or her Family Members shall be combined and treated as a single HCE. Such amounts for all other Family Members shall be removed from the NHCE Group percentage calculation and be combined with the HCE's. (3) If an HCE is covered by more than one cash or deferred arrangement, or more than one arrangement permitting employee or matching contributions, maintained by the Related Companies, all such plans shall be aggregated and treated as one plan (other than those plans that may not be permissively aggregated) for purposes of 33 11/17/95 calculating the separate percentage for the HCE which is used in the determination of the Average Percentage. (k) "Lookback Year". Pursuant to Code section 414(q), the Company elects as the Lookback Year the current calendar year (ending with the Plan Year). (l) "Multiple Use Test". The test described in Section 12.4 which a Plan must meet where the Alternative Limitation (described in Section 12.2(b)) is used to meet both the ADP and ACP Tests. (m) "NHCE" or "Non-Highly Compensated Employee". An Employee who is not an HCE. 12.2 ADP and ACP Tests For each Plan Year, the ADP and ACP for the HCE Group must meet either the Basic or Alternative Limitation when compared to the respective ADP and ACP for the NHCE Group, defined as follows: (a) Basic Limitation. The HCE Group Average Percentage may not exceed 1.25 times the NHCE Group Average percentage. (b) Alternative Limitation. The HCE Group Average Percentage is limited by reference to the NHCE Group Average Percentage as follows: If the NHCE Group Then the Maximum HCE Average Percentage is: Group Average Percentage is: ---------------------- --------------------------- Less than 2% 2 times NHCE Group Average % 2% to 8% NHCE Group Average % plus 2% More than 8% NA - Basic Limitation applies 12.3 Correction of ADP and ACP Tests If the ADP or ACP Tests are not met, the Administrator shall determine, no later than the end of the next Plan Year, a maximum percentage to be used in place of the calculated percentage for all HCEs that would reduce the ADP and/or ACP for the HCE group by a sufficient amount to meet the ADP and ACP Tests. ADP and/or ACP corrections shall be made in accordance with the leveling method as described below. (a) ADP Correction. The HCE with the highest Deferral percentage shall have his or her Deferral percentage reduced to the lesser of the extent required to meet 34 11/17/95 the ADP Test or to cause his or her Deferral percentage to equal that of the HCE with the next highest Deferral percentage. The process shall be repeated until the ADP Test is met. To the extent an HCE's Deferrals were determined to be reduced as described in the paragraph above, Employee Pre-Tax Contributions shall, by the end of the next Plan Year, be refunded to the HCE in an amount equal to the actual Deferrals minus the product of the maximum percentage and the HCE's Compensation, except that such amount to be refunded shall be reduced by Employee Pre- Tax Contributions previously refunded because they exceeded the Contribution Dollar Limit. The excess amounts shall first be taken from unmatched Employee Pre-Tax Contributions and then from matched Employee Pre-Tax Contributions. Any Employer Contributions attributable to refunded excess Employee Pre-Tax Contributions as described in this Section shall be forfeited and used to reduce Contributions made by an Employer as soon as administratively feasible. (b) ACP Correction. The HCE with the highest Contribution percentage shall have his or her Contribution percentage reduced to the lesser of the extent required to meet the ACP Test or to cause his or her Contribution percentage to equal that of the HCE with the next highest Contribution percentage. The process shall be repeated until the ACP Test is met. To the extent an HCE's Contributions were determined to be reduced as described in the paragraph above, Employer Contributions shall, by the end of the next Plan Year, be refunded to the HCE in an amount equal to the actual Contributions minus the product of the maximum percentage and the HCE's Compensation. (c) Investment Fund Sources. Once the amount of excess Deferrals and/or Contributions is determined amounts shall first be taken from the Sweep Account and then taken by Investment Fund in direct proportion to the market value of the Participant's interest in each Investment Fund (which excludes his or her Loan Account balance) as of the Trade Date on which the correction is processed. (d) Family Member Correction. To the extent any reduction is necessary with respect to an HCE and his or her Family Members that have been combined and treated for testing purposes as a single Employee, the excess Deferrals and Contributions from the ADP and/or ACP Test shall be prorated among each such Participant in 35 11/17/95 direct proportion to his or her Deferrals or Contributions included in each Test. 12.4 Multiple Use Test If the Alternative Limitation (defined in Section 12.2) is used to meet both the ADP and ACP Tests, the ADP and ACP for the HCE Group must also comply with the requirements of Code section 401(m)(9). Such Code section requires that the sum of the ADP and ACP for the HCE Group (as determined after any corrections needed to meet the ADP and ACP Tests have been made) not exceed the sum (which produces the most favorable result) of: (a) the Basic Limitation (defined in Section 12.2) applied to either the ADP or ACP for the NHCE Group, and (b) the Alternative Limitation applied to the other NHCE Group percentage. 12.5 Correction of Multiple Use Test If the multiple use limit is exceeded, the Administrator shall determine a maximum percentage to be used in place of the calculated percentage for all HCEs that would reduce either or both the ADP or ACP for the HCE Group by a sufficient amount to meet the multiple use limit. Any excess shall be handled in the same manner that the distribution of excess Deferrals or Contributions are handled. 12.6 Adjustment for Investment Gain or Loss Any excess Deferrals or Contributions to be refunded to a Participant in accordance with Section 12.3 or 12.5 shall be adjusted for investment gain or loss. Refunds shall not include investment gain or loss for the period between the end of the applicable Plan Year and the date of distribution. 12.7 Testing Responsibilities and Required Records The Administrator shall be responsible for ensuring that the Plan meets the ADP Test, the ACP Test and the Multiple Use Test, and that the Contribution Dollar Limit is not exceeded. In carrying out its responsibilities, the Administrator shall have sole discretion to limit or reduce Deferrals or Contributions at any time. The Administrator shall maintain records which are sufficient to demonstrate that the ADP Test, the ACP Test and the Multiple Use Test, have been met for each Plan Year for at least as long as the Employer's corresponding tax year is open to audit. 36 11/17/95 12.8 Separate Testing (a) Multiple Employers: The determination of HCEs, NHCEs, and the performance of the ADP Test, the ACP Test and Multiple Use Test, and any corrective action resulting therefrom, shall be made separately with regard to the Employees of each Employer (and its Related Companies) that is not a Related Company with the other Employer(s). (b) Collective Bargaining Units: The performance of the ADP Test, and if applicable, the ACP Test and Multiple Use Test, and any corrective action resulting therefrom, shall be applied separately to Employees who are eligible to participate in the Plan as a result of a collective bargaining agreement. In addition, separate testing may be applied, at the discretion of the Administrator and to the extent permitted under Treasury regulations, to any group of Employees for whom separate testing is permissible. 13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS 13.1 "Annual Addition" Defined The sum of all amounts allocated to the Participant's Account for a Plan Year. Amounts include contributions (except for rollovers or transfers from another qualified plan), forfeitures and, if the Participant is a Key Employee (pursuant to Section 14) for the applicable or any prior Plan Year, medical benefits provided pursuant to Code section 419A(d)(1). For purposes of this Section 13.1, "Account" also includes a Participant's account in all other defined contribution plans currently or previously maintained by any Related Company. The Plan Year refers to the year to which the allocation pertains, regardless of when it was allocated. The Plan Year shall be the Code section 415 limitation year. 13.2 Maximum Annual Addition The Annual Addition to a Participant's accounts under this Plan and any other defined contribution plan maintained by any Related Company for any Plan Year shall not exceed the lesser of (1) 25% of his or her Taxable Income or (2) $30,000 (as adjusted for the cost of living pursuant to Code section 415(d)). 