Document:

ex4-2_9thduppind.htm

THIS NINTH SUPPLEMENTAL INDENTURE, dated as of May 1, 2010 (the “Supplemental Indenture”), is made by and between NORTHWESTERN CORPORATION (formerly known as NorthWestern Public Service Company), a corporation organized and existing under the laws of the State of Delaware (the “Company”), the post office address of which is 3010 West 69th Street, Sioux Falls, South Dakota 57108, and THE BANK OF NEW YORK MELLON (formerly known as The Bank of New York (successor to JPMorgan Chase Bank, N.A. (successor by merger to The Chase Manhattan Bank (National Association)))) (the “Trustee”), as Trustee under the General Mortgage Indenture and Deed of Trust dated as of August 1, 1993, hereinafter mentioned, the post office address of which is 101 Barclay Street, New York, New York 10286;

 

WHEREAS, the Company has heretofore executed and delivered its General Mortgage Indenture and Deed of Trust dated as of August 1, 1993 (the “Original Indenture”), to the Trustee, for the security of the Bonds of the Company issued and to be issued thereunder (the “Bonds”); and 

 

WHEREAS, the Company has heretofore executed and delivered to the Trustee eight indentures supplemental to the Original Indenture, the first dated as of August 15, 1993, the second dated as of August 1, 1995, each of the third, fourth and fifth dated as of September 1, 1995, the sixth dated as of February 1, 2003, the seventh dated as of November 1, 2004 and the eighth dated as of May 1, 2008 (the Original Indenture, as supplemented and amended by the aforementioned eight supplemental indentures and by this Supplemental Indenture, being hereinafter referred to as the “Indenture”); and 

 

WHEREAS, the Company desires to create a new series of Bonds to be issued under the Indenture, to be known as First Mortgage Bonds, 5.01% Series due 2025 (the “First Mortgage Bonds of the 5.01% Series”), which First Mortgage Bonds of the 5.01% Series are to be issued on the basis of Retired Bonds pursuant to Section 4.04 of the Indenture; and 

 

WHEREAS, the Company, in the exercise of the powers and authority conferred upon and reserved to it under the provisions of the Indenture, and pursuant to appropriate resolutions of the Board of Directors, has duly resolved and determined to make, execute and deliver to the Trustee a Supplemental Indenture in the form hereof for the purposes herein provided; and 

 

WHEREAS, all conditions and requirements necessary to make this Supplemental Indenture a valid, binding and legal instrument have been done, performed and fulfilled and the execution and delivery hereof have been in all respects duly authorized;

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

THAT the Company, in consideration of the acceptance or the purchase and ownership (as applicable) from time to time of the First Mortgage Bonds of the 5.01% Series and the service by the Trustee and its successors, under the Indenture and of One Dollar to it, duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, hereby covenants and agrees to and with the Trustee and its successors in the trust under the Indenture, for the benefit of those who shall hold the Bonds as follows:

 

  

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ARTICLE I.

DESCRIPTION OF FIRST MORTGAGE BONDS, 5.01% SERIES DUE 2025

 

Section 1. The Company hereby creates a new series of Bonds to be known as “First Mortgage Bonds, 5.01% Series due 2025.”  The First Mortgage Bonds of the 5.01% Series shall be executed, authenticated and delivered in accordance with the provisions of, and shall in all respects be subject to, all of the terms, conditions and covenants of the Indenture, as supplemented and modified.  The aggregate principal amount of First Mortgage Bonds of the 5.01% Series, which may be authenticated and delivered under the Indenture (except for First Mortgage Bonds of the 5.01% Series authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other First Mortgage Bonds of the 5.01% Series pursuant to the Indenture and except for First Mortgage Bonds of the 5.01% Series which, pursuant to the Indenture, are deemed never to have been authenticated and delivered under the Indenture) is limited to $64,000,000.  

 

The commencement of the first interest period for the First Mortgage Bonds of the 5.01% Series shall be May 27, 2010.  The First Mortgage Bonds of the 5.01% Series shall mature on May 1, 2025, and shall bear interest at the rate of 5.01% per annum, from May 27, 2010 or from the most recent date to which interest has been paid or duly provided for, payable semi-annually on the first day of May and the first day of November (each, an “Interest Payment Date”) in each year, commencing November 1, 2010. Any interest on any First Mortgage Bond of the 5.01% Series which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such First Mortgage Bond of the 5.01% Series (or one or more Predecessor Bonds) is registered at the close of business on the April 15 or October 15, as the case may be (whether or not a Business Day) next preceding such Interest Payment Date. The First Mortgage Bonds of the 5.01% Series shall bear interest at the Default Rate under the circumstances set forth in the form of such Bond set forth in Section 3 of this Article I. 

 

Section 2. The First Mortgage Bonds of the 5.01% Series shall be issued only as registered Bonds without coupons of the denomination of $1,000, or any integral multiple of $1 in excess of $1,000, appropriately numbered.  The First Mortgage Bonds of the 5.01% Series may be exchanged, upon surrender thereof, at the office or agency of the Company in the Borough of Manhattan, The City of New York, State of New York, for one or more First Mortgage Bonds of the 5.01% Series of other authorized denominations, for the same aggregate principal amount, subject to the terms and conditions set forth in the Indenture.

 

First Mortgage Bonds of the 5.01% Series may be exchanged or transferred without expense to the registered owner thereof except that any taxes or other governmental charges required to be paid with respect to such transfer or exchange shall be paid by the registered owner requesting such transfer or exchange as a condition precedent to the exercise of such privilege, other than exchanges pursuant to Section 3.04, 5.06 or 14.06 of the Indenture, not involving any transfer.

 

  

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The Trustee shall not register the transfer of any First Mortgage Bond of the 5.01% Series unless it receives a certificate in the form attached hereto as Appendix A.

 

The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under applicable law or under this Supplemental Indenture with respect to any transfer of any interest in a First Mortgage Bond of the 5.01% Series other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Supplemental Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

 

Section 3. The First Mortgage Bonds of the 5.01% Series and the Trustee’s Certificate of Authentication shall be substantially in the following forms respectively:

 

[Remainder of page Intentionally Blank]

 

  

6720279V6                                 3

  

[FORM OF BOND OF THE 5.01% SERIES DUE 2025]

THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED OR PLEDGED UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF SUCH ACT OR AN EXEMPTION THEREFROM IS AVAILABLE, EXCEPT UNDER CIRCUMSTANCES WHERE NEITHER SUCH REGISTRATION NOR SUCH AN EXEMPTION IS REQUIRED BY LAW.

 

NORTHWESTERN CORPORATION

 

(Incorporated under the laws of the State of Delaware)

 

FIRST MORTGAGE BOND, 5.01% SERIES DUE 2025

	
No. R-

$___________

	
[Date]

[CUSIP No. ________]

 

For Value Received, the undersigned, NorthWestern Corporation, (herein called the “Company,” which term shall include any Successor Corporation, as defined in the Indenture hereinafter referred to), a corporation organized and existing under the laws of the State of Delaware, hereby promises to pay to [____________], or registered assigns, the principal sum of [_____________________] Dollars (or so much thereof as shall not have been redeemed) on May 1, 2025, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance hereof at the rate of 5.01% per annum from May 27, 2010, or from the most recent date to which interest has been paid or duly provided for, payable semiannually, on the first day of May and November in each year, commencing November 1, 2010, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law, on any overdue payment of interest and, during the continuance of an Event of Default, on such unpaid balance and on any overdue payment of any Make-Whole Amount, at a rate per annum from time to time equal to the greater of (i) Interest Rate plus 2% or (ii) 2% over the rate of interest publicly announced by The Bank of New York Mellon from time to time in New York, New York as its “base” or “prime” rate, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand).  Reference is hereby made to the further provisions of this First Mortgage Bond set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION]

 

This is one of the Bonds of the series designated therein referred to in the within-mentioned Indenture and Supplemental Indenture dated as of May 1, 2010.

 

                THE BANK OF NEW YORK MELLON,

                AS TRUSTEE 

                By_________________________________ 

                     Authorized Signatory 

 

 

  

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Payments of principal of, interest on and any Make-Whole Amount with respect to this First Mortgage Bond are to be made in lawful money of the United States of America at The Bank of New York Mellon in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this First Mortgage Bond.  Any interest on this First Mortgage Bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name this First Mortgage Bond (or one or more Predecessor Bonds) is registered at the close of business on the April fifteenth or October fifteenth, as the case may be (whether or not a Business Day) next preceding such Interest Payment Date.

 

This First Mortgage Bond is one of a series of First Mortgage Bonds, 5.01% Series due 2025 (herein called the “First Mortgage Bonds”) issued pursuant to the Ninth Supplemental Indenture dated as of May 1, 2010 (as from time to time amended, the “Supplemental Indenture”), between the Company and the Trustee named therein which amends and supplements the General Mortgage Indenture and Deed of Trust dated as of August 1, 1993, executed by the Company (under its then name, NorthWestern Public Services Company) to The Chase Manhattan Bank (National Association), the predecessor to The Bank of New York Mellon, as Trustee (the “Trustee”) (as amended and supplemented from time to time, the “Indenture”) to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the properties mortgaged and pledged, the nature and extent of the security, the rights of registered owners of the Bonds and of the Trustee in respect thereof, and the terms and conditions upon which the Bonds are, and are to be, secured.  The Bonds may be issued in series, for various principal sums, may mature at different times, may bear interest at different rates and may otherwise vary as provided in the Indenture.  The First Mortgage Bonds are also entitled to the benefits thereof and the Bond Purchase Agreement dated as of April 26, 2010 between the Company and the purchasers of the First Mortgage Bonds listed in Schedule A thereto (the “Bond Purchase Agreement”).  Each holder of this First Mortgage Bond will be deemed, by its acceptance hereof, to have made the representation set forth in Section 6.2 of the Bond Purchase Agreement.  Unless otherwise indicated, capitalized terms used in this First Mortgage Bond shall have the respective meanings ascribed to such terms in the Supplemental Indenture.

 

This First Mortgage Bond is a registered First Mortgage Bond and, as provided in Section 3.05 of the Indenture but subject to the provisions of the Supplemental Indenture, upon surrender of this First Mortgage Bond for registration of transfer accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new First Mortgage Bond for a like principal amount will be issued to, and registered in the name of, the transferee.  The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this First Mortgage Bond is registered as the absolute owner hereof for the purpose of receiving payment and for all other purposes, and neither the Company, the Trustee nor any agent of the Company or the Trustee will be affected by any notice to the contrary.

