EXHIBIT 10.7
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment and such portions have been filed separately with the
Commission.
PRIVILEGED AND CONFIDENTIAL
December 3, 2003
▇▇▇▇▇▇▇ ▇. Adik
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇▇:
This Letter Agreement confirms our decision concerning your employment status.
As we discussed, your employment with NiSource Corporate Services Company will
be terminated as a result of your voluntary retirement. If you sign this Letter
Agreement, it will constitute the mutual agreement between you and the Company
regarding the termination of your employment. As used herein, "the Company"
shall mean NiSource Inc. or any of its affiliates or subsidiaries, including
NiSource Corporate Services Company, and "NiSource" shall mean exclusively
NiSource Inc.
1. Employment Status
Unless you are discharged for cause, you will continue as an active
employee of the Company through December 31, 2003 for purposes of
determining your NiSource post-retirement health, life insurance and
retirement benefits, as well as participation in the 2003 NiSource
bonus plan. You will be treated as retiring as an active employee on
January 1, 2004 for purposes of vesting (a) any restricted and
contingent stock in NiSource owned by you and (b) any NiSource stock
options owned by you; provided, however, you shall be treated as
retiring as an active employee on January 29, 2004 for purposes of
vesting the contingent stock grant awarded to you by NiSource January
29, 2000. Thereafter, you will retire from the Company with the
benefits which you are entitled to as a retired employee of the Company
and only those additional benefits set forth in Paragraphs 2 and 3,
provided that you shall be entitled to the benefits set forth in
Paragraphs 2 and 3 after you timely execute a release in the form
attached as Exhibit 1 hereto.
You will resign as an officer and director of the Company on December
31, 2003, except you will not resign as a director of NiSource.
After your retirement, you agree to cooperate whenever needed in the
preparation for and/or defense of any litigation in which the Company
is involved.
2. Retirement Payments
A. Special Retirement Cash Bonus
On December 31, 2003, and in recognition for your past services to the
Company, you will receive a cash bonus in the amount of $450,000 (the
"Special Bonus"). The Special Bonus will be subject to legally-mandated
deductions for Social Security and federal, state and local taxes.
B. Special Restricted Stack Grant
On January 2, 2004, and in recognition for your past services to the
Company, you will receive $450,000 in value of NiSource restricted
common stock, with the number of restricted shares to be issued to
equal $450,000 divided by the closing stock price of a share of
NiSource common stock on January 2, 2004 (the "Special Restricted Stock
Grant"). The terms of the Special Restricted Stock Grant agreement are
attached as Exhibit 2.
C. Previously Issued Stock Options and Restricted Stock Grants
Exhibit 3 lists the terms of all stock options, restricted stock grants
and contingent stock grants previously issued to you and which remain
outstanding as of January 1, 2004.
3. Change In Control
You acknowledge that you are not currently owed any benefits under your
Change in Control Agreement dated as of February 5, 1990, and as
amended and restated as of September 1, 1997 and April 19, 2000 (the
"CIC"). Nonetheless, as additional consideration for your execution of
this Agreement, the Company agrees that, if
(a) an Acquisition of NiSource (as defined below) (**) is
announced on or before June 30, 2005, or
(b) (**) then you will receive 34,101 shares of NiSource common
stock (determined by taking the difference between 55,529 TARSAP shares
forfeited upon your retirement less 21,428 shares granted to you under the
Special Restricted Stock Grant and based on the assumption the shares issued
under the Restricted Stock Grant are valued at $21.00 per share). You will not
receive any payments in the event there is an Acquisition of NiSource under
circumstances not specifically described in the previous sentence. For purposes
of this Paragraph 3, the phrase "Acquisition of NiSource" means a transaction
which is defined as a "Change in Control" in the CIC.(**)
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(**) Text has been omitted pursuant to a request for confidential treatment and
such text has been filed separately with the Commission.
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4. Vacation
You are eligible to receive a lump sum payment representing
compensation for your accrued and unused vacation in the amount of
$80,288.49. This payment will be subject to legally-mandated deductions
for Social Security and federal, state and local taxes, as well as
deductions for any contributory benefit plans in which you elect to
continue participation.