37 11/17/95 13.3 Avoiding an Excess Annual Addition If, at any time during a Plan Year, the allocation of any additional Contributions would produce an excess Annual Addition for such year, Contributions to be made for the remainder of the Plan Year shall be limited to the amount needed for each affected Participant to receive the maximum Annual Addition. 13.4 Correcting an Excess Annual Addition Upon the discovery of an excess Annual Addition to a Participant's Account (resulting from forfeitures, allocations, reasonable error in determining Participant compensation or the amount of elective contributions, or other facts and circumstances acceptable to the Internal Revenue Service) the excess amount (adjusted to reflect investment gains) shall first be returned to the Participant to the extent of his or her Employee Pre-Tax Contributions (however to the extent Employee Pre-Tax Contributions were matched, the applicable Employer Contributions shall be forfeited in proportion to the returned matched Employee Pre-Tax Contributions) and the remaining excess, if any, shall be forfeited by the Participant and used to reduce Contributions made by an Employer as soon as administratively feasible. 13.5 Correcting a Multiple Plan Excess If a Participant, whose Account is credited with an excess Annual Addition, received allocations to more than one defined contribution plan, the excess shall be corrected by reducing the Annual Addition to this Plan only after all possible reductions have been made to the other defined contribution plans. 13.6 "Defined Benefit Fraction" Defined The fraction, for any Plan Year, where the numerator is the "projected annual benefit" and the denominator is the greater of 125% of the "protected current accrued benefit" or the normal limit which is the lesser of (1) 125% of the maximum dollar limitation provided under Code section 415(b)(1)(A) for the Plan Year or (2) 140% of the amount which may be taken into account under Code section 415(b)(1)(B) for the Plan Year, where a Participant's: (a) "projected annual benefit" is the annual benefit provided by the Plan determined pursuant to Code section 415(e)(2)(A), and 38 11/17/95 (b) "protected current accrued benefit" in a defined benefit plan in existence (1) on July 1, 1982, shall be the accrued annual benefit provided for under Public Law 97-248, section 235(g)(4), as amended, or (2) on May 6, 1986, shall be the accrued annual benefit provided for under Public Law 99-514, section 1106(i)(3). 13.7 "Defined Contribution Fraction" Defined The fraction where the numerator is the sum of the Participant's Annual Addition for each Plan Year to date and the denominator is the sum of the "annual amounts" for each year in which the Participant has performed service with a Related Company. The "annual amount" for any Plan Year is the lesser of (1)125% of the Code section 415(c)(1)(A) dollar limitation (determined without regard to subsection (c)(6)) in effect for the Plan Year and (2)140% of the Code section 415(c)(1)(B) amount in effect for the Plan Year, where: (a) each Annual Addition is determined pursuant to the Code section 415(c) rules in effect for such Plan Year, and (b) the numerator is adjusted pursuant to Public Law 97- 248, section 235(g)(3), as amended, or Public Law 99- 514, section 1106(i)(4). 13.8 Combined Plan Limits and Correction If a Participant has also participated in a defined benefit plan maintained by a Related Company, the sum of the Defined Benefit Fraction and the Defined Contribution Fraction for any Plan Year may not exceed 1.0. If the combined fraction exceeds 1.0 for any Plan Year, the Participant's benefit under any defined benefit plan (to the extent it has not been distributed or used to purchase an annuity contract) shall be limited so that the combined fraction does not exceed 1.0 before any defined contribution, limits shall be enforced. 14 TOP HEAVY RULES 14.1 Top Heavy Definitions When capitalized, the following words and phrases have the following meanings when used in this Section: (a) "Aggregation Group". The group consisting of each qualified plan of an Employer (and its Related Companies) (1) in which a Key Employee is a participant or was a participant during the determination period 39 11/17/95 (regardless of whether such plan has terminated), or (2) which enables another plan in the group to meet the requirements of Code sections 401(a)(4) or 410(b). The Employer may also treat any other qualified plan as part of the group if the group would continue to meet the requirements of Code sections 401(a)(4) and 410(b) with such plan being taken into account. (b) "Determination Date". The last Trade Date of the preceding Plan Year or, in the case of the Plan's first year, the last Trade Date of the first Plan Year. (c) "Key Employee". A current or former Employee (or his or her Beneficiary) who at any time during the five year period ending on the Determination Date was: (1) an officer of a Related Company whose Compensation (i) exceeds 50% of the amount in effect under Code section 415(b)(1)(A) and (ii) places him within the following highest paid group of officers: Number of Employees Number of not Excluded Under Code Highest Paid Section 414(g)(8) Officers Included ----------------------- ----------------- Less than 30 3 30 to 500 10% of the number of Employees not excluded under Code section 414(q)(8) More than 500 50 (2) a more than 5% Owner, (3) a more than 1% Owner whose Compensation exceeds $150,000, or (4) a more than 0.5% Owner who is among the 10 Employees owning the largest interest in a Related Company and whose Compensation exceeds the amount in effect under Code section 415(c)(1)(A). (d) "Plan Benefit". The sum as of the Determination Date of (1) an Employee's Account, (2) the present value of his or her other accrued benefits provided by all qualified plans within the Aggregation Group, and (3) the aggregate distributions made within the five year period ending on such date. Plan Benefits shall exclude Rollover Contributions and plan to plan transfers made after December 31, 1983 which are both 40 11/17/95 employee initiated and from a plan maintained by a non- related employer. (e) "Top Heavy". The Plan's status when the Plan Benefits of Key Employees account for more than 60% of the Plan Benefits of all Employees who have performed services at any time during the five year period ending on the Determination Date. The Plan Benefits of Employees who were, but are no longer, Key Employees (because they have not been an officer or Owner during the five year period), are excluded in the determination. 14.2 Special Contributions (a) Minimum Contribution Requirement. For each Plan Year in which the Plan is Top Heavy, the Employer shall not allow any contributions (other than a Rollover Contribution from a plan maintained by a non-related employer) to be made by or on behalf of any Key Employee unless the Employer makes a contribution (other than contributions made by an Employer in accordance with a Participant's salary deferral election or contributions made by an Employer based upon the amount contributed by a Participant) on behalf of all Participants who were Eligible Employees as of the last day of the Plan Year in an amount equal to at least 3% of each such Participant's Taxable Income. The Administrator shall remove any such contributions (including applicable investment gain or loss) credited to a Key Employee's Account in violation of the foregoing rule and return them to the Employer or Employee to the extent permitted by the Limited Return of Contributions paragraph of Section 18. (b) Overriding Minimum Benefit. Notwithstanding, contributions shall be permitted on behalf of Key Employees if the Employer also maintains a defined benefit plan which automatically provides a benefit which satisfies the Code section 416(c)(1) minimum benefit requirements, including the adjustment provided in Code section 416(h)(2)(A), if applicable. If this Plan is part of an aggregation group in which a Key Employee is receiving a benefit and no minimum is provided in any other plan, a minimum contribution of at least 3% of Taxable Income shall be provided to the Participants specified in the preceding paragraph. In addition, the Employer may offset a defined benefit minimum by contributions (other than contributions made by an, Employer in accordance with a Participant's salary deferral election or contributions made by an Employer based upon the amount contributed by a Participant) made to this Plan. 41 11/17/95 14.3 Adjustment to Combined Limits for Different Plans For each Plan Year in which the Plan is Top Heavy, 100% shall be substituted for 125% in determining the Defined Benefit Fraction and the Defined Contribution Fraction. 