 

This First Mortgage Bond is subject to optional redemption, in whole or from time to time in part, at the times and on the terms specified in the Supplemental Indenture, but not otherwise.

 

 

  

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If an Event of Default occurs and is continuing, the principal of this First Mortgage Bond may be declared or otherwise become due and payable in the manner and upon the conditions provided for in the Indenture, at the price equal to the outstanding principal amount thereof, together with interest accrued on such principal amount.  

 

This Bond shall not be entitled to any benefit under the Indenture or any indenture supplemental thereto, or become valid or obligatory for any purpose, until the form of certificate endorsed hereon shall have been signed by or on behalf of The Bank of New York Mellon, the Trustee under the Indenture, or a successor trustee thereto under the Indenture, or by an authenticating agent duly appointed by the Trustee in accordance with the terms of the Indenture.

 

 

IN WITNESSETH WHEREOF, NorthWestern Corporation has caused this First Mortgage Bond to be signed (manually or by facsimile signature) in its name by an Authorized Executive Officer, as defined in the Indenture, and its corporate seal (or a facsimile thereof) to be hereto affixed and attested (manually or by facsimile signature) by an Authorized Executive Officer, as defined in the Indenture.

 

Dated:

 

                NORTHWESTERN CORPORATION

                BY________________________________ 

                Authorized Executive Officer

	
  ATTEST:

	
 

	
  By_________________________________

	
 

	
  Authorized Executive Officer

	
     

 

  

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ARTICLE II.

ISSUE OF FIRST MORTGAGE BONDS OF THE 5.01% SERIES 

 

Section 1. The Company hereby exercises the right to obtain the authentication of $64,000,000 principal amount of Bonds pursuant to the terms of Section 4.04 of the Indenture. All such Bonds shall be First Mortgage Bonds of the 5.01% Series.  

 

Section 2. Such First Mortgage Bonds of the 5.01% Series may be authenticated and delivered prior to the filing for recordation of this Supplemental Indenture.

 

 

ARTICLE III.

REDEMPTION 

 

Section 1. Whenever the Company shall propose to redeem less than all of the Outstanding First Mortgage Bonds of the 5.01% Series on any Redemption Date, the Bond Registrar, instead of selecting by lot, shall select the serial numbers of the First Mortgage Bonds of the 5.01% Series to be redeemed (in whole or in part) by prorating, as nearly as may be, the aggregate principal amount of the First Mortgage Bonds of the 5.01% Series to be redeemed among the registered owners of the First Mortgage Bonds of the 5.01% Series according to the principal amount thereof registered in their respective names. In any such pro ration, the Bond Registrar shall make such adjustments, reallocations and eliminations as it shall deem proper to the end that the principal amount of the First Mortgage Bonds of the 5.01% Series so prorated to any registered owner of the First Mortgage Bonds of the 5.01% Series shall be $1,000 or an integral multiple of $1 in excess thereof, by increasing or decreasing or eliminating the amount which would be allocable to any such registered owner on the basis of exact proportion by an amount not exceeding $1. The Bond Registrar in its discretion may determine the particular First Mortgage Bonds of the 5.01% Series (if there are more than one) registered in the name of any registered owner which are to be redeemed, in whole or in part.  In any determination by pro ration pursuant to this Section, First Mortgage Bonds of the 5.01% Series registered in the name of the Company shall not be considered Outstanding and shall be excluded in making the determination of the First Mortgage Bonds of the 5.01% Series to be redeemed.

 

Notice of redemption of any First Mortgage Bonds of the 5.01% Series shall be given as provided in Section 5.04 of the Original Indenture.  If given by mail, the mailing of such notice shall be a condition precedent to redemption, provided that any notice which is mailed in the manner provided in Section 5.04 of the Original Indenture shall be conclusively presumed to have been duly given whether or not the Holders receive such notice, and failure to give such notice by mail, or any defect in such notice, to the Holder of any such Bond designated for redemption in whole or in part shall not affect the validity of the redemption of any other such Bond.

 

Except for the determination of the serial numbers of the First Mortgage Bonds of the 5.01% Series to be redeemed (in whole or in part) by pro ration as provided in this Section when less than all of the First Mortgage Bonds of the 5.01% Series are to be redeemed on any Redemption Date and except for the changes in the giving of notice of redemption as provided in this Section, the procedures for redemption of the First Mortgage Bonds of the 5.01% Series shall be as provided in Article Five of the Original Indenture.

 

 

  

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Section 2. The Company, with the approval of the Trustee, may enter into a written agreement with the Holder of any First Mortgage Bonds of the 5.01% Series providing that payment of such Bonds called for redemption in part only may be made directly by mail, wire transfer or in any other manner to the Holder thereof without presentation or surrender thereof if there shall be delivered to the Trustee an agreement (which may be executed in counterparts between the Company and such Holder (or other Person acting as agent for such Holder or for whom such Holder is a nominee) that payment shall be so made, and that in the event the Holder thereof shall sell or transfer any such Bonds (a) it will, prior to the delivery of such Bonds, either (i) surrender such Bonds to the Trustee to make a proper notation of the amount of principal paid thereon or (ii) surrender such Bonds to the Trustee against receipt of one or more First Mortgage Bonds of the 5.01% Series in an aggregate principal amount equal to the unpaid principal portion of the Bonds so surrendered, and (b) it will promptly notify the Company and the Trustee of the name and address of the transferee of any First Mortgage Bonds of the 5.01% Series so transferred. The Trustee shall not be liable or responsible to any such Holder or transferee or to the Company or to any other Person for any act or omission to act on the part of the Company or any such Holder in connection with any such agreement. The Company will indemnify and save the Trustee harmless against any liability resulting from any such act or omission and against any liability resulting from any action taken by the Trustee in accordance with the provisions of any such agreement.  The Company will afford the benefits of this Section 2 to any Institutional Investor that is the direct or indirect transferee of any First Mortgage Bond of the 5.01% Series purchased by a Holder under the Bond Purchase Agreement and that has made the same agreement relating to such First Mortgage Bonds of the 5.01% Series as the Holders have made in this Section 2.

 

Section 3.Maturity.  As provided therein, the entire unpaid principal balance of the First Mortgage Bonds of the 5.01% Series shall be due and payable on May 1, 2025.

 

Section 4.Optional Redemption with Make-Whole Amount.  The Company may, at its option, upon notice as provided below, redeem at any time all, or from time to time any part of, the First Mortgage Bonds of the 5.01% Series, in an amount not less than $1,000,000 in the case of a partial redemption, at 100% of the principal amount so redeemed, and the Make-Whole Amount determined for the redemption with respect to such principal amount.  The Company will give each holder of First Mortgage Bonds of the 5.01% Series to be redeemed written notice of each optional redemption under this Section 4 not less than 30 days and not more than 60 days prior to the date fixed for such redemption.  Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the First Mortgage Bonds of the 5.01% Series to be redeemed on such date, the principal amount of each First Mortgage Bond held by such Holder to be redeemed (determined in accordance with Section 5), and the interest to be paid on the Redemption Date with respect to such principal amount being redeemed, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such redemption (calculated as if the date of such notice were the date of the redemption), setting forth the details of such computation.  Two Business Days prior to such Redemption Date, the Company shall deliver to the Trustee and to each Holder of First Mortgage Bonds of the 5.01% Series to be redeemed a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified Redemption Date.  The Trustee shall have no responsibility for any such calculation.

 

 

  

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Section 5.Allocation in the Event of Partial Redemption.  Subject to Article III, Section 1 above, in the case of each partial redemption of the First Mortgage Bonds of the 5.01% Series, the principal amount of the First Mortgage Bonds of the 5.01% Series to be redeemed shall be allocated among all of the First Mortgage Bonds of the 5.01% Series at the time Outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for redemption.

 

Section 6.Maturity; Surrender, Etc.  In the case of each redemption of First Mortgage Bonds of the 5.01% Series pursuant to this Article III, the principal amount of each First Mortgage Bond to be redeemed shall mature and become due and payable on the date fixed for such redemption (which shall be a Business Day), together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any.  From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue.  Any First Mortgage Bond paid or redeemed in full shall be surrendered to the Trustee and cancelled and shall not be reissued, and no First Mortgage Bond shall be issued in lieu of any redeemed principal amount of any First Mortgage Bond.

 

Section 7. Purchase of First Mortgage Bonds of the 5.01% Series.  The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the Outstanding First Mortgage Bonds of the 5.01% Series except upon the payment or redemption of the First Mortgage Bonds of the 5.01% Series in accordance with the terms of the Indenture.  The Company will promptly cancel all First Mortgage Bonds of the 5.01% Series acquired by it or any Affiliate pursuant to any payment or redemption of First Mortgage Bonds of the 5.01% Series pursuant to any provision of the Indenture and no First Mortgage Bonds of the 5.01% Series may be issued in substitution or exchange for any such First Mortgage Bonds of the 5.01% Series, except pursuant to Section 5.06 of the Original Indenture.

 

Section 8.Make-Whole Amount.  

 

“Make-Whole Amount” means, with respect to any First Mortgage Bond of the 5.01% Series, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such First Mortgage Bond over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero.  For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

 

“Called Principal” means, with respect to any First Mortgage Bond of the 5.01% Series, the principal of such First Mortgage Bond that is to be redeemed pursuant to Section 4.

 

“Discounted Value” means, with respect to the Called Principal of any First Mortgage Bond of the 5.01% Series, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the First Mortgage Bonds of the 5.01% Series is payable) equal to the Reinvestment Yield with respect to such Called Principal.

 

 

  

6720279V6                                 9

  

 

“Reinvestment Yield” means, with respect to the Called Principal of any First Mortgage Bond, .50% (50 basis points) over the yield to maturity implied by (i) the yields reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on the run U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (or any comparable successor publication) for U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date.  

 

In the case of each determination under clause (i) or clause (ii), as the case may be, of the preceding paragraph, such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the applicable U.S. Treasury security with the maturity closest to and greater than such Remaining Average Life and (2) the applicable U.S. Treasury security with the maturity closest to and less than such Remaining Average Life.  The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable First Mortgage Bond of the 5.01% Series.

 

“Remaining Average Life” means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

 

“Remaining Scheduled Payments” means, with respect to the Called Principal of any First Mortgage Bond, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the First Mortgage Bonds of the 5.01% Series, then (solely for the purpose of determining the Remaining Scheduled Payments) the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 4.

