CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") dated as of
January 31, 1996, is entered into by and between Black
Hills Corporation ("Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary-
Treasurer ("Executive").
1. RECITALS.
The Board of Directors of the Company ("Board") has
determined that it is in the best interests of the Company and
its shareholders to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change in Control (as defined below).
Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
2. CERTAIN DEFINITIONS.
"CHANGE IN CONTROL" shall mean any of the
following events:
(1) An acquisition (other than directly from the
Company) of any common stock of the Company (the
"Common Stock") by any "Person" (as the term
person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), immediately after
which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of thirty percent (30%) or
more of the Common Stock of the Company; provided,
however, in determining whether a Change in
Control has occurred, Common Stock which is
acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control.
A "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other
Person of which a majority of its voting power or
its voting equity securities ("Voting Securities")
or equity interest is owned, directly or
indirectly, by the Company (for purposes of this
definition, a "Subsidiary"), (ii) the Company or
its Subsidiaries, or (iii) any Person in
connection with a "Non-Control Transaction" (as
hereinafter defined);
(2) The individuals who, as of January 30, 1996 are
members of the Board (the "Incumbent Board"),
cease for any reason to constitute at least two-
thirds of the members of the Board; provided,
however, that if the election, or nomination for
election by the Company's common shareholders, of
any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board;
provided further, however, that no individual
shall be considered a member of the Incumbent
Board if such individual initially assumed office
as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason
of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(3) Approval by shareholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless such merger,
consolidation or reorganization is a "Non-
Control Transaction." A "Non-Control
Transaction" shall mean a merger,
consolidation or reorganization of the
Company where:
(A) the shareholders of the Company,
immediately before such merger,
consolidation or reorganization, own
directly or indirectly immediately
following such merger, consolidation or
reorganization, at least seventy
percent (70%) of the combined voting
power of the outstanding Voting
Securities of the corporation resulting
from such merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially the same
proportion as their ownership of the
Voting Securities immediately before
such merger, consolidation or
reorganization.
(B) the individuals who were members of the
Incumbent Board immediately prior to
the execution of the agreement
providing for such merger,
consolidation or reorganization
constitute at least two-thirds of the
members of the board of directors of
the Surviving Corporation, or a
corporation beneficially directly or
indirectly owning a majority of the
Voting Securities of the Surviving
Corporation, and
(C) no Person other than (i) the Company,
(ii) any Subsidiary, (iii) any employee
benefit plan (or any trust forming a
part thereof) maintained by the
Company, the Surviving Corporation, or
any Subsidiary, or (iv) any Person who,
immediately prior to such merger,
consolidation or reorganization had
Beneficial Ownership of thirty percent
(30%) or more of the then outstanding
Voting Securities), has Beneficial
Ownership of thirty percent (30%) or
more of the combined voting power of
the Surviving Corporation's then
outstanding Voting Securities.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other
disposition of all or substantially all of
the assets of the Company to any Person
other than (x) a transfer to a Subsidiary or
(y) a sale or transfer of a Subsidiary by
the Company except if such sale or transfer
would be a sale or other disposition of all
or substantially all of the assets of the
Company.
(4) Notwithstanding the foregoing, (i) a Change in
Control shall not be deemed to occur solely
because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted
amount of the then outstanding Common Stock as a
result of the acquisition of Common Stock by the
Company which, by reducing the number of shares of
Common Stock then outstanding, increases the
proportional number of shares Beneficially Owned
by the Subject Persons, provided that if a Change
in Control would occur (but for the operation of
this sentence) as a result of the acquisition of
Common Stock by the Company, and after such stock
acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional
Common Stock which increases the percentage of the
then outstanding Common Stock Beneficially Owned
by the Subject Person, then a Change in Control
shall occur; and (ii) a Change in Control shall
not be deemed to occur unless and until all
regulatory approvals required to effect a Change
in Control of the Company have been obtained.
"EFFECTIVE DATE" shall mean the first date on which a
Change in Control occurs. The Effective Date does not
occur and no benefits shall be paid under this
Agreement if for any reason the Executive is not an
employee of the Company on the day prior to the
Effective Date.
"EMPLOYMENT TERM" shall mean a term of employment with
the Company which shall commence on the Effective Date
and which shall expire on the third anniversary of the
Effective Date; provided, however, that the Employment
Term shall in no event extend beyond the first day of
the month following the month in which the Executive
attains age sixty-five (65).
"GOOD CAUSE" means those events or conditions described
in paragraph 8(c)(i) through (vi) below.
"NOTICE OF TERMINATION" shall mean a notice which
indicates the specific termination provision in this
Agreement, if any, relied upon and shall set forth in
reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's
employment under the provisions so indicated. Any
purported termination by the Company or Executive shall
be communicated by written notice of termination to the
other.
"PENSION EQUALIZATION PLAN" is the Company's pension
equalization plan as amended and restated effective
January 27, 1995, and as amended from time to time
thereafter prior to the Effetive Date.
"PENSION PLAN" is the Company's tax qualified defined
benefit pension plan as amended and restated effective
October 1, 1989, and as amended from time to time
thereafter prior to the Effective Date.
"REMAINING TERM" shall mean that period of time
measured from the Termination Date through the end of
the Employment Term.
"TERMINATION DATE" shall mean the date subsequent to a
Change in Control that the Executive's employment with
the Company terminates.
"WELFARE BENEFITS" shall mean the Black Hills
Corporation Medical and Dental Plan, the Black Hills
Corporation Flexible Benefit Plan, and the Black Hills
Corporation Employee Life and Long-Term Disability Plan
as the plans and the terms and conditions thereof exist
on the day prior to the Effective Date.
3. EMPLOYMENT.
Subject to the provisions of Section 8 hereof, during the
Employment Term, the Company agrees to continue to employ the
Executive and the Executive agrees to remain in the employ of the
Company. During the Employment Term, the Executive shall be
employed as the Secretary-Treasurer of the Company or in such
executive capacity as may be mutually agreed to in writing by the
parties. Executive shall perform the duties, undertake the
responsibilities and exercise the authority customarily
performed, undertaken and exercised by persons situated in a
similar executive capacity.
During the Employment Term, excluding periods of vacation
and sick leave to which Executive is entitled, Executive agrees
to devote reasonable attention and time during usual business
hours to the business and affairs of the Company to the extent
necessary to discharge the responsibilities assigned to Executive
hereunder. It is expressly understood and agreed that to the
extent that any outside activities have been conducted by
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature
and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of
Executive's responsibilities to the Company.
4. COMPENSATION.
During the Employment Term, the Company agrees to pay or
cause to be paid to Executive annual compensation at a rate at
least equal to the highest rate of the Executive's annual
compensation as in effect at any time within one year preceding
the Effective Date, and as may be increased from time to time.
Such annual compensation shall be payable in accordance with the
Company's customary practices applicable to its executives. For
purposes of this Agreement, "annual compensation" shall mean all
compensation paid to the Executive by the Company during a
calendar year, which amounts are includable in the gross income
of the Executive for federal income tax purposes, including, but
not limited to, overtime, bonus, commission or incentive
compensation ("Annual Compensation").
5. EMPLOYEE WELFARE AND PENSION BENEFITS.
During the Employment Term, the Company shall provide to the
Executive the Welfare Benefits and the Pension Plan or other
substantially similar employee welfare and pension benefits, but
in no event on a basis less favorable in terms of benefit levels
and coverage than the Welfare Benefits and the Pension Plan.
6. PENSION EQUALIZATION PLAN.
During the Employment Term, the Company shall continue to
provide to Executive coverage and participation under the Pension
Equalization Plan or a substantially similar supplemental
retirement plan, but in no event on a basis less favorable in
terms of benefit levels and coverage than the Pension
Equalization Plan.
7. OTHER BENEFITS.
(a) Fringe Benefits, Perquisites, Vacation and Sick
Leave. During the Employment Term, Executive shall be entitled
to all fringe benefits, perquisites, vacation and sick leave
generally made available by the Company to its executives.
Unless otherwise provided herein, the fringe benefits,
perquisites, vacation and sick leave provided to Executive shall
be on the same basis and terms as other similarly situated
executives of the Company, but in no event shall be less
favorable than the most favorable fringe benefits, perquisites,
vacation and sick leave applicable to Executive at any time
within one year preceding the Effective Date, or if more
favorable, at any time thereafter.
(b) Expenses. Executive shall be entitled to receive
prompt reimbursement of all expenses reasonably incurred by him
in connection with the performance of his duties hereunder or for
promoting, pursuing or otherwise furthering the business or
interests of the Company.
8. TERMINATION.
During the Employment Term, Executive's employment hereunder
may be terminated under the following circumstances:
(a) Cause. The Company may terminate Executive's
employment for "Cause." A termination of employment is for
"Cause" if Executive (1) has been convicted of a felony or (2)
intentionally engaged in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise;
provided, however, that no termination of Executive's employment
shall be for Cause as set forth in clause (2) above until (i)
there shall have been delivered to Executive a copy of a written
notice setting forth that Executive was guilty of the conduct set
forth in clause (2) and specifying the particulars thereof in
detail, and (ii) Executive shall have been provided an
opportunity to be heard by the Board (with the assistance of
Executive's counsel if Executive so desires). No act, nor
failure to act, on Executive's part shall be considered
"intentional" unless he has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his
action or failure to act was in the best interest of the Company.
Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by Executive after a Notice of
Termination is given by Executive shall constitute Cause for
purposes of this Agreement.
(b) Disability. The Company may terminate Executive's
employment after having established Executive's Disability. For
purposes of this Agreement, "Disability" means a physical or
mental infirmity which impairs Executive's ability to
substantially perform his duties under this Agreement which
continues for a period of at least one hundred eighty (180)
consecutive days to be determined by a physician selected by
Company and acceptable to Executive. Executive shall be entitled
to the compensation and benefits provided for under this
Agreement for any period during Employment Term and prior to the
establishment of Executive's Disability during which Executive is
unable to work due to a physical or mental infirmity.
Notwithstanding anything contained in this Agreement to the
contrary, until the Termination Date specified in a Notice of
Termination relating to Executive's Disability, Executive shall
be entitled to return to his position with the Company as set
forth in this Agreement in which event no Disability of Executive
will be deemed to have occurred.
(c) Good Reason. During the Employment Term, the
Executive may terminate his employment for "Good Reason." For
purposes of this Agreement, "Good Reason" shall mean the
occurrence after the Effective Date of any of the events or
conditions described below:
(i) a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities), which, in the Executive's reasonable
judgment, represent an adverse change from his status,
title, position or responsibilities as in effect prior
to the Effective Date or any other action by the
Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for
this purpose an isolated, unsubstantial and inadvertent
action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof by
Executive;
(ii) a reduction in the Executive's Annual
Compensation as defined in paragraph 4 or any failure
to pay the Executive any compensation or benefits to
which he is entitled within seven (7) days of the date
due;
(iii) any material breach by the Company of any
provision of this Agreement, including, but not limited
to, the Company's failure to provide the Employee
Welfare and Pension Benefits and Pension Equalization
Plan as set forth in paragraphs 5 and 6 above;
(iv) The Company's requiring the Executive to be
based outside a 50-mile radius from Rapid City, South
Dakota, except for reasonably required travel on the
Company's business which is not substantially greater
than such travel requirements prior to the Effective
Date;
(v) Any purported termination of the Executive's
employment for Cause by the Company which does not
comply with the terms of Section 8(a) above; or
(vi) The failure of the Company to obtain an
agreement, satisfactory to the Executive, from any
successor or assign of the Company to assume and agree
to perform this Agreement, as contemplated in Section
12 hereof.
(d) Voluntary Termination. The Executive may
voluntarily terminate his employment hereunder at any time.
9. COMPENSATION UPON TERMINATION.
Upon termination of Executive's employment during the
Employment Term, Executive shall be entitled to the following
benefits:
(a) If Executive's employment with the Company shall
be terminated (i) by the Company for Cause or Disability, or
(ii) by reason of Executive's death, or (iii) by Executive
without "Good Reason," the Company shall pay Executive all
amounts earned or accrued through the Termination Date but not
paid as of the Termination Date, including all Annual
Compensation, reimbursement for reasonable and necessary expenses
incurred by Executive on behalf of the Company during the period
ending on the Termination Date, vacation pay and sick leave
(collectively "Accrued Compensation").
(b) If the Executive's employment with the Company
shall be terminated (other than by reason of death) (i) by the
Company other than for Cause or Disability, or (ii) by Executive
for Good Reason, Executive shall be entitled to the following:
(i) The Company shall pay Executive all Accrued
Compensation;
(ii) The Company shall pay Executive as severance
pay and in lieu of any further compensation for periods
subsequent to the Termination Date an amount in cash
equal to (w) 2.99 times (x) the Executive's average
Annual Compensation for the most recent five taxable
years ending prior to the Change in Control times (y) a
ratio, the numerator of which shall be the number of
months in the Remaining Term (a partial month being
considered a full month) and the denominator of which
shall be the number of months in the Employment Term
times (z) a ratio, the numerator of which shall be the
number of months in the Employment Term and the
denominator of which shall be 36 months;
(iii) During the "Remaining Term," the Company
shall at its expense continue on behalf of Executive
and his dependents and beneficiaries the Welfare
Benefits or similar benefits no less favorable than the
benefit levels and coverages provided in the Welfare
Benefits; provided, however, that the Company's
obligation with respect to the foregoing benefits shall
be limited to the extent that Executive obtains any
such benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide
Executive hereunder so long as the aggregate coverages
and benefits of the combined benefit plans is no less
favorable to Executive than the Welfare Benefits;
(iv) Executive shall be entitled to an amount of
credited service for vesting purposes under the Pension
Equalization Plan equal to the period of time in the
Remaining Term, and it shall be assumed for purposes of
determining benefits under the Pension Equalization
Plan, that Executive's employment continued during the
Remaining Term at the compensation level provided for
in Section 4 above. In addition, the Executive shall
be entitled to a supplemental Pension Plan benefit,
which shall be the excess, if any, of (x) the amount
that Executive would have been entitled to receive
under the Pension Plan as if (i) Executive received
additional credited service under the Pension Plan for
the Remaining Term and (ii) Executive's Annual
Compensation as defined in Section 4 above remained in
effect during the Remaining Term over (y) the amount
that Executive will actually receive under the Pension
Plan. This supplemental benefit shall be determined
using the same factors, actuarial or otherwise, as used
in determining Executive's Pension Plan benefit and
shall be payable at like terms and in like manner as
the Pension Plan benefit. This supplemental benefit is
not payable unless and until the Executive receives
Pension Plan benefits.