15 PLAN ADMINISTRATION 15.1 Plan Delineates Authority and Responsibility Plan fiduciaries include the Company, the Administrator, the Committee and/or the Trustee, as applicable, whose specific duties are delineated in this Plan and Trust. Fiduciary duties or responsibilities may be delegated by the Company, Administrator or the Committee in writing in accordance with ERISA section 405. Plan fiduciaries shall include any other person to whom fiduciary duties or responsibility is delegated with respect to the Plan. Any person or group may serve in more than one fiduciary capacity with respect to the Plan. To the extent permitted under ERISA section 405, no fiduciary shall be liable for a breach by another fiduciary. 15.2 Fiduciary Standards Each fiduciary shall: (a) discharge his or her duties in accordance with this Plan and Trust to the extent they are consistent with ERISA; (b) use that degree of care, skill, prudence and diligence that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (c) act with the exclusive purpose of providing benefits to Participants and their Beneficiaries, and defraying reasonable expenses of administering the Plan; (d) diversify Plan investments, to the extent such fiduciary is responsible for directing the investment of Plan assets, so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and (e) treat similarly situated Participants and Beneficiaries in a uniform and nondiscriminatory manner. 42 11/17/95 15.3 Company is ERISA Plan Administrator The Company is the plan administrator, within the meaning of ERISA section 3(16), which is responsible for compliance with all reporting and disclosure requirements, except those that are explicitly the responsibility of the Trustee under applicable law. The Administrator and/or Committee shall have any necessary authority to carry out such functions through the actions of the Administrator, duly appointed officers of the Company, and/or the Committee. 15.4 Administrator Duties The Administrator shall have the discretionary authority to construe this Plan and Trust, other than the provisions which relate to the Trustee, and to do all things necessary or convenient to effect the intent and purposes thereof, whether or not such powers are specifically set forth in this Plan and Trust. Actions taken in good faith by the Administrator shall be conclusive and binding on all interested parties, and shall be given the maximum possible deference allowed by law. ln addition to the duties listed elsewhere in this Plan and Trust, the Administrator's authority shall include, but not be limited to, the discretionary authority to: (a) determine who is eligible to participate, if a contribution qualifies as a rollover contribution, the allocation of Contributions, and the eligibility for loans, withdrawals and distributions; (b) provide each Participant with a summary plan description no later than 90 days after he or she has become a Participant (or such other period permitted under ERISA section 104(b)(1)), as well as informing each Participant of any material modification to the Plan in a timely manner; (c) make a copy of the following documents available to Participants during normal work hours: this Plan and Trust (including subsequent amendments), all annual and interim reports of the Trustee related to the entire Plan, the latest annual report and the summary plan description; (d) determine the fact of a Participant's death and of any Beneficiary's right to receive the deceased Participant's interest based upon such proof and evidence as it deems necessary; (e) establish and review at least annually a funding policy bearing in mind both the short-run and long-run needs 43 11/17/95 and goals of the Plan and to the extent Participants may direct their own investments, the funding policy shall focus on which Investment Funds are available for Participants to use; and (f) adjudicate claims pursuant to the claims procedure described in Section 18. 15.5 Advisors May be Retained The Administrator may retain such agents and advisors (including attorneys, accountants, actuaries, consultants, record keepers, investment counsel and administrative assistants) as it considers necessary to assist it in the performance of its duties. The Administrator shall also comply with the bonding requirements of ERISA section 412. 15.6 Delegation of Administrator Duties The, Company, as Administrator of the Plan, has appointed a Committee to administer the Plan on its behalf. The Company shall provide the Trustee with the names and specimen signatures of any persons authorized to serve as Committee members and act as or on its behalf. Any Committee member appointed by the Company shall serve at the pleasure of the Company, but may resign by written notice to the Company. Committee members shall serve without compensation from the Plan for such services. Except to the extent that the Company otherwise provides, any delegation of duties to a Committee shall carry with it the full discretionary authority of the Administrator to complete such duties. 15.7 Committee Operating Rules (a) Actions of Majority. Any act delegated by the Company to the Committee may be done by a majority of its members. The majority may be expressed by a vote at a meeting or in writing without a meeting, and a majority action shall be equivalent to an action of all Committee members. (b) Meetings. The Committee shall hold meetings upon such notice, place and times as it determines necessary to conduct its functions properly. (c) Reliance by Trustee. The Committee may authorize one or more of its members to execute documents on its behalf and may authorize one or more of its members or other individuals who are not members to give written direction to the Trustee in the performance of its duties. The Committee shall provide such authorization in writing to the Trustee with the name and specimen 44 11/17/95 signatures of any person authorized to act on its behalf. The Trustee shall accept such direction and rely upon it until notified in writing that the Committee has revoked the authorization to give such direction. The Trustee shall not be deemed to be on notice of any change in the membership of the Committee, parties authorized to direct the Trustee in the performance of its duties, or the duties delegated to and by the Committee until notified in writing. 16 MANAGEMENT OF INVESTMENTS 16.1 Trust Agreement All Plan assets shall be held by the Trustee in trust, in accordance with those provisions of this Plan and Trust which relate to the Trustee, for use in providing Plan benefits and paying Plan fees and expenses not paid directly by the Employer. Plan benefits shall be drawn solely from the Trust and paid by the Trustee as directed by the Administrator. Notwithstanding, the Administrator may appoint, with the approval of the Trustee, another trustee to hold and administer Plan assets which do not meet the requirements of Section 16.2. 16.2 Investment Funds The Administrator is hereby granted the authority to select the Investment Funds offered to Participants for investment of Trust assets and to direct the Trustee to comply with the investment instructions of Participants. The number and composition of Investment Funds may be changed from time to time, without the necessity of amending this Plan and Trust. The Trustee may establish reasonable limits on the number of Investment Funds as well as the acceptable assets for any such Investment Fund. Each of the Investment Funds may be comprised of any of the following: (a) shares of a registered investment company, whether or not the Trustee or any of its affiliates is an advisor to, or other service provider to, such company; (b) collective investment funds maintained by the Trustee, or any other fiduciary to the Plan, which are available for investment by trusts which are qualified under Code sections 401(a) and 501(a); (c) individual equity and fixed income securities which are readily tradeable on the open market; (d) guaranteed investment contracts issued by a bank or insurance company; 45 11/17/95 (e) interest bearing deposits of the Trustee; and (f) Company Stock. Any Investment Fund assets invested in a collective investment fund, shall be subject to all the provisions of the instruments establishing and governing such fund. These instruments, including any subsequent amendments, are incorporated herein by reference. 