AMENDED AND RESTATED
ENERGY WEST INCORPORATED
DEFERRED COMPENSATION PLAN FOR DIRECTORS
1.1 Establishment. Energy West Incorporated, a
Montana corporation (the “Company”), hereby establishes
the Energy West Incorporated Deferred Compensation Plan for
Directors (the “Plan”) for those directors of the
Company who are neither officers nor employees of the Company. The
Plan provides the opportunity for Directors to defer in accordance
with Section 409A receipt of all or part of their cash
compensation on a pretax basis, subject to approval of the Plan by
shareholders. Specifically, the Plan provides (i) the
opportunity for Directors to elect to receive Fees in the form of
Stock or the opportunity to defer in accordance with
Section 409A receipt of those Fees in the form of cash or
Stock Equivalents(ii) the opportunity for Directors to be paid
Incentive Awards in Stock or the opportunity for Directors to defer
in accordance with Section 409A receipt of such Incentive
Awards in the form of Stock Equivalents; and (iii) the
opportunity for an investment return on those deferrals.
Capitalized terms used herein are defined in Section 2
hereof.
1.2 Purposes. The purposes of the Plan are to
align the interests of Directors more closely with the interests of
other shareholders of the Company, to encourage the highest level
of Director performance by providing the Directors with a direct
interest in the Company’s attainment of its financial goals,
and to help attract and retain qualified Directors.
1.3 Effective Date. This Plan shall be effective
upon approval of the Plan by the Board; provided that, until the
later of the Shareholder Approval Date or the effective date of an
applicable election required pursuant to Sections 5.1 or 6.3,
as the case may be, (i) no Stock shall be issued under the
Plan, (ii) no Fees shall be deferred as cash amounts or as
Stock Equivalents under the Plan, and (iii) no Incentive Award
shall be made under the Plan. To the extent an investment or
distribution of Stock may be made under this Plan, the Plan is
intended to qualify for the exemption from short swing profits
under Section 16(b) of the Exchange Act, as amended, provided by
Rule 16b-3 of the Securities and Exchange Commission and now
in effect or as hereafter amended. In the event the shareholders of
the Company do not approve this Plan at the Company’s 1996
annual meeting of shareholders, a participating Director may,
within thirty days after the date of such meeting, elect to
terminate participation in this Plan and to receive a one-time
immediate cash distribution of the entire balance in the Deferred
Account.
1.4 Section 409A. This Plan and any Awards
made or granted hereunder are intended to comply with or be exempt
from the requirements of Section 409A, and shall be
interpreted and administered in a manner consistent with those
intentions. Any provision of this Plan to the contrary
notwithstanding, Grandfathered Awards shall be governed by the
provisions of the Energy West Incorporated Deferred Compensation
Plan for Directors effective as of
, 1996 (the “Original Plan”) as in effect on
December 31, 2004.
2.1 Definitions. The following terms shall have
the meanings set forth below:
|
|
(a)
|
|
“409A Award” means an
Award that provides for a deferral of compensation from the Award
Date, as determined under Section 409A.
|
|
|
(b)
|
|
“Administrative
Committee” means the committee designated in Section 3
to administer the Plan.
|
|
|
(c)
|
|
“Applicable Percentage”
shall have the meaning set forth in Section 5.2.
|
|
|
(d)
|
|
“Award” means any right
or interest relating to Deferred Stock Fees, Stock, or Stock
Equivalents of the Company granted under the provisions of the
Plan.
|
|
|
(e)
|
|
“Award Date” means, as
determined by the Administrative Committee, the date on which the
recipient of an Award first becomes eligible to receive an Award
under Section 5 of this Plan.
|
|
|
|
|
|
|
|
(f)
|
|
“Board” means the Board
of Directors of the Company.
|
|
|
(g)
|
|
“Change in Control”
means the date on which any one of the following occurs:
(i) any one person, or more than one person acting as a group
(as determined under Section 409A), acquires (or has acquired
during the twelve (12) month period ending on the date of the
most recent acquisition by that person or persons) ownership of
stock of the Company possessing 30% or more of the total voting
power of the stock of the Company; (ii) a majority of members
of the Board is replaced during any twelve (12) month period
by directors whose appointment or election is not endorsed by a
majority of the members of the Board before the date of that
appointment or election; (iii) any one person, or more than
one person acting as a group (as determined under
Section 409A), acquires ownership of stock of the Company
that, together with stock held by that person or group, constitutes
more than 50% of the total fair market value or total voting power
of the stock of the Company; or (iv) any one person, or more
than one person acting as a group (as determined under Section
409A), acquires (or has acquired during the twelve (12) month
period ending on the date of the most recent acquisition by that
person or persons) assets from the Company that have a total gross
fair market value equal to more than 40% of the total gross fair
market value of all of the assets of the Company before such
acquisition or acquisitions. For this purpose, “gross fair
market value” means the value of the assets of the Company,
or the value of the assets being disposed of, without regard to any
liabilities associated with those assets.
