Exhibit 10.13
BLACK HILLS CORPORATION
NONQUALIFIED DEFERRED COMPENSATION PLAN
1. Purpose of Plan and Effective Date. The effective date of this Black
Hills Corporation Nonqualified Deferred Compensation Plan ("Plan") shall be the
1st day of June, 1999. The purpose of the Plan is to provide benefits to a
select group of management or highly compensated employees who contribute
materially to the continued growth, development and future business success of
the Company. It is the intention of Company that this Plan shall be administered
as an unfunded benefit plan established and maintained for a select group of
management or highly compensated employees.
2. Definitions. For purposes of this Plan, the following phrases or
terms have the indicated meanings unless otherwise clearly apparent from the
context:
(a) "Beneficiary" shall mean the person, persons, or
estate of a Participant, entitled to receive any
benefits subsequent to the death of a Participant
under a Beneficiary Designation form entered into in
accordance with the terms of this Plan.
(b) "Base Salary" shall mean the compensation paid to a
Participant by the Employer during a calendar year,
including any compensation reduction under a cash or
deferred arrangement under Section 401(k) of the
Internal Revenue Code or under a flexible benefit
program under Section 125 of the Internal Revenue
Code but not including any amounts paid to the
Participant as overtime, bonus, commission, or
incentive compensation, nor reimbursements and
expense allowances, fringe benefits, moving expenses,
nonqualified deferred compensation, or welfare
benefits.
(c) "Beneficiary Designation" shall mean the form of
written agreement, by which the Participant names the
Beneficiary(ies) under the Plan.
(d) "Board of Directors" shall mean the Board of
Directors of Company.
(e) "Change in Control" shall mean any of the following
events:
(1) An acquisition (other than directly from the
Company) of any common stock of the Company
(the "Common Stock") by any "Person" (as the
term person is used for purposes of Section
13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange
Act"), immediately after which such Person
has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the
Exchange Act) of thirty percent (30%) or
more of the Common Stock of the Company;
provided, however, in determining whether a
Change in Control has occurred, Common Stock
which is acquired in a "Noncontrol
Acquisition" (as hereinafter defined) shall
not constitute an acquisition which would
cause a Change in Control. A "Noncontrol
Acquisition" shall mean an acquisition by
(i) an employee benefit plan (or a trust
forming a part thereof) maintained by (A)
the Company or (B) any corporation or other
Person of which a majority of its voting
power or its voting equity securities
("Voting Securities") or equity interest is
owned, directly or indirectly, by the
Company (for purposes of this definition, a
"Subsidiary"), (ii) the Company or its
Subsidiaries, or (iii) any Person in
connection with a "Noncontrol Transaction"
(as hereinafter defined);
(2) The individuals who, as of January 1, 1997,
are members of the Board (the "Incumbent
Board"), cease for any reason to constitute
at least two-thirds of the members of the
Board; provided, however, that if the
election, or nomination for election by the
Company's common shareholders, of any new
director was approved by a vote of at least
two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan,
be considered as a member of the Incumbent
Board; provided further, however, that no
individual shall be considered a member of
the Incumbent Board if such individual
initially assumed office as a result of
either an actual or threatened "Election
Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies
or consents by or on behalf of a Person
other than the Board (a "Proxy Contest")
including by reason of any agreement
intended to avoid or settle any Election
Contest or Proxy Contest; or
(3) Approval by shareholders of the Company of:
(i) A merger, consolidation or
reorganization involving the
Company, unless such merger,
consolidation or reorganization is a
"Noncontrol Transaction." A
"Noncontrol Transaction" shall mean
a merger, consolidation or
reorganization of the Company where:
(A) the shareholders of the
Company, immediately before
such merger, consolidation
or reorganization, own
directly or indirectly
immediately following such
merger, consolidation or
reorganization, at least
seventy percent (70%) of
the combined voting power
of the outstanding Voting
Securities of the
corporation resulting from
such merger or
consolidation or
reorganization (the
"Surviving Corporation") in
substantially the same
proportion as their
ownership of the Voting
Securities immediately
before such merger,
consolidation or
reorganization.