16.3 Authority to Hold Cash The Trustee shall have the authority to cause the investment manager of each Investment Fund to maintain sufficient deposit or money market type assets in each Investment Fund to handle the Fund's liquidity and disbursement needs. Each Participant's and Beneficiary's Sweep Account, which is used to hold assets pending investment or disbursement, shall consist of interest bearing deposits of the Trustee. 16.4 Trustee to Act Upon Instructions The Trustee shall carry out instructions to invest assets in the Investment Funds as soon as practicable after such instructions are received from the Administrator, Participants, or Beneficiaries. Such instructions shall remain in effect until changed by the Administrator, Participants or Beneficiaries. 16.5 Administrator Has Right to Vote Registered Investment Company Shares The Administrator shall be entitled to vote proxies or exercise any shareholder rights relating to shares held on behalf of the Plan in a registered investment company. Notwithstanding, the authority to vote proxies and exercise shareholder rights related to such shares held in a Custom Fund is vested as provided otherwise in Section 16. 16.6 Custom Fund Investment Management The Administrator may designate, with the consent of the Trustee, an investment manager for any Investment Fund established by the Trustee solely for Participants of this Plan, and subject to Section 16.7, any other plan of a Related Company (a "Custom Fund"). The investment manager may be the Administrator, Trustee or an investment manager pursuant to ERISA section 3(38). The Administrator shall advise the Trustee in writing of the appointment of an investment manager and shall cause the investment manager to acknowledge to the Trustee in writing that the investment manager is a fiduciary to the Plan. 46 11/17/95 A Custom Fund shall be subject to the following: (a) Guidelines. Written guidelines, acceptable to the Trustee, shall be established for a Custom Fund. If a Custom Fund consists solely of collective investment funds or shares of a registered investment company (and sufficient deposit or money market type assets to handle the Fund's liquidity and disbursement needs), its underlying instruments shall constitute the guidelines. (b) Authority of Investment Manager. The investment manager of a Custom Fund shall have the authority to vote or execute proxies, exercise shareholder rights, manage, acquire, and dispose of Trust assets. Notwithstanding, the authority to vote proxies and exercise shareholder rights related to shares of Company Stock held in a Custom Fund is vested as provided otherwise in Section 16. (c) Custody and Trade Settlement. Unless otherwise agreed to by the Trustee, the Trustee shall maintain custody of all Custom Fund assets and be responsible for the settlement of all Custom Fund trades. For purposes of this section, shares of a collective investment fund, shares of a registered investment company and guaranteed investment contracts issued by a bank or insurance company, shall be regarded as the Custom Fund assets instead of the underlying assets of such instruments. (d) Limited Liability of Co-Fiduciaries. Neither the Administrator nor the Trustee shall be obligated to invest or otherwise manage any Custom Fund assets for which the Trustee or Administrator is not the investment manager nor shall the Administrator or Trustee be liable for acts or omissions with regard to the investment of such assets except to the extent required by ERISA. 16.7 Master Custom Fund The Trustee may establish, at the direction of the Company, a single Custom Fund (the "Master Custom Fund"), for the benefit of this Plan and any other plan of a Related Company for which the Trustee acts as trustee pursuant to a plan and trust document that contains a provision substantially identical to this Section 16.7. The assets of this Plan, to the extent invested in the Master Custom Fund, shall consist only of that percentage of the assets of the Master Custom Fund represented by the shares held by this Plan. 47 11/17/95 16.8 Authority to Segregate Assets The Company may direct the Trustee to split an Investment Fund into two or more funds in the event any assets in the Fund are illiquid or the value is not readily determinable. In the event of such segregation, the Company shall give instructions to the Trustee on what value to use for the split-off assets, and the Trustee shall not be responsible for confirming such value. 16.9 Maximum Permitted Investment in Company Stock If the Company provides for a Company Stock Fund, the Fund shall be comprised of Company Stock and sufficient deposit or money market type assets to handle the Fund's liquidity and disbursement needs. The Fund may be as large as necessary to comply with Participants' and Beneficiaries' investment elections. 16.10 Participants Have Right to Vote and Tender Company Stock Each Participant or Beneficiary shall be entitled to instruct the Trustee as to the voting or tendering of any full or partial shares of Company Stock held on his or her behalf in the Company Stock Fund. Prior to such voting or tendering of Company Stock, each Participant or Beneficiary shall receive a copy of the proxy solicitation or other material relating to such vote or tender decision and a form for the Participant or Beneficiary to complete which confidentially instructs the Trustee to vote or tender such shares in the manner indicated by the Participant or Beneficiary. Upon receipt of such instructions, the Trustee shall act with respect to such shares as instructed. The Administrator shall instruct the Trustee with respect to how to vote or tender any shares for which instructions are not received from Participants or Beneficiaries. 16.11 Registration and Disclosure for Company Stock The Administrator shall be responsible for determining the applicability (and, if applicable, complying with) the requirements of the Securities Act of 1933, as amended, the California Corporate Securities Law of 1968, as amended, and any other applicable blue sky law. The Administrator shall also specify what restrictive legend or transfer restriction, if any, is required to be set forth on the certificates for the securities and the procedure to be followed by the Trustee to effectuate a resale of such securities. 48 11/17/95 17 TRUST ADMINISTRATION 17.1 Trustee to Construe Trust The Trustee has the authority to do all things necessary or convenient to the administration of the Trust, whether or not such powers are specifically set forth in this Plan and Trust. Actions taken in good faith by the Trustee shall be conclusive and binding on all interested parties, and shall be given the maximum possible deference allowed by law. 17.2 Trustee To Act As Owner of Trust Assets Subject to the specific conditions and limitations set forth in this Plan and Trust, the Trustee shall have all the power, authority, rights and privileges of an absolute owner of the Trust assets and, not in limitation but in amplification of the foregoing, may: (a) receive, hold, manage, invest and reinvest, sell, tender, exchange, dispose of, encumber, hypothecate, pledge, mortgage, lease, grant options respecting, repair, alter, insure, or distribute any and all property in the Trust; (b) borrow money, participate in reorganizations, pay calls and assessments, vote or execute proxies, exercise subscription or conversion privileges, exercise options and register any securities in the Trust in the name of the nominee, in federal book entry form or in any other form as shall permit title thereto to pass by delivery; (c) renew, extend the due date, compromise, arbitrate, adjust, settle, enforce or foreclose, by judicial proceedings or otherwise, or defend against the same, any obligations or claims in favor of or against the Trust; and (d) lend, through a collective investment fund, any securities held in such collective investment fund to brokers, dealers or other borrowers and to permit such securities to be transferred into the name and custody and be voted by the borrower or others. 