|
|
|
(h)
|
|
“Code” means the
Internal Revenue Code of 1986, as amended from time to time, and
any successor thereto.
|
|
|
(i)
|
|
“Deferred Account”
means the bookkeeping account established by the Company in respect
to each Director pursuant to Section 6.3 hereof and to which
shall be credited (i) an amount equal to the Fees deferred by
the Director and interest thereon, if any, as provided in this
Plan, (ii) the Stock Equivalents into which any deferred Fees
and interest are converted by election of the Director pursuant to
the Plan, (iii) the Stock Equivalents credited to such
Director as Incentive Awards pursuant to Section 5.2 hereof,
and (iv) the Stock Equivalents credited to such Director in
respect of dividends pursuant to Section 6.4
hereof.
|
|
|
(j)
|
|
“Deferred Stock Fee”
means either cash or a number of Stock Equivalent shares equal to
the amount of Fees due to a Director, divided by the Fair Market
Value of a share of Stock, determined as of the Payment Dates for
such Fees.
|
|
|
(k)
|
|
“Director” means a
member of the Board who is neither an officer nor an employee of
the Company. For purposes of the Plan, an employee is an individual
whose wages are subject to the withholding of federal income tax
under section 3401 of the Internal Revenue Code, and an officer who
is an individual elected or appointed by the Board or chosen in
such other manner as may be prescribed in the Bylaws of the Company
to serve as such.
|
|
|
(l)
|
|
“Exchange Act” means
the Securities Exchange Act of 1934, as amended from time to
time.
|
|
|
(m)
|
|
“Fair Market Value”
means, with respect to Stock, as of any applicable date the value
of a share of Stock determined as follows (in order of
applicability): (i) if on the Award Date or other
determination date the Stock is listed on an established national
or regional stock exchange, is admitted to quotation on The NASDAQ
Stock Market, Inc. or is publicly traded on an established
securities market, the Fair Market Value of a share of Stock shall
be the closing price of the share of Stock on that exchange or in
that market (if there is more than one such exchange or market the
Administrative Committee shall determine the appropriate exchange
or market) on the Award Date or such other determination date (or
if there is no such reported closing price, the Fair Market Value
shall be the mean between the highest bid and lowest asked prices
or between the high and low sale prices on that trading day) or,
(ii) if no sale of Stock is reported for that trading day, on
the next preceding day on which any sale has been reported. If the
Stock is not listed on such an exchange, quoted on such system or
traded on such a market, Fair Market Value shall be the value of
the share of Stock as determined by such methods or procedures as
shall be established from time to time by the Administrative
Committee in good faith in a manner consistent with
Section 409A.
|
|
|
(n)
|
|
“Fees” means any annual
retainer, meeting fees, and committee fees payable in cash to the
Director for serving on the Board or any committee thereof, but
does not include reimbursable expenses or any Incentive Award
hereunder.
|
|
|
|
|
|
|
|
(o)
|
|
“Fiscal Year” means any
fiscal year of the Company.
|
|
|
(p)
|
|
“Grandfathered Awards”
means all awards made under the Plan which were earned and vested
on or before December 31, 2004. Grandfathered Awards are
subject to the provisions of Section 1.4 above.
|
|
|
(q)
|
|
“Incentive Award” means
an award of Stock or Stock Equivalents pursuant to
Section 5.2.
|
|
|
|
|
|
|
|
(r)
|
|
“Incentive Plan” means
the Energy West Management Incentive Plan.
|
|
|
(s)
|
|
“Internal Revenue Code”
means the Internal Revenue Code of 1986, as amended from time to
time.
|
|
|
(t)
|
|
“Interest Rate” shall
mean, from time to time, the annual rate of interest on U.S.