 

 

  

6720279V6                                 10

  

 

“Settlement Date” means, with respect to the Called Principal of any First Mortgage Bond of the 5.01% Series, the date on which such Called Principal is to be redeemed pursuant to Section 4.

 

ARTICLE IV.

AMENDMENTS TO MORTGAGE

 

SECTION 1. Section 1.03 of the Original Indenture is amended by adding at the end thereof the following additional paragraph:

 

Notwithstanding anything herein to the contrary, with respect to each Net Earnings Certificate required at any time at which (a) any of the First Mortgage Bonds of the 5.01% Series  are Outstanding under the Indenture, and (b) any bonds are outstanding under the Company’s Mortgage and Deed of Trust, dated as of October 1, 1945 relating to the Company’s utility property in the states of Montana and Wyoming (the “Montana Mortgage”), the “Adjusted Net Earnings of the Company” shall be, and shall be stated in such Net Earnings Certificate to be, the lesser of (A) the amount (for the applicable period selected in accordance with paragraph (a) of this Section 1.03) determined in accordance with paragraph (a) of this Section 1.03 (and the other provisions of this Section 1.03 that are relevant to such paragraph) on the basis of (i) the items set forth in clauses (i) and (ii) of paragraph (a) of this Section 1.03 being such portions of such items of the Company as have been reasonably allocated by the Company to or from the Mortgaged Property as a plant or plants and an operating system or operating systems in a manner consistent with the manner of allocation utilized and/or to be utilized by the Company in making calculations of the “Adjusted Net Earnings of the Company” under and as defined in the Montana Mortgage, and (ii) the item set forth in clause (iv) of paragraph (a) of this Section 1.03 being calculated without regard to income derived by the Company from any electric and/or gas utility business of the Company in which the Mortgaged Property is not utilized (but otherwise in accordance this Section 1.03), and (B) the amount (for the applicable period selected in accordance with paragraph (a) of this Section 1.03) determined in accordance with paragraph (a) of this Section 1.03 (and the other provisions of this Section 1.03 that are relevant to such paragraph) without any allocation or distinction as to the derivation of the items set forth in any of the clauses of paragraph (a) of this Section 1.03, other than allocation or distinction between (i) the electric and/or gas utility business or businesses in which the Company is engaged (whether or not the Mortgaged Property is utilized in connection therewith), and (ii) the other business or businesses (if any) in which the Company is engaged (with such other business or businesses being given effect under the item set forth in clause (iv) of paragraph (a) of this Section 1.03).  Each such Net Earnings Certificate shall contain a statement of the signers of such Net Earnings Certificate that, in the opinion of such signers, the allocations made in the calculations of “Adjusted Net Earnings of the Company” as set forth in such Net Earnings Certificate are in accordance with the requirements of this final paragraph of this Section 1.03.

 

 

ARTICLE V.

THE TRUSTEE 

 

The Trustee hereby accepts the trusts hereby declared and provided, and agrees to perform the same upon the terms and conditions in the Indenture set forth and upon the following terms and conditions:

 

 

  

6720279V6                                 11

  

 

The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or the due execution hereof by the Company or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely. In general, each and every term and condition contained in Article Eleven of the Indenture shall apply to this Supplemental Indenture with the same force and effect as if the same were herein set forth in full, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Supplemental Indenture.

 

 

ARTICLE VI.

HOME OFFICE PAYMENT

 

So long as any Purchaser (as such term is defined in the Bond Purchase Agreement) or its nominee shall be the Holder of any First Mortgage Bond of the 5.01% Series, and notwithstanding anything contained in the Indenture or in such First Mortgage Bond of the 5.01% Series to the contrary, the Company will pay all sums becoming due on such First Mortgage Bond of the 5.01% Series for principal, Make-Whole Amount or premium, if any, and interest by the method and at the address specified for such purpose below such Holder’s name in Schedule A to the Bond Purchase Agreement dated as of April 26, 2010, or by such other method or at such other address as such Holder shall have from time to time specified to the Company and the Trustee in writing for such purpose, without the presentation or surrender of such First Mortgage Bond of the 5.01% Series unless such Bond is to be paid or redeemed in full, in which case, as a condition to such payment, such Bond shall be presented and surrendered at the place of payment most recently designated by the Company pursuant to Section 3.05 of the Indenture.  Prior to any sale or other disposition of any First Mortgage Bond of the 5.01% Series held by any such Holder, such Holder, by its acceptance of a First Mortgage Bond, agrees that it will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such First Mortgage Bond of the 5.01% Series to the Trustee in exchange for a new First Mortgage Bond of the 5.01% Series or First Mortgage Bonds of the 5.01% Series in a principal amount giving effect to such payments of principal and interest pursuant to Section 3.05 of the Indenture, and in either case shall promptly notify the Company and the Trustee of the name and address of the transferee of any such Bond so sold or disposed of.  The Company will afford the benefits of this Article VI to any Institutional Investor that is the direct or indirect transferee of any First Mortgage Bond of the 5.01% Series purchased by any such Purchaser or its nominee and that has made the same agreement relating to such First Mortgage Bond of the 5.01% Series as such Purchaser has made in this Article VI.

 

ARTICLE VII.

CONFIRMATION OF LIEN OF INDENTURE ON CERTAIN PROPERTY

 

 

The Company hereby confirms, acknowledges and states that the property described on Appendix B attached hereto is subject to the Lien of the Indenture pursuant to Granting Clause Second of the Original Indenture; and, for the avoidance of any doubt, the Company hereby grants, bargains, sells, conveys, assigns, transfers, mortgages, pledges, sets over and confirms to the Trustee, and grants to the Trustee a security interest in, all right, title and interest of the Company in and to such property, as security for the payment of the principal of, premium, if any, and interest, if any, on all Bonds issued under the Indenture and Outstanding (as defined in the Indenture), when payable in accordance with the provisions thereof, and as security for the performance by the Company of, and compliance by the Company with, the covenants and conditions of the Indenture, TO HAVE AND TO HOLD all such property on the same terms as all other property subject to the Lien of the Indenture.

 

 

  

6720279V6                                 12

  

 

ARTICLE VIII.

MISCELLANEOUS PROVISIONS 

 

Section 1.                      Except as otherwise defined herein or below, all capitalized terms used in this Supplemental Indenture have the meanings stated in the Indenture.

 

“Default Rate” means that rate of interest that is the greater of (i) 2% per annum above the rate of interest stated in clause (a) of the first paragraph of the First Mortgage Bonds of the 5.01% Series or (ii) 2% over the rate of interest publicly announced by The Bank of New York Mellon in New York, New York as its “base” or “prime” rate.

 

“Institutional Investor” means (a) any original purchaser of a First Mortgage Bond of the 5.01% Series, (b) any holder of a First Mortgage Bond of the 5.01% Series holding (together with one or more of its affiliates) more than 5% of the aggregate principal amount of the First Mortgage Bonds of the 5.01% Series then outstanding, (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form, and (d) any Related Fund of any holder of any First Mortgage Bond of the 5.01% Series.

 

“Related Fund” means, with respect to any holder of any First Mortgage Bond of the 5.01% Series, any fund or entity that (i) invests in Securities or bank loans, and (ii) is advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment advisor.

 

 “Securities” or “Security” shall have the meaning specified in Section 2(1) of the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

 

“Senior Financial Officer” means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company.

 

Section 2.This Supplemental Indenture may be simultaneously executed in any number of counterparts, each of which when so executed shall be deemed to be an original; but such counterparts shall together constitute but one and the same instrument.

 

 

  

6720279V6                                 13

  

 

IN WITNESS WHEREOF, said NorthWestern Corporation has caused this Indenture to be executed on its behalf by an Authorized Executive Officer as defined in the Indenture, and its corporate seal to be hereto affixed and said seal and this Indenture to be attested by an Authorized Executive Officer as defined in the Indenture; and The Bank of New York Mellon, in evidence of its acceptance of the trust hereby created, has caused this Indenture to be executed on its behalf by one of its Vice Presidents and its corporate seal to be hereto affixed and said seal and this Indenture to be attested by one of its Vice Presidents; all as of the ____ day of _________, 2010.

                 NORTHWESTERN CORPORATION

                 By_____________________________

                       Its Vice President, Treasurer and 

                       Chief Financial Officer

CORPORATE SEAL

ATTEST:

___________________________________

                 THE BANK OF NEW YORK MELLON

                 By_____________________________

                       Its Vice President

CORPORATE SEAL

ATTEST:

___________________________________

Vice President

 

  

6720279V6                                 14

  

 

STATE OF SOUTH DAKOTA )

)SS

COUNTY OF ___________)

BE IT REMEMBERED, that on this ___ day of __________, 2010, before me, ______________________, a Notary Public within and for the County and State aforesaid, personally came Brian Bird, the Vice President, Treasurer and Chief Financial Officer of NorthWestern Corporation, a Delaware corporation, who is personally known to me to be such officer, and who is personally known to me to be the same person who executed as such officer the within instrument of writing, and such person duly acknowledged that he signed, sealed and delivered the said instrument as his free and voluntary act as such Vice President, Treasurer and Chief Financial Officer, and as the free and voluntary act of NorthWestern Corporation for the uses and purposes therein set forth.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal on the day and year last above written.

(NOTARIAL SEAL)               ______________________________

        Notary Public

STATE OF NEW YORK )

)SS

COUNTY OF ___________)

BE IT REMEMBERED, that on this ___ day of ____________, 2010, before me, ______________________, a Notary Public within and for the County and State aforesaid, personally came _____________________, the _______________ of The Bank of New York Mellon, who is personally known to me to be such officer, and who is personally known to me to be the same person who executed as such officer the within instrument of writing, and such person duly acknowledged that he signed, sealed and delivered the said instrument as his free and voluntary act as such ______________________, and as the free and voluntary act of The Bank of New York Mellon for the uses and purposes therein set forth.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal on the day and year last above written.

(NOTARIAL SEAL)               ______________________________

        Notary Public

 

  

6720279V6                                 15

  

 

APPENDIX A

 

ASSIGNMENT CERTIFICATE

 

In connection with the undersigned’s assignment and transfer to the assignee identified below of that certain First Mortgage Bond of the 5.01% Series issued by the Company to the undersigned dated ________________:

 

Assignee’s social security or tax I.D. number: ___________________________

Assignee’s name: _____________________________

Assignee’s address and zip code: ___________________________

___________________________

___________________________

 

the undersigned hereby certifies that such First Mortgage Bond of the 5.01% Series is being transferred as specified below:

 

CHECK ONE

 

(1) ☐           to the Company or a Subsidiary thereof;

 

(2) ☐           pursuant to an effective registration statement under the Securities Act of 1933; or

 

(3) ☐           pursuant to an exemption from the registration requirements of the Securities Act of 1933.