5. COBRA Coverage
Your retirement is a qualifying event under the Consolidated Omnibus
Budget Reconciliation Act ("COBRA"). The Company will notify you and/or
your dependents of the insurance coverage which you may continue on a
self-pay basis as provided by COBRA upon termination of your
employment. You are entitled to 18 months of COBRA for dental and
vision insurance on a self-pay basis commencing January 1, 2004.
Notwithstanding the foregoing, you will be reimbursed by the Company
for the first 12 months of COBRA for dental and vision insurance.
6. Waiver of Severance Payments
You agree to waive any rights to severance payments under the NiSource
Executive Severance Policy that became effective as of June 1, 2002
7. Long Term Incentive Program
You will be treated as an active employee of the Company through
January 1, 2004 for purposes of the 1994 Long Term Incentive Plan as
amended, including the vesting of any contingent or restricted stock or
stock options.
8. Indemnification
You will be entitled to indemnification by the Company pursuant to the
provisions of Article 6 of NiSource Corporate Services Company's
by-laws in effect on December 31, 2003 notwithstanding any change made
thereafter, except as such change may be required by law. You will also
be entitled to coverage under the directors and officers liability
insurance coverage maintained by the Company (as in effect from time to
time) to the same extent as other former officers of the Company.
9. Company Property
The Company will transfer to you, title to your current Company
automobile, at no cost to you, at a time of your choosing, but in no
event later than January 31, 2004. The Company, in accordance with
practices previously in place, will reimburse any income tax liability
incurred by you as a result of this transfer.
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You agree to return to the Company any and all of its property,
including but not limited to, keys, employee identification or security
access cards, telephones, computing equipment, PDAs, credit cards and
cars on or before January 1, 2004.
Notwithstanding the foregoing, you may continue to use your Company
mobile telephones until January 31, 2004.
10. Confidentiality
You acknowledge that preservation of a continuing business relationship
between the Company and their respective customers, representatives,
and employees is of critical importance to the continued business
success of the Company and that it is the active policy of the Company
to guard as confidential certain information not available to the
public and relating to the business affairs of the Company. In view of
the foregoing, you agree that you shall not disclose to any person or
entity any such confidential information that was obtained by you in
the course of your employment by the Company (including your employment
as a director of NiSource) without the prior written consent of the
Company. It will not be considered a violation of this Paragraph 10 if
you are required to disclose confidential information in a proceeding
to enforce your rights under this Letter Agreement or pursuant to a
subpoena, order of court or other governmental or administrative
directive, compliance with which is mandatory, provided you give the
Company notice that you have been served with such a subpoena or order
immediately upon receiving service.
Moreover, you agree that upon termination of your employment, you will
promptly deliver to the Company all documentation and other materials
relating to the Company's business or the business of any NiSource
company which are in your possession or under your control, including
customer and potential customer lists, product lists, and marketing
material, whether in written or electronic data form; and you will
delete, destroy or discard all copies of such confidential information
remaining in your possession, provided, however, you shall be entitled
to retain documentation and other materials relating to the Company's
business that is necessary for you to serve as a director of NiSource.
To facilitate the foregoing, the Company will allow you to use your
existing office space and will provide you with secretarial assistance
on an as-needed basis, until the earlier of the date upon which you
certify that you have complied with the foregoing, or April 1, 2004.
You further acknowledge and agree that the Company's remedy in the form
of monetary damages for any breach by you of any of the provisions of
this paragraph may be inadequate and that, in addition to any monetary
damages for such breach, the Company shall be entitled to institute and
maintain any appropriate proceeding or proceedings, including an action
for specific performance and/or injunction.
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11. Status as a Director
Unless nominated by NiSource, you hereby agree not to stand for
re-election as a director of NiSource upon the expiration of your
current term as a director of NiSource.