Treasury Notes maturing in seven years (or if none is maturing in
exactly seven years, the rate for the Treasury Note which has a
maturity closest to seven years in length), as listed in the
edition of the Wall Street Journal, published next following
the last business day of each calendar quarter, and shall be
adjusted on a quarterly basis.
|
|
|
|
|
|
|
|
(u)
|
|
“Original Plan” has the
meaning set forth in Section 1.4.
|
|
|
(v)
|
|
“Payment Date” means
each of the dates each year on which the Company pays Fees to
Directors.
|
|
|
(w)
|
|
“Section 409A”
means Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), and the U.S. Department of
Treasury regulations and other interpretive guidance issued
thereunder, each as in effect from time to time.
|
|
|
(x)
|
|
“Separation from
Service” means a termination of services provided by a
Director to the Company, whether voluntarily or involuntarily, as
determined by the Company in accordance with Treasury Regulations
Section 1.409-1(h).
|
|
|
(y)
|
|
“Shareholder Approval
Date” shall mean the date on which the Plan is approved by
the shareholders of the Company.
|
|
|
(z)
|
|
“Specified Employee”
means any Director who is determined to be a “key
employee” as defined under Code Section 416(i)) without
regard to paragraph (5) thereof) for the applicable period, as
determined by the Company under Section 409A and in accordance
with Treasury Regulations Section 1.409A-1(i).
|
|
|
|
|
|
|
|
(aa)
|
|
“Stock” means the $.15
par value common stock of the Company.
|
|
|
(bb)
|
|
“Stock Equivalent”
means a hypothetical share of Stock which shall have a value on any
date equal to the Fair Market Value of one share of Stock on that
date.
|
|
|
(cc)
|
|
“Treasury Regulations”
means Regulations of the Department of the Treasury under the Code
as such regulations may be changed from time to time.
|
|
|
(dd)
|
|
“Unforeseeable
Emergency” means, with respect to a Director, any of the
following as provided under, and determined by the Board in
accordance, with Section 409A: (i) a severe financial
hardship to a Director resulting from an illness or accident of the
Director, the Director’s spouse, the Director’s
beneficiary, or the Director’s dependent (as defined in Code
Section 152, without regard to Code Sections 152(b)(1),
(b)(2), and (d)(1)(B)); (ii) loss of a Director’s
property due to casualty; and (iii) other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Director.
|
|
|
(ee)
|
|
Unforeseeable Emergency
Determination” has the meaning set forth in
Section 6.10.
|
|
|
(ff)
|
|
“Unforeseeable Emergency
Payment” means an amount payable upon an Unforeseeable
Emergency Determination, which amount is limited to the amount
reasonably necessary to satisfy the Unforeseeable Emergency and may
include amounts necessary to pay any Federal, state, local, or
foreign income taxes or penalties reasonably anticipated to result
from the distribution. In determining an Unforeseeable Emergency
Payment, the Board is not required to take into account any
additional compensation that due to the Unforeseeable Emergency is
available under another nonqualified deferred compensation plan but
has not actually been paid, or that is available due to the
Unforeseeable Emergency under another plan that would provide for
deferred compensation except due to the application of the
effective date provisions under Treasury
Regulation Section 1.409A-6.
|
|
|
(gg)
|
|
“Unforeseeable Emergency
Payment Application” has the meaning set forth in
Section 6.10.
|
2.2 Gender and Number. Except when indicated by
the context, the masculine gender shall also include the feminine
gender, and the definitions of any term herein in the singular
shall also include the plural.
Section 3. Plan
Administration
The Plan shall be administered by the
Administrative Committee, which shall be appointed by and serve at
the pleasure of the Board. Subject to the limitations of the Plan,
the Administrative Committee shall have the sole and complete
authority and discretion: (i) to impose such limitations,
restrictions and conditions as shall be deemed appropriate,
(ii) to interpret the Plan
and to adopt, amend and rescind administrative guidelines and other
rules and regulations relating to the Plan and (iii) to make
all other determinations and to take all other actions necessary or
advisable for the implementation and administration of the Plan.
Notwithstanding the foregoing, the Administrative Committee shall
have no authority, discretion or power to alter any terms or
conditions specified in the Plan, except in the sense of
administering the Plan subject to the provisions of the Plan. The
Administrative Committee’s determination on matters within
its authority shall be conclusive and binding upon the Company, the
Directors and all other persons.
Section 4. Stock Subject to the
Plan
4.1 Number of Shares. There shall be authorized
for issuance under the Plan, in accordance with the provisions of
the Plan, 100,000 shares of Stock. This authorization may be
increased from time to time by approval of the Board and by
, the shareholders of the Company if such
shareholder approval is required. The Company shall at all times
during the term of the Plan retain as authorized and unissued Stock
at least the number of shares from time to time which may be
required under the provisions of the Plan, or otherwise assure
itself of its ability to perform its obligations hereunder. The
shares of Stock issuable hereunder shall be authorized and unissued
shares or previously issued and outstanding shares of Stock
reacquired by the Company.