(B) the individuals who were
members of the Incumbent
Board immediately prior to
the execution of the
agreement providing for
such merger, consolidation
or reorganization
constitute at least
two-thirds of the members
of the board of directors
of the Surviving
Corporation, or a
corporation beneficially
directly or indirectly
owning a majority of the
Voting Securities of the
Surviving Corporation, and
(C) no Person other than (i)
the Company, (ii) any
Subsidiary, (iii) any
employee benefit plan (or
any trust forming a part
thereof) maintained by the
Company, the Surviving
Corporation, or any
Subsidiary, or (iv) any
Person who, immediately
prior to such merger,
consolidation or
reorganization had
Beneficial Ownership of
thirty percent (30%) or
more of the then
outstanding Voting
Securities), has Beneficial
Ownership of thirty percent
(30%) or more of the
combined voting power of
the Surviving Corporation's
then outstanding Voting
Securities.
(ii) A complete liquidation or dissolution
of the Company; or
(iii) An agreement for the sale or other
disposition of all or substantially
all of the assets of the Company to
any Person other than (x) a transfer
to a Subsidiary or (y) a sale or
transfer of a Subsidiary by the
Company except if such sale or
transfer would be a sale or other
disposition of all or substantially
all of the assets of the Company.
(4) Notwithstanding the foregoing, (i) a Change
in Control shall not be deemed to occur
solely because any Person (the "Subject
Person") acquired Beneficial Ownership of
more than the permitted amount of the then
outstanding Common Stock as a result of the
acquisition of Common Stock by the Company
which, by reducing the number of shares of
Common Stock then outstanding, increases the
proportional number of shares Beneficially
Owned by the Subject Persons, provided that
if a Change in Control would occur (but for
the operation of this sentence) as a result
of the acquisition of Common Stock by the
Company, and after such stock acquisition by
the Company, the Subject Person becomes the
Beneficial Owner of any additional Common
Stock which increases the percentage of the
then outstanding Common Stock Beneficially
Owned by the Subject Person, then a Change
in Control shall occur; and (ii) a Change in
Control shall not be deemed to occur unless
and until all regulatory approvals required
to effect a Change in Control of the Company
have been obtained.
(f) "Committee" shall mean the Compensation Committee of the
Board of Directors.
(g) "Company" shall mean Black Hills Corporation, a South Dakota
corporation, with principal offices in the State of South
Dakota.
(h) "Elective Contribution" means that part of a Participant's
compensation that such Participant has elected to defer
pursuant to Section 4.1.
(i) "Incentive Contribution" means that portion of a
Participant's award under the Company's Short Term Annual
Incentive Plan ("STIP") which the Participant has elected to
defer under the STIP and under Section 4.2.
(j) "Employer" shall mean the Company and any Subsidiary that
duly adopts the Plan.
(k) "Employee" shall mean any person who is in the regular
full-time employment of the Company or a Subsidiary, as
determined by the personnel rules and practices of the
Company or a Subsidiary. The term does not include persons
who are retained by the Company or a Subsidiary solely as
consultants.
(l) "Participant" shall mean an Employee who is selected to
participate in the Plan.
(m) "Participant's Account" shall mean the memorandum account
established and maintained by the Company for each
Participant with respect to the Participant's total interest
in the Plan resulting from the Participant's Elective
Contributions and Incentive Contributions plus the earnings
thereon.
(n) "Plan Year" shall mean the Plan's accounting year of 12
months beginning on January 1 and ending on the following
December 31.
(o) "Retirement" and "Retire" shall mean severance of employment
with Employer, for any reason.
(p) "Subsidiary" shall mean any business organization in which
Company, directly or indirectly, owns a majority of its
voting power or voting equity securities or equity interest
and which the Board of Directors designates as a Subsidiary
for purposes of this Plan.