 

Unless one of items (1) through (3) above is checked, the Trustee or Bond Registrar will refuse to register the above-referenced First Mortgage Bond of the 5.01% Series in the name of any person other than the registered Holder thereof; provided, however, that if item (3) is checked, the Company may reasonably require, prior to the registration of any such transfer of the First Mortgage Bond of the 5.01% Series, additional information to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.

 

If none of the foregoing items are checked, the Trustee or Bond Registrar shall not be obligated to register the First Mortgage Bond of the 5.01% Series in the name of any person other than the Holder thereof unless and until the conditions to any such transfer of registration set forth therein and in the Ninth Supplemental Indenture shall have been satisfied.

 

Signed:  ___________________________________

Name of Holder:____________________________

Name of Signatory:__________________________

Title of Signatory:___________________________

Dated:___________________

 

 

 

  

6720279V6                                 16

  

APPENDIX B

The following properties, located in the following counties of the State of South Dakota, are subject to the Lien of the Indenture pursuant to Granting Clause Second of the Original Indenture:

Douglas County

The West Twenty-three and Sixty-four Hundredths feet (23.64’) of Lot Fifteen (15), all of Lot Sixteen (16) and Lot Seventeen (17) in Block Twenty-five (25) of the Original Town, now City of Armour, Douglas County, South Dakota, according to the record plat thereof.  Subject to all Easements, Covenants and Restrictions of record.

Hyde County

HIGHMORE – EAST SUBSTATION ADDITION, a part of the Northeast Quarter (NE1/4) and the Southeast Quarter (SE1/4) of Section Twelve (S12), Township One Hundred Twelve North (T.112 N.), Range Seventy-two West (R.72 W.) of the Fifth (5th) Principal Meridian, City of Highmore, Hyde County, South Dakota, containing 1.46 acres more or less gross and 1.27 acres more or less net.

Hand County

NWE Lot 1, located in the Northwest Quarter (NW1/4) of the Northwest Quarter (NW1/4) of Section Twenty (S20), Township One Hundred Twelve North (T.112 N.), Range Sixty-nine West (R.69 W.) of the Fifth (5th) Principal Meridian, Hand County, South Dakota.  Containing 1.679 acres more or less.

Brookings County

All of Block Four “A” (4A) of Hyland Addition in the City of Brookings, a replat of Blocks Two (2), Three (3) and Four (4), Hyland Addition in the City of Brookings, Brookings County, South Dakota.

Brown County

Lot One (1) of NorthWestern Energy Addition to the City of Aberdeen, a part of the Southeast Quarter (SE1/4) of Section Seventeen (S17), Township One Hundred Twenty-three North (T.123 N.), Range Sixty-three West (R.63 W.) of the Fifth (5th) Principal Meridian, Brown County, South Dakota, containing 4.99 acres more or less.

 

 

  

6720279V6                                 17ex10-3_2005directorscomp.htm

NORTHWESTERN CORPORATION

 

2005 DEFERRED COMPENSATION PLAN

 

FOR NON-EMPLOYEE DIRECTORS

_______________________________

 

Effective February 1, 2005

_______________________________

 

As Amended December 15, 2005

_______________________________

 

As Amended October 31, 2007

_______________________________

 

As Amended April 21, 2010

_______________________________

Approved by the Board of Directors

April 21, 2010

  

  

  

 

TABLE OF CONTENTS

 

	  	  	
Page

	  
	
ARTICLE 1

	
DEFINITIONS

	
1

	  
	
ARTICLE 2

	
Eligibility

	
4

	  
	
2.1     

	
Requirements for Participation

	
4

	  
	
2.2     

	
Enrollment Procedure

	
4

	  
	
ARTICLE 3

	
Participants’ Deferrals

	
4

	  
	
3.1     

	
Deferral of Qualified Compensation

	
4

	  
	
3.2     

	
Irrevocability of Deferral Elections

	
5

	  
	
ARTICLE 4

	
Deferred COMPENSATION ACCOUNTS

	
5

	  
	
4.1     

	
Deferred Compensation Accounts

	
5

	  
	
4.2     

	
Account Elections

	
5

	  
	
4.3     

	
Crediting of Deferred Compensation

	
5

	  
	
4.4     

	
Crediting of Earnings

	
6

	  
	
4.5     

	
Applicability of Account Values

	
6

	  
	
4.6     

	
Vesting of Deferred Compensation Accounts

	
6

	  
	
4.7     

	
Assignments, Etc. Prohibited

	
6

	  
	
ARTICLE 5

	
Distribution Of Accounts

	
6

	  
	
5.1     

	
Distributions upon a Participant’s Separation from Service

	
6

	  
	
5.2     

	
Distributions upon a Participant’s Death

	
7

	  
	
5.3     

	
Election of Manner and Time of Distribution

	
7

	  
	
5.4     

	
Applicable Taxes

	
7

	  
	
5.5     

	
Nature and Sources of Benefit Payments

	
8

	  
	
ARTICLE 6

	
Withdrawals From Accounts

	
8

	  
	
6.1     

	
Hardship Distributions from Accounts

	
8

	  
	
6.2     

	
Payment of Withdrawals

	
8

	  
	
6.3     

	
Effect of Withdrawals

	
9

	  
	
6.4     

	
Applicable Taxes

	
9

	  
	
ARTICLE 7

	
Administrative Provisions

	
9

	  
	
7.1     

	
Administrator’s Duties and Powers

	
9

	  
	
7.2     

	
Limitations Upon Powers

	
9

	  
	
7.3     

	
Final Effect of Administrator Action

	
9

	  
	
7.4     

	
Delegation by Administrator

	
10

	  

  

  

  

	
7.5     

	
Indemnification by the Company; Liability Insurance

	
10

	  
	
7.6     

	
Recordkeeping

	
10

	  
	
7.7     

	
Statement to Participants

	
10

	  
	
7.8     

	
Inspection of Records

	
11

	  
	
7.9     

	
Identification of Fiduciaries

	
11

	  
	
7.10     

	
Procedure for Allocation of Fiduciary Responsibilities

	
11

	  
	
7.11     

	
Claims Procedure

	
11

	  
	
7.12     

	
Conflicting Claims

	
13

	  
	
7.13     

	
Service of Process

	
13

	  
	
7.14     

	
Fees

	
13

	  
	
ARTICLE 8

	
Miscellaneous Provisions

	
13

	  
	
8.1     

	
Termination of the Plan

	
13

	  
	
8.2     

	
Limitation on Rights of Participants

	
13

	  
	
8.3     

	
Consolidation or Merger; Adoption of Plan by Other Companies

	
14

	  
	
8.4     

	
Errors and Misstatements

	
14

	  
	
8.5     

	
Payment on Behalf of Minor, Etc

	
14

	  
	
8.6     

	
Amendment of Plan

	
14

	  
	
8.7     

	
Governing Law

	
14

	  
	
8.8     

	
Pronouns and Plurality

	
15

	  
	
8.9     

	
Titles

	
15

	  
	
8.10     

	
References

	
15

	  

 

Exhibit A

 

Exhibit B

 

Exhibit C

 

  

  

  

 

NORTHWESTERN CORPORATION

2005 DEFERRED COMPENSATION PLAN

FOR NON-EMPLOYEE DIRECTORS

 

Amended and Restated

 

As of April 21, 2010

 

 

PREAMBLE

 

NorthWestern Corporation (the “Company”), a Delaware corporation, by resolution of its Board of Directors dated January 26, 2005, had previously adopted this NorthWestern Corporation 2005 Deferred Compensation Plan for Non-Employee Directors (the “Plan”), effective as of February 1, 2005, for the benefit of non-employee members of its Board of Directors. This amends and restates the Plan effective April 21, 2010.

 

The Plan is a nonqualified deferred compensation plan which is unfunded and is maintained primarily for the purpose of providing deferred compensation for non-employee directors of the Company.

 

ARTICLE 1

Definitions

Whenever the following terms are used in the Plan with the first letter capitalized, they shall have the meaning specified below unless the context clearly indicates to the contrary.

 

1.1 “Account” of a Participant shall mean the Participant’s individual deferred compensation account established for his or her benefit pursuant to Section 4.1 hereof that is credited with amounts equal to (a) the portion of the Participant's Qualified Compensation that he or she elects to defer pursuant to Section 3.1, and (b) earnings and losses pursuant to Section 4.5.

 

1.2 “Administrator” shall mean NorthWestern Corporation, acting through the Board and any committee that the Board has appointed to act at its pleasure to administer the Plan.  If the Board or a committee of the Board appoints any Delegate under Section 7.4 hereof, the term “Administrator” shall mean the Delegate as to those duties, powers and responsibilities specifically conferred upon the Delegate.  Notwithstanding any delegation of authority, the Board shall, with respect to any matter arising under this Plan, have the authority to act in lieu of the Administrator, any Delegate, any sub-committee, or any other person.

 

1.3 “Board” shall mean the Board of Directors of NorthWestern Corporation.  The Board may delegate any power or duty otherwise allocated to the Administrator to any other person or persons, including a sub-committee or sub-committees, appointed under Section 7.4 hereof.

 

1.4  “Change in Control” means, for purposes of the interpretation of this Plan in conformance with section 409A of the Code and the applicable guidance issued by the Department of the Treasury with respect to the application of section 409A, with respect to a Plan Participant, a Change in Control event must relate to:  (i) the corporation for which the Participant is performing services at the time of the Change in Control event, (ii) the corporation that is liable for the payment of the deferred compensation (or all corporations liable for the payment if more than one corporation is liable), or (iii) a corporation that is a majority shareholder of a corporation identified in part (i) or part (ii) above, or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in part (i) or part (ii) above. For purposes of this provision, a majority shareholder is a shareholder owning more than fifty percent (50%) of the total fair market value and total voting power of such corporation. Also, for purposes of this provision, section 318(a) of the Code applies to determine stock ownership. Additionally, for purposes of this provision and in conformance with section 409A and the applicable guidance issued by the Department of the Treasury with respect to the application of section 409A, a change in the ownership of a corporation or a change in the effective control of a corporation is determined in accordance with the provisions described below in this definition.