Subsequent to December 31, 2003, you will have the status of a
non-employee director of NiSource and shall be entitled to such
compensation for board and committee duties as is accorded to
non-employee directors of NiSource.
12. Release of Claims
In consideration of the payment and benefits described above, you, on
behalf of yourself and your heirs, executors, and administrators, fully
and finally settle, release, and waive any and all local, state
(including but not limited to the Indiana Civil Frights Law), and
federal civil, common law, statutory (including, but not limited to,
the AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, Title VII of the
Civil Rights Act of 1964, the Americans with Disabilities Act of 1990,
the Family and Medical Leave Act of 1993, and the Employee Retirement
Income Security Act of 1974, as those Acts are amended), and equitable
claims against the Company and NiSource, Inc. and its subsidiaries and
affiliated companies, and all the stockholders, predecessors,
successors, agents, directors, officers, employees, representatives,
and attorneys of NiSource, and its subsidiaries and affiliated
companies, known or unknown, occurring or arising prior to you signing
this Letter Agreement, except for claims relating to the enforcement of
this Letter Agreement.
You acknowledge and agree that this release is being given only in
exchange for consideration to which you are not otherwise entitled.
Based on the knowledge the Company has of the date of this Letter
Agreement, the Company has no intention to ▇▇▇ you or your heirs,
executors or administrators.
13. Outstanding Charges
You hereby agree to pay the Company any outstanding amounts owed to the
Company, and further agree that by signing this Letter Agreement you
hereby authorize the Company to deduct any outstanding charges from
your lump sum or salary continuation payments.
14. Governing Law
This Letter Agreement shall be construed in accordance with the laws of
Indiana.
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15. Severability
In the event that one or more of the provisions contained in this
Letter Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, the Company shall have the right to
enforce the remainder of this Letter Agreement.
16. Non-Disclosure
Except to the extent that disclosure is required to enforce your rights
under this Letter Agreement or otherwise is required by subpoena, order
of court or other governmental or administrative directive, compliance
with which is mandatory, you expressly agree to keep the terms of this
Letter Agreement strictly confidential and that you will not disclose
the terms of this Letter Agreement to anyone other than your spouse,
your legal counsel or your tax advisor, provided that they each agree
to preserve the confidentiality of the terms of this Letter Agreement.
You agree not to make any false and disparaging statements about the
Released Parties to any media outlet, industry group, financial
institution or analyst, or current or former employee, consultant,
client or customer of the Company.
NiSource and the officers of NiSource shall not make any false and
disparaging statements about you to any media outlet, individual group,
financial institution or analyst.
Nothing herein should be construed as a limitation on your ability to
consult with your counsel or with an administrative agency.
17. Complete Agreement
You acknowledge that in accepting this Letter Agreement, you have not
relied upon any representation or promise other than those expressly
stated in this Letter Agreement.
This Letter Agreement and those sections of other Agreements
specifically referenced herein, constitute the complete understanding
between you and the Company relating to your separation and supersede
any and all prior agreements, promises, representations or inducements,
no matter their form, concerning your employment with the Company. No
promises or agreements made subsequent to the execution of this
Agreement by these parties shall be binding unless reduced to writing
and signed by authorized representatives of these parties.
18. Important Information
YOU ACKNOWLEDGE THAT THE COMPANY HAS ADVISED YOU TAKE UP TO 21 DAYS TO
CONSIDER THE TERMS AND CONDITIONS OUTLINED ABOVE, AND THAT THE COMPANY
HAS ALSO ADVISED YOU TO CONSULT AN ATTORNEY BEFORE SIGNING THIS LETTER
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AGREEMENT. YOU ALSO HAVE THE RIGHT TO REVOKE YOUR EXECUTION OF THIS
LETTER AGREEMENT WITHIN 7 DAYS AFTER EXECUTION IN ACCORDANCE WITH THE
NOTICE TO EMPLOYEE ATTACHED HERETO.