10. OFFSET.
Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, and except as provided in Section
9(b)(iii), such payments shall not be reduced whether or not
Executive obtains other employment.
11. TAX EFFECT.
Notwithstanding anything contained in this Agreement to the
contrary, if any payment received or to be received by Executive
pursuant to the terms of this Agreement or otherwise and in
connection with, or arising out of, Executive's employment with
the Company or a Change in Control ("Total Payments"), would not
be deductible by the Company (in whole or in part) as the result
of Section 280G of the Internal Revenue Code (the "Code"), the
amount determined under Section 9(b)(ii) shall be reduced until
no portion of the Total Payments is not nondeductible.
For purposes of determining whether any of the Total
Payments would not be deductible by the Company (1) Total
Payments will be treated as "Parachute Payments" within the
meaning of Section 280G(b)(2) of the Code and all Parachute
Payments in excess of the base amount within the meaning of
Section 280G(b)(3) will be treated as nondeductible unless, in
the opinion of tax counsel selected by the Company's independent
auditors and acceptable to Executive, such Total Payments (in
whole or in part) are not Parachute Payments, or such Parachute
Payments in excess of the base amount (in whole or in part) are
otherwise not nondeductible and (2) the value of any noncash
benefits or any deferred payment or benefit will be determined by
the Company's independent auditors in accordance with Section
280G(d)(3) and (4) of the Code.
12. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the
Company shall require any successor or assign to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession or assignment had taken place. The term
"Company" as used herein shall include such successors and
assigns. The term "successors and assigns" as used herein shall
mean a corporation or other entity acquiring all or substantially
all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the
laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal
personal representative.
13. FEES AND EXPENSES.
The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred
by the Executive subsequent to the Effective Date as they become
due as a result of the Executive seeking to obtain or enforce any
right or benefit provided by this Agreement.
14. NOTICE.
For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to
the other. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the
third business day after the mailing thereof, except that notice
of change of address shall be effective only upon receipt.
15. NONEXCLUSIVITY OF RIGHTS.
Nothing in this Agreement shall prevent or limit Executive's
continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any
of its subsidiaries and for which Executive may qualify, nor
shall anything herein limit or reduce such rights as Executive
may have under any other agreements with the Company or any of
its subsidiaries. Amounts which are vested benefits or which
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its subsidiaries shall be
payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
16. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and the Company. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this
Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the state of South
Dakota.
20. SEVERABILITY.
The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions
hereof.
18. NO GUARANTEED EMPLOYMENT.
Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between
Executive and the Company, the employment of Executive by the
Company is "at will" and, prior to the Effective Date, may be
terminated by either Executive or the Company at any time.
Moreover, if prior to the Effective Date, Executive's employment
with the Company terminates, Executive shall have no further
rights under this Agreement.
19. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the
parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the
parties hereto with respect to the subject matter hereof.
Dated the day and year first above written.
BLACK HILLS CORPORATION
By /c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman, President and Chief Executive
ATTEST:
/c/▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Assistant Secretary
By /c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") dated as of
January 30, 1996, is entered into by and between Black
Hills Corporation ("Company") and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President
- Finance ("Executive").
1. RECITALS.
The Board of Directors of the Company ("Board") has
determined that it is in the best interests of the Company and
its shareholders to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change in Control (as defined below).
Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
2. CERTAIN DEFINITIONS.
"CHANGE IN CONTROL" shall mean any of the
following events:
(1) An acquisition (other than directly from the
Company) of any common stock of the Company (the
"Common Stock") by any "Person" (as the term
person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), immediately after
which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of thirty percent (30%) or
more of the Common Stock of the Company; provided,
however, in determining whether a Change in
Control has occurred, Common Stock which is
acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control.
A "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other
Person of which a majority of its voting power or
its voting equity securities ("Voting Securities")
or equity interest is owned, directly or
indirectly, by the Company (for purposes of this
definition, a "Subsidiary"), (ii) the Company or
its Subsidiaries, or (iii) any Person in
connection with a "Non-Control Transaction" (as
hereinafter defined);
(2) The individuals who, as of January 30, 1996 are
members of the Board (the "Incumbent Board"),
cease for any reason to constitute at least two-
thirds of the members of the Board; provided,
however, that if the election, or nomination for
election by the Company's common shareholders, of
any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board;
provided further, however, that no individual
shall be considered a member of the Incumbent
Board if such individual initially assumed office
as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason
of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(3) Approval by shareholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless such merger,
consolidation or reorganization is a "Non-
Control Transaction." A "Non-Control
Transaction" shall mean a merger,
consolidation or reorganization of the
Company where:
(A) the shareholders of the Company,
immediately before such merger,
consolidation or reorganization, own
directly or indirectly immediately
following such merger, consolidation or
reorganization, at least seventy
percent (70%) of the combined voting
power of the outstanding Voting
Securities of the corporation resulting
from such merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially the same
proportion as their ownership of the
Voting Securities immediately before
such merger, consolidation or
reorganization.
(B) the individuals who were members of the
Incumbent Board immediately prior to
the execution of the agreement
providing for such merger,
consolidation or reorganization
constitute at least two-thirds of the
members of the board of directors of
the Surviving Corporation, or a
corporation beneficially directly or
indirectly owning a majority of the
Voting Securities of the Surviving
Corporation, and
(C) no Person other than (i) the Company,
(ii) any Subsidiary, (iii) any employee
benefit plan (or any trust forming a
part thereof) maintained by the
Company, the Surviving Corporation, or
any Subsidiary, or (iv) any Person who,
immediately prior to such merger,
consolidation or reorganization had
Beneficial Ownership of thirty percent
(30%) or more of the then outstanding
Voting Securities), has Beneficial
Ownership of thirty percent (30%) or
more of the combined voting power of
the Surviving Corporation's then
outstanding Voting Securities.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other
disposition of all or substantially all of
the assets of the Company to any Person
other than (x) a transfer to a Subsidiary or
(y) a sale or transfer of a Subsidiary by
the Company except if such sale or transfer
would be a sale or other disposition of all
or substantially all of the assets of the
Company.
(4) Notwithstanding the foregoing, (i) a Change in
Control shall not be deemed to occur solely
because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted
amount of the then outstanding Common Stock as a
result of the acquisition of Common Stock by the
Company which, by reducing the number of shares of
Common Stock then outstanding, increases the
proportional number of shares Beneficially Owned
by the Subject Persons, provided that if a Change
in Control would occur (but for the operation of
this sentence) as a result of the acquisition of
Common Stock by the Company, and after such stock
acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional
Common Stock which increases the percentage of the
then outstanding Common Stock Beneficially Owned
by the Subject Person, then a Change in Control
shall occur; and (ii) a Change in Control shall
not be deemed to occur unless and until all
regulatory approvals required to effect a Change
in Control of the Company have been obtained.
"EFFECTIVE DATE" shall mean the first date on which a
Change in Control occurs. The Effective Date does not
occur and no benefits shall be paid under this
Agreement if for any reason the Executive is not an
employee of the Company on the day prior to the
Effective Date.
"EMPLOYMENT TERM" shall mean a term of employment with
the Company which shall commence on the Effective Date
and which shall expire on the third anniversary of the
Effective Date; provided, however, that the Employment
Term shall in no event extend beyond the first day of
the month following the month in which the Executive
attains age sixty-five (65).
"GOOD CAUSE" means those events or conditions described
in paragraph 8(c)(i) through (vi) below.
"NOTICE OF TERMINATION" shall mean a notice which
indicates the specific termination provision in this
Agreement, if any, relied upon and shall set forth in
reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's
employment under the provisions so indicated. Any
purported termination by the Company or Executive shall
be communicated by written notice of termination to the
other.
"PENSION EQUALIZATION PLAN" is the Company's pension
equalization plan as amended and restated effective
January 27, 1995, and as amended from time to time
thereafter prior to the Effetive Date.
"PENSION PLAN" is the Company's tax qualified defined
benefit pension plan as amended and restated effective
October 1, 1989, and as amended from time to time
thereafter prior to the Effective Date.
"REMAINING TERM" shall mean that period of time
measured from the Termination Date through the end of
the Employment Term.
"TERMINATION DATE" shall mean the date subsequent to a
Change in Control that the Executive's employment with
the Company terminates.
"WELFARE BENEFITS" shall mean the Black Hills
Corporation Medical and Dental Plan, the Black Hills
Corporation Flexible Benefit Plan, and the Black Hills
Corporation Employee Life and Long-Term Disability Plan
as the plans and the terms and conditions thereof exist
on the day prior to the Effective Date.
3. EMPLOYMENT.
Subject to the provisions of Section 8 hereof, during the
Employment Term, the Company agrees to continue to employ the
Executive and the Executive agrees to remain in the employ of the
Company. During the Employment Term, the Executive shall be
employed as the Vice President - Finance of the Company or in
such executive capacity as may be mutually agreed to in writing
by the parties. Executive shall perform the duties, undertake
the responsibilities and exercise the authority customarily
performed, undertaken and exercised by persons situated in a
similar executive capacity.
During the Employment Term, excluding periods of vacation
and sick leave to which Executive is entitled, Executive agrees
to devote reasonable attention and time during usual business
hours to the business and affairs of the Company to the extent
necessary to discharge the responsibilities assigned to Executive
hereunder. It is expressly understood and agreed that to the
extent that any outside activities have been conducted by
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature
and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of
Executive's responsibilities to the Company.
4. COMPENSATION.
During the Employment Term, the Company agrees to pay or
cause to be paid to Executive annual compensation at a rate at
least equal to the highest rate of the Executive's annual
compensation as in effect at any time within one year preceding
the Effective Date, and as may be increased from time to time.
Such annual compensation shall be payable in accordance with the
Company's customary practices applicable to its executives. For
purposes of this Agreement, "annual compensation" shall mean all
compensation paid to the Executive by the Company during a
calendar year, which amounts are includable in the gross income
of the Executive for federal income tax purposes, including, but
not limited to, overtime, bonus, commission or incentive
compensation ("Annual Compensation").
5. EMPLOYEE WELFARE AND PENSION BENEFITS.
During the Employment Term, the Company shall provide to the
Executive the Welfare Benefits and the Pension Plan or other
substantially similar employee welfare and pension benefits, but
in no event on a basis less favorable in terms of benefit levels
and coverage than the Welfare Benefits and the Pension Plan.
6. PENSION EQUALIZATION PLAN.
During the Employment Term, the Company shall continue to
provide to Executive coverage and participation under the Pension
Equalization Plan or a substantially similar supplemental
retirement plan, but in no event on a basis less favorable in
terms of benefit levels and coverage than the Pension
Equalization Plan.
7. OTHER BENEFITS.
(a) Fringe Benefits, Perquisites, Vacation and Sick
Leave. During the Employment Term, Executive shall be entitled
to all fringe benefits, perquisites, vacation and sick leave
generally made available by the Company to its executives.
Unless otherwise provided herein, the fringe benefits,
perquisites, vacation and sick leave provided to Executive shall
be on the same basis and terms as other similarly situated
executives of the Company, but in no event shall be less
favorable than the most favorable fringe benefits, perquisites,
vacation and sick leave applicable to Executive at any time
within one year preceding the Effective Date, or if more
favorable, at any time thereafter.
(b) Expenses. Executive shall be entitled to receive
prompt reimbursement of all expenses reasonably incurred by him
in connection with the performance of his duties hereunder or for
promoting, pursuing or otherwise furthering the business or
interests of the Company.
8. TERMINATION.
During the Employment Term, Executive's employment hereunder
may be terminated under the following circumstances:
(a) Cause. The Company may terminate Executive's
employment for "Cause." A termination of employment is for
"Cause" if Executive (1) has been convicted of a felony or (2)
intentionally engaged in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise;
provided, however, that no termination of Executive's employment
shall be for Cause as set forth in clause (2) above until (i)
there shall have been delivered to Executive a copy of a written
notice setting forth that Executive was guilty of the conduct set
forth in clause (2) and specifying the particulars thereof in
detail, and (ii) Executive shall have been provided an
opportunity to be heard by the Board (with the assistance of
Executive's counsel if Executive so desires). No act, nor
failure to act, on Executive's part shall be considered
"intentional" unless he has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his
action or failure to act was in the best interest of the Company.
Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by Executive after a Notice of
Termination is given by Executive shall constitute Cause for
purposes of this Agreement.