3. Eligibility and Participation. In order to be eligible for
participation in the Plan, an Employee must be selected by the Committee. The
Committee, in its sole and absolute discretion, shall determine eligibility for
participation from among management or highly compensated employees of the
Employer in accordance with the purposes of the Plan.
4. Contributions.
4.1 Elective Contributions. Each Participant may elect to
defer up to 50% of the Participant's Base Salary. An election to defer must be
made in writing prior to the beginning of a Plan Year; provided, that (a) in the
Plan Year in which the Plan is first implemented, a Participant may make an
election to defer compensation earned subsequent to the election within 30 days
after the date the Plan is effective and (b) in the first year in which a
Participant becomes eligible to participate in the Plan, the newly eligible
Participant may make an election to defer compensation earned subsequent to the
election within 30 days after the date the Participant becomes eligible. This
election shall be irrevocable for that Plan Year and shall continue to be valid
unless subsequently revoked for the following Plan Years. The amount by which
the Participant's Base Salary is reduced shall be that Participant's Elective
Contribution and shall be allocated to that Participant's Account on a monthly
basis.
4.2 Incentive Contributions. In addition to the Elective
Contributions, a Participant, if eligible under the STIP, may elect under the
terms of the Company's STIP, to defer the receipt of all or any portion of a
Participant's award thereunder, including shares of Company stock. The amount of
the award deferred under the STIP shall be allocated to a Participant's Account.
In the event that Participant defers a stock award under the STIP, then the
Company shall establish within the Participant's Account a common stock
equivalent memorandum account ("Stock Account") and shall credit the Stock
Account with Company common stock equivalents, including fractional equivalents.
Appropriate adjustments shall be made to the Stock Account for stock splits,
stock dividends, mergers, consolidation and other similar circumstances
affecting the Company common stock.
5. Earnings on Participant's Account. Each Participant may, at the time
of his deferral election, choose to allocate the amount of Elective
Contributions deferred and the amount of the Incentive Contributions deferred
(except for the Company stock deferred) into certain categories of hypothetical
investments to be determined by the Participant as are available under the range
of investments as may be allowed by any third-party service provider to the
Plan, or trustee, if any, or if none, from the range of investments as
determined by the Committee in its discretion. The amounts deferred into a
Participant's Account shall change in value based upon the allocated underlying
hypothetical investments, including Company Stock.
6. Payment of Benefit. Upon Retirement of a Participant, the Employer
shall pay to or cause to be paid to such Participant the then amount in the
Participant's Account. At the time that a Participant makes a deferral election,
the Participant shall choose from the following payment options: (a) a lump sum
payment to be paid within 30 days of Retirement, or (b) annual or monthly
installment payments over a period of years designated by Employee but not to
exceed 15 years. Once payments hereunder have begun, the payment option chosen
is irrevocable. In the event that a Participant has elected a payment option and
desires to change the same prior to such payment option becoming irrevocable,
Participant may make a request of the Committee to change the payment option;
provided, that such request shall not become effective until the Plan Year
subsequent to the Plan Year in which the request is made.
If the installment payment is elected, the first payment shall be made
in cash to Employee on the 1st day of January following the date on which
Employee Retires. Annual payments for each succeeding year shall be paid to
Employee on the first January of each succeeding year. Monthly payments shall be
made on the first day of each month. Subsequent to the first installment
payment, accrued interest on the unpaid accumulated balance will be added to
each subsequent payment based on amortization over the term of payment. The
interest rate to be used shall be equal to the seven year United States Treasury
Bond yield as determined on the Retirement date.
In the event of Employee's death after Retirement, and in the event
installment payments had been elected, the payments shall be made as provided
herein on each payment date established and shall continue until paid in full to
Participant's Beneficiary; provided, however, that Participant's Beneficiary, or
personal representative, as the case may be, shall have the option, by written
notice given to Company within 12 months after Participant's death, to receive
any remaining installment payments in a lump sum. If such option is exercised,
the lump sum shall be paid within 60 days thereafter.