IF YOU ACCEPT THE TERMS AND CONDITIONS OUTLINED ABOVE, INCLUDING
PARAGRAPH 12, PLEASE SIGN BOTH COPIES OF THIS LETTER AGREEMENT IN THE
SPACE PROVIDED BELOW TO SIGNIFY YOUR ACCEPTANCE, AND RETURN BOTH COPIES
TO ▇▇▇▇ ▇. ▇▇▇▇▇ BY DECEMBER 24, 2003, ON WHICH DATE THIS OFFER WILL
EXPIRE IF NOT ACCEPTED. IF YOU ACCEPT THE TERMS AND CONDITIONS OUTLINED
ABOVE, YOUR ACCEPTANCE IS IN LIEU OF ANY AND ALL OTHER SEVERANCE
PROGRAMS OFFERED BY THE COMPANY AND YOU KNOWINGLY AND VOLUNTARILY WAIVE
PARTICIPATION IN ALL OTHER SEVERANCE PROGRAMS OFFERED BY THE COMPANY.
YOU ACKNOWLEDGE THAT THE COMPANY'S PERFORMANCE UNDER THIS AGREEMENT
CONSTITUTES FULL AND COMPLETE PAYMENT OF ALL AMOUNTS DUE TO YOU FROM
THE COMPANY AND CONSTITUTES ADDITIONAL CONSIDERATION TO WHICH YOU ARE
NOT OTHERWISE ENTITLED.
Very truly yours,
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
Accepted:
/s/ ▇▇▇▇▇▇▇ ▇. Adik
▇▇▇▇▇▇▇ ▇. Adik
Date: ____________________
Witness: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Date:_________________
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EXHIBIT 1
GENERAL RELEASE
ATTN: THIS GENERAL RELEASE SHOULD NOT BE SIGNED PRIOR TO EMPLOYEE'S TERMINATION
DATE, JANUARY 1, 2004.
In consideration of the payments and benefits set forth in the Letter
Agreement attached hereto, the sufficiency of which consideration is hereby
acknowledged, I, for myself and my heirs, executors and administrators, do
hereby fully, finally and unconditionally release and forever discharge NiSource
Inc. and all of its parent, sister and subsidiary corporations and all of its
affiliates, as well as all of its former and current directors, officers,
employees, stockholders, attorneys, agents, predecessor, successors and assigns,
in their personal and corporate capacities (hereinafter "Released Parties"),
from any and all liabilities, actions, causes of action, claims, rights,
obligations, charges, damages, costs, attorneys' fees, suits, re-employment
rights and demands of any and every kind, nature, and character, known and
unknown, liquidated or unliquidated, absolute or contingent, in law or in
equity, enforceable under and local, state, or federal statute or ordinance, or
under the common laws of the United States, FROM THE BEGINNING OF TIME TO THE
DATE OF THIS GENERAL RELEASE, including but not limited to, all claims relating
to THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, 29 U.S-C.
SECTION 621 ET SEQ. and the specific statutes referred to in footnote 1(1), any
and all claims relative to any agreement relating to my employment with any of
the Released Parties, including but not limited to any claims under the
doctrines of defamation, libel, slander, invasion of privacy, intentional
infliction of emotional distress, interference with contractual relations,
retaliatory discharge, breach of contract, wrongful discharge, breach of implied
contract or implied covenant of good faith or fair dealing, and any other
statute, authority or law, providing a cause of action relating to my employment
with NiSource and all of its parent, sister and subsidiary corporations and all
of its affiliates, and/or its termination. I also agree not to ▇▇▇ NiSource or
any of the other Released Parties with respect to the claims covered by the
foregoing General Release.
This General Release shall not apply to: (1) any third party claims
against me relating to or arising from my employment with the released Parties;
or any of its related parties; or (2) the Letter Agreement attached hereto.
I acknowledge that prior to entering into the Letter Agreement to which
this General Release is attached and made a part of, I was advised in writing to
consult with an attorney before executing the Letter Agreement and that I was
given a period of at least twenty-one (21)
----------------------------
(1) Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C.