(b) Disability. The Company may terminate Executive's
employment after having established Executive's Disability. For
purposes of this Agreement, "Disability" means a physical or
mental infirmity which impairs Executive's ability to
substantially perform his duties under this Agreement which
continues for a period of at least one hundred eighty (180)
consecutive days to be determined by a physician selected by
Company and acceptable to Executive. Executive shall be entitled
to the compensation and benefits provided for under this
Agreement for any period during Employment Term and prior to the
establishment of Executive's Disability during which Executive is
unable to work due to a physical or mental infirmity.
Notwithstanding anything contained in this Agreement to the
contrary, until the Termination Date specified in a Notice of
Termination relating to Executive's Disability, Executive shall
be entitled to return to his position with the Company as set
forth in this Agreement in which event no Disability of Executive
will be deemed to have occurred.
(c) Good Reason. During the Employment Term, the
Executive may terminate his employment for "Good Reason." For
purposes of this Agreement, "Good Reason" shall mean the
occurrence after the Effective Date of any of the events or
conditions described below:
(i) a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities), which, in the Executive's reasonable
judgment, represent an adverse change from his status,
title, position or responsibilities as in effect prior
to the Effective Date or any other action by the
Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for
this purpose an isolated, unsubstantial and inadvertent
action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof by
Executive;
(ii) a reduction in the Executive's Annual
Compensation as defined in paragraph 4 or any failure
to pay the Executive any compensation or benefits to
which he is entitled within seven (7) days of the date
due;
(iii) any material breach by the Company of any
provision of this Agreement, including, but not limited
to, the Company's failure to provide the Employee
Welfare and Pension Benefits and Pension Equalization
Plan as set forth in paragraphs 5 and 6 above;
(iv) The Company's requiring the Executive to be
based outside a 50-mile radius from Rapid City, South
Dakota, except for reasonably required travel on the
Company's business which is not substantially greater
than such travel requirements prior to the Effective
Date;
(v) Any purported termination of the Executive's
employment for Cause by the Company which does not
comply with the terms of Section 8(a) above; or
(vi) The failure of the Company to obtain an
agreement, satisfactory to the Executive, from any
successor or assign of the Company to assume and agree
to perform this Agreement, as contemplated in Section
12 hereof.
(d) Voluntary Termination. The Executive may
voluntarily terminate his employment hereunder at any time.
9. COMPENSATION UPON TERMINATION.
Upon termination of Executive's employment during the
Employment Term, Executive shall be entitled to the following
benefits:
(a) If Executive's employment with the Company shall
be terminated (i) by the Company for Cause or Disability, or
(ii) by reason of Executive's death, or (iii) by Executive
without "Good Reason," the Company shall pay Executive all
amounts earned or accrued through the Termination Date but not
paid as of the Termination Date, including all Annual
Compensation, reimbursement for reasonable and necessary expenses
incurred by Executive on behalf of the Company during the period
ending on the Termination Date, vacation pay and sick leave
(collectively "Accrued Compensation").
(b) If the Executive's employment with the Company
shall be terminated (other than by reason of death) (i) by the
Company other than for Cause or Disability, or (ii) by Executive
for Good Reason, Executive shall be entitled to the following:
(i) The Company shall pay Executive all Accrued
Compensation;
(ii) The Company shall pay Executive as severance
pay and in lieu of any further compensation for periods
subsequent to the Termination Date an amount in cash
equal to (w) 2.99 times (x) the Executive's average
Annual Compensation for the most recent five taxable
years ending prior to the Change in Control times (y) a
ratio, the numerator of which shall be the number of
months in the Remaining Term (a partial month being
considered a full month) and the denominator of which
shall be the number of months in the Employment Term
times (z) a ratio, the numerator of which shall be the
number of months in the Employment Term and the
denominator of which shall be 36 months;
(iii) During the "Remaining Term," the Company
shall at its expense continue on behalf of Executive
and his dependents and beneficiaries the Welfare
Benefits or similar benefits no less favorable than the
benefit levels and coverages provided in the Welfare
Benefits; provided, however, that the Company's
obligation with respect to the foregoing benefits shall
be limited to the extent that Executive obtains any
such benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide
Executive hereunder so long as the aggregate coverages
and benefits of the combined benefit plans is no less
favorable to Executive than the Welfare Benefits;
(iv) Executive shall be entitled to an amount of
credited service for vesting purposes under the Pension
Equalization Plan equal to the period of time in the
Remaining Term, and it shall be assumed for purposes of
determining benefits under the Pension Equalization
Plan, that Executive's employment continued during the
Remaining Term at the compensation level provided for
in Section 4 above. In addition, the Executive shall
be entitled to a supplemental Pension Plan benefit,
which shall be the excess, if any, of (x) the amount
that Executive would have been entitled to receive
under the Pension Plan as if (i) Executive received
additional credited service under the Pension Plan for
the Remaining Term and (ii) Executive's Annual
Compensation as defined in Section 4 above remained in
effect during the Remaining Term over (y) the amount
that Executive will actually receive under the Pension
Plan. This supplemental benefit shall be determined
using the same factors, actuarial or otherwise, as used
in determining Executive's Pension Plan benefit and
shall be payable at like terms and in like manner as
the Pension Plan benefit. This supplemental benefit is
not payable unless and until the Executive receives
Pension Plan benefits.
10. OFFSET.
Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, and except as provided in Section
9(b)(iii), such payments shall not be reduced whether or not
Executive obtains other employment.
11. TAX EFFECT.
Notwithstanding anything contained in this Agreement to the
contrary, if any payment received or to be received by Executive
pursuant to the terms of this Agreement or otherwise and in
connection with, or arising out of, Executive's employment with
the Company or a Change in Control ("Total Payments"), would not
be deductible by the Company (in whole or in part) as the result
of Section 280G of the Internal Revenue Code (the "Code"), the
amount determined under Section 9(b)(ii) shall be reduced until
no portion of the Total Payments is not nondeductible.
For purposes of determining whether any of the Total
Payments would not be deductible by the Company (1) Total
Payments will be treated as "Parachute Payments" within the
meaning of Section 280G(b)(2) of the Code and all Parachute
Payments in excess of the base amount within the meaning of
Section 280G(b)(3) will be treated as nondeductible unless, in
the opinion of tax counsel selected by the Company's independent
auditors and acceptable to Executive, such Total Payments (in
whole or in part) are not Parachute Payments, or such Parachute
Payments in excess of the base amount (in whole or in part) are
otherwise not nondeductible and (2) the value of any noncash
benefits or any deferred payment or benefit will be determined by
the Company's independent auditors in accordance with Section
280G(d)(3) and (4) of the Code.
12. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the
Company shall require any successor or assign to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession or assignment had taken place. The term
"Company" as used herein shall include such successors and
assigns. The term "successors and assigns" as used herein shall
mean a corporation or other entity acquiring all or substantially
all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the
laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal
personal representative.
13. FEES AND EXPENSES.
The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred
by the Executive subsequent to the Effective Date as they become
due as a result of the Executive seeking to obtain or enforce any
right or benefit provided by this Agreement.
14. NOTICE.
For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to
the other. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the
third business day after the mailing thereof, except that notice
of change of address shall be effective only upon receipt.
15. NONEXCLUSIVITY OF RIGHTS.
Nothing in this Agreement shall prevent or limit Executive's
continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any
of its subsidiaries and for which Executive may qualify, nor
shall anything herein limit or reduce such rights as Executive
may have under any other agreements with the Company or any of
its subsidiaries. Amounts which are vested benefits or which
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its subsidiaries shall be
payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
16. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and the Company. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this
Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the state of South
Dakota.
20. SEVERABILITY.
The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions
hereof.
18. NO GUARANTEED EMPLOYMENT.
Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between
Executive and the Company, the employment of Executive by the
Company is "at will" and, prior to the Effective Date, may be
terminated by either Executive or the Company at any time.
Moreover, if prior to the Effective Date, Executive's employment
with the Company terminates, Executive shall have no further
rights under this Agreement.
19. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the
parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the
parties hereto with respect to the subject matter hereof.
Dated the day and year first above written.
BLACK HILLS CORPORATION
By /c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman, President and Chief Executive
ATTEST:
/c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary and Treasurer
By /c/▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") dated as of
January 30, 1996, is entered into by and between Black
Hills Corporation ("Company") and ▇▇▇▇ ▇. ▇▇▇▇, Controller
("Executive").
1. RECITALS.
The Board of Directors of the Company ("Board") has
determined that it is in the best interests of the Company and
its shareholders to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change in Control (as defined below).
Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
2. CERTAIN DEFINITIONS.
"CHANGE IN CONTROL" shall mean any of the
following events:
(1) An acquisition (other than directly from the
Company) of any common stock of the Company (the
"Common Stock") by any "Person" (as the term
person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), immediately after
which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of thirty percent (30%) or
more of the Common Stock of the Company; provided,
however, in determining whether a Change in
Control has occurred, Common Stock which is
acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control.
A "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other
Person of which a majority of its voting power or
its voting equity securities ("Voting Securities")
or equity interest is owned, directly or
indirectly, by the Company (for purposes of this
definition, a "Subsidiary"), (ii) the Company or
its Subsidiaries, or (iii) any Person in
connection with a "Non-Control Transaction" (as
hereinafter defined);
(2) The individuals who, as of January 30, 1996 are
members of the Board (the "Incumbent Board"),
cease for any reason to constitute at least two-
thirds of the members of the Board; provided,
however, that if the election, or nomination for
election by the Company's common shareholders, of
any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board;
provided further, however, that no individual
shall be considered a member of the Incumbent
Board if such individual initially assumed office
as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason
of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(3) Approval by shareholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless such merger,
consolidation or reorganization is a "Non-
Control Transaction." A "Non-Control
Transaction" shall mean a merger,
consolidation or reorganization of the
Company where:
(A) the shareholders of the Company,
immediately before such merger,
consolidation or reorganization, own
directly or indirectly immediately
following such merger, consolidation or
reorganization, at least seventy
percent (70%) of the combined voting
power of the outstanding Voting
Securities of the corporation resulting
from such merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially the same
proportion as their ownership of the
Voting Securities immediately before
such merger, consolidation or
reorganization.
(B) the individuals who were members of the
Incumbent Board immediately prior to
the execution of the agreement
providing for such merger,
consolidation or reorganization
constitute at least two-thirds of the
members of the board of directors of
the Surviving Corporation, or a
corporation beneficially directly or
indirectly owning a majority of the
Voting Securities of the Surviving
Corporation, and
(C) no Person other than (i) the Company,
(ii) any Subsidiary, (iii) any employee
benefit plan (or any trust forming a
part thereof) maintained by the
Company, the Surviving Corporation, or
any Subsidiary, or (iv) any Person who,
immediately prior to such merger,
consolidation or reorganization had
Beneficial Ownership of thirty percent
(30%) or more of the then outstanding
Voting Securities), has Beneficial
Ownership of thirty percent (30%) or
more of the combined voting power of
the Surviving Corporation's then
outstanding Voting Securities.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other
disposition of all or substantially all of
the assets of the Company to any Person
other than (x) a transfer to a Subsidiary or
(y) a sale or transfer of a Subsidiary by
the Company except if such sale or transfer
would be a sale or other disposition of all
or substantially all of the assets of the
Company.
(4) Notwithstanding the foregoing, (i) a Change in
Control shall not be deemed to occur solely
because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted
amount of the then outstanding Common Stock as a
result of the acquisition of Common Stock by the
Company which, by reducing the number of shares of
Common Stock then outstanding, increases the
proportional number of shares Beneficially Owned
by the Subject Persons, provided that if a Change
in Control would occur (but for the operation of
this sentence) as a result of the acquisition of
Common Stock by the Company, and after such stock
acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional
Common Stock which increases the percentage of the
then outstanding Common Stock Beneficially Owned
by the Subject Person, then a Change in Control
shall occur; and (ii) a Change in Control shall
not be deemed to occur unless and until all
regulatory approvals required to effect a Change
in Control of the Company have been obtained.
"EFFECTIVE DATE" shall mean the first date on which a
Change in Control occurs. The Effective Date does not
occur and no benefits shall be paid under this
Agreement if for any reason the Executive is not an
employee of the Company on the day prior to the
Effective Date.
"EMPLOYMENT TERM" shall mean a term of employment with
the Company which shall commence on the Effective Date
and which shall expire on the third anniversary of the
Effective Date; provided, however, that the Employment
Term shall in no event extend beyond the first day of
the month following the month in which the Executive
attains age sixty-five (65).
"GOOD CAUSE" means those events or conditions described
in paragraph 8(c)(i) through (vi) below.
"NOTICE OF TERMINATION" shall mean a notice which
indicates the specific termination provision in this
Agreement, if any, relied upon and shall set forth in
reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's
employment under the provisions so indicated. Any
purported termination by the Company or Executive shall
be communicated by written notice of termination to the
other.
"PENSION EQUALIZATION PLAN" is the Company's pension
equalization plan as amended and restated effective
January 27, 1995, and as amended from time to time
thereafter prior to the Effetive Date.
"PENSION PLAN" is the Company's tax qualified defined
benefit pension plan as amended and restated effective
October 1, 1989, and as amended from time to time
thereafter prior to the Effective Date.
"REMAINING TERM" shall mean that period of time
measured from the Termination Date through the end of
the Employment Term.
"TERMINATION DATE" shall mean the date subsequent to a
Change in Control that the Executive's employment with
the Company terminates.
"WELFARE BENEFITS" shall mean the Black Hills
Corporation Medical and Dental Plan, the Black Hills
Corporation Flexible Benefit Plan, and the Black Hills
Corporation Employee Life and Long-Term Disability Plan
as the plans and the terms and conditions thereof exist
on the day prior to the Effective Date.