 

 

  

  

  

 

	
i.  

	
A change in the ownership of a corporation shall occur on the date that any one person, or more than one person acting as a group, in one transaction or a series of transactions, directly or indirectly, acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the corporation. However, if any one person or more than one person acting as a group, is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the corporation, the acquisition of additional stock by the same person or persons shall not be considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction, in one transaction or a series of transactions, directly or indirectly, in which the corporation acquires its stock in exchange for property shall be treated as an acquisition of stock for purposes of this provision.

 

	
ii.  

	
For purposes of paragraph (i) above, persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

 

	
iii.  

	
A change in the effective control of a corporation shall occur on the date that either:

 

	
a.  

	
any one person, or more than one person acting as a group, in one transaction or a series of transactions, directly or indirectly, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing thirty-five percent (35%) or more of the total voting power of the stock of the corporation; or

 

 

  

2

  

 

	
b.  

	
a majority of members of the board of directors of the corporation is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the board of directors of the corporation prior to the date of the appointment or election, provided that for purposes of this subparagraph (B) the term “corporation” shall be determined in accordance with the requirements of section 409A of the Code and the applicable guidance issued by the Department of the Treasury with respect to the application of section 409A of the Code.

 

	
iv.  

	
A change in the ownership of a substantial portion of the assets of a corporation shall occur on the date that any one person, or more than one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

The provisions of this section 1.4 regarding the definition of the term “Change in Control,” shall be determined and administered in accordance with Code Section 409A and the applicable guidance issued by the Department of the Treasury with respect to the application of section 409A.”

 

1.5 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with regulations there under.

 

1.6 “Company” shall mean NorthWestern Corporation and all of its affiliates, and any entity which is a successor in interest to the Company.

 

1.7 “Deferred Share Units” shall have the meaning set forth in Section 9 of the Company’s 2005 Long-Term Incentive Plan (the “LTIP”),.

 

1.8 “Delegate” shall mean each Delegate appointed in accordance with Section 7.4.

 

1.9 “Disability” means, with respect to a Participant, the Participant is:  (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; (ii) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company; or (iii) determined to be totally disabled by the Social Security Administration.

 

1.10 “Eligible Person” shall mean all non-employee members of the Board.

 

1.11 “Enrollment Documents” shall mean the Deferral Election Form, the Investment Election Form, and the Distribution Election Form substantially in the form attached hereto as Exhibits A, B, and C, respectively.  The Administrator shall have the discretion to change the terms and conditions of any Enrollment Document at any time prior to the date on which it becomes a legally binding agreement pursuant to the terms of Section 3.1 below.  The use of Enrollment Documents may be administered electronically.

 

 

  

3

  

 

1.12  “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

1.13 “Hardship” means an unforeseeable emergency resulting in financial hardship of the Participant or beneficiary due to an illness or accident of the Participant or beneficiary, a spouse of the Participant or beneficiary or of a dependent (as defined in Code Section 152(a)) of a Participant or beneficiary; loss of the Participant’s or the beneficiary’s property due to casualty, or other similar or extraordinary and unforeseeable circumstances arising  as a result of events beyond the control of the Participant or beneficiary. Whether a Participant or beneficiary is faced with an unforeseeable emergency permitting a distribution under the Plan shall be determined based upon the relevant facts and circumstances of each case, but in any case, its distribution shall not be allowed to the extent that such hardship is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant’s assets to the extent liquidation of such assets would not cause a severe financial hardship or be cessation of deferrals under the Plan.  The amount of a distribution on account of a hardship shall be limited to the amount reasonably necessary to satisfy the emergency need plus amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution.

 

1.14  “Investment Fund” shall mean any of the investment funds that the Administrator so designates as available investment vehicles for measuring the return on Accounts under the Plan.

 

1.15 “Participant” shall mean each Eligible Person who elects to participate in the Plan as provided in Article 2 and who defers Qualified Compensation pursuant to Article 3 of the Plan.  Each of such persons shall continue to be a “Participant” until they have received all benefits due under the Plan.

 

1.16 “Plan” shall mean the NorthWestern Corporation 2005 Deferred Compensation Plan for Non-Employee Directors.

 

1.17 “Plan Year” shall mean the 12-month period beginning on January 1st and ending on December 31st.

 

1.18 “Qualified Compensation” shall mean any compensation which may be payable to a Participant that may be designated on an Deferral Election Form.

 

1.19 “Separation from Service” shall mean a Participant’s termination of service as a member of the Board of the Company for any reason, including the Participant’s involuntary termination, resignation, death, Disability, or retirement.

 

1.20 “Trust” shall mean the trust established by the NorthWestern Corporation Grantor Trust Agreement.

 

1.21 “Trustee” shall mean the trustee of the Trust, and shall refer to the successor of any trustee who resigns or is removed in accordance with the terms of the Trust.

 

 

  

4

  

 

ARTICLE 2

Eligibility

 

2.1 Requirements for Participation.  Any Eligible Person who executes the Enrollment Documents shall become a Participant on the date on which the Administrator receives and accepts such documents.

 

2.2 Enrollment Procedure.  The Company will be deemed to have accepted an Eligible Person’s Enrollment Documents as of the date of their delivery to the Administrator, unless the Administrator sends the Eligible Person a written notice of rejection within ten (10) business days after receiving the Enrollment Documents.

 

ARTICLE 3

Participant Deferrals

 

3.1 Deferral of Qualified Compensation.  To the extent allowed by the Administrator, each Eligible Person may elect to defer into his or her Account up to 100% of any Qualified Compensation that would otherwise be payable to him or her for any Plan Year, subject to any conditions or limitations that the Administrator may implement for a Plan Year through a written notice delivered to Eligible Persons at least thirty (30) days before the Plan Year begins.

 

 An Eligible Person shall make any election pursuant to this Section 3.1 by completing and delivering his or her Enrollment Documents to the Administrator no later than the December 20th preceding the Plan Year to which they relate.  Notwithstanding the foregoing, with respect to the initial Plan Year for this Plan or in the case of the first year in which an Eligible Person becomes eligible to participate in the Plan (as defined in section 1.409A-1(c) of the Final  Regulations or the corresponding provision in subsequent guidance issued by the Department of the Treasury to include any other plan that would be considered together with this Plan as the same plan),  the Eligible Person may make an initial deferral election within thirty (30) days after the date the Eligible Person becomes eligible to participate in the Plan, with respect to Qualified Compensation with respect to services to be performed by the Eligible Person subsequent to the election.

 

3.2 Irrevocability  of Deferral Elections.   A Participant’s election to defer Qualified Compensation for a Plan Year is irrevocable as of  the last day of the calendar year preceding the calendar year in which the services related to the Qualified Compensation are to be performed.  An election to revoke or modify an existing deferral election will be effective as of the first day of the next succeeding Plan Year.

 

ARTICLE 4

Deferred Compensation Accounts

 

4.1 Deferred Compensation Accounts.  The Administrator shall establish and maintain for each Participant an Account to which shall be credited pursuant to Section 4.3 hereof, and from which shall be debited the Participant’s distributions and withdrawals under Articles 5 and 6.  Such Account may be a simple account payable in the Company’s financial records.

 

  

5

  

4.2 Account Elections.

 

(a)           At the time of making the deferral elections described in Section 3.1, the Administrator may in its discretion permit one or more Participants to designate whether such deferral shall be irrevocably credited to his or her Account in cash or DSUs, or some combination of the two.  Notwithstanding the foregoing, to the extent a Participant defers Qualified Compensation that would otherwise be paid in shares of the Company’s common stock, those shares (and any earnings thereon) shall be credited to the Participant’s Account and shall be used to settle that portion of the Participant’s Account.

 

(b)           With respect to deferrals credited in cash to a Participant’s Account, the Participant must designate, on the Investment Election form provided by the Administrator as part of the Enrollment Documents, the Investment Funds in which the Participant's Account will be deemed to be invested for purposes of determining the amount of earnings to be credited to his or her Account.  In making the designation pursuant to this Section 4.2(b), the Participant may specify that all or any fraction of his or her Account be deemed to be invested, in whole percentage increments, in one or more of the Investment Funds provided under the Plan as communicated from time to time by the Administrator.  A Participant may from time to time change the designation made under this Section 4.2(b) by filing a superseding investment election form.

 

4.3 Crediting of Deferred Compensation.  As of the first day of each calendar month that begins after the Plan takes effect, each Participant’s Account shall be credited with an amount that is equal to the amount of the Participant’s Qualified Compensation which such Participant has elected to defer under Article 3 and which would otherwise have been paid in cash to the Participant during the preceding month.

 

4.4 Crediting of Earnings.  With respect to each Participant’s Account, beginning with the first day of the month after the Plan takes effect, earnings, if any, shall be credited at a rate equal to the earnings experience of the Investment Fund(s) selected by the Participant on his or her Investment Election Form for that percentage of the Participant’s Accounts that are invested in each selected Investment Fund.  Earnings shall be credited on such valuation dates as the Administrator shall determine, but not less frequently than once per calendar year.

 

4.5 Applicability of Account Values.  The value of each Participant’s Account as determined as of a given date under this Article, plus any amounts subsequently allocated thereto under this Article, and less any amounts distributed or withdrawn under Articles 5 or 6 shall remain the value thereof for all purposes of the Plan until the Account is revalued hereunder.

 

4.6 Vesting of Deferred Compensation Accounts.  Each Participant’s interest in his or her Account shall be 100% vested and non-forfeitable at all times.

 

4.7 Assignments, Etc. Prohibited.  No part of any Participant’s Account shall be liable to anyone other than the Company for the debts, contracts or engagements of the Participant, or the Participant’s beneficiaries or successors in interest, or be taken in execution by levy, attachment or garnishment or by any other legal or equitable proceeding, nor shall any such person have any rights to alienate, anticipate, commute, pledge, encumber or assign any benefits or payments hereunder in any manner whatsoever except to designate a beneficiary as provided in Section 5.3.