4.2 Adjustments Upon Changes in Stock. If there
shall be any change in the Stock of the Company, through merger,
consolidation, reorganization, recapitalization, stock dividend,
stock split, spinoff, split up, dividend in kind or other change in
the corporate structure or distribution to the shareholders,
appropriate adjustments shall be made by the Administrative
Committee (or if the Company is not the surviving corporation in
any such transaction, the board of directors of the surviving
corporation) in the aggregate number and kind of shares subject to
the Plan, and the number and kind of shares which may be issued
under the Plan. Appropriate adjustments may also be made by the
Administrative Committee on an equitable basis as the
Administrative Committee in its discretion determines.
Notwithstanding the foregoing, no adjustment shall be made to an
Award or a Deferred Account which will result in the Award or
Deferred Account becoming subject to the terms and conditions of
Section 409A, unless agreed upon by the Administrative
Committee and the Director.
Section 5. Payment of Fees and Incentive
Awards
5.1 Form of Payment of Fees. Unless a Director
makes an election under the Plan, the Director shall receive cash
payment of all Fees on the Payment Dates for such Fees. Each
Director may elect to receive for the Director’s Fees, Stock
or Deferred Stock Fees in accordance with Section 409A and the
terms of the Plan; provided that a Director shall be entitled to
receive Stock or Deferred Stock Fees only if he or she has filed a
written election with the Company, in a form prescribed by the
Administrative Committee, in accordance with Section 6 of this
Plan.
5.2 Incentive Awards. Each Director shall
receive an Incentive Award following the end of each Fiscal Year
equal to the product of (x) total Fees earned by such Director
during such Fiscal Year, multiplied by the (y) Applicable
Percentage with respect to such Fiscal Year (which Applicable
Percentage will be zero if no awards are made by the Company under
the Incentive Plan for that year) (such product being referred to
as the “Incentive Award Value”); provided that such
Director must have been a Director as of the last day of such
Fiscal Year in order to be eligible for an Incentive Award with
respect to such Fiscal Year. As used herein, the “Applicable
Percentage” means the greatest (in percentage terms and not
in absolute dollar terms) of the amounts of incentive compensation
awarded to eligible participants pursuant to the Incentive Plan
expressed as a percentage of such eligible participants’ base
salaries for the Fiscal Year with respect to which such awards are
made. The “Applicable Percentage” shall be expressed as
a decimal. (Example: The Incentive Plan has two participants for
1.997, A and B. A’s base salary for 1997 is $50,000, and A
receives incentive compensation under the Incentive Plan of $5,000.
B’s base salary for 1997 is $40,000, and B receives incentive
compensation under the Incentive Plan of $4,400. In this example,
the Applicable Percentage is .11 because B received incentive pay
equal to 11 % of his base salary for the Fiscal Year in question.)
Incentive Awards shall be paid only in (i) Stock or,
(ii) if the Director has elected to defer receipt of such
Incentive Award pursuant to Section 6, in the form of Stock
Equivalents credited to the Director’s Deferred Account. For
each Incentive Award, the number of shares of Stock to be issued or
the number of Stock Equivalents to be credited, as the case may be,
shall be equal to the Incentive Award Value of such Incentive
Award, divided by the Fair Market Value of a share of Stock
determined as of the date incentive bonuses become payable to
employees of the Company under the Incentive Plan. Incentive Awards
shall, subject to receipt of approval by the shareholders of the
Company, be awarded to Directors beginning with awards for the
Fiscal Year ended June 30, 1996, and for each Fiscal Year
thereafter during the term of this Plan. The Incentive Awards for
the Fiscal Year ended June 30, 1996 shall be made as soon as
practicable following the Shareholder Approval Date.
Section 6. Deferrals and
Distributions
|
|
(a)
|
|
A Director may elect to defer
receipt of (i) Fees otherwise payable to him as provided under
Section 5.1; and (ii) Incentive Awards payable to the
Director pursuant to Section 5.2. A Director may make the
elections permitted hereunder by giving written notice to the
Company in a form approved by the Administrative
Committee.
|
|
|
(b)
|
|
The election provided for under
Section 5.1 must meet the following requirements:
|
|
|
(i)
|
|
Election relating to Fees. The
election notice relating to Fees shall provide each of the
following: (i) whether the Director elects to receive Stock or
to defer payment; (ii) if the Director elects to defer
payment, whether such payment deferral shall be in the form of cash
or Stock Equivalents; and (iii) the elected payme
|
|