3. EMPLOYMENT.
Subject to the provisions of Section 8 hereof, during the
Employment Term, the Company agrees to continue to employ the
Executive and the Executive agrees to remain in the employ of the
Company. During the Employment Term, the Executive shall be
employed as the Controller of the Company or in such executive
capacity as may be mutually agreed to in writing by the parties.
Executive shall perform the duties, undertake the
responsibilities and exercise the authority customarily
performed, undertaken and exercised by persons situated in a
similar executive capacity.
During the Employment Term, excluding periods of vacation
and sick leave to which Executive is entitled, Executive agrees
to devote reasonable attention and time during usual business
hours to the business and affairs of the Company to the extent
necessary to discharge the responsibilities assigned to Executive
hereunder. It is expressly understood and agreed that to the
extent that any outside activities have been conducted by
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature
and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of
Executive's responsibilities to the Company.
4. COMPENSATION.
During the Employment Term, the Company agrees to pay or
cause to be paid to Executive annual compensation at a rate at
least equal to the highest rate of the Executive's annual
compensation as in effect at any time within one year preceding
the Effective Date, and as may be increased from time to time.
Such annual compensation shall be payable in accordance with the
Company's customary practices applicable to its executives. For
purposes of this Agreement, "annual compensation" shall mean all
compensation paid to the Executive by the Company during a
calendar year, which amounts are includable in the gross income
of the Executive for federal income tax purposes, including, but
not limited to, overtime, bonus, commission or incentive
compensation ("Annual Compensation").
5. EMPLOYEE WELFARE AND PENSION BENEFITS.
During the Employment Term, the Company shall provide to the
Executive the Welfare Benefits and the Pension Plan or other
substantially similar employee welfare and pension benefits, but
in no event on a basis less favorable in terms of benefit levels
and coverage than the Welfare Benefits and the Pension Plan.
6. PENSION EQUALIZATION PLAN.
During the Employment Term, the Company shall continue to
provide to Executive coverage and participation under the Pension
Equalization Plan or a substantially similar supplemental
retirement plan, but in no event on a basis less favorable in
terms of benefit levels and coverage than the Pension
Equalization Plan.
7. OTHER BENEFITS.
(a) Fringe Benefits, Perquisites, Vacation and Sick
Leave. During the Employment Term, Executive shall be entitled
to all fringe benefits, perquisites, vacation and sick leave
generally made available by the Company to its executives.
Unless otherwise provided herein, the fringe benefits,
perquisites, vacation and sick leave provided to Executive shall
be on the same basis and terms as other similarly situated
executives of the Company, but in no event shall be less
favorable than the most favorable fringe benefits, perquisites,
vacation and sick leave applicable to Executive at any time
within one year preceding the Effective Date, or if more
favorable, at any time thereafter.
(b) Expenses. Executive shall be entitled to receive
prompt reimbursement of all expenses reasonably incurred by him
in connection with the performance of his duties hereunder or for
promoting, pursuing or otherwise furthering the business or
interests of the Company.
8. TERMINATION.
During the Employment Term, Executive's employment hereunder
may be terminated under the following circumstances:
(a) Cause. The Company may terminate Executive's
employment for "Cause." A termination of employment is for
"Cause" if Executive (1) has been convicted of a felony or (2)
intentionally engaged in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise;
provided, however, that no termination of Executive's employment
shall be for Cause as set forth in clause (2) above until (i)
there shall have been delivered to Executive a copy of a written
notice setting forth that Executive was guilty of the conduct set
forth in clause (2) and specifying the particulars thereof in
detail, and (ii) Executive shall have been provided an
opportunity to be heard by the Board (with the assistance of
Executive's counsel if Executive so desires). No act, nor
failure to act, on Executive's part shall be considered
"intentional" unless he has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his
action or failure to act was in the best interest of the Company.
Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by Executive after a Notice of
Termination is given by Executive shall constitute Cause for
purposes of this Agreement.
(b) Disability. The Company may terminate Executive's
employment after having established Executive's Disability. For
purposes of this Agreement, "Disability" means a physical or
mental infirmity which impairs Executive's ability to
substantially perform his duties under this Agreement which
continues for a period of at least one hundred eighty (180)
consecutive days to be determined by a physician selected by
Company and acceptable to Executive. Executive shall be entitled
to the compensation and benefits provided for under this
Agreement for any period during Employment Term and prior to the
establishment of Executive's Disability during which Executive is
unable to work due to a physical or mental infirmity.
Notwithstanding anything contained in this Agreement to the
contrary, until the Termination Date specified in a Notice of
Termination relating to Executive's Disability, Executive shall
be entitled to return to his position with the Company as set
forth in this Agreement in which event no Disability of Executive
will be deemed to have occurred.
(c) Good Reason. During the Employment Term, the
Executive may terminate his employment for "Good Reason." For
purposes of this Agreement, "Good Reason" shall mean the
occurrence after the Effective Date of any of the events or
conditions described below:
(i) a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities), which, in the Executive's reasonable
judgment, represent an adverse change from his status,
title, position or responsibilities as in effect prior
to the Effective Date or any other action by the
Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for
this purpose an isolated, unsubstantial and inadvertent
action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof by
Executive;
(ii) a reduction in the Executive's Annual
Compensation as defined in paragraph 4 or any failure
to pay the Executive any compensation or benefits to
which he is entitled within seven (7) days of the date
due;
(iii) any material breach by the Company of any
provision of this Agreement, including, but not limited
to, the Company's failure to provide the Employee
Welfare and Pension Benefits and Pension Equalization
Plan as set forth in paragraphs 5 and 6 above;
(iv) The Company's requiring the Executive to be
based outside a 50-mile radius from Rapid City, South
Dakota, except for reasonably required travel on the
Company's business which is not substantially greater
than such travel requirements prior to the Effective
Date;
(v) Any purported termination of the Executive's
employment for Cause by the Company which does not
comply with the terms of Section 8(a) above; or
(vi) The failure of the Company to obtain an
agreement, satisfactory to the Executive, from any
successor or assign of the Company to assume and agree
to perform this Agreement, as contemplated in Section
12 hereof.
(d) Voluntary Termination. The Executive may
voluntarily terminate his employment hereunder at any time.
9. COMPENSATION UPON TERMINATION.
Upon termination of Executive's employment during the
Employment Term, Executive shall be entitled to the following
benefits:
(a) If Executive's employment with the Company shall
be terminated (i) by the Company for Cause or Disability, or
(ii) by reason of Executive's death, or (iii) by Executive
without "Good Reason," the Company shall pay Executive all
amounts earned or accrued through the Termination Date but not
paid as of the Termination Date, including all Annual
Compensation, reimbursement for reasonable and necessary expenses
incurred by Executive on behalf of the Company during the period
ending on the Termination Date, vacation pay and sick leave
(collectively "Accrued Compensation").
(b) If the Executive's employment with the Company
shall be terminated (other than by reason of death) (i) by the
Company other than for Cause or Disability, or (ii) by Executive
for Good Reason, Executive shall be entitled to the following:
(i) The Company shall pay Executive all Accrued
Compensation;
(ii) The Company shall pay Executive as severance
pay and in lieu of any further compensation for periods
subsequent to the Termination Date an amount in cash
equal to (w) 2.99 times (x) the Executive's average
Annual Compensation for the most recent five taxable
years ending prior to the Change in Control times (y) a
ratio, the numerator of which shall be the number of
months in the Remaining Term (a partial month being
considered a full month) and the denominator of which
shall be the number of months in the Employment Term
times (z) a ratio, the numerator of which shall be the
number of months in the Employment Term and the
denominator of which shall be 36 months;
(iii) During the "Remaining Term," the Company
shall at its expense continue on behalf of Executive
and his dependents and beneficiaries the Welfare
Benefits or similar benefits no less favorable than the
benefit levels and coverages provided in the Welfare
Benefits; provided, however, that the Company's
obligation with respect to the foregoing benefits shall
be limited to the extent that Executive obtains any
such benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide
Executive hereunder so long as the aggregate coverages
and benefits of the combined benefit plans is no less
favorable to Executive than the Welfare Benefits;
(iv) Executive shall be entitled to an amount of
credited service for vesting purposes under the Pension
Equalization Plan equal to the period of time in the
Remaining Term, and it shall be assumed for purposes of
determining benefits under the Pension Equalization
Plan, that Executive's employment continued during the
Remaining Term at the compensation level provided for
in Section 4 above. In addition, the Executive shall
be entitled to a supplemental Pension Plan benefit,
which shall be the excess, if any, of (x) the amount
that Executive would have been entitled to receive
under the Pension Plan as if (i) Executive received
additional credited service under the Pension Plan for
the Remaining Term and (ii) Executive's Annual
Compensation as defined in Section 4 above remained in
effect during the Remaining Term over (y) the amount
that Executive will actually receive under the Pension
Plan. This supplemental benefit shall be determined
using the same factors, actuarial or otherwise, as used
in determining Executive's Pension Plan benefit and
shall be payable at like terms and in like manner as
the Pension Plan benefit. This supplemental benefit is
not payable unless and until the Executive receives
Pension Plan benefits.
10. OFFSET.
Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, and except as provided in Section
9(b)(iii), such payments shall not be reduced whether or not
Executive obtains other employment.
11. TAX EFFECT.
Notwithstanding anything contained in this Agreement to the
contrary, if any payment received or to be received by Executive
pursuant to the terms of this Agreement or otherwise and in
connection with, or arising out of, Executive's employment with
the Company or a Change in Control ("Total Payments"), would not
be deductible by the Company (in whole or in part) as the result
of Section 280G of the Internal Revenue Code (the "Code"), the
amount determined under Section 9(b)(ii) shall be reduced until
no portion of the Total Payments is not nondeductible.
For purposes of determining whether any of the Total
Payments would not be deductible by the Company (1) Total
Payments will be treated as "Parachute Payments" within the
meaning of Section 280G(b)(2) of the Code and all Parachute
Payments in excess of the base amount within the meaning of
Section 280G(b)(3) will be treated as nondeductible unless, in
the opinion of tax counsel selected by the Company's independent
auditors and acceptable to Executive, such Total Payments (in
whole or in part) are not Parachute Payments, or such Parachute
Payments in excess of the base amount (in whole or in part) are
otherwise not nondeductible and (2) the value of any noncash
benefits or any deferred payment or benefit will be determined by
the Company's independent auditors in accordance with Section
280G(d)(3) and (4) of the Code.
12. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the
Company shall require any successor or assign to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession or assignment had taken place. The term
"Company" as used herein shall include such successors and
assigns. The term "successors and assigns" as used herein shall
mean a corporation or other entity acquiring all or substantially
all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the
laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal
personal representative.
13. FEES AND EXPENSES.
The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred
by the Executive subsequent to the Effective Date as they become
due as a result of the Executive seeking to obtain or enforce any
right or benefit provided by this Agreement.
14. NOTICE.
For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to
the other. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the
third business day after the mailing thereof, except that notice
of change of address shall be effective only upon receipt.
15. NONEXCLUSIVITY OF RIGHTS.
Nothing in this Agreement shall prevent or limit Executive's
continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any
of its subsidiaries and for which Executive may qualify, nor
shall anything herein limit or reduce such rights as Executive
may have under any other agreements with the Company or any of
its subsidiaries. Amounts which are vested benefits or which
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its subsidiaries shall be
payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
16. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and the Company. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this
Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the state of South
Dakota.
20. SEVERABILITY.
The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions
hereof.
18. NO GUARANTEED EMPLOYMENT.
Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between
Executive and the Company, the employment of Executive by the
Company is "at will" and, prior to the Effective Date, may be
terminated by either Executive or the Company at any time.
Moreover, if prior to the Effective Date, Executive's employment
with the Company terminates, Executive shall have no further
rights under this Agreement.
19. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the
parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the
parties hereto with respect to the subject matter hereof.
Dated the day and year first above written.
BLACK HILLS CORPORATION
By /c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman, President and Chief Executive
ATTEST:
/c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary and Treasurer
By /c/▇▇▇▇ ▇. ▇▇▇▇
Executive
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") dated as of
January 30, 1996, is entered into by and between Black
Hills Corporation ("Company") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President and
Chief Operating Officer, Black Hills Power and Light Company
("Executive").
1. RECITALS.
The Board of Directors of the Company ("Board") has
determined that it is in the best interests of the Company and
its shareholders to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change in Control (as defined below).
Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
2. CERTAIN DEFINITIONS.
"CHANGE IN CONTROL" shall mean any of the
following events:
(1) An acquisition (other than directly from the
Company) of any common stock of the Company (the
"Common Stock") by any "Person" (as the term
person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), immediately after
which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of thirty percent (30%) or
more of the Common Stock of the Company; provided,
however, in determining whether a Change in
Control has occurred, Common Stock which is
acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control.
A "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other
Person of which a majority of its voting power or
its voting equity securities ("Voting Securities")
or equity interest is owned, directly or
indirectly, by the Company (for purposes of this
definition, a "Subsidiary"), (ii) the Company or
its Subsidiaries, or (iii) any Person in
connection with a "Non-Control Transaction" (as
hereinafter defined);
(2) The individuals who, as of January 30, 1996 are
members of the Board (the "Incumbent Board"),
cease for any reason to constitute at least two-
thirds of the members of the Board; provided,
however, that if the election, or nomination for
election by the Company's common shareholders, of
any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board;
provided further, however, that no individual
shall be considered a member of the Incumbent
Board if such individual initially assumed office
as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason
of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(3) Approval by shareholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless such merger,
consolidation or reorganization is a "Non-
Control Transaction." A "Non-Control
Transaction" shall mean a merger,
consolidation or reorganization of the
Company where:
(A) the shareholders of the Company,
immediately before such merger,
consolidation or reorganization, own
directly or indirectly immediately
following such merger, consolidation or
reorganization, at least seventy
percent (70%) of the combined voting
power of the outstanding Voting
Securities of the corporation resulting
from such merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially the same
proportion as their ownership of the
Voting Securities immediately before
such merger, consolidation or
reorganization.