7. Payment of Benefits upon Unforeseeable Emergency. Notwithstanding
paragraph 6 above, in the event of an Unforeseeable Emergency as hereafter
defined, a Participant may withdraw amounts from the Participant's Account to
the extent reasonably needed to satisfy the Unforeseeable Emergency. In
addition, in the event of an Unforeseeable Emergency, Participant may cease
contributions during a Plan Year notwithstanding Section 4.1. For the purposes
of this paragraph an "Unforeseeable Emergency" is a severe financial hardship to
the Participant resulting from a sudden and unexpected illness or accident of
the Participant or a dependent (as defined in Internal Revenue Code ss. 152(a))
of the Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. The circumstances that will
constitute an Unforeseeable Emergency will depend upon the facts of each case,
but, in any case, payment may not be made to the extent that such hardship is or
may be relieved--(a) through reimbursement or compensation by insurance or
otherwise; (b) by liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe financial hardship; or
(c) by cessation of Contributions under the Plan. Examples of what are not
considered to be an Unforeseeable Emergency include the need to send a
Participant's child to college or the desire to purchase a home.
8. Death Benefit and Disability Benefits.
8.1 Amount and Payment of Death Benefit. If a Participant dies
before Retirement, the Employer will pay or cause to be paid as a death benefit
to such Participant's Beneficiary the balance of the Participant's Account, in a
lump sum.
Proof of death in a form determined acceptable by the Committee must be
furnished.
8.2 Total Disability. If a Participant becomes totally and
permanently disabled before he or she ceases to be employed by the Employer, the
balance of the Participant's Account shall be paid in a lump sum; provided, that
the Committee, in its sole discretion, may pay out Participant's Account balance
in installments.
The determination of total and permanent disability for purposes of
this section, shall be made by the Committee in its sole and absolute
discretion.
8.3 Time of Payment. The benefit paid under Section 8.1 or
Section 8.2 shall be paid as soon as possible following the Participant's death
or the date on which the Committee determines a Participant is totally or
permanently disabled but not later than 12 months following Participant's death
or determination of total or permanent disability.
9. Change in Control. In the event of a Change in Control, a
Participant shall have the option to request immediate distribution of the
Participant's Account as if Participant had Retired, whether or not
Participant's employment status with Company or any successor of Company has
changed.
10. Beneficiary. Participant shall designate a Beneficiary or
Beneficiaries to receive benefits under the Plan by completing the Beneficiary
Designation. If more than one Beneficiary is named, the shares or precedence of
each Beneficiary shall be indicated. A Participant shall have the right to
change the Beneficiary by submitting to the Committee a new Beneficiary
Designation. The Beneficiary Designation must be approved in writing by the
Committee; however, upon the Committee's acknowledgment of approval, the
effective date of the Beneficiary Designation shall be the date it was executed
by the Participant. If the Committee has any doubt as to the proper Beneficiary
to receive payments, it shall have the right to withhold payments until the
matter is finally adjudicated or to interplead the Participant's Account into a
court of competent jurisdiction. Any payment made by the Employer in good faith
and in accordance with the provisions of this Plan and a Participant's
Beneficiary Designation shall fully discharge the Employer and Committee from
all further obligations with respect to the payment.
11. Source of Benefits.
11.1 Benefits Payable from General Assets. Amounts payable
shall be paid exclusively from the general assets of the Employer, and no person
entitled to payment shall have any claim, right, security interest, or other
interest in any fund, trust, account, or other asset of the Employer that may be
looked to for payment. The Employer's liability for the payment of benefits
shall be evidenced only by this Plan. In all events, it is the intent of the
Employer that the Plan be treated as unfunded for tax purposes and for purposes
of Title I of ERISA.
11.2 Investments to Facilitate Payment of Benefits. Although
the Employer is not obligated to invest in any specific asset or fund in order
to provide the means for the payment of any liabilities under this Plan, the
Employer may elect to do so and may also elect to acquire life insurance
policies on any Participant or create a "Rabbi" trust.