Section 2000e et seq.; the Employee Retirement Income Security Act, as amended,
29 U.S.C. Section 1001 et seq.; the Rehabilitation Act of 1973, as amended, 29
U.S.C. Section 701 et seq.; the Americans with Disabilities Act of 1990, as
amended, 42 U.S.C. Section 12101 et seq.; the Family and Medical Leave Act of
1993, 29 U.S.C. Section 2601 et seq.; the Fair Labor Standards Act, as amended,
29 U.S.C. Section 201 et seq.; the Civil Rights Act of 1866, 42 U.S.C. Section
1981 et seq.; the Worker Adjustment Retraining Notification Act, 29 U.S.C. 2101
Section et seq., the Occupational Safety and Health Act, 29 U.S.C. Section 651
et seq. and the Indiana Civil Rights Act.
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days within which to consider the Letter Agreement, including the terms of this
General Release. Moreover, I was advised in writing of my right, for seven days
following my execution of the Letter Agreement, to revoke the Letter Agreement
and thereby decline to execute this General Release. I expressly represent that
I did not revoke the Letter Agreement. Accordingly, I acknowledge and agree that
the Letter Agreement is effective and enforceable.
I hereby represent that I have read and understand the terms of this
General Release and represent that my execution of this General Release
constitutes my knowing and voluntary act, made without coercion or intimidation.
I understand that this General Release in applicable to any claims arising prior
to the date of this General Release and is binding upon me, my heirs, executors
and assigns.
__________________________
▇▇▇▇▇▇▇ ▇. Adik
Date: __________________________
__________________________
Witness' Signature
Date: __________________________
NISOURCE RELEASE
Based on the knowledge NiSource Inc. and its affiliates have as of the
date of this Release, NiSource Inc. has no intention to ▇▇▇ you or your heirs,
executors or administrators.
NISOURCE INC.
By:_____________________________
Its:_____________________________
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EXHIBIT 2
NISOURCE INC.
1994 LONG-TERM INCENTIVE PLAN,
AS AMENDED AND RESTATED
RESTRICTED STOCK AGREEMENT
This Agreement is made as of the 2nd day of January, 2004 ("Date of
Award"), between NiSource Inc. (the "Company") and ▇▇▇▇▇▇▇ ▇. Adik (the
"Grantee"). In consideration of the agreements set forth below, the Company an
the Grantee agree as follows:
1. Grant. A restricted stock award ("Award") of 20,736 shares
("Restricted Shares") of the Company's common stock, par value $.01 per share,
is hereby granted by the Company to the Grantee, subject to the following terms
and conditions, and, to the extent relevant and not covered by this Agreement,
to the provisions of the NiSource Inc. 1994 Long-Term Incentive Plan, as Amended
and Restated Effective January 1, 2004 (the "Plan"), the terms of which are
incorporated by reference herein.
2. Transfer Restrictions. None of the Restricted Shares shall be
sold, assigned, pledged or otherwise transferred, voluntarily or involuntarily,
by the Grantee prior to the lapse of restrictions pursuant to Sections 3, 4 and
5 below.
3. Lapse of Restrictions. The restrictions set forth in Section 2
above shall lapse with respect to the Restricted Shares as follows:
The restrictions shall lapse on the first to occur of (i) April 17,
2005 and (ii) the date of the Grantee's death.
4. Change in Control. Notwithstanding the provisions of Section 3
above, in the event of a Change in Control of the Company, as defined in the
Flan, all restrictions applicable to the Restricted Shares shall lapse.
5. Forfeiture. All of the Restricted Shares shall be forfeited to
the Company if, on or before April 1.7, 2015, the Grantee enters into an
employment, commercial or consulting relationship with (i) another public
utility, public utility holding company or a subsidiary of a public utility
holding company, (ii) a regulated or nonregulated energy company or subsidiary
of a regulated or nonregulated energy company, or (iii) an independent power
producer; or solicits any employee of the Company or its subsidiaries to work
for a business entity described in this Section 5; provided, however, the
Grantee shall be allowed to undertake an employment, commercial or consulting
arrangement with a business entity whose business operations are described above
if the Chief Executive Officer of the Company agrees in writing that such
activities would not conflict with the best interests of the Company, which
agreement shall not he unreasonably withheld.