(B) the individuals who were members of the
Incumbent Board immediately prior to
the execution of the agreement
providing for such merger,
consolidation or reorganization
constitute at least two-thirds of the
members of the board of directors of
the Surviving Corporation, or a
corporation beneficially directly or
indirectly owning a majority of the
Voting Securities of the Surviving
Corporation, and
(C) no Person other than (i) the Company,
(ii) any Subsidiary, (iii) any employee
benefit plan (or any trust forming a
part thereof) maintained by the
Company, the Surviving Corporation, or
any Subsidiary, or (iv) any Person who,
immediately prior to such merger,
consolidation or reorganization had
Beneficial Ownership of thirty percent
(30%) or more of the then outstanding
Voting Securities), has Beneficial
Ownership of thirty percent (30%) or
more of the combined voting power of
the Surviving Corporation's then
outstanding Voting Securities.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other
disposition of all or substantially all of
the assets of the Company to any Person
other than (x) a transfer to a Subsidiary or
(y) a sale or transfer of a Subsidiary by
the Company except if such sale or transfer
would be a sale or other disposition of all
or substantially all of the assets of the
Company.
(4) Notwithstanding the foregoing, (i) a Change in
Control shall not be deemed to occur solely
because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted
amount of the then outstanding Common Stock as a
result of the acquisition of Common Stock by the
Company which, by reducing the number of shares of
Common Stock then outstanding, increases the
proportional number of shares Beneficially Owned
by the Subject Persons, provided that if a Change
in Control would occur (but for the operation of
this sentence) as a result of the acquisition of
Common Stock by the Company, and after such stock
acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional
Common Stock which increases the percentage of the
then outstanding Common Stock Beneficially Owned
by the Subject Person, then a Change in Control
shall occur; and (ii) a Change in Control shall
not be deemed to occur unless and until all
regulatory approvals required to effect a Change
in Control of the Company have been obtained.
"EFFECTIVE DATE" shall mean the first date on which a
Change in Control occurs. The Effective Date does not
occur and no benefits shall be paid under this
Agreement if for any reason the Executive is not an
employee of the Company on the day prior to the
Effective Date.
"EMPLOYMENT TERM" shall mean a term of employment with
the Company which shall commence on the Effective Date
and which shall expire on the third anniversary of the
Effective Date; provided, however, that the Employment
Term shall in no event extend beyond the first day of
the month following the month in which the Executive
attains age sixty-five (65).
"GOOD CAUSE" means those events or conditions described
in paragraph 8(c)(i) through (vi) below.
"NOTICE OF TERMINATION" shall mean a notice which
indicates the specific termination provision in this
Agreement, if any, relied upon and shall set forth in
reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's
employment under the provisions so indicated. Any
purported termination by the Company or Executive shall
be communicated by written notice of termination to the
other.
"PENSION EQUALIZATION PLAN" is the Company's pension
equalization plan as amended and restated effective
January 27, 1995, and as amended from time to time
thereafter prior to the Effetive Date.
"PENSION PLAN" is the Company's tax qualified defined
benefit pension plan as amended and restated effective
October 1, 1989, and as amended from time to time
thereafter prior to the Effective Date.
"REMAINING TERM" shall mean that period of time
measured from the Termination Date through the end of
the Employment Term.
"TERMINATION DATE" shall mean the date subsequent to a
Change in Control that the Executive's employment with
the Company terminates.
"WELFARE BENEFITS" shall mean the Black Hills
Corporation Medical and Dental Plan, the Black Hills
Corporation Flexible Benefit Plan, and the Black Hills
Corporation Employee Life and Long-Term Disability Plan
as the plans and the terms and conditions thereof exist
on the day prior to the Effective Date.
3. EMPLOYMENT.
Subject to the provisions of Section 8 hereof, during the
Employment Term, the Company agrees to continue to employ the
Executive and the Executive agrees to remain in the employ of the
Company. During the Employment Term, the Executive shall be
employed as the President and Chief Operating Officer--Black
Hills Power and Light Company or in such executive capacity as
may be mutually agreed to in writing by the parties. Executive
shall perform the duties, undertake the responsibilities and
exercise the authority customarily performed, undertaken and
exercised by persons situated in a similar executive capacity.
During the Employment Term, excluding periods of vacation
and sick leave to which Executive is entitled, Executive agrees
to devote reasonable attention and time during usual business
hours to the business and affairs of the Company to the extent
necessary to discharge the responsibilities assigned to Executive
hereunder. It is expressly understood and agreed that to the
extent that any outside activities have been conducted by
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature
and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of
Executive's responsibilities to the Company.
4. COMPENSATION.
During the Employment Term, the Company agrees to pay or
cause to be paid to Executive annual compensation at a rate at
least equal to the highest rate of the Executive's annual
compensation as in effect at any time within one year preceding
the Effective Date, and as may be increased from time to time.
Such annual compensation shall be payable in accordance with the
Company's customary practices applicable to its executives. For
purposes of this Agreement, "annual compensation" shall mean all
compensation paid to the Executive by the Company during a
calendar year, which amounts are includable in the gross income
of the Executive for federal income tax purposes, including, but
not limited to, overtime, bonus, commission or incentive
compensation ("Annual Compensation").
5. EMPLOYEE WELFARE AND PENSION BENEFITS.
During the Employment Term, the Company shall provide to the
Executive the Welfare Benefits and the Pension Plan or other
substantially similar employee welfare and pension benefits, but
in no event on a basis less favorable in terms of benefit levels
and coverage than the Welfare Benefits and the Pension Plan.
6. PENSION EQUALIZATION PLAN.
During the Employment Term, the Company shall continue to
provide to Executive coverage and participation under the Pension
Equalization Plan or a substantially similar supplemental
retirement plan, but in no event on a basis less favorable in
terms of benefit levels and coverage than the Pension
Equalization Plan.
7. OTHER BENEFITS.
(a) Fringe Benefits, Perquisites, Vacation and Sick
Leave. During the Employment Term, Executive shall be entitled
to all fringe benefits, perquisites, vacation and sick leave
generally made available by the Company to its executives.
Unless otherwise provided herein, the fringe benefits,
perquisites, vacation and sick leave provided to Executive shall
be on the same basis and terms as other similarly situated
executives of the Company, but in no event shall be less
favorable than the most favorable fringe benefits, perquisites,
vacation and sick leave applicable to Executive at any time
within one year preceding the Effective Date, or if more
favorable, at any time thereafter.
(b) Expenses. Executive shall be entitled to receive
prompt reimbursement of all expenses reasonably incurred by him
in connection with the performance of his duties hereunder or for
promoting, pursuing or otherwise furthering the business or
interests of the Company.
8. TERMINATION.
During the Employment Term, Executive's employment hereunder
may be terminated under the following circumstances:
(a) Cause. The Company may terminate Executive's
employment for "Cause." A termination of employment is for
"Cause" if Executive (1) has been convicted of a felony or (2)
intentionally engaged in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise;
provided, however, that no termination of Executive's employment
shall be for Cause as set forth in clause (2) above until (i)
there shall have been delivered to Executive a copy of a written
notice setting forth that Executive was guilty of the conduct set
forth in clause (2) and specifying the particulars thereof in
detail, and (ii) Executive shall have been provided an
opportunity to be heard by the Board (with the assistance of
Executive's counsel if Executive so desires). No act, nor
failure to act, on Executive's part shall be considered
"intentional" unless he has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his
action or failure to act was in the best interest of the Company.
Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by Executive after a Notice of
Termination is given by Executive shall constitute Cause for
purposes of this Agreement.
(b) Disability. The Company may terminate Executive's
employment after having established Executive's Disability. For
purposes of this Agreement, "Disability" means a physical or
mental infirmity which impairs Executive's ability to
substantially perform his duties under this Agreement which
continues for a period of at least one hundred eighty (180)
consecutive days to be determined by a physician selected by
Company and acceptable to Executive. Executive shall be entitled
to the compensation and benefits provided for under this
Agreement for any period during Employment Term and prior to the
establishment of Executive's Disability during which Executive is
unable to work due to a physical or mental infirmity.
Notwithstanding anything contained in this Agreement to the
contrary, until the Termination Date specified in a Notice of
Termination relating to Executive's Disability, Executive shall
be entitled to return to his position with the Company as set
forth in this Agreement in which event no Disability of Executive
will be deemed to have occurred.
(c) Good Reason. During the Employment Term, the
Executive may terminate his employment for "Good Reason." For
purposes of this Agreement, "Good Reason" shall mean the
occurrence after the Effective Date of any of the events or
conditions described below:
(i) a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities), which, in the Executive's reasonable
judgment, represent an adverse change from his status,
title, position or responsibilities as in effect prior
to the Effective Date or any other action by the
Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for
this purpose an isolated, unsubstantial and inadvertent
action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof by
Executive;
(ii) a reduction in the Executive's Annual
Compensation as defined in paragraph 4 or any failure
to pay the Executive any compensation or benefits to
which he is entitled within seven (7) days of the date
due;
(iii) any material breach by the Company of any
provision of this Agreement, including, but not limited
to, the Company's failure to provide the Employee
Welfare and Pension Benefits and Pension Equalization
Plan as set forth in paragraphs 5 and 6 above;
(iv) The Company's requiring the Executive to be
based outside a 50-mile radius from Rapid City, South
Dakota, except for reasonably required travel on the
Company's business which is not substantially greater
than such travel requirements prior to the Effective
Date;
(v) Any purported termination of the Executive's
employment for Cause by the Company which does not
comply with the terms of Section 8(a) above; or
(vi) The failure of the Company to obtain an
agreement, satisfactory to the Executive, from any
successor or assign of the Company to assume and agree
to perform this Agreement, as contemplated in Section
12 hereof.
(d) Voluntary Termination. The Executive may
voluntarily terminate his employment hereunder at any time.
9. COMPENSATION UPON TERMINATION.
Upon termination of Executive's employment during the
Employment Term, Executive shall be entitled to the following
benefits:
(a) If Executive's employment with the Company shall
be terminated (i) by the Company for Cause or Disability, or
(ii) by reason of Executive's death, or (iii) by Executive
without "Good Reason," the Company shall pay Executive all
amounts earned or accrued through the Termination Date but not
paid as of the Termination Date, including all Annual
Compensation, reimbursement for reasonable and necessary expenses
incurred by Executive on behalf of the Company during the period
ending on the Termination Date, vacation pay and sick leave
(collectively "Accrued Compensation").
(b) If the Executive's employment with the Company
shall be terminated (other than by reason of death) (i) by the
Company other than for Cause or Disability, or (ii) by Executive
for Good Reason, Executive shall be entitled to the following:
(i) The Company shall pay Executive all Accrued
Compensation;
(ii) The Company shall pay Executive as severance
pay and in lieu of any further compensation for periods
subsequent to the Termination Date an amount in cash
equal to (w) 2.99 times (x) the Executive's average
Annual Compensation for the most recent five taxable
years ending prior to the Change in Control times (y) a
ratio, the numerator of which shall be the number of
months in the Remaining Term (a partial month being
considered a full month) and the denominator of which
shall be the number of months in the Employment Term
times (z) a ratio, the numerator of which shall be the
number of months in the Employment Term and the
denominator of which shall be 36 months;
(iii) During the "Remaining Term," the Company
shall at its expense continue on behalf of Executive
and his dependents and beneficiaries the Welfare
Benefits or similar benefits no less favorable than the
benefit levels and coverages provided in the Welfare
Benefits; provided, however, that the Company's
obligation with respect to the foregoing benefits shall
be limited to the extent that Executive obtains any
such benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide
Executive hereunder so long as the aggregate coverages
and benefits of the combined benefit plans is no less
favorable to Executive than the Welfare Benefits;
(iv) Executive shall be entitled to an amount of
credited service for vesting purposes under the Pension
Equalization Plan equal to the period of time in the
Remaining Term, and it shall be assumed for purposes of
determining benefits under the Pension Equalization
Plan, that Executive's employment continued during the
Remaining Term at the compensation level provided for
in Section 4 above. In addition, the Executive shall
be entitled to a supplemental Pension Plan benefit,
which shall be the excess, if any, of (x) the amount
that Executive would have been entitled to receive
under the Pension Plan as if (i) Executive received
additional credited service under the Pension Plan for
the Remaining Term and (ii) Executive's Annual
Compensation as defined in Section 4 above remained in
effect during the Remaining Term over (y) the amount
that Executive will actually receive under the Pension
Plan. This supplemental benefit shall be determined
using the same factors, actuarial or otherwise, as used
in determining Executive's Pension Plan benefit and
shall be payable at like terms and in like manner as
the Pension Plan benefit. This supplemental benefit is
not payable unless and until the Executive receives
Pension Plan benefits.
10. OFFSET.
Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, and except as provided in Section
9(b)(iii), such payments shall not be reduced whether or not
Executive obtains other employment.