The Participant also understands and agrees that the participation of
Participant, in any way, in the acquisition of any insurance policy or any other
general asset by the Employer shall not constitute a representation to the
Employee, the designated recipient, or any person claiming through the Employee
that any of them has a special or beneficial interest in the general asset.
11.3 Employer Obligation. The Employer shall have no
obligation of any nature whatsoever to a Participant under this Plan other than
what is specifically stated in the Plan.
12. Termination of Employment. This Plan does not obligate the Employer
to continue the employment of a Participant with the Employer nor does it limit
the right of the Employer at any time and for any reason to terminate the
Participant's employment. Termination of a Participant's employment with the
Employer for any reason, whether by action of the Employer or otherwise, shall
immediately terminate a Participant's continued participation in this Plan. In
no event shall this Plan by its terms or implications constitute an employment
contract of any nature whatsoever between the Employer and a Participant.
13. Terminations, Amendments, Modification or Supplement of Plan.
13.1 Termination, Amendment and Modifications. The Employer
reserves the right to terminate, amend, modify or supplement this Plan, wholly
or partially, and from time to time, at any time. Such right to terminate,
amend, modify, or supplement this Plan shall be exercised for the Employer by
the Board of Directors; provided, however, that no action to terminate this Plan
shall be taken except upon written notice to each Participant to be affected,
which notice shall be given not less than 30 days prior to the action. Any
action under this Section 14.1 shall not affect rights previously accrued under
this Plan.
13.2 Rights and Obligations Upon Termination. Upon the
termination of this Plan by the Board of Directors, the Participant's Account
shall be paid as if the Participant had Retired as of the date the Plan was
terminated.
14. Other Benefits and Agreements. The benefits provided for a
Participant and any Beneficiary hereunder and under this Plan are in addition to
any other benefits available to such Participant under any other program or plan
of the Employer for its employees, and, except as may otherwise be expressly
provided for, this Plan shall supplement and shall not supersede, modify, or
amend any other program or plan of the Employer or a Participant.
15. Restrictions on Alienation of Benefits. No right or benefit under
this Plan shall be subject to sale, assignment, or encumbrances, and any attempt
to sell, assign, or encumber the Plan shall be void. No right or benefit
hereunder shall in any manner be liable for or subject to the debts, contract,
liabilities, or torts of the person entitled to such benefit. If any Participant
or Beneficiary under this Plan should become bankrupt or attempt to sell,
assign, or encumber any right to a benefit under this Plan then such right or
benefit shall, in the discretion of the Committee, terminate, and, in that
event, the Committee shall hold or apply the same or any part of it for the
benefit of the Participant or Beneficiary, or the Participant's spouse,
children, or other dependents, in a manner and in a portion that the Committee,
in its sole and absolute discretion, may deem proper.
16. Withholding. There shall be deducted from all benefits paid under
this Plan the amount of any taxes required to be withheld by any federal, state
or local government. The Participants and their Beneficiaries will bear any and
all federal, foreign, state, local or other income or other taxes imposed on
amounts paid under this Plan.
17. Administration of this Plan.
17.1 Appointment of Committee. The general administration of
this Plan, as well as its construction and interpretation, shall be vested in
the Committee or its successor, as the members of which are designated and
appointed from time to time by the Board of Directors.
17.2 Committee Rules and Powers -- General. Subject to the
provisions of this Plan, the Committee shall from time to time establish rules,
forms, and procedures for the administration of this Plan. Such decisions,
actions and records of the Committee shall be conclusive and binding upon the
Employer and all persons having or claiming to have any right or interest in or
under the Plan.
17.3 Reliance on Certificate, Etc. The members of the
Committee and the officers and directors of the Employer shall be entitled to
rely on all certificates and reports made by any duly appointed accountants, and
on all opinions given by any duly appointed legal counsel. Such legal counsel
may be counsel for the Employer.
17.4 Determination of Benefits. In addition to the powers
specified, the Committee shall have the power to compute and certify under this
Plan the amount and kind of benefits from time to time payable to Participants
and their Beneficiaries and to authorize all disbursements for such purposes.