6. Rights as Stockholder. During the restriction period, the
Grantee shall be entitled to all of the rights of a stockholder with respect to
the Restricted Shares, including without
limitation the right to vote and tender such Restricted Shares, and to receive
dividends and other distributions payable with respect to such Restricted Shares
since the Date of Award.
7. Escrow of Share Certificates. Certificates for the Restricted
Shares shall be issued in the Grantee's name and shall be held in escrow by the
Company until all restrictions lapse or such Shares are forfeited as provided
herein. A certificate or certificates representing the Restricted Shares as to
which restrictions have lapsed shall be delivered from escrow by the Company to
the grantee upon such lapse.
8. Government Regulations. Notwithstanding anything contained
herein to the contrary, the Company's obligation to issue or deliver
certificates evidencing the Restricted Shares shall be subject to all applicable
laws, rules and regulations, and to such approvals by any governmental agencies
or rational securities exchanges as may be required.
9. Withholding Taxes. The Company shall have the right to require
the Grantee to remit to the Company, or to withhold from other amounts payable
to the Grantee, as compensation or otherwise, an amount sufficient to satisfy
all federal, state and local withholding tax requirements as provided in the
Plan.
10. Governing Law. This Agreement shall be construed under the
laws of the State of Indiana.
In Witness Whereof, the Company has caused this Award to be granted,
and the Grantee has accepted this Award, as of the date first above written.
NISOURCE INC.
By: ____________________________
Chairman of the Nominating and
Compensation Committee Board of
Directors
_________________________________
▇▇▇▇▇▇▇ ▇. Adik, Grantee
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EXHIBIT 3
A. Vested NiSource Stock Options
GRANT EXPIRATION PLAN GRANT OPTIONS OPTION OPTIONS OPTIONS OPTIONS
DATE DATE ID TYPE GRANTED PRICE OUTSTANDING VESTED EXERCISABLE
--------- ---------- ---- ------------- ------- ---------- ----------- ------- -----------
8/23/1994 8/23/2004 1988 Non-Qualified 16,000 $14.375000 16,000 16,000 16,000
8/22/1995 8/22/2005 1988 Non-Qualified 20,000 $16.218800 20,000 20,000 20,000
8/27/1996 8/27/2006 1988 Non-Qualified 20,000 $18.906300 20,000 20,000 20,000
8/26/1997 8/26/2007 1994 Non-Qualified 20,000 $20.640700 20,000 20,000 20,000
8/25/1998 8/25/2008 1994 Non-Qualified 20,000 $29.218800 20,000 20,000 20,000
8/24/1999 8/24/2009 1994 Non-Qualified 30,000 $24.593800 30,000 30,000 30,000
1/31/2000 1/31/2010 1994 Non-Qualified 45,000 $18.437500 45,000 45,000 45,000
8/22/2000 8/22/2010 1994 Non-Qualified 45,000 $22.22000 45,000 45,000 45,000
1/1/2001 1/1/2011 1994 Non-Qualified 56,604 $25.940000 56,604 56,604 56,604
1/25/2002 1/25/2012 1994 Non-Qualified 68,493 $21.005000 68,493 68,493 68,493
1/1/2003 1/1/2013 1994 Non-Qualified 135,546 $19.840000 135,546 135,546 135,546
B. Vested Restricted Shares
1. 151,992 restricted NiSource shares which vest on January 1,
2004.
C. Vested NiSource Contingent Shares
1. 25,000 contingent NiSource shares granted in 2000 and vesting
on January 29, 2004.
2. 25,000 contingent NiSource shares granted in 2000 and vesting
on January 29, 2005.
3. 16,361 contingent NiSource shares granted in 2001 and vesting
on January 1, 2004.
4. 16,360 contingent NiSource shares granted in 2001 and vesting
on January 1, 2005.
5. 27,765 contingent TARSAP NiSource shares granted in 2003 and
vesting on January 1, 2004.
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