11. TAX EFFECT.
Notwithstanding anything contained in this Agreement to the
contrary, if any payment received or to be received by Executive
pursuant to the terms of this Agreement or otherwise and in
connection with, or arising out of, Executive's employment with
the Company or a Change in Control ("Total Payments"), would not
be deductible by the Company (in whole or in part) as the result
of Section 280G of the Internal Revenue Code (the "Code"), the
amount determined under Section 9(b)(ii) shall be reduced until
no portion of the Total Payments is not nondeductible.
For purposes of determining whether any of the Total
Payments would not be deductible by the Company (1) Total
Payments will be treated as "Parachute Payments" within the
meaning of Section 280G(b)(2) of the Code and all Parachute
Payments in excess of the base amount within the meaning of
Section 280G(b)(3) will be treated as nondeductible unless, in
the opinion of tax counsel selected by the Company's independent
auditors and acceptable to Executive, such Total Payments (in
whole or in part) are not Parachute Payments, or such Parachute
Payments in excess of the base amount (in whole or in part) are
otherwise not nondeductible and (2) the value of any noncash
benefits or any deferred payment or benefit will be determined by
the Company's independent auditors in accordance with Section
280G(d)(3) and (4) of the Code.
12. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the
Company shall require any successor or assign to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession or assignment had taken place. The term
"Company" as used herein shall include such successors and
assigns. The term "successors and assigns" as used herein shall
mean a corporation or other entity acquiring all or substantially
all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the
laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal
personal representative.
13. FEES AND EXPENSES.
The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred
by the Executive subsequent to the Effective Date as they become
due as a result of the Executive seeking to obtain or enforce any
right or benefit provided by this Agreement.
14. NOTICE.
For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to
the other. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the
third business day after the mailing thereof, except that notice
of change of address shall be effective only upon receipt.
15. NONEXCLUSIVITY OF RIGHTS.
Nothing in this Agreement shall prevent or limit Executive's
continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any
of its subsidiaries and for which Executive may qualify, nor
shall anything herein limit or reduce such rights as Executive
may have under any other agreements with the Company or any of
its subsidiaries. Amounts which are vested benefits or which
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its subsidiaries shall be
payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
16. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and the Company. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this
Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the state of South
Dakota.
20. SEVERABILITY.
The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions
hereof.
18. NO GUARANTEED EMPLOYMENT.
Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between
Executive and the Company, the employment of Executive by the
Company is "at will" and, prior to the Effective Date, may be
terminated by either Executive or the Company at any time.
Moreover, if prior to the Effective Date, Executive's employment
with the Company terminates, Executive shall have no further
rights under this Agreement.
19. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the
parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the
parties hereto with respect to the subject matter hereof.
Dated the day and year first above written.
BLACK HILLS CORPORATION
By /c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman, President and Chief Executive
ATTEST:
/c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary and Treasurer
By /c/▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Executive
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") dated as of
January 30, 1996, is entered into by and between Black
Hills Corporation ("Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
and Chief Executive Officer of the Company ("Executive").
1. RECITALS.
The Board of Directors of the Company ("Board") has
determined that it is in the best interests of the Company and
its shareholders to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change in Control (as defined below).
Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
2. CERTAIN DEFINITIONS.
"CHANGE IN CONTROL" shall mean any of the
following events:
(1) An acquisition (other than directly from the
Company) of any common stock of the Company (the
"Common Stock") by any "Person" (as the term
person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), immediately after
which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of thirty percent (30%) or
more of the Common Stock of the Company; provided,
however, in determining whether a Change in
Control has occurred, Common Stock which is
acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control.
A "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other
Person of which a majority of its voting power or
its voting equity securities ("Voting Securities")
or equity interest is owned, directly or
indirectly, by the Company (for purposes of this
definition, a "Subsidiary"), (ii) the Company or
its Subsidiaries, or (iii) any Person in
connection with a "Non-Control Transaction" (as
hereinafter defined);
(2) The individuals who, as of January 30, 1996 are
members of the Board (the "Incumbent Board"),
cease for any reason to constitute at least two-
thirds of the members of the Board; provided,
however, that if the election, or nomination for
election by the Company's common shareholders, of
any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board;
provided further, however, that no individual
shall be considered a member of the Incumbent
Board if such individual initially assumed office
as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason
of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(3) Approval by shareholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless such merger,
consolidation or reorganization is a "Non-
Control Transaction." A "Non-Control
Transaction" shall mean a merger,
consolidation or reorganization of the
Company where:
(A) the shareholders of the Company,
immediately before such merger,
consolidation or reorganization, own
directly or indirectly immediately
following such merger, consolidation or
reorganization, at least seventy
percent (70%) of the combined voting
power of the outstanding Voting
Securities of the corporation resulting
from such merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially the same
proportion as their ownership of the
Voting Securities immediately before
such merger, consolidation or
reorganization.
(B) the individuals who were members of the
Incumbent Board immediately prior to
the execution of the agreement
providing for such merger,
consolidation or reorganization
constitute at least two-thirds of the
members of the board of directors of
the Surviving Corporation, or a
corporation beneficially directly or
indirectly owning a majority of the
Voting Securities of the Surviving
Corporation, and
(C) no Person other than (i) the Company,
(ii) any Subsidiary, (iii) any employee
benefit plan (or any trust forming a
part thereof) maintained by the
Company, the Surviving Corporation, or
any Subsidiary, or (iv) any Person who,
immediately prior to such merger,
consolidation or reorganization had
Beneficial Ownership of thirty percent
(30%) or more of the then outstanding
Voting Securities), has Beneficial
Ownership of thirty percent (30%) or
more of the combined voting power of
the Surviving Corporation's then
outstanding Voting Securities.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other
disposition of all or substantially all of
the assets of the Company to any Person
other than (x) a transfer to a Subsidiary or
(y) a sale or transfer of a Subsidiary by
the Company except if such sale or transfer
would be a sale or other disposition of all
or substantially all of the assets of the
Company.
(4) Notwithstanding the foregoing, (i) a Change in
Control shall not be deemed to occur solely
because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted
amount of the then outstanding Common Stock as a
result of the acquisition of Common Stock by the
Company which, by reducing the number of shares of
Common Stock then outstanding, increases the
proportional number of shares Beneficially Owned
by the Subject Persons, provided that if a Change
in Control would occur (but for the operation of
this sentence) as a result of the acquisition of
Common Stock by the Company, and after such stock
acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional
Common Stock which increases the percentage of the
then outstanding Common Stock Beneficially Owned
by the Subject Person, then a Change in Control
shall occur; and (ii) a Change in Control shall
not be deemed to occur unless and until all
regulatory approvals required to effect a Change
in Control of the Company have been obtained.
"EFFECTIVE DATE" shall mean the first date on which a
Change in Control occurs. The Effective Date does not
occur and no benefits shall be paid under this
Agreement if for any reason the Executive is not an
employee of the Company on the day prior to the
Effective Date.
"EMPLOYMENT TERM" shall mean a term of employment with
the Company which shall commence on the Effective Date
and which shall expire on the third anniversary of the
Effective Date; provided, however, that the Employment
Term shall in no event extend beyond the first day of
the month following the month in which the Executive
attains age sixty-five (65).
"GOOD CAUSE" means those events or conditions described
in paragraph 8(c)(i) through (vi) below.
"NOTICE OF TERMINATION" shall mean a notice which
indicates the specific termination provision in this
Agreement, if any, relied upon and shall set forth in
reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's
employment under the provisions so indicated. Any
purported termination by the Company or Executive shall
be communicated by written notice of termination to the
other.
"PENSION EQUALIZATION PLAN" is the Company's pension
equalization plan as amended and restated effective
January 27, 1995, and as amended from time to time
thereafter prior to the Effective Date.
"PENSION PLAN" is the Company's tax qualified defined
benefit pension plan as amended and restated effective
October 1, 1989, and as amended from time to time
thereafter prior to the Effective Date.
"REMAINING TERM" shall mean that period of time
measured from the Termination Date through the end of
the Employment Term.
"TERMINATION DATE" shall mean the date subsequent to a
Change in Control that the Executive's employment with
the Company terminates.
"WELFARE BENEFITS" shall mean the Black Hills
Corporation Medical and Dental Plan, the Black Hills
Corporation Flexible Benefit Plan, and the Black Hills
Corporation Employee Life and Long-Term Disability Plan
as the plans and the terms and conditions thereof exist
on the day prior to the Effective Date.
3. EMPLOYMENT.
Subject to the provisions of Section 8 hereof, during the
Employment Term, the Company agrees to continue to employ the
Executive and the Executive agrees to remain in the employ of the
Company. During the Employment Term, the Executive shall be
employed as the President and Chief Executive Officer of the
Company or in such executive capacity as may be mutually agreed
to in writing by the parties. Executive shall perform the
duties, undertake the responsibilities and exercise the authority
customarily performed, undertaken and exercised by persons
situated in a similar executive capacity.
During the Employment Term, excluding periods of vacation
and sick leave to which Executive is entitled, Executive agrees
to devote reasonable attention and time during usual business
hours to the business and affairs of the Company to the extent
necessary to discharge the responsibilities assigned to Executive
hereunder. It is expressly understood and agreed that to the
extent that any outside activities have been conducted by
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature
and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of
Executive's responsibilities to the Company.
4. COMPENSATION.
During the Employment Term, the Company agrees to pay or
cause to be paid to Executive annual compensation at a rate at
least equal to the highest rate of the Executive's annual
compensation as in effect at any time within one year preceding
the Effective Date, and as may be increased from time to time.
Such annual compensation shall be payable in accordance with the
Company's customary practices applicable to its executives. For
purposes of this Agreement, "annual compensation" shall mean all
compensation paid to the Executive by the Company during a
calendar year, which amounts are includable in the gross income
of the Executive for federal income tax purposes, including, but
not limited to, overtime, bonus, commission or incentive
compensation ("Annual Compensation").
5. EMPLOYEE WELFARE AND PENSION BENEFITS.
During the Employment Term, the Company shall provide to the
Executive the Welfare Benefits and the Pension Plan or other
substantially similar employee welfare and pension benefits, but
in no event on a basis less favorable in terms of benefit levels
and coverage than the Welfare Benefits and the Pension Plan.
6. PENSION EQUALIZATION PLAN.
During the Employment Term, the Company shall continue to
provide to Executive coverage and participation under the Pension
Equalization Plan or a substantially similar supplemental
retirement plan, but in no event on a basis less favorable in
terms of benefit levels and coverage than the Pension
Equalization Plan.
7. OTHER BENEFITS.
(a) Fringe Benefits, Perquisites, Vacation and Sick
Leave. During the Employment Term, Executive shall be entitled
to all fringe benefits, perquisites, vacation and sick leave
generally made available by the Company to its executives.
Unless otherwise provided herein, the fringe benefits,
perquisites, vacation and sick leave provided to Executive shall
be on the same basis and terms as other similarly situated
executives of the Company, but in no event shall be less
favorable than the most favorable fringe benefits, perquisites,
vacation and sick leave applicable to Executive at any time
within one year preceding the Effective Date, or if more
favorable, at any time thereafter.
(b) Expenses. Executive shall be entitled to receive
prompt reimbursement of all expenses reasonably incurred by him
in connection with the performance of his duties hereunder or for
promoting, pursuing or otherwise furthering the business or
interests of the Company.
8. TERMINATION.
During the Employment Term, Executive's employment hereunder
may be terminated under the following circumstances:
(a) Cause. The Company may terminate Executive's
employment for "Cause." A termination of employment is for
"Cause" if Executive (1) has been convicted of a felony or (2)
intentionally engaged in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise;
provided, however, that no termination of Executive's employment
shall be for Cause as set forth in clause (2) above until (i)
there shall have been delivered to Executive a copy of a written
notice setting forth that Executive was guilty of the conduct set
forth in clause (2) and specifying the particulars thereof in
detail, and (ii) Executive shall have been provided an
opportunity to be heard by the Board (with the assistance of
Executive's counsel if Executive so desires). No act, nor
failure to act, on Executive's part shall be considered
"intentional" unless he has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his
action or failure to act was in the best interest of the Company.
Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by Executive after a Notice of
Termination is given by Executive shall constitute Cause for
purposes of this Agreement.
(b) Disability. The Company may terminate Executive's
employment after having established Executive's Disability. For
purposes of this Agreement, "Disability" means a physical or
mental infirmity which impairs Executive's ability to
substantially perform his duties under this Agreement which
continues for a period of at least one hundred eighty (180)
consecutive days to be determined by a physician selected by
Company and acceptable to Executive. Executive shall be entitled
to the compensation and benefits provided for under this
Agreement for any period during Employment Term and prior to the
establishment of Executive's Disability during which Executive is
unable to work due to a physical or mental infirmity.
Notwithstanding anything contained in this Agreement to the
contrary, until the Termination Date specified in a Notice of
Termination relating to Executive's Disability, Executive shall
be entitled to return to his position with the Company as set
forth in this Agreement in which event no Disability of Executive
will be deemed to have occurred.