17.3 United States Indicia of Ownership The Trustee shall not maintain the indicia of ownership of any Trust assets outside the jurisdiction of the United States, except as authorized by ERISA section 404(b). 49 11/17/95 17.4 Tax Withholding and Payment (a) Withholding. The Trustee shall calculate and withhold federal (and, if applicable, state) income taxes with regard to any Eligible Rollover Distribution that is not paid as a Direct Rollover in accordance with the Participant's withholding election or as required by law if no election is made or the election is less than the amount required by law. With regard to any taxable distribution that is not an Eligible Rollover Distribution, the Trustee shall calculate and withhold federal (and, if applicable, state) income taxes in accordance with the Participant's withholding election or as required by law if no election is made. (b) Taxes Due From Investment Funds. The Trustee shall pay from the Investment Fund any taxes or assessments imposed by any taxing or governmental authority on such Fund or its income, including related interest and penalties. 17.5 Trust Accounting (a) Annual Report. Within 60 days (or other reasonable period) following the close of the Plan Year, the Trustee shall provide the Administrator with an annual accounting of Trust assets and information to assist the Administrator in meeting ERISA's annual reporting and audit requirements. (b) Periodic Reports. The Trustee shall maintain records and provide sufficient reporting to allow the Administrator to properly monitor the Trust's assets and activity. (c) Administrator Approval. Approval of any Trustee accounting shall automatically occur 90 days after such accounting has been received by the Administrator, unless the Administrator files a written objection with the Trustee within such time period. Such approval shall be final as to all matters and transactions stated or shown therein and binding upon the Administrator. 17.6 Valuation of Certain Assets If the Trustee determines the Trust holds any asset which is not readily tradeable and listed on a national securities exchange registered under the Securities Exchange Act of 1934, as amended, the Trustee may engage a qualified independent appraiser to determine the fair market value of 50 11/17/95 such property, and the appraisal fees shall be paid from the Investment Fund containing the asset. 17.7 Legal Counsel The Trustee may consult with legal counsel of its choice, including counsel for the Employer or counsel of the Trustee, upon any question or matter arising under this Plan and Trust. When relied upon by the Trustee, the opinion of such counsel shall be evidence that the Trustee has acted in good faith. 17.8 Fees and Expenses The Trustee's fees for its services as Trustee shall be such as may be mutually agreed upon by the Company and the Trustee. Trustee fees and all reasonable expenses of counsel and advisors retained by the Trustee shall be paid in accordance with Section 6. 17.9 Trustee Duties and Limitations The Trustee's duties, unless otherwise agreed to by the Trustee, shall be confined to construing the terms of the Plan and Trust as they relate to the Trustee, receiving funds on behalf of and making payments from the Trust, safeguarding and valuing Trust assets, investing and reinvesting Trust assets in the Investment Funds as directed by the Administrator, Participants or Beneficiaries and those duties as described in this Section 17. The Trustee shall have no duty or authority to ascertain whether Contributions are in compliance with the Plan, to enforce collection or to compute or verify the accuracy or adequacy of any amount to be paid to it by the Employer. The Trustee shall not be liable for the proper application of any part of the Trust with respect to any disbursement made at the direction of the Administrator. 18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION 18.1 Plan Does Not Affect Employment Rights The Plan does not provide any employment rights to any Employee. The Employer expressly reserves the right to discharge an Employee at any time, with or without cause, without regard to the effect such discharge would have upon the Employee's interest in the Plan. 51 11/17/95 18.2 Limited Return of Contributions Except as provided in this paragraph, (1) Plan assets shall not revert to the Employer nor be diverted for any purpose other than the exclusive benefit of Participants or their Beneficiaries; and (2) a Participant's vested interest shall not be subject to divestment. As provided in ERISA section 403(c)(2), the actual amount of a Contribution made by the Employer (or the current value of the Contribution if a net loss has occurred) may revert to the Employer if: (a) such Contribution is made by reason of a mistake of fact; or (b) such Contribution is not deductible under Code section 404 (such Contributions are hereby conditioned upon such deductibility) in the taxable year of the Employer for which the Contribution is made. The reversion to the Employer must be made (if at all) within one year of the mistaken payment of the Contribution or the date of disallowance of deduction, as the case may be. A Participant shall have no rights under the Plan with respect to any such reversion. 18.3 Assignment and Alienation As provided by Code section 401(a)(13) and to the extent not otherwise required by law, no benefit provided by the Plan may be anticipated, assigned or alienated, except: (a) to create, assign or recognize a right to any benefit with respect to a Participant pursuant to a QDRO, or (b) to use a Participant's vested Account balance as security for a loan from the Plan which is permitted pursuant to Code section 4975. 18.4 Facility of Payment If a Plan benefit is due to be paid to a minor or if the Administrator reasonably believes that any payee is legally incapable of giving a valid receipt and discharge for any payment due him or her, the Administrator shall have the payment of the benefit, or any part thereof, made to the person (or persons or institution) whom it reasonably believes is caring for or supporting the payee, unless it has received due notice of claim therefor from a duly appointed guardian or conservator of the payee. Any payment shall to the extent thereof, be a complete discharge of any liability under the Plan to the payee. 52 11/17/95 18.5 Reallocation of Lost Participant's Accounts If the Administrator cannot locate a person entitled to payment of a Plan benefit after a reasonable search, the Administrator may at any time thereafter treat such person's Account as forfeited and use such amount to reduce Contributions made by an Employer as soon as administratively feasible. If such person subsequently presents the Administrator with a valid claim for the benefit, such person shall be paid the amount treated as forfeited, plus the interest that would have been earned in the Sweep Account to the date of determination. The Administrator shall pay the amount through an additional amount contributed by the Employer. 18.6 Claims Procedure (a) Right to Make Claim. An interested party who disagrees with the Administrator's determination of his or her right to Plan benefits must submit a written claim and exhaust this claim procedure before legal recourse of any type is sought. The claim must include the important issues the interested party believes support the claim. The Administrator, pursuant to the authority provided in this Plan, shall either approve or deny the claim. (b) Process for Denying a Claim. The Administrator's partial or complete denial of an initial claim must include an understandable, written response covering (1) the specific reasons why the claim is being denied (with reference to the pertinent Plan provisions) and (2) the steps necessary to perfect the claim and obtain a final review. (c) Appeal of Denial and Final Review. The interested party may make a written appeal of the Administrator's initial decision, and the Administrator shall respond in the same manner and form as prescribed for denying a claim initially. (d) Time Frame. The initial claim, its review, appeal and final review shall be made in a timely fashion, subject to the following time table: 53 11/17/95 Days to Respond Action From Last Action ------ ---------------- Administrator determines benefit NA Interested party files initial request 60 days Administrator's initial decision 90 days Interested party requests final review 60 days Administrator's final decision 60 days However, the Administrator may take up to twice the maximum response time for its initial and final review if it provides an explanation within the normal period of why an extension is needed and when its decision shall be forthcoming. 