THE OUTSIDE DIRECTORS
STOCK BASED COMPENSATION PLAN
This Outside Directors Stock Based Compensation Plan ("Plan"), is adopted
by Black Hills Corporation ("Company") effective the 1st day of January, 1997.
1.RECITALS.
This Plan is an amendment and restatement of the prior Retirement Plan for
Outside Directors which was adopted by Company effective the 1st day of January,
1993 ("Prior Plan"). The purpose of the Plan is to provide to Participants
certain benefits in order to attract and retain competent and hardworking
outside directors whose abilities, experience and judgment can contribute to
the well-being of the Company and its shareholders and to further align the
long-term interests of the outside directors with those of the shareholders by
converting the outside directors' vested benefits under the Prior Plan into
Company common stock equivalent accounts and providing that future benefits
will also be based on Company common stock equivalents, as more particularly
set forth hereafter.
2.PARTICIPANTS.
Those persons eligible for participation in the Plan ("Participants") are
the present and future outside directors of the Company. Outside directors
are directors who are not full-time employees of the Company. A Participant's
eligibility for benefits under this Plan shall cease upon the Participant no
longer being an outside director of the Company.
3. ESTABLISHMENT OF COMPANY COMMON STOCK EQUIVALENT
ACCOUNT.
For each Participant, the Company shall establish a Company common stock
equivalent memorandum account ("Account") and shall credit the Account with
Company common stock equivalents, including fractional equivalents. The stock
equivalents shall be determined by using the closing price of the Company
common stock on the New York Stock Exchange on the date of determination.
Appropriate adjustments shall be made to the Account for stock splits, stock
dividends, merger, consolidation and similar circumstances affecting the Company
common stock.
4. CONVERSION OF VESTED BENEFITS AND PROVISION OF ANNUAL
BENEFITS.
a.In lieu of the benefits payable under the Prior Plan, the present value
of the vested benefits of those Participants who had vested benefits under the
Prior Plan as of January 1, 1997, shall be converted to Company common stock
equivalents and credited to the Participant's Account. The present value of
the vested benefits under the Plan has been determined using a 7 percent
discount rate and a determination date of January 1, 1997. The present value of
the vested benefits and the number of Company common stock equivalents is as
follows:
OUTSIDE PRESENT VALUE OF COMMON STOCK
DIRECTORS VESTED BENEFITS EQUIVALENTS
Glenn C. Barber $ 86,126.00 3,055 shares
Bruce B. Brundage 86,126.00 3,055 shares
John R. Howard 66,493.00 2,359 shares
Kay S. Jorgensen 17,398.00 617 shares
b.In addition, beginning with the Plan year beginning January 1, 1997, and
in each Plan year thereafter, each Participant shall be entitled to a monthly
addition to their Account in the amount of the number of Company common stock
equivalents determined by dividing the sum of $291.67 by the market price of
the Company common stock on the last day of the month for each month of each
Plan year that the Participant is eligible for benefits.
c.By their signatures below, all Participants hereby consent to the
conversion of their vested benefits under the Prior Plan as set forth in this
Section 4a above and the provision of monthly additions to their Account as set
forth Section 4b above in lieu of any continuing earning of vesting service
under the Prior Plan. The Participants agree that the benefits provided
in this Plan are in full substitution for any and all benefits that they may
have been entitled to under the Prior Plan.
5.TIME AND MANNER OF BENEFIT PAYMENTS.
a.For the purposes of this section, the term "Payment Date" shall mean the
date that a Participant is no longer an outside director of the Company. Not
more than 90 days prior to or 90 days subsequent to the Payment Date, the
Participant shall elect: (1) either to defer the commencement of payment of
benefits until the anniversary date of the Payment Date ("Deferral
Election"); or (2) to receive payment of the benefits represented in the
Participant's Account from the following choices:
(1) A lump sum payment in cash in an amount equal to the Participant's
Account determined as of the Payment Date due 30 days after the later
of the Payment Date or the date of election;
(2) Payment of shares of common stock of the Company equal to the number
of shares of Company common stock equivalents credited to the
Participant's Account as of the Payment Date due 30 days after the
later of the Payment Date or the date of election;
(3) Payment in monthly installments of either cash or shares of Company
common stock over a period of up to 15 years with the first
installment being due 30 days after the later of the Payment Date
or the date of election. The installment payout period shall be
specified in the election. The installment size shall be fixed on
the Payment Date and on each anniversary of the Payment Date as
though equal installments were to be paid for the then entire
balance of the Account over the remaining payment period including
any accrued interest or dividends or stock appreciation or
depreciation. The installment payout election, once made,
may only be changed by the Participant's giving written notice of the
Participant's election to change the installment payout period within
30 days prior to any anniversary date of the Payment Date. Said
election to change the installment period shall include, without
limitation, the right to elect to have the then remaining entire
balance of the Account paid in a lump sum in cash or shares of
common stock.
b.In the event the Participant makes a Deferral Election, then the
Participant shall, within 30 days of the anniversary date of the Payment Date,
either make another Deferral Election until the next anniversary date of the
Payment Date (with the right in the Participant to make further Deferral
Elections in like manner) or make a payment election in accordance with
the payment choices set forth in 5.a above. In the event of any Deferral
Election, Account values shall be determined upon a payment election being
made as of the anniversary date of the Payment Date subsequent to the payment
election.