(c) Good Reason. During the Employment Term, the
Executive may terminate his employment for "Good Reason." For
purposes of this Agreement, "Good Reason" shall mean the
occurrence after the Effective Date of any of the events or
conditions described below:
(i) a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities), which, in the Executive's reasonable
judgment, represent an adverse change from his status,
title, position or responsibilities as in effect prior
to the Effective Date or any other action by the
Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for
this purpose an isolated, unsubstantial and inadvertent
action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof by
Executive;
(ii) a reduction in the Executive's Annual
Compensation as defined in paragraph 4 or any failure
to pay the Executive any compensation or benefits to
which he is entitled within seven (7) days of the date
due;
(iii) any material breach by the Company of any
provision of this Agreement, including, but not limited
to, the Company's failure to provide the Employee
Welfare and Pension Benefits and Pension Equalization
Plan as set forth in paragraphs 5 and 6 above;
(iv) The Company's requiring the Executive to be
based outside a 50-mile radius from Rapid City, South
Dakota, except for reasonably required travel on the
Company's business which is not substantially greater
than such travel requirements prior to the Effective
Date;
(v) Any purported termination of the Executive's
employment for Cause by the Company which does not
comply with the terms of Section 8(a) above; or
(vi) The failure of the Company to obtain an
agreement, satisfactory to the Executive, from any
successor or assign of the Company to assume and agree
to perform this Agreement, as contemplated in Section
12 hereof.
(d) Window Period. During the Window Period, the
Executive may terminate his employment for any reason. For
purposes of this Agreement, the "Window Period" shall mean the
30-day period immediately following the first anniversary of the
Effective Date.
(e) Voluntary Termination. The Executive may
voluntarily terminate his employment hereunder at any time.
9. COMPENSATION UPON TERMINATION.
Upon termination of Executive's employment during the
Employment Term, Executive shall be entitled to the following
benefits:
(a) If Executive's employment with the Company shall
be terminated (i) by the Company for Cause or Disability, or
(ii) by reason of Executive's death, or (iii) by Executive
without "Good Reason" or other than during the "Window Period",
the Company shall pay Executive all amounts earned or accrued
through the Termination Date but not paid as of the Termination
Date, including all Annual Compensation, reimbursement for
reasonable and necessary expenses incurred by Executive on behalf
of the Company during the period ending on the Termination Date,
vacation pay and sick leave (collectively "Accrued
Compensation").
(b) If the Executive's employment with the Company
shall be terminated (other than by reason of death) (i) by the
Company other than for Cause or Disability, or (ii) by Executive
for Good Reason or (iii) by the Executive for any reason during
the Window Period, Executive shall be entitled to the following:
(i) The Company shall pay Executive all Accrued
Compensation;
(ii) The Company shall pay Executive as severance
pay and in lieu of any further compensation for periods
subsequent to the Termination Date an amount in cash
equal to (w) 2.99 times (x) the Executive's average
Annual Compensation for the most recent five taxable
years ending prior to the Change in Control times (y) a
ratio, the numerator of which shall be the number of
months in the Remaining Term (a partial month being
considered a full month) and the denominator of which
shall be the number of months in the Employment Term
times (z) a ratio, the numerator of which shall be the
number of months in the Employment Term and the
denominator of which shall be 36 months;
(iii) During the "Remaining Term," the Company
shall at its expense continue on behalf of Executive
and his dependents and beneficiaries the Welfare
Benefits or similar benefits no less favorable than the
benefit levels and coverages provided in the Welfare
Benefits; provided, however, that the Company's
obligation with respect to the foregoing benefits shall
be limited to the extent that Executive obtains any
such benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide
Executive hereunder so long as the aggregate coverages
and benefits of the combined benefit plans is no less
favorable to Executive than the Welfare Benefits;
(iv) Executive shall be entitled to an amount of
credited service for vesting purposes under the Pension
Equalization Plan equal to the period of time in the
Remaining Term, and it shall be assumed for purposes of
determining benefits under the Pension Equalization
Plan, that Executive's employment continued during the
Remaining Term at the compensation level provided for
in Section 4 above. In addition, the Executive shall
be entitled to a supplemental Pension Plan benefit,
which shall be the excess, if any, of (x) the amount
that Executive would have been entitled to receive
under the Pension Plan as if (i) Executive received
additional credited service under the Pension Plan for
the Remaining Term and (ii) Executive's Annual
Compensation as defined in Section 4 above remained in
effect during the Remaining Term over (y) the amount
that Executive will actually receive under the Pension
Plan. This supplemental benefit shall be determined
using the same factors, actuarial or otherwise, as used
in determining Executive's Pension Plan benefit and
shall be payable at like terms and in like manner as
the Pension Plan benefit. This supplemental benefit is
not payable unless and until the Executive receives
Pension Plan benefits.
10. OFFSET.
Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, and except as provided in Section
9(b)(iii), such payments shall not be reduced whether or not
Executive obtains other employment.
11. TAX EFFECT.
Notwithstanding anything contained in this Agreement to the
contrary, if any payment received or to be received by Executive
pursuant to the terms of this Agreement or otherwise and in
connection with, or arising out of, Executive's employment with
the Company or a Change in Control ("Total Payments"), would not
be deductible by the Company (in whole or in part) as the result
of Section 280G of the Internal Revenue Code (the "Code"), the
amount determined under Section 9(b)(ii) shall be reduced until
no portion of the Total Payments is not nondeductible.
For purposes of determining whether any of the Total
Payments would not be deductible by the Company (1) Total
Payments will be treated as "Parachute Payments" within the
meaning of Section 280G(b)(2) of the Code and all Parachute
Payments in excess of the base amount within the meaning of
Section 280G(b)(3) will be treated as nondeductible unless, in
the opinion of tax counsel selected by the Company's independent
auditors and acceptable to Executive, such Total Payments (in
whole or in part) are not Parachute Payments, or such Parachute
Payments in excess of the base amount (in whole or in part) are
otherwise not nondeductible and (2) the value of any noncash
benefits or any deferred payment or benefit will be determined by
the Company's independent auditors in accordance with Section
280G(d)(3) and (4) of the Code.
12. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the
Company shall require any successor or assign to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession or assignment had taken place. The term
"Company" as used herein shall include such successors and
assigns. The term "successors and assigns" as used herein shall
mean a corporation or other entity acquiring all or substantially
all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the
laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal
personal representative.
13. FEES AND EXPENSES.
The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred
by the Executive subsequent to the Effective Date as they become
due as a result of the Executive seeking to obtain or enforce any
right or benefit provided by this Agreement.
14. NOTICE.
For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to
the other. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the
third business day after the mailing thereof, except that notice
of change of address shall be effective only upon receipt.
15. NONEXCLUSIVITY OF RIGHTS.
Nothing in this Agreement shall prevent or limit Executive's
continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any
of its subsidiaries and for which Executive may qualify, nor
shall anything herein limit or reduce such rights as Executive
may have under any other agreements with the Company or any of
its subsidiaries. Amounts which are vested benefits or which
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its subsidiaries shall be
payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
16. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and the Company. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this
Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the state of South
Dakota.
20. SEVERABILITY.
The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions
hereof.
18. NO GUARANTEED EMPLOYMENT.
Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between
Executive and the Company, the employment of Executive by the
Company is "at will" and, prior to the Effective Date, may be
terminated by either Executive or the Company at any time.
Moreover, if prior to the Effective Date, Executive's employment
with the Company terminates, Executive shall have no further
rights under this Agreement.
19. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the
parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the
parties hereto with respect to the subject matter hereof.
Dated the day and year first above written.
BLACK HILLS CORPORATION
By /c/▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President - Finance
ATTEST:
/c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary and Treasurer
By /c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") dated as of
January 30, 1996, is entered into by and between Black
Hills Corporation ("Company") and ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President -
Administration ("Executive").
1. RECITALS.
The Board of Directors of the Company ("Board") has
determined that it is in the best interests of the Company and
its shareholders to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change in Control (as defined below).
Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
2. CERTAIN DEFINITIONS.
"CHANGE IN CONTROL" shall mean any of the
following events:
(1) An acquisition (other than directly from the
Company) of any common stock of the Company (the
"Common Stock") by any "Person" (as the term
person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), immediately after
which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of thirty percent (30%) or
more of the Common Stock of the Company; provided,
however, in determining whether a Change in
Control has occurred, Common Stock which is
acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control.
A "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other
Person of which a majority of its voting power or
its voting equity securities ("Voting Securities")
or equity interest is owned, directly or
indirectly, by the Company (for purposes of this
definition, a "Subsidiary"), (ii) the Company or
its Subsidiaries, or (iii) any Person in
connection with a "Non-Control Transaction" (as
hereinafter defined);
(2) The individuals who, as of January 30, 1996 are
members of the Board (the "Incumbent Board"),
cease for any reason to constitute at least two-
thirds of the members of the Board; provided,
however, that if the election, or nomination for
election by the Company's common shareholders, of
any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board;
provided further, however, that no individual
shall be considered a member of the Incumbent
Board if such individual initially assumed office
as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason
of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(3) Approval by shareholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless such merger,
consolidation or reorganization is a "Non-
Control Transaction." A "Non-Control
Transaction" shall mean a merger,
consolidation or reorganization of the
Company where:
(A) the shareholders of the Company,
immediately before such merger,
consolidation or reorganization, own
directly or indirectly immediately
following such merger, consolidation or
reorganization, at least seventy
percent (70%) of the combined voting
power of the outstanding Voting
Securities of the corporation resulting
from such merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially the same
proportion as their ownership of the
Voting Securities immediately before
such merger, consolidation or
reorganization.
(B) the individuals who were members of the
Incumbent Board immediately prior to
the execution of the agreement
providing for such merger,
consolidation or reorganization
constitute at least two-thirds of the
members of the board of directors of
the Surviving Corporation, or a
corporation beneficially directly or
indirectly owning a majority of the
Voting Securities of the Surviving
Corporation, and
(C) no Person other than (i) the Company,
(ii) any Subsidiary, (iii) any employee
benefit plan (or any trust forming a
part thereof) maintained by the
Company, the Surviving Corporation, or
any Subsidiary, or (iv) any Person who,
immediately prior to such merger,
consolidation or reorganization had
Beneficial Ownership of thirty percent
(30%) or more of the then outstanding
Voting Securities), has Beneficial
Ownership of thirty percent (30%) or
more of the combined voting power of
the Surviving Corporation's then
outstanding Voting Securities.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other
disposition of all or substantially all of
the assets of the Company to any Person
other than (x) a transfer to a Subsidiary or
(y) a sale or transfer of a Subsidiary by
the Company except if such sale or transfer
would be a sale or other disposition of all
or substantially all of the assets of the
Company.
(4) Notwithstanding the foregoing, (i) a Change in
Control shall not be deemed to occur solely
because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted
amount of the then outstanding Common Stock as a
result of the acquisition of Common Stock by the
Company which, by reducing the number of shares of
Common Stock then outstanding, increases the
proportional number of shares Beneficially Owned
by the Subject Persons, provided that if a Change
in Control would occur (but for the operation of
this sentence) as a result of the acquisition of
Common Stock by the Company, and after such stock
acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional
Common Stock which increases the percentage of the
then outstanding Common Stock Beneficially Owned
by the Subject Person, then a Change in Control
shall occur; and (ii) a Change in Control shall
not be deemed to occur unless and until all
regulatory approvals required to effect a Change
in Control of the Company have been obtained.
"EFFECTIVE DATE" shall mean the first date on which a
Change in Control occurs. The Effective Date does not
occur and no benefits shall be paid under this
Agreement if for any reason the Executive is not an
employee of the Company on the day prior to the
Effective Date.
"EMPLOYMENT TERM" shall mean a term of employment with
the Company which shall commence on the Effective Date
and which shall expire on the third anniversary of the
Effective Date; provided, however, that the Employment
Term shall in no event extend beyond the first day of
the month following the month in which the Executive
attains age sixty-five (65).
"GOOD CAUSE" means those events or conditions described
in paragraph 8(c)(i) through (vi) below.
"NOTICE OF TERMINATION" shall mean a notice which
indicates the specific termination provision in this
Agreement, if any, relied upon and shall set forth in
reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's
employment under the provisions so indicated. Any
purported termination by the Company or Executive shall
be communicated by written notice of termination to the
other.
"PENSION EQUALIZATION PLAN" is the Company's pension
equalization plan as amended and restated effective
January 27, 1995, and as amended from time to time
thereafter prior to the Effetive Date.
"PENSION PLAN" is the Company's tax qualified defined
benefit pension plan as amended and restated effective
October 1, 1989, and as amended from time to time
thereafter prior to the Effective Date.
"REMAINING TERM" shall mean that period of time
measured from the Termination Date through the end of
the Employment Term.
"TERMINATION DATE" shall mean the date subsequent to a
Change in Control that the Executive's employment with
the Company terminates.
"WELFARE BENEFITS" shall mean the Black Hills
Corporation Medical and Dental Plan, the Black Hills
Corporation Flexible Benefit Plan, and the Black Hills
Corporation Employee Life and Long-Term Disability Plan
as the plans and the terms and conditions thereof exist
on the day prior to the Effective Date.
3. EMPLOYMENT.
Subject to the provisions of Section 8 hereof, during the
Employment Term, the Company agrees to continue to employ the
Executive and the Executive agrees to remain in the employ of the
Company. During the Employment Term, the Executive shall be
employed as the Vice President - Administration of the Company or
in such executive capacity as may be mutually agreed to in
writing by the parties. Executive shall perform the duties,
undertake the responsibilities and exercise the authority
customarily performed, undertaken and exercised by persons
situated in a similar executive capacity.
During the Employment Term, excluding periods of vacation
and sick leave to which Executive is entitled, Executive agrees
to devote reasonable attention and time during usual business
hours to the business and affairs of the Company to the extent
necessary to discharge the responsibilities assigned to Executive
hereunder. It is expressly understood and agreed that to the
extent that any outside activities have been conducted by
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature
and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of
Executive's responsibilities to the Company.