18.7 Construction Headings are included for reading convenience. The text shall control if any ambiguity or inconsistency exists between the headings and the text. The singular and plural shall be interchanged wherever appropriate. References to Participant shall include Beneficiary when appropriate and even if not otherwise already expressly stated. 18.8 Jurisdiction and Severability The Plan and Trust shall be construed, regulated and administered under ERISA and other applicable federal laws and, where not otherwise preempted, by the laws of the State of California with respect to issues affecting the Trustee's responsibilities and by the laws of the State of Massachusetts with respect to all other matters. If any provision of this Plan and Trust shall become invalid or unenforceable, that fact shall not affect the validity or enforceability of any other provision of this Plan and Trust. All provisions of this Plan and Trust shall be so construed as to render them valid and enforceable in accordance with their intent. 18.9 Indemnification by Employer The Employers hereby agree to indemnify the Administrator, the Committee and the Trustee against any and all liabilities resulting from any action or inaction, (including a Plan termination in which the Company fails to apply for a favorable determination from the Internal Revenue Service with respect to the qualification of the Plan upon its termination), in relation to the Plan or Trust (1) including (without limitation) expenses reasonably incurred in the defense of any claim relating to the Plan or 54 11/17/95 its assets, and amounts paid in any settlement relating to the Plan or its assets, but (2) excluding liability resulting from actions or inactions made in bad faith, or resulting from the negligence or willful misconduct of the Trustee. The Company shall have the right, but not the obligation, to conduct the defense of any action to which this Section applies. The Plan fiduciaries are not entitled to indemnity from the Plan assets relating to any such action. 19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION 19.1 Amendment The Company reserves the right to amend this Plan and Trust at any time, to any extent and in any manner it may deem necessary or appropriate. The Company (and not the Trustee) shall be responsible for adopting any amendments necessary to maintain the qualified status of this Plan and Trust under Code sections 401(a) and 501(a). If the Committee is acting as the Administrator in accordance with Section 15.6, it shall have the authority to adopt Plan and Trust amendments which have no substantial adverse financial impact upon any Employer or the Plan. All interested parties shall be bound by any amendment, provided that no amendment shall: (a) become effective unless it has been adopted in accordance with the procedures set forth in Section 19.5; (b) except to the extent permissible under ERISA and the Code, make it possible for any portion of the Trust assets to revert to an Employer or to be used for, or diverted to, any purpose other than for the exclusive benefit of Participants and Beneficiaries entitled to Plan benefits and to defray reasonable expenses of administering the Plan; (c) decrease the rights of any Employee to benefits accrued (including the elimination of optional forms of benefits) to the date on which the amendment is adopted, or if later, the date upon which the amendment becomes effective, except to the extent permitted under ERISA and the Code; nor (d) permit an Employee to be paid the balance of his or her Employee Pre-Tax Account unless the payment would otherwise be permitted under Code section 401(k). 55 11/17/95 19.2 Merger This Plan and Trust may not be merged or consolidated with, nor may its assets or liabilities be transferred to, another plan unless each Participant and Beneficiary would, if the resulting plan were then terminated, receive a benefit just after the merger, consolidation or transfer which is at least equal to the benefit which would be received if either plan had terminated just before such event. 19.3 Divestitures In the event of a sale by an Employer which is a corporation of: (1) substantially all of the Employer's assets used in a trade or business to an unrelated corporation, or (2) a sale of such Employer's interest in a subsidiary to an unrelated entity or individual, lump sum distributions shall be permitted from the Plan, except as provided below, to Participants with respect to Employees who continue employment with the corporation acquiring such assets or who continue employment with such subsidiary, as applicable. Notwithstanding, distributions shall not be permitted if the purchaser agrees, in connection with the sale, to be substituted as the Company as the sponsor of the Plan or to accept a transfer of the assets and liabilities representing the Participants' benefits into a plan of the purchaser or a plan to be established by the purchaser. 19.4 Plan Termination The Company may, at any time and for any reason, terminate the Plan in accordance with the procedures set forth in Section 19.5, or completely discontinue contributions. Upon either of these events, or in the event of a partial termination of the Plan within the meaning of Code section 411(d)(3), the Accounts of each affected Employee shall be fully vested. If no successor plan is established or maintained, lump sum distributions shall be made in accordance with the terms of the Plan as in effect at the time of the Plan's termination or as thereafter amended provided that a post-termination amendment shall not be effective to the extent that it violates Section 19.1 unless it is required in order to maintain the qualified status of the Plan upon its termination. The Trustee's and Employer's authority shall continue beyond the Plan's termination date until all Trust assets have been liquidated and distributed. 56 11/17/95 19.5 Amendment and Termination Procedures The following procedural requirements shall govern the adoption of any amendment or termination (a "Change") of this Plan and Trust: (a) The Company may adopt any Change by action of its board of directors in accordance with its normal procedures. (b) The Committee, if acting as Administrator in accordance with Section 15.6, may adopt any amendment within the scope of its authority provided under Section 19.1 and in the manner specified in Section 15.7(a). (c) Any Change must be (1) set forth in writing, and (2) signed and dated by an executive officer of the Company or, in the case of an amendment adopted by the Committee, at least one of its members. (d) If the effective date of any Change is not specified in the document setting forth the Change, it shall be effective as of the date it is signed by the last person whose signature is required under clause (2) above, except to the extent that another effective date is necessary to maintain the qualified status of this Plan and Trust under Code sections 401(a) and 501(a). (e) No Change shall become effective until it is accepted and signed by the Trustee (which acceptance shall not unreasonably be withheld). 19.6 Termination of Employer's Participation Any Employer may, at any time and for any reason, terminate its Plan participation by action of its board of directors in accordance with its normal procedures. Written notice of such action shall be signed and dated by an executive officer of the Employer and delivered to the Company. If the effective date of such action is not specified, it shall be effective on, or as soon as reasonably practicable after, the date of delivery. Upon the Employer's request, the Company may instruct the Trustee and Administrator to spin off all affected Accounts and underlying assets into a separate qualified plan under which the Employer shall assume the powers and duties of the Company. Alternatively, the Company may treat the event as a partial termination described above or continue to maintain the Accounts under the Plan. 57 11/17/95 19.7 Replacement of the Trustee The Trustee may resign as Trustee under this Plan and Trust or may be removed by the Company at any time upon at least 90 days written notice (or less if agreed to by both parties). In such event, the Company shall appoint a successor trustee by the end of the notice period. The successor trustee shall then succeed to all the powers and duties of the Trustee under this Plan and Trust. If no successor trustee has been named by the end of the notice period, the Company's chief executive officer shall become the trustee, or if he or she declines, the Trustee may petition the court for the appointment of a successor trustee. 