 

 

  

6

  

 

ARTICLE 5

Distribution of Accounts

 

5.1           Distributions upon a Participant’s Separation from Service.  The Account of a Participant who incurs a Separation from Service other than on account of death shall be paid to the Participant as elected in accordance with Section 5.3. The Participant may choose to receive, upon Separation of Service, a lump sum payment or payments in approximately equal annual installments (not to exceed ten (10) years) and may choose to have payments begin within thirty (30) days following the date of the Participant’s Separation from Service, or a 1-10 year delay following the date of the Participant’s Separation from Service.  A Participant also may optionally choose to receive an in-service withdrawal in a lump sum payment or payments in approximately equal annual installments (not to exceed ten (10) years) on a specified month and year.  If both distribution options are chosen, the distribution will process on the earlier of Separation from Service or the in-service date elected. Absent a clear distribution election, the default form of distribution will be a lump sum payment made within thirty (30) days following the date of the Participant’s Separation from Service. Effective for deferral elections made for Plan Years beginning on or after January 1, 2011, upon a Change in Control of the Company, payment of a Participant’s entire Account will occur within thirty (30) days following the date of the Participant’s Separation from Service. Notwithstanding any provision of the Plan to the contrary, no payment subject to Code Section 409A payable on account of a Separation from Service shall be made to a Participant who is a specified employee (within the meaning of Code Section 409A and the applicable guidance issued by the Department of the Treasury with respect to the application of Section 409A) as of the date of such Participant’s Separation from Service, within the six-month period following such Participant’s Separation from Service.  Amounts to which such Participant would otherwise be entitled under the Plan during the first six months following the Separation from Service will be accumulated and paid on the first day of the seventh month following the Participant’s Separation from Service.

 

A Participant may elect a distribution pursuant to this Section 5.1 in such other forms, or payable upon such other commencement dates, as are specified by the Administrator in the Enrollment Documents; provided, however, that no such election shall provide for payments to begin more than ten (10) years after such Participant’s Separation from Service.

 

5.2 Distributions upon a Participant’s Death. Notwithstanding anything to the contrary in the Plan, the remaining balance of the Account of a Participant who dies (i) shall be paid to the persons and entities designated by the Participant as his or her beneficiaries for such purpose and (ii) shall be paid in the manner set forth in this Section 5.2.  Upon a Participant’s death, such balance shall be paid as specified by the Participant in an election made pursuant to Section 5.3.  Such election shall specify whether payment shall be made –

 

(a)           in a lump-sum distribution within thirty (30) days following the Participant’s death, which shall be the default form of distribution absent a clear election; or

 

(b)           for deferral elections made for Plan Years beginning on or after January 1, 2011, in approximately equal annual installments (not to exceed ten (10) years) to begin within thirty (30) days following the Participant’s death; or

 

(c)           for deferral elections made for Plan Years beginning prior to January 1, 2011, in accordance with the terms of the Plan in place at the time of such election..

 

 

  

7

  

 

If the Participant fails to make a beneficiary election pursuant to Section 5.3, his or her spouse shall be deemed to be the beneficiary of his or her Account, provided that if the Participant does not have a spouse at the time of his or her death, the Participant’s estate shall be deemed to be the beneficiary of his or her Account.

 

5.3           Election of Manner and Time of Distribution.  At the time a Participant elects to defer Qualified Compensation under Article 3, he or she shall make distribution elections on the Enrollment Documents and deliver such forms to the Administrator.  Such elections shall apply to the portion of the Participant’s Account that is attributable to Qualified Compensation deferred under the applicable Enrollment Documents while such Enrollment Documents are in effect.  A Participant may change such elections through one or more subsequent elections that in each case (i) do not take effect until at least twelve (12) months after the date on which such election is made, (ii) are delivered to the Administrator at least one (1) year before the date on which distributions are otherwise scheduled to commence pursuant to the Participant’s election from the choices set forth in Section 5.1(b)(2) through 5.1(b)(5) hereof, and (iii) defer the commencement of distributions by at least five (5) years from the originally scheduled commencement date (except for distributions that commence because of the Participant’s death, Disability, or Hardship).  The right to a series of installment payments upon the distribution of an amount deferred pursuant to the Plan shall be treated as a right to a series of separate payments.

 

5.4           Applicable Taxes.  All distributions under the Plan shall be subject to withholding for all amounts that the Company is required to withhold under federal, state or local tax law.

 

5.5           Nature and Sources of Benefit Payments.

 

(a)           The Company shall make distributions of Accounts in cash, except to the extent a Participant has elected pursuant to Sections 3.1 and 4.2 above either (i) to defer compensation into Deferred Share Units (as defined in the Company’s 2005 Long-Term Incentive Plan (the “LTIP”) that shall be issued pursuant to the LTIP, in which event that distribution shall occur in shares of the Company’s common stock, or (ii) to defer Qualified Compensation that would otherwise be paid in shares of the Company’s common stock.

 

(b)           The Company may at any time create a Trust with a Trustee.  If the Company creates a Trust, the Company shall cause the Trust to be funded as soon as practicable after the end of each calendar month.  The Company shall contribute to the Trust liquid assets, net of any distributions paid pursuant to Article 6, (1) an amount of cash equal to the amount deferred and elected to be credited in cash by each Participant; and (2) an amount of shares of the Company’s common stock equal to the amount deferred and elected to be credited in DSUs by each Participant.  Notwithstanding the creation of a Trust, Participants shall at all times have the status of general unsecured creditors with respect to their rights under the Plan.

 

(c)           Notwithstanding the foregoing, as soon as practicable following a Change in Control, the Company shall create a Trust with the Trustee.  The Company shall contribute liquid assets to the Trust in an amount equal to the sum of (i) the aggregate Account balances of all Participants at the time the Change in Control occurred, and (ii) the reasonable costs expected to be necessary in order for the Trust proceeds to pay for the Trust’s administration until its final termination.

 

 

  

8

  

 

(c)           Although the principal of the Trust and any earnings thereon shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of Participants and beneficiaries as set forth therein, neither the Participants nor their beneficiaries shall have any preferred claim on, or any beneficial ownership in, any assets of the Trust prior to the time such assets are paid to the Participants or beneficiaries as benefits and all rights created under this Plan shall be unsecured contractual rights of Participants and beneficiaries against the Company.  Any assets held in the Trust will be subject to the claims of Company's general creditors under federal and state law in the event of insolvency as defined in the Trust.

 

ARTICLE 6

Withdrawals From Accounts

 

6.1 Hardship Distributions from Accounts.  In the event a Participant suffers a Hardship, the Participant may apply to the Administrator for an immediate distribution of all or a portion of the Participant’s Account.  The amount of any distribution hereunder shall be limited to the amount necessary to relieve the Participant’s Hardship, plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which the Hardship is or may be relieved through reimbursement or compensation by insurance or otherwise, by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship), or by cessation of the Participant’s deferrals under the Plan.  The Administrator will require evidence of the purpose and amount of the need and may establish such application forms or other procedures deemed appropriate.  Notwithstanding the foregoing, a financial need shall not constitute a Hardship unless it is for at least $175,000 for the Chairman of the Board or $100,000 for all other Participants (or the entire vested principal amount of the Participant’s Accounts, if less).

 

6.2 Payment of Withdrawals.  All withdrawals under this Article 6 shall be paid within thirty (30) days after a valid election to withdraw is delivered to the Administrator.  The Administrator shall give prompt notice to the Participant if an election is invalid and is therefore rejected, identifying the reason(s) for the invalidity.  If the Administrator has not paid but has not affirmatively rejected an election within the thirty (30) day deadline, then the election shall be deemed rejected on the thirtieth (30th) day.  If a withdrawal election is rejected, the Participant may bring a claim for benefits under Section 7.11.

 

6.3 Effect of Withdrawals.  If a Participant receives a withdrawal under this Article 6 after payments have commenced under Section 5.1, the remaining payments shall be recalculated, by reamortizing the remaining payments over the remaining term and applying the method used to credit earnings under Section 4.3.

 

6.4 Applicable Taxes.  All withdrawals under the Plan shall be subject to withholding for all amounts which the Company is required to withhold under federal, state or local tax law.

 

ARTICLE 7

Administrative Provisions

 

7.1 Administrator’s Duties and Powers.  The Administrator shall conduct the general administration of the Plan in accordance with the Plan and shall have all the necessary power, authority and discretion to carry out that function. Among its necessary powers and duties are the following:

 

 

  

9

  

 

(a)           To delegate all or part of its function as Administrator to others and to revoke any such delegation.

 

(b)           To determine questions of eligibility of Participants and their entitlement to benefits, subject to the provisions of Section 7.11.

 

(c)           To select and engage attorneys, accountants, actuaries, trustees, appraisers, brokers, consultants, administrators, physicians, or other persons to render service or advice with regard to any responsibility the Administrator or the Board has under the Plan, or otherwise, to designate such persons to carry out fiduciary responsibilities under the Plan, and (together with the Administrator, the Company, the Board and the officers and Employees of the Company) to rely upon the advice, opinions or valuations of any such persons, to the extent permitted by law, being fully protected in acting or relying thereon in good faith.

 

(d)            To interpret the Plan and any relevant facts for purposes of the administration and application of the Plan in a manner not inconsistent with the Plan or applicable law including, but not limited to, Code Section 409A and the Regulations thereunder.

 

(e)           To conduct claims procedures as provided in Section 7.11.

 

7.2 Limitations Upon Powers.  The Plan shall be uniformly and consistently administered, interpreted and applied with regard to all Participants in similar circumstances.  The Plan shall be administered, interpreted and applied fairly and equitably and in accordance with the specified purposes of the Plan.  Notwithstanding the foregoing, the distribution forms and commencement dates specified in Section 5.1 shall apply to such Participants, and in such manner, as the Administrator determines in its sole discretion.

 

7.3 Final Effect of Administrator Action.  Except as provided in Section 7.11, all actions taken and all determinations made by the Administrator shall, unless arbitrary and capricious, be final and binding upon all Participants, the Company, and any person interested in the Plan.

 

7.4 Delegation by Administrator.

 

(a)           The Administrator may, but need not, appoint a Delegate which may be a single individual or a sub-committee or sub-committees consisting of two or more members, to hold office during the pleasure of the Administrator. The Delegate shall have such powers and duties as are delegated to it by the Administrator. The Delegate and/or sub-committee members shall not receive payment for their services as such.

 

(b)           Appointment of the Delegate and/or sub-committee members shall be effective upon the filing of written acceptance of appointment with the Administrator.

 

(c)           The Delegate and/or sub-committee member may resign at any time by delivering written notice to the Administrator.

 

(d)           Vacancies in the Delegate and/or sub-committee shall be filled by the Administrator.