17.5 Information to Committee. To enable the Committee to
perform its functions, the Employer shall supply full and timely information to
the Committee on all matters relating to the compensation of all Participants,
their retirement, death or other cause for termination of employment, and such
other pertinent facts as the Committee may require.
18. Claims. All claims for benefits under the Plan shall be made to the
Committee. If the Committee denies a claim, the Committee may provide notice to
the Participant or beneficiary, in writing, within 90 days after the claim is
filed unless special circumstances require an extension of time for processing
the claim, not to exceed an additional 90 days. If the Committee does not notify
the Participant or Beneficiary of the denial of the claim within the time period
specified above, then the claim shall be deemed denied. The notice of a denial
of a claim shall be written in a manner calculated to be understood by the
claimant and shall set forth (1) specific references to the pertinent Plan
provisions on which the denial is based; (2) a description of any additional
material or information necessary for the claimant to perfect the claim and an
explanation as to why such information is necessary; and (3) an explanation of
the Plan's claim procedure.
Within 60 days after receipt of the above material, the claimant shall
have a reasonable opportunity to appeal the claim denial to the Committee for a
full and fair review. The claimant or his duly authorized representative may (1)
request a review upon written notice to the Committee; (2) review pertinent
documents; and (3) submit issues and comments in writing.
A decision on the review by the Committee will be made not later than
60 days after receipt of a request for review, unless special circumstances
require an extension of time for processing (such as the need to hold a
hearing), in which case a decision shall be rendered as soon as possible, but
not later than 120 days after receipt of a request for review. The decision on
review shall be in writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by the claimant, as well as
specific references to the pertinent Plan provisions on which the decision is
based.
19. Miscellaneous.
19.1 Execution of Receipts and Releases. Any payment to any
Participant, a Participant's legal representative, or Beneficiary in accordance
with the provisions of this Plan shall, to the extent thereof, be in full
satisfaction of all claims against the Employer. The Employer may require the
Participant, legal representative, or Beneficiary, as a condition precedent to
payment, to execute a receipt and release in a form it may determine.
19.2 No Guarantee of Interests. Neither the Committee nor any
of its members guarantees the payment of any amounts which may be or become due
to any person or entity under this Plan. The liability of the Employer to make
any payment under this Plan is limited to the then available assets of the
Employer.
19.3 Employer Records. Records of the Employer as to a
Participant's employment, termination of employment and the reason therefor,
re-employment, authorized leaves of absence, and compensation shall be
conclusive on all persons and entities, unless determined to be incorrect.
19.4 Evidence. Evidence required of anyone under this Plan and
any Plan Agreement executed may be by certificate, affidavit, document, or other
information which the person or entity acting on it considers pertinent and
reliable, and signed, made, or presented by the proper party or parties.
19.5 Administration Expenses. The Company shall bear all
costs and expenses necessary to administer the Plan.
19.6 Notice. Any notice which shall or may be given under this
Plan shall be in writing and shall be mailed by United States mail, postage
prepaid. If notice is to be given to the Employer, such notice shall be
addressed to the Employer at:
Black Hills Corporation
P. O. Box 1400
Rapid City, SD 57709
marked to the attention of the Secretary of Black Hills Corporation.
19.7 Change of Address. Any party may, from time to time,
change the address to which notices shall be mailed by giving written notice of
such new address.
19.8 Effect of Provisions. The provisions of this Plan shall
be binding upon the Employer and its successors and assigns, and upon the
Participant, Beneficiaries, assigns, heirs, executors and administrators.
19.9 Headings. The titles and headings of Articles and
Sections are included for convenience of reference only and are not to be
considered in the construction of the provisions hereof.
19.10 Governing Law. All questions arising with respect to
this Plan shall be determined by reference to the laws of the State of South
Dakota unless preempted by federal law.
BLACK HILLS CORPORATION
By: /s/ Daniel P. Landguth
Its Chairman, President & CEO