19.8 Final Settlement and Accounting of Trustee (a) Final Settlement. As soon as administratively feasible after its resignation or removal as Trustee, the Trustee shall transfer to the successor trustee all property currently held by the Trust. However, the Trustee is authorized to reserve such sum of money as it may deem advisable for payment of its accounts and expenses in connection with the settlement of its accounts or other fees or expenses payable by the Trust. Any balance remaining after payment of such fees and expenses shall be paid to the successor trustee. (b) Final Accounting. The Trustee shall provide a final accounting to the Administrator within 90 days of the date Trust assets are transferred to the successor trustee. (c) Administrator Approval. Approval of the final accounting shall automatically occur 90 days after such accounting has been received by the Administrator, unless the Administrator files a written objection with the Trustee within such time period. Such approval shall be final as to all matters and transactions stated or shown therein and binding upon the Administrator. 58 11/17/95 APPENDIX A - INVESTMENT FUNDS I. Investment Funds Available The Investment Funds offered under the Plan as of the Effective Date include this set of daily valued funds: Category Funds -------- ----- Income Stable Value ------ Equity Company Stock ------ S&P 500 Stock Aim, Constellation Templeton, Foreign Combination LifePath ----------- II. Default Investment Fund The default Investment Fund as of the Effective Date is the Stable Value Fund. Ill. Maximum Percentage Restrictions Applicable to Certain Investment Funds As of the Effective Date, there are no maximum percentage restrictions applicable to any Investment Funds. 59 11/17/95 APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES As of the Effective Date, payment of Plan fees and expenses shall be as follows: 1) Investment Management Fees: These are paid by Participants in that management fees reduce the investment return reported and credited to Participants. 2) Recordkeeping Fees: These are paid by the Employer on a quarterly basis. 3) Loan Fees: A $3.50 per month fee is assessed and billed/collected quarterly from the Account of each Participant who has an outstanding loan balance for loans entered into on or after April 1, 1995. For loans entered into prior to April 1, 1995, these are paid by the Employer on a quarterly basis. 4) Investment Fund Election Changes: For each Investment Fund election change by a Participant, in excess of 10 changes per year, a $10 fee shall be assessed and billed/collected quarterly from the Participant's Account. 5) Periodic Installment Payment Fees: A $3.00 per check fee shall be assessed and billed/collected quarterly from the Participant's Account. 6) Additional Fees Paid by Employer: All other Plan related fees and expenses shall be paid by the Employer. To the extent that the Administrator later elects that any such fees shall be borne by Participants, estimates of the fees shall be determined and reconciled, at least annually, and the fees shall be assessed monthly and billed/collected from Accounts quarterly. 60 11/17/95 APPENDIX C - LOAN INTEREST RATE As of the Effective Date, the interest rate charged on Participant loans shall be equal to the Trustee's prime rate, plus 1%. 61 11/17/95 SCHEDULE A - EMPLOYER CONTRIBUTIONS LOCAL 326 - LAWRENCE EMPLOYEES (1) Eligibility for Employer Contributions: A Participant who is a Local 326 - Lawrence Employee is not eligible for Employer Contributions. 62 11/17/95 SCHEDULE B - EMPLOYER CONTRIBUTIONS LOCAL 273 - BROCKTON EMPLOYEES (1) Eligibility for Employer Contributions. For each period for which Participant Contributions are made, the Employer shall make Employer Contributions, as set forth below, on behalf of each Participant who is a Local 273 - Brockton Employee and who (a) is not eligible to receive medical insurance coverage upon retirement or (b) would otherwise be eligible to receive medical coverage upon retirement but who in accordance with procedures prescribed by the Administrator made a one-time irrevocable election to waive his or her right to receive medical insurance coverage upon his or her retirement. (2) Amount of Employer Contributions. The Employer Contributions for each period shall total 100% of each eligible Participant's Employee Pre-Tax Contributions for the period, provided that no Employer Contributions shall be made based upon a Participant's Contributions in excess of 2.5% of his or her Pay, except that effective March 1, 1997 "50%" and "5%" shall be substituted for the preceding references to "100%" and "2.5%". 63 11/17/95 SCHEDULE C - EMPLOYER CONTRIBUTIONS LOCAL 341 - PORTLAND EMPLOYEES (1) Eligibility for Employer Contributions. For each period for which Participant Contributions are made, the Employer shall make Employer Contributions, as set forth below, on behalf of each Participant who is a Local 341 - Portland Employee and who (a) is not eligible to receive medical insurance coverage upon retirement or (b) would otherwise be eligible to receive medical coverage upon retirement but who in accordance with procedures prescribed by the Administrator made a one-time irrevocable election to waive his or her right to receive medical insurance coverage upon his or her retirement. (2) Amount of Employer Contributions. The Employer Contributions for each period shall total 100% of each eligible Participant's Employee Pre-Tax Contributions for the period, provided that no Employer Contributions shall be made based upon a Participant's Contributions in excess of 2.5% of his or her Pay, except that effective April 1, 1997 "50%" and "5%" shall be substituted for the preceding references to "100%" and "2.5%". 64 11/17/95 SCHEDULE D - EMPLOYER CONTRIBUTIONS LOCAL 341 - GRANITE STATE EMPLOYEES (1) Eligibility for Employer Contributions. For each period for which Participant Contributions are made, the Employer shall make Employer Contributions, as set forth below, on behalf of each Participant who is a Local 341 - Granite State Employee and who (a) is not eligible to receive medical insurance coverage upon retirement or (b) would otherwise be eligible to receive medical coverage upon retirement but who in accordance with procedures prescribed by the Administrator made a one-time irrevocable election to waive his or her right to receive medical insurance coverage upon his or her retirement. (2) Amount of Employer Contributions. The Employer Contributions for each period shall total 100% of each eligible Participant's Employee Pre-Tax Contributions for the period, provided that no Employer Contributions shall be made based upon a Participant's Contributions in excess of 2.5% of his or her Pay, except that effective April 1, 1997 "50%" and "5%" shall be substituted for the preceding references to "100%" and "2.5%". 65 11/17/95 SCHEDULE D - EMPLOYER CONTRIBUTIONS LOCAL 12026 - SPRINGFIELD EMPLOYEES (1) Eligibility for Employer Contributions: A Participant who is a Local 12026 - Springfield Employee is not eligible for Employer Contributions. 66 11/17/95 SCHEDULE E - EMPLOYER CONTRIBUTIONS LOCAL 486 - SPRINGFIELD EMPLOYEES (1) Eligibility for Employer Contributions: A Participant who is a Local 486 - Springfield Employee is not eligible for Employer Contributions. 67 11/17/95 SCHEDULE F - EMPLOYER CONTRIBUTIONS LOCAL 14930 - PORTSMOUTH EMPLOYEES (1) Eligibility for Employer Contributions: A Participant who is a Local 14930 - Portsmouth Employee is not eligible for Employer Contributions. 68 11/17/95 SCHEDULE G - EMPLOYER CONTRIBUTIONS LOCAL 8-366 - BROCKTON PROPANE EMPLOYEES (1) Eligibility for Employer Contributions: A Participant who is a Local 8-366 - Brockton Propane Employee is not eligible for Employer Contributions. 69 11/17/95 SCHEDULE H - EMPLOYER CONTRIBUTIONS LOCAL 14930 - LEWISTON EMPLOYEES (1) Eligibility for Employer Contributions: A Participant who is a Local 14930 - Lewiston Employee is not eligible for Employer Contributions. 70 11/17/95 SCHEDULE I - EMPLOYER CONTRIBUTIONS LOCAL 14930 - SALEM PROPANE EMPLOYEES (1) Eligibility for Employer Contributions: A Participant who is a Local 14930 - Salem Propane Employee is not eligible for Employer Contributions. 