 

 

  

10

  

 

(e)           If there is a sub-committee, the sub-committee shall act by a majority of its members in office; provided, however, that the sub-committee may appoint one of its members or a delegate to act on behalf of the sub-committee on matters arising in the ordinary course of administration of the Plan or on specific matters.

 

7.5 Indemnification by the Company; Liability Insurance.  The Company shall pay or reimburse any of the Company’s officers, directors, Administrator, sub-committee members, Delegates, or Employees who are fiduciaries with respect to the Plan for all expenses incurred by such persons with respect to, and shall indemnify and hold them harmless from, all claims, liability and costs (including reasonable attorneys’ fees) arising out of the performance of their duties under the Plan, provided that such persons do not act negligently in the performance of such duties. The Company may obtain and provide for any such person, at the Company’s expense, liability insurance against liabilities imposed on such person by law.

 

7.6 Recordkeeping

 

(a)           The Administrator shall maintain suitable records of each Participant’s Account which, among other things, shall show separately deferrals and the earnings and/or dividends credited thereon, as well as distributions and withdrawals therefrom and records of its deliberations and decisions.

 

(b)           The Administrator shall appoint a secretary, and at its discretion, an assistant secretary, to keep the record of proceedings, to transmit its decisions, instructions, consents or directions to any interested party, to execute and file, on behalf of the Administrator, such documents, reports or other matters as may be necessary or appropriate in the discretion of the Administrator and to perform ministerial acts.

 

(c)           The Administrator shall not be required to maintain any records or accounts which duplicate any records or accounts maintained by the Company.

 

7.7 Statement to Participants.  By March 15 of each year, the Administrator shall furnish to each Participant a statement setting forth the value of the Participant’s Account as of the preceding December 31 and such other information as the Administrator shall deem advisable to furnish.

 

7.8 Inspection of Records.  Copies of the Plan and records of a Participant’s Account shall be open to inspection by the Participant or the Participant’s duly authorized representative at the office of the Administrator at any reasonable business hour.

 

7.9 Identification of Fiduciaries.  The Administrator shall be the named fiduciary of the Plan and, as permitted or required by law, shall have exclusive authority and discretion to operate and administer the Plan.

 

7.10 Procedure for Allocation of Fiduciary Responsibilities.  Fiduciary responsibilities under the Plan are allocated as follows:

 

	
  

	
(i)

	
The sole duties, responsibilities and powers allocated to the Board, any Administrator and any fiduciary shall be those expressly provided in the relevant Sections of the Plan.

 

 

  

11

  

 

	
  

	
(ii)

	
All fiduciary duties, responsibilities, and powers not allocated to the Board, any Administrator or any fiduciary, are hereby allocated to the Administrator, subject to delegation.

Fiduciary duties, responsibilities and powers under the Plan may be reallocated among fiduciaries by amending the Plan in the manner prescribed in Section 8.6, followed by the fiduciaries’ acceptance of, or operation under, such amended Plan.

7.11 Claims Procedures

 

(a)           Any Participant or beneficiary has the right to make a written claim for benefits under the Plan. If such a written claim is made, and the Administrator wholly or partially denies the claim, the Administrator shall provide the claimant with written notice of such denial, setting forth, in a manner calculated to be understood by the claimant:

 

(i)           the specific reason or reasons for such denial;

(ii)           specific reference to pertinent Plan provisions on which the denial is based;

 

(iii)           a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and

 

(iv)           an explanation of the Plan’s claims review procedure and time limits applicable to those procedures.

(b)           The written notice of any claim denial pursuant to Section 7.11(a) shall be given not later than ninety (90) days after receipt of the claim by the Administrator, unless the Administrator determines that special circumstances require an extension of time for processing the claim, in which event:

 

(i)           written notice of the extension shall be given by the Administrator to the claimant prior to ninety (90) days after receipt of the claim;

(ii)           the extension shall not exceed a period of ninety (90) days from the end of the initial ninety (90) day period for giving notice of a claim denial; and

(iii)           the extension notice shall indicate (A) the special circumstances requiring an extension of time and (B) the date by which the Administrator expects to render the benefit determination.

(c)           The decision of the Administrator shall be final unless the claimant, within sixty (60) days after receipt of notice of the claims denial from the Administrator, submits a written request to the Board, or its delegate, for an appeal of the denial. During that sixty (60) day period, the claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits. The claimant shall be provided the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits as part of the claimant’s appeal. The claimant may act in these matters individually, or through his or her authorized representative.

 

 

  

12

  

 

(d)           After receiving the written appeal, if the Board, or its delegate, shall issue a written decision notifying the claimant of its decision on review, not later than sixty (60) days after receipt of the written appeal, unless the Board or its delegate determines that special circumstances require an extension of time for reviewing the appeal, in which event:

 

(i)           written notice of the extension shall be given by the Board or its delegate prior to sixty (60) days after receipt of the written appeal;

(ii)           the extension shall not exceed a period of sixty (60) days from the end of the initial sixty (60) day review period; and

(iii)           the extension notice shall indicate (A) the special circumstances requiring an extension of time and (B) the date by which the Board or its delegate expects to render the appeal decision.

The period of time within which a benefit determination on review is required to be made shall begin at the time an appeal is received by the Board or its delegate, without regard to whether all the information necessary to make a benefit determination on review accompanies the filing of the appeal. If the period of time for reviewing the appeal is extended as permitted above, due to a claimant’s failure to submit information necessary to decide the claim on appeal, then the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information.

(e)           In conducting the review on appeal, the Board or its delegate shall take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. If the Board or its delegate upholds the denial, the written notice of decision from the Board or its delegate shall set forth, in a manner calculated to be understood by the claimant:

 

(i)           the specific reason or reasons for the denial;

(ii)           specific reference to pertinent Plan provisions on which the denial is based; and

(iii)           a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits.

7.12 Conflicting Claims.  If the Administrator is confronted with conflicting claims concerning a Participant’s Account, the Administrator may interplead the claimants in an action at law, or in an arbitration conducted in accordance with the rules of the American Arbitration Association, as the Administrator shall elect in its sole discretion, and in either case, the attorneys’ fees, expenses and costs reasonably incurred by the Administrator in such proceeding shall be paid from the Participant’s Account.

 

7.13 Service of Process.  The Corporate Secretary of NorthWestern Corporation is hereby designated as agent of the Plan for the service of legal process.

 

 

  

13

  

 

7.14 Fees.  Any fees associated with ongoing plan administration shall be paid by the Company.

 

ARTICLE 8

Miscellaneous Provisions

 

8.1 Termination of the Plan

 

(a)           While the Plan is intended as a permanent program, the Board shall have the right at any time to declare the Plan terminated completely as to the Company or as to any group, division or other operational unit thereof or as to any affiliate thereof.

 

(b)           The Separation from Service of any Eligible Person without such a declaration shall not result in a termination of the Plan.

 

(c)           In the event of any termination, the Board, in its sole and absolute discretion may elect:

 

(i)           to maintain Participants’ Accounts, payment of which shall be made in accordance with Articles 5 and 6; or

(ii)           to the extent the Administrator determines that such action would not violate Section 409A of the Code, liquidate the portion of the Plan attributable to each Participant as to whom the Plan is terminated and distribute each such Participant’s Account in a lump sum or pursuant to any method which is at least as rapid as the distribution method elected by the Participant under Section 5.1.

8.2 Limitation on Rights of Participants.  The Plan is strictly a voluntary undertaking on the part of the Company and shall not constitute a contract between the Company and any Eligible Person.  Inclusion under the Plan will not give any Eligible Person any right or claim to any benefit hereunder except to the extent such right has specifically become fixed under the terms of the Plan.  The doctrine of substantial performance shall have no application to Eligible Persons, Participants or any other persons entitled to payments under the Plan.

 

8.3 Consolidation or Merger; Adoption of Plan by Other Companies.

 

           (a)           In the event of the consolidation or merger of the Company with or into any other entity, or the sale by the Company of substantially all of its assets, the resulting successor may continue the Plan by adopting it in a resolution of its Board of Directors.  If within ninety (90) days from the effective date of such consolidation, merger or sale of assets, such successor corporation does not adopt the Plan, the Plan shall be terminated in accordance with Section 8.1.

 

(b)           There shall be no merger or consolidation with, or transfer of the liabilities of the Plan to, any other plan unless each Participant in the Plan would have, if the combined or successor plans were terminated immediately after the merger, consolidation, or transfer, an account which is equal to or greater than his or her corresponding Account under the Plan had the Plan been terminated immediately before the merger, consolidation or transfer.

 

8.4 Errors and Misstatements.  In the event of any misstatement or omission of fact by a Participant to the Administrator or any clerical error resulting in payment of benefits in an incorrect amount, the Administrator shall promptly cause the amount of future payments to be corrected upon discovery of the facts and shall cause the Company to pay the Participant or any other person entitled to payment under the Plan any underpayment in cash or Company stock (whichever shall be applicable to the situation) in a lump sum, or to recoup any overpayment from future payments to the Participant or any other person entitled to payment under the Plan in such amounts as the Administrator shall direct, or to proceed against the Participant or any other person entitled to payment under the Plan for recovery of any such overpayment.

 

 

  

14

  

 

8.5 Payment on Behalf of Minor, Etc.  In the event any amount becomes payable under the Plan to a minor or a person who, in the sole judgment of the Administrator, is considered by reason of physical or mental condition to be unable to give a valid receipt therefor, the Administrator may direct that such payment be made to any person found by the Administrator in its sole judgment, to have assumed the care of such minor or other person.  Any payment made pursuant to such determination shall constitute a full release and discharge of the Company, the Board, the Administrator, the Administrator and their officers, directors and employees.

 

8.6 Amendment of Plan.  The Plan may be wholly or partially amended by the Board from time to time, in its sole and absolute discretion, including prospective amendments which apply to amounts held in a Participant’s Account as of the effective date of such amendment and including retroactive amendments necessary to conform the Plan to the provisions and requirements of the Code; provided, however, that no amendment shall decrease the amount of any Participant’s Account as of the effective date of such amendment.  Notwithstanding the foregoing, this Section 8.6 shall not be amended in any respect on or after a Change in Control and no amendment to this Plan shall reduce, limit or eliminate any rights of a Participant to withdrawals pursuant to Article 6 for deferrals for which elections under Section 3.1 occurred prior to the effective date of the amendment, without the Participant’s prior written consent, except for amendments necessary to conform to the provisions and requirements of the Code.