6.PAYMENTS UPON DEATH.
In the event of the death of a Participant, the benefits which would have
been payable to the Participant if not for the Participant's death shall be paid
as follows:
(1) In the event of the death of a Participant prior to the Participant's
payment election, the Participant's beneficiary designated under
Section 8 below, or if there is no designated beneficiary, the
personal representative of the Participant's estate shall have the
right to make the payment election under Section 5 above. Such
payment election shall be made within 90 days of the death of the
Participant.
(2) If the Participant dies subsequent to the commencement of payment of
benefits under the Plan, then the Participant's beneficiary, or if
there is no designated beneficiary, the Participant's personal
representative, shall have the right to continue the payment of
benefits at the same time and manner that payments were made to the
Participant prior to Participant's death; provided, that the
beneficiary or personal representative of the Participant may elect to
receive a lump sum payment in cash or shares of common stock equal to
the Participant's remaining balance on the date of Participant's
death.
7.LOSS OF BENEFITS.
Notwithstanding any other provision in this Plan, if a Participant is
removed as a director of the Company because of misconduct or dishonesty, the
Participant shall forfeit all right to any benefits payable under this Plan,
including vested benefits.
8.DESIGNATION OF BENEFICIARY.
A Participant may designate a beneficiary or beneficiaries to receive
benefits after the death of the Participant. The designation shall be effective
upon filing written notice with the Compensation Committee of the Board of
Directors of the Company ("Committee") on the form provided for that purpose.
If more than one beneficiary designation has been filed, the beneficiary or
beneficiaries designated in the notice bearing the most recent date will be
deemed the valid beneficiary or beneficiaries.
9.PLAN TO BE UNFUNDED.
All benefit payments under the Plan will be made from the general assets of
the Company and Participants and their beneficiaries are to be unsecured general
creditors of the Company. No special or separate fund is to be established nor
other segregation of assets made to create Plan assets or cause the Plan to be a
funded plan. Notwithstanding the foregoing, however, the Company may, in its
sole discretion, place assets in a trust that may be used to meet Company's
obligations under the Plan and any right of a Participant to any benefit payment
under the Plan shall be reduced by any payment received by the Participant from
the trustee under such a trust. In the event such a trust is established, the
assets of such trust shall be available to the general creditors of the Company
in the event of the insolvency or bankruptcy of the Company (a "Rabbi trust").
10.PLAN MAY BE MODIFIED OR DISCONTINUED.
The Company reserves the right to amend, modify or discontinue the Plan
except under the circumstances set forth in Section 11 below. Any modification
or discontinuance of benefits shall not reduce accrued and unpaid benefits.
11.CHANGE IN CONTROL.
In the event of a Change in Control, as hereafter defined, the Company
shall, as soon as possible, but in no event longer than 30 days following the
Change of Control, make an irrevocable contribution to the Rabbi trust referred
to in Section 9 above, or in the event the Rabbi trust has not been created,
create such a trust, and make an irrevocable contribution to the trust, in an
amount that is sufficient to pay each Participant or beneficiary the benefits to
which the Participants or their beneficiaries would be entitled pursuant to
the terms of this Plan as of the date of the Change in Control.
For the purposes of this section, the term "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 "Non-Control
Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control.
A "Non-Control 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 "Non-Control 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 "Non-Control Transaction." A "Non-Control 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.
12.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, distributees, and Personal
Representatives, will bear any and all federal, foreign, state, local or
other income or other taxes imposed on amounts paid under this Plan.
13.ASSIGNABILITY.
No right to receive payments under this Plan shall be subject to voluntary
or involuntary alienation, assignment or transfer, sale, bankruptcy, pledge,
attachment, charge, lien or encumbrance of any kind.
14.ADMINISTRATION OF PLAN.
The Amended Plan shall be administered by the Committee. The Committee
shall conclusively interpret the provisions of the Plan, decide all claims and
shall make all determinations under the Plan. The Committee shall act by vote
or written consent of a majority of its members.
15.GOVERNING LAW.
This Plan shall be governed by and construed in accordance with the laws of
the State of South Dakota.
16.NO CONTRACT.
Neither the action of the Company in establishing the Plan or any action
taken by it or by the Committee under the provisions hereof or any provisions of
the Plan shall be construed as giving to any Participant the right to be
retained as a director of the Company.
17.NO TAX-QUALIFIED OR ERISA PLAN.
It is not intended that this Plan be a tax-qualified plan under the Internal
Revenue Code, nor is it intended that this Plan be an employee benefit plan
subject to ERISA because none of the Participants are employees of the Company.
The Participant's rights under the Plan are contractual.
BLACK HILLS CORPORATION
By/s/Daniel P. Landguth
Its Chairman, President and CEO
ATTEST:
/s/Roxann R. Basham
Secretary and Treasurer
(SEAL)
OUTSIDE DIRECTORS:
/s/Glenn C. Barber
Glenn C. Barber
/s/Bruce B. Brundage
Bruce B. Brundage
/s/John R. Howard
John R. Howard
/s/Kay S. Jorgensen
Kay S. Jorgensen
/s/Adil M. Ameer
Adil M. Ameer
/s/Thomas J. Zeller
Thomas J. Zeller