71 11/17/95 AMENDMENT NO. 1 TO THE BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES AND TRUST WHEREAS, Bay State Gas Company (the "Company"), approved and adopted the Bay State Gas Company Savings Plan for Operating Employees (the "Plan") and Trust Agreement (the "Trust") which were originally effective January 1, 1988 and most recently restated effective April 1, 1995; WHEREAS, Section 19.1 of the Plan and Trust provides that the Company reserves the right to amend the Plan and Trust; NOW THEREFORE RESOLVED, that Section 3 is amended effective April 1, 1995, Section 1 is amended effective January 1, 1996 and Sections 1, 2 and 5 are amended effective July 1, 1996 as follows: Effective April 1, 1995: ----------------------- 1. Section 3 is amended to restate Subsection 3.1 in its entirety as follows: 3.1 Employee Pre-Tax Contribution Election Upon becoming a Participant, an Eligible Employee may elect to reduce his or her Pay by an amount which does not exceed the Contribution Dollar Limit, within the limits described in the Contribution Percentage Limits paragraph of this Section 3, and have such amount contributed to the Plan by the Employer as an Employee Pre-Tax Contribution. The election shall be made as a percentage of Pay in such manner and with such advance notice as prescribed by the Administrator. In no event shall an Employee's Employee Pre-Tax Contributions under the Plan and comparable contributions to all other plans, contracts or arrangements of all Related Companies exceed the Contribution Dollar Limit for the Employee's taxable year beginning in the Plan Year. Effective January 1, 1996: ------------------------- 1. Section 1 is amended to restate Subsection 1.48 in its entirety as follows: 1.48 "Trustee". BZW Barclays Global Investors, National Association. 1 AMENDMENT NO. 1 BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES AND TRUST Effective July 1, 1996: ---------------------- 1. Section 1 is amended to add a new Subsection 1.36 and to redesignate each subsequent Subsection as follows: 1.36 "Period of Employment" The period beginning on the date an Employee first performs an hour of service and ending on the date his or her employment ends. Employment ends on the date the Employee quits, retires, is discharged, dies or (if earlier) the first anniversary of his or her absence for any other reason. The period of absence starting with the date an Employee's employment temporarily ends and ending on the date he or she is subsequently reemployed is (1) included in his or her Period of Employment if the period of absence does not exceed one year, and (2) excluded if such period exceeds one year. An Employee's service with a predecessor or acquired company shall only be counted in the determination of his or her Period of Employment for eligibility and/or vesting purposes if (1) the Company directs that credit for such service be granted, or (2) a qualified plan of the predecessor or acquired company is subsequently maintained by any Employer or Related Company. 2. Section 2 is amended to restate Subsection 2.1 in its entirety as follows: 2.1 Eligibility Each Eligible Employee who is a Participant shall continue their eligibility to participate. Each other Eligible Employee shall become a Participant on the first day of the next month after the date he or she completes a 12-month eligibility period in which he or she is credited with at least 1,000 Hours of Service. The initial eligibility period begins on the date an Employee first performs an Hour of Service. Subsequent eligibility periods begin with the start of each Plan Year beginning after the first Hour of Service is performed. Notwithstanding, if so provided by the Employee's governing collective bargaining Agreement, for purposes of Employee 2 AMENDMENT NO. 1 BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES AND TRUST Pre-Tax Contributions only, such Eligible Employee shall become a Participant on the later of July 1, 1996 (or such other date as so provided in the Eligible Employee's governing collective bargaining agreement) or the first day of the next month after the date he or she completes a 60 day Period of Employment but in no event later than the date he or she would have otherwise become a Participant in accordance with the preceding paragraph. The eligibility period begins on the date an Employee's Period of Employment commences. 3. Section 5 is amended to restate Subsection 5.1(a) in its entirety as follows: 5.1 Employer Contributions (a) Frequency and Eligibility; For each period for which Participants' Contributions are made, the Employer shall make Employer Contributions on behalf of each Participant who contributed during the period, met the eligibility requirements of Section 2.1 and who is so eligible for Employer Contributions under his or her governing collective bargaining agreement as set forth in Schedules A though I. 3 AMENDMENT NO. 1 BAY STATE GAS COMPANY SAVINGS PLAN FOR OPERATING EMPLOYEES AND TRUST Date: September 12, 1996 Bay State Gas Company By: /s/ Jane P. Campagna ------------------------------------ Title: Benefits Manager The provisions of the above amendment which relate to the Trustee are hereby approved and executed. Date: September 20, 1996 BZW Barclays Global Investors National Association By: /s/ David Lysen ------------------------------------ Title: Principal Date: September 20, 1996 BZW Barclays Global Investors, National Association By: /s/ Gwyn E. Slack ------------------------------------ Title: Principal 4 EX-5 3 EXHIBIT 5 --------- SCHIFF HARDIN & WAITE 7200 Sears Tower, Chicago, Illinois 60606 (312) 258-5500 ----------------------------------------- April 20, 1999 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D. C. 20549-1004 Re: NiSource Inc. - Registration Statement on Form S-3 -------------------------------------------------- Ladies and Gentlemen: We have acted as counsel to NiSource Inc., an Indiana corporation (the "Corporation"), in connection with the Corporation's filing of a Registration Statement on Form S-3 (the "Registration Statement") relating to the offer and sale by the Corporation of 14,000 of its common shares, without par value (including associated preferred share purchase rights) (the "Common Shares"), as more fully described in the Registration Statement, through the Bay State Gas Company Savings Plan for Operating Employees (the "Plan"). In this connection, we have examined such documents and have made such factual and legal investigations as we have deemed necessary or appropriate for purposes of this opinion. Based upon the foregoing, we are of the opinion that: (i) the written provisions of the current Plan documents comply with the applicable provisions of the Employee Retirement Income Security Act of 1974; and (ii) the Common Shares have been duly authorized and, when issued upon payment therefor, as contemplated in the Registration Statement, will be legally issued, fully paid and nonassessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, SCHIFF HARDIN & WAITE By: /s/ Robert J. Minkus ------------------------------- Robert J. Minkus EX-23 4 EXHIBIT 23.1 ------------ CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS ----------------------------------------- As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement of our reports dated February 5, 1999 included in the Annual Report on Form 10-K for NIPSCO Industries, Inc. for the year ended December 31, 1998; and our report dated February 5, 1999 included in the Current Report on Form 8-K for NIPSCO Industries, Inc. dated February 8, 1999 and to all references to our Firm included in this Registration Statement. /s/ Arthur Andersen LLP ARTHUR ANDERSEN LLP Chicago, Illinois April 15, 1999 EX-23 5 EXHIBIT 23.2 ------------ Accountants' Consent The Board of Directors Bay State Gas Company: We consent to the use of our audit reports dated October 27, 1998 on the consolidated financial statements and schedule of Bay State Gas Company and subsidiaries as of September 30, 1998 and for each of the years in the three-year period then ended incorporated herein by reference to our firm under the heading "Experts" in the prospectus. Our reports refer to a change in accounting for postretirement benefit plans during the year ended September 30, 1998. /s/ KPMG Peat Marwick LLP KPMG Peat Marwick LLP Boston, Massachusetts April 16, 1999 -----END PRIVACY-ENHANCED MESSAGE-----