 

8.7 Governing Law.  All disputes relating to or arising from the Plan shall be governed by the terms of the Plan and to the extent applicable the internal substantive laws (and not the laws of conflicts of laws) of the State of Delaware, to the extent not preempted by United States federal law.  If any provision of this Plan is held by a court of competent jurisdiction to be invalid and unenforceable, the remaining provisions shall continue to be fully effective.

 

8.8 Pronouns and Plurality.  The masculine pronoun shall include the feminine pronoun, and the singular the plural where the context so indicates.

 

8.9 Titles.  Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.

 

8.10 References.  Unless the context clearly indicates to the contrary, a reference to a statute, regulation or document shall be construed as referring to any subsequently enacted, adopted or executed statute, regulation or document.

 

  

  

  

Exhibit A

NORTHWESTERN CORPORATION

2005 DEFERRED COMPENSATION PLAN

FOR NON-EMPLOYEE DIRECTORS

 

_____________________________

 

Deferral Election Form for ________ Plan Year

_____________________________

 

 

AGREEMENT, made this __ day of ________, ____, by and between me, as a participant in the NorthWestern Corporation 2005 Deferred Compensation Plan for Non-Employee Directors (the “Plan”), and NorthWestern Corporation (the "Company").

 

WHEREAS, the Company has established and maintains the Plan and the NorthWestern Corporation 2005 Long-Term Incentive Plan (the “LTIP”), and I am eligible to participate in the Plan and the LTIP on the terms and conditions set forth therein; and

 

WHEREAS, I understand that terms herein that begin with initial capital letters will have the defined meaning set forth in the Plan (unless the context clearly indicates a different meaning).

 

NOW THEREFORE, it is mutually agreed as follows:

 

1. By the execution hereof, I agree to participate in the Plan upon the terms and conditions set forth therein, and, in accordance therewith, make the elections set forth herein effective –

 

	
  

	
___

	
on the January 1st that follows the Administrator’s acceptance of my Enrollment Documents.

 

	
  

	
___

	
on the first day of the next calendar month, but only if this election occurs within the 30-day period after I first become eligible for Plan participation in this Plan or any other account balance plan of the Company.  (NOTE: applicable only to elections made with respect to the 2005 Plan Year or in subsequent Plan Years by newly elected directors).

 

2. For the duration of this election (as determined under paragraph 4 below), I hereby elect to defer the receipt of the following percentage(s) of Qualified Compensation that the Company will withhold and credit to my Deferral Account pursuant to the Plan:

 

	 	
____%

	
of my annual cash retainer (up to 100%).

 

	 	
____%

	
of my cash-based director fees (up to 100%).

 

	 	
____%

	
of my director compensation (up to 100%) otherwise payable in shares of the Company’s common stock.

 

 

  

  

  

NorthWestern Corporation

2005 Deferred Compensation Plan for Non-Employee Directors

Deferral Election Form

Page 2

 

3. I hereby elect to have any cash-based Qualified Compensation that I defer pursuant to paragraph 2 above credited to my Account for future distribution, in accordance with Section 5.5 of the Plan, in the form of –

 

	
  

	
___%

	
cash to be credited with earnings determined in accordance with Section 4.4 of the Plan as set forth on an Investment Election form.

 

	
  

	
___%

	
shares of common stock of the Company, which shall be credited, prior to their distribution, in the form of deferred share units (“DSUs”) granted under the LTIP.

 

Note that any DSUs or stock-based Qualified Compensation will be settled in common stock of the Company issued pursuant to the LTIP or other arrangement identified by the Administrator.

 

4. By the execution hereof, I further recognize and agree to participate in the Plan upon the terms and conditions set forth therein, including but not limited to the following terms:

 

	
  

	
(a)

	
This election is irrevocable with respect to any Qualified Compensation that is deferred during the term of this election.

 

	
  

	
(b)

	
I may change this election with respect to future Qualified Compensation effective on the next following January 1st by filing a superseding election using Enrollment Documents accepted by the Administrator.

 

	
  

	
(c)

	
Unless arbitrary and capricious, any decisions of the Administrator with respect to the operation, interpretation, or administration of the Plan or my Account will be final and binding on me and all other interested parties.

 

 

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the day and year first above-written.

 

	  	
PARTICIPANT

	  	  
	  	
_________________________________________

	  	  
	  	  
	  	  
	  	  
	  	  

  

  

  

Exhibit B

NORTHWESTERN CORPORATION

2005 DEFERRED COMPENSATION PLAN

FOR NON-EMPLOYEE DIRECTORS

_____________________________

 

Investment Election Form

 

(for Cash-based Deferrals Only)

_____________________________

 

WHEREAS, NorthWestern Corporation (the "Company") has established the NorthWestern Corporation 2005 Deferred Compensation Plan for Non-Employee Directors (the "Plan"), and I am eligible to make an investment election pursuant to Section 4.2(b) of the Plan.

 

NOW THEREFORE, I hereby elect as follows:

 

1. I direct that any amounts credited in cash to my Account under the Plan will appreciate or depreciate from the effective date hereof, as though they were invested as follows:

 

	
  

	
___%

	
________________________.

 

	
  

	
___%

	
________________________.

 

	
  

	
___%

	
________________________.

 

	
  

	
___%

	
________________________.

 

	
  

	
___%

	
________________________.

 

	
  

	
___%

	
________________________.

 

	
  

	
___%

	
________________________.

 

	
  

	
___%

	
________________________.

 

	
  

	
____

	
  

	
100%

 

2. The investment election I made in the prior paragraph shall be effective as soon as practicable following the effective date of this Investment Election Form  and shall remain in effect until the effective date of a properly executed superseding Investment Election form.

 

IN WITNESS WHEREOF, I have executed this form on the ____ day of ____________, ____.

 

	  	
PARTICIPANT

	  	  
	  	
________________________________

	  	  

  

  

  

Exhibit C

NORTHWESTERN CORPORATION

2005 DEFERRED COMPENSATION PLAN

FOR NON-EMPLOYEE DIRECTORS

_____________________________

 

Distribution Election Form

______________________________

 

AGREEMENT, made this ___ day of ___________________, ____, by and between me, a participant in the NorthWestern Corporation 2005 Deferred Compensation Plan for Non-Employee Directors (the “Plan”), and NorthWestern Corporation (the "Company").  The parties agree that any term that begins herein with initial capital letters shall have the special meaning defined in the Plan, unless the context clearly requires otherwise.

 

NOW THEREFORE, it is mutually agreed as follows:

 

By the execution hereof, I agree to participate in the Plan, subject to the terms and conditions set forth therein, and, in accordance therewith, elect to have my Account distributed in the form and timing as follows:

 

	
1.  

	
Upon Separation of Service (Required)

 

Form of Payment.

 

	
 ̈  

	
in a lump sum payable at the time elected below.

 

	
 ̈  

	
in substantially equal annual payments over a period of ___ years (not to exceed 10 years) payable at the time elected below.

 

Timing of Payment.

 

	
 ̈  

	
within thirty (30) days following my Separation from Service with the Company.

 

	
 ̈  

	
On the _______ (2nd to 10th) anniversary of my Separation from Service with the Company.

 

	
2.  

	
In Service Withdrawal (Optional)

 

Form of Payment.

 

	
 ̈  

	
in a lump sum payable at the time elected below.

 

	
 ̈  

	
in substantially equal annual payments over a period of ___ years (not to exceed 10 years) payable at the time elected below.

  

  

  

NorthWestern Corporation

2005 Deferred Compensation Plan for Non-Employee Directors

Distribution Election Form

Page 2

 

Timing of Payment.

 

	
 ̈  

	
in ____________ (month),  ________ (year).

 

3.           Form of Payment to Beneficiary.  In the event of my death, my Account shall be distributed --

 

	
 ̈  

	
in one lump sum payment within thirty (30) days following my death.

	
 ̈  

	
in substantially equal annual payments over a period of ___ years (not to exceed 10 years) beginning within thirty (30) days following my death.

4.           Designation of Beneficiary. In the event of my death before I have collected all of the benefits payable under the Plan, I hereby direct that any remaining benefits payable under the Plan be distributed to the beneficiary or beneficiaries designated under subparagraphs a and b of this paragraph 4 in the manner elected pursuant to paragraph 4 above:

 

a. Primary Beneficiary.  I hereby designate the person(s) named below to be my primary beneficiary and to receive the balance of any unpaid benefits under the Plan.

 

	
Name of

Primary Beneficiary

	
Social Security Number

	
Mailing Address

	
Percentage of

Death Benefit

	  	  	  	
%

	  	  	  	
%

 

b. Contingent Beneficiary.  In the event that the primary beneficiary or beneficiaries named above are not living at the time of my death, I hereby designate the following person(s) to be my contingent beneficiary for purposes of the Plan:

 

	
Name of

Contingent Beneficiary

	
Social Security Number

	
Mailing Address

	
Percentage of

Death Benefit

	  	  	  	
%

	  	  	  	
%

  

  

  

NorthWestern Corporation

2005 Deferred Compensation Plan for Non-Employee Directors

Distribution Election Form

Page 3

 

5.           Effect of Election.  The elections made in paragraphs 1 and 2 hereof shall apply –

 

	
  

	
 ̈

	
to any deferred compensation that is deferred pursuant to the deferral election to which this Distribution Election Form relates.

 

	
  

	
 ̈

	
to the entire value of my Account, provided that these elections may only be changed at least one year in advance of the earliest date on which payments would otherwise commence pursuant to paragraphs 1 or 2 hereof, and may only be changed pursuant to an election that conforms with the requirements set forth in Section 5.3 of the Plan.

 

With respect to the elections in paragraphs 4 and 5 hereof, I may, by submitting an effective superseding Distribution Election Form at any time and from time to time, prospectively change the beneficiary designation and the manner of payment to a Beneficiary.  Such elections shall, however, become irrevocable upon my death.

 

6.           Mutual Commitments.  The Company agrees to make payment of all amounts due to me in accordance with the terms of the Plan and the elections I make herein.  I agree to be bound by the terms of the Plan, as in effect on the date hereof or properly amended hereafter.

 

7.           Tax Consequences to Participant.  I acknowledge that I am solely responsible for the satisfaction of any taxes that may arise under the Plan (including any taxes arising under Sections 409A or 4999 of the Code).  I understand that neither the Company nor the Administrator shall have any obligation whatsoever to pay such taxes or to prevent me from incurring them.

 

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands the day and year first above-written.

 

	  	
PARTICIPANT

	  	  
	  	
_____________________________________

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