4. COMPENSATION.
During the Employment Term, the Company agrees to pay or
cause to be paid to Executive annual compensation at a rate at
least equal to the highest rate of the Executive's annual
compensation as in effect at any time within one year preceding
the Effective Date, and as may be increased from time to time.
Such annual compensation shall be payable in accordance with the
Company's customary practices applicable to its executives. For
purposes of this Agreement, "annual compensation" shall mean all
compensation paid to the Executive by the Company during a
calendar year, which amounts are includable in the gross income
of the Executive for federal income tax purposes, including, but
not limited to, overtime, bonus, commission or incentive
compensation ("Annual Compensation").
5. EMPLOYEE WELFARE AND PENSION BENEFITS.
During the Employment Term, the Company shall provide to the
Executive the Welfare Benefits and the Pension Plan or other
substantially similar employee welfare and pension benefits, but
in no event on a basis less favorable in terms of benefit levels
and coverage than the Welfare Benefits and the Pension Plan.
6. PENSION EQUALIZATION PLAN.
During the Employment Term, the Company shall continue to
provide to Executive coverage and participation under the Pension
Equalization Plan or a substantially similar supplemental
retirement plan, but in no event on a basis less favorable in
terms of benefit levels and coverage than the Pension
Equalization Plan.
7. OTHER BENEFITS.
(a) Fringe Benefits, Perquisites, Vacation and Sick
Leave. During the Employment Term, Executive shall be entitled
to all fringe benefits, perquisites, vacation and sick leave
generally made available by the Company to its executives.
Unless otherwise provided herein, the fringe benefits,
perquisites, vacation and sick leave provided to Executive shall
be on the same basis and terms as other similarly situated
executives of the Company, but in no event shall be less
favorable than the most favorable fringe benefits, perquisites,
vacation and sick leave applicable to Executive at any time
within one year preceding the Effective Date, or if more
favorable, at any time thereafter.
(b) Expenses. Executive shall be entitled to receive
prompt reimbursement of all expenses reasonably incurred by him
in connection with the performance of his duties hereunder or for
promoting, pursuing or otherwise furthering the business or
interests of the Company.
8. TERMINATION.
During the Employment Term, Executive's employment hereunder
may be terminated under the following circumstances:
(a) Cause. The Company may terminate Executive's
employment for "Cause." A termination of employment is for
"Cause" if Executive (1) has been convicted of a felony or (2)
intentionally engaged in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise;
provided, however, that no termination of Executive's employment
shall be for Cause as set forth in clause (2) above until (i)
there shall have been delivered to Executive a copy of a written
notice setting forth that Executive was guilty of the conduct set
forth in clause (2) and specifying the particulars thereof in
detail, and (ii) Executive shall have been provided an
opportunity to be heard by the Board (with the assistance of
Executive's counsel if Executive so desires). No act, nor
failure to act, on Executive's part shall be considered
"intentional" unless he has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his
action or failure to act was in the best interest of the Company.
Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by Executive after a Notice of
Termination is given by Executive shall constitute Cause for
purposes of this Agreement.
(b) Disability. The Company may terminate Executive's
employment after having established Executive's Disability. For
purposes of this Agreement, "Disability" means a physical or
mental infirmity which impairs Executive's ability to
substantially perform his duties under this Agreement which
continues for a period of at least one hundred eighty (180)
consecutive days to be determined by a physician selected by
Company and acceptable to Executive. Executive shall be entitled
to the compensation and benefits provided for under this
Agreement for any period during Employment Term and prior to the
establishment of Executive's Disability during which Executive is
unable to work due to a physical or mental infirmity.
Notwithstanding anything contained in this Agreement to the
contrary, until the Termination Date specified in a Notice of
Termination relating to Executive's Disability, Executive shall
be entitled to return to his position with the Company as set
forth in this Agreement in which event no Disability of Executive
will be deemed to have occurred.
(c) Good Reason. During the Employment Term, the
Executive may terminate his employment for "Good Reason." For
purposes of this Agreement, "Good Reason" shall mean the
occurrence after the Effective Date of any of the events or
conditions described below:
(i) a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities), which, in the Executive's reasonable
judgment, represent an adverse change from his status,
title, position or responsibilities as in effect prior
to the Effective Date or any other action by the
Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for
this purpose an isolated, unsubstantial and inadvertent
action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof by
Executive;
(ii) a reduction in the Executive's Annual
Compensation as defined in paragraph 4 or any failure
to pay the Executive any compensation or benefits to
which he is entitled within seven (7) days of the date
due;
(iii) any material breach by the Company of any
provision of this Agreement, including, but not limited
to, the Company's failure to provide the Employee
Welfare and Pension Benefits and Pension Equalization
Plan as set forth in paragraphs 5 and 6 above;
(iv) The Company's requiring the Executive to be
based outside a 50-mile radius from Rapid City, South
Dakota, except for reasonably required travel on the
Company's business which is not substantially greater
than such travel requirements prior to the Effective
Date;
(v) Any purported termination of the Executive's
employment for Cause by the Company which does not
comply with the terms of Section 8(a) above; or
(vi) The failure of the Company to obtain an
agreement, satisfactory to the Executive, from any
successor or assign of the Company to assume and agree
to perform this Agreement, as contemplated in Section
12 hereof.
(d) Voluntary Termination. The Executive may
voluntarily terminate his employment hereunder at any time.
9. COMPENSATION UPON TERMINATION.
Upon termination of Executive's employment during the
Employment Term, Executive shall be entitled to the following
benefits:
(a) If Executive's employment with the Company shall
be terminated (i) by the Company for Cause or Disability, or
(ii) by reason of Executive's death, or (iii) by Executive
without "Good Reason," the Company shall pay Executive all
amounts earned or accrued through the Termination Date but not
paid as of the Termination Date, including all Annual
Compensation, reimbursement for reasonable and necessary expenses
incurred by Executive on behalf of the Company during the period
ending on the Termination Date, vacation pay and sick leave
(collectively "Accrued Compensation").
(b) If the Executive's employment with the Company
shall be terminated (other than by reason of death) (i) by the
Company other than for Cause or Disability, or (ii) by Executive
for Good Reason, Executive shall be entitled to the following:
(i) The Company shall pay Executive all Accrued
Compensation;
(ii) The Company shall pay Executive as severance
pay and in lieu of any further compensation for periods
subsequent to the Termination Date an amount in cash
equal to (w) 2.99 times (x) the Executive's average
Annual Compensation for the most recent five taxable
years ending prior to the Change in Control times (y) a
ratio, the numerator of which shall be the number of
months in the Remaining Term (a partial month being
considered a full month) and the denominator of which
shall be the number of months in the Employment Term
times (z) a ratio, the numerator of which shall be the
number of months in the Employment Term and the
denominator of which shall be 36 months;
(iii) During the "Remaining Term," the Company
shall at its expense continue on behalf of Executive
and his dependents and beneficiaries the Welfare
Benefits or similar benefits no less favorable than the
benefit levels and coverages provided in the Welfare
Benefits; provided, however, that the Company's
obligation with respect to the foregoing benefits shall
be limited to the extent that Executive obtains any
such benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide
Executive hereunder so long as the aggregate coverages
and benefits of the combined benefit plans is no less
favorable to Executive than the Welfare Benefits;
(iv) Executive shall be entitled to an amount of
credited service for vesting purposes under the Pension
Equalization Plan equal to the period of time in the
Remaining Term, and it shall be assumed for purposes of
determining benefits under the Pension Equalization
Plan, that Executive's employment continued during the
Remaining Term at the compensation level provided for
in Section 4 above. In addition, the Executive shall
be entitled to a supplemental Pension Plan benefit,
which shall be the excess, if any, of (x) the amount
that Executive would have been entitled to receive
under the Pension Plan as if (i) Executive received
additional credited service under the Pension Plan for
the Remaining Term and (ii) Executive's Annual
Compensation as defined in Section 4 above remained in
effect during the Remaining Term over (y) the amount
that Executive will actually receive under the Pension
Plan. This supplemental benefit shall be determined
using the same factors, actuarial or otherwise, as used
in determining Executive's Pension Plan benefit and
shall be payable at like terms and in like manner as
the Pension Plan benefit. This supplemental benefit is
not payable unless and until the Executive receives
Pension Plan benefits.
10. OFFSET.
Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, and except as provided in Section
9(b)(iii), such payments shall not be reduced whether or not
Executive obtains other employment.
11. TAX EFFECT.
Notwithstanding anything contained in this Agreement to the
contrary, if any payment received or to be received by Executive
pursuant to the terms of this Agreement or otherwise and in
connection with, or arising out of, Executive's employment with
the Company or a Change in Control ("Total Payments"), would not
be deductible by the Company (in whole or in part) as the result
of Section 280G of the Internal Revenue Code (the "Code"), the
amount determined under Section 9(b)(ii) shall be reduced until
no portion of the Total Payments is not nondeductible.
For purposes of determining whether any of the Total
Payments would not be deductible by the Company (1) Total
Payments will be treated as "Parachute Payments" within the
meaning of Section 280G(b)(2) of the Code and all Parachute
Payments in excess of the base amount within the meaning of
Section 280G(b)(3) will be treated as nondeductible unless, in
the opinion of tax counsel selected by the Company's independent
auditors and acceptable to Executive, such Total Payments (in
whole or in part) are not Parachute Payments, or such Parachute
Payments in excess of the base amount (in whole or in part) are
otherwise not nondeductible and (2) the value of any noncash
benefits or any deferred payment or benefit will be determined by
the Company's independent auditors in accordance with Section
280G(d)(3) and (4) of the Code.
12. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the
Company shall require any successor or assign to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession or assignment had taken place. The term
"Company" as used herein shall include such successors and
assigns. The term "successors and assigns" as used herein shall
mean a corporation or other entity acquiring all or substantially
all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the
laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal
personal representative.
13. FEES AND EXPENSES.
The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred
by the Executive subsequent to the Effective Date as they become
due as a result of the Executive seeking to obtain or enforce any
right or benefit provided by this Agreement.
14. NOTICE.
For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to
the other. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the
third business day after the mailing thereof, except that notice
of change of address shall be effective only upon receipt.
15. NONEXCLUSIVITY OF RIGHTS.
Nothing in this Agreement shall prevent or limit Executive's
continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any
of its subsidiaries and for which Executive may qualify, nor
shall anything herein limit or reduce such rights as Executive
may have under any other agreements with the Company or any of
its subsidiaries. Amounts which are vested benefits or which
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its subsidiaries shall be
payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
16. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and the Company. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this
Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the state of South
Dakota.
20. SEVERABILITY.
The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions
hereof.
18. NO GUARANTEED EMPLOYMENT.
Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between
Executive and the Company, the employment of Executive by the
Company is "at will" and, prior to the Effective Date, may be
terminated by either Executive or the Company at any time.
Moreover, if prior to the Effective Date, Executive's employment
with the Company terminates, Executive shall have no further
rights under this Agreement.
19. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the
parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the
parties hereto with respect to the subject matter hereof.
Dated the day and year first above written.
BLACK HILLS CORPORATION
By /c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman, President and Chief Executive
ATTEST:
/c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary and Treasurer
By /c/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") dated as of
January 30, 1996, is entered into by and between Black
Hills Corporation ("Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice
President - Power Supply ("Executive").
1. RECITALS.
The Board of Directors of the Company ("Board") has
determined that it is in the best interests of the Company and
its shareholders to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change in Control (as defined below).
Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
2. CERTAIN DEFINITIONS.
"CHANGE IN CONTROL" shall mean any of the
following events:
(1) An acquisition (other than directly from the
Company) of any common stock of the Company (the
"Common Stock") by any "Person" (as the term
person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), immediately after
which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of thirty percent (30%) or
more of the Common Stock of the Company; provided,
however, in determining whether a Change in
Control has occurred, Common Stock which is
acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control.
A "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a
trust forming a part thereof) maintained by
(A) the Company or (B) any corporation or other
Person of which a majority of its voting power or
its voting equity securities ("Voting Securities")
or equity interest is owned, directly or
indirectly, by the Company (for purposes of this
definition, a "Subsidiary"), (ii) the Company or
its Subsidiaries, or (iii) any Person in
connection with a "Non-Control Transaction" (as
hereinafter defined);
(2) The individuals who, as of January 30, 1996 are
members of the Board (the "Incumbent Board"),
cease for any reason to constitute at least two-
thirds of the members of the Board; provided,
however, that if the election, or nomination for
election by the Company's common shareholders, of
any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board;
provided further, however, that no individual
shall be considered a member of the Incumbent
Board if such individual initially assumed office
as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason
of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(3) Approval by shareholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless such merger,
consolidation or reorganization is a "Non-
Control Transaction." A "Non-Control
Transaction" shall mean a merger,
consolidation or reorganization of the
Company where:
(A) the shareholders of the Company,
immediately before such merger,
consolidation or reorganization, own
directly or indirectly immediately
following such merger, consolidation or
reorganization, at least seventy
percent (70%) of the combined voting
power of the outstanding Voting
Securities of the corporation resulting
from such merger or consolidation or
reorganization (the "Surviving
Corporation") in substantially the same
proportion as their ownership of the
Voting Securities immediately before
such merger, consolidation or
reorganization.
(B) the individuals who were members of the
Incumbent Board immediately prior to
the execution of the agreement
providing for such merger,
consolidation or reorganization
constitute at least two-thirds of the
members of the board of directors of
the Surviving Corporation, or a
corporation beneficially directly or
indirectly owning a majority of the
Voting Securities of the Surviving
Corporation, and
(C) no Person other than (i) the Company,
(ii) any Subsidiary, (iii) any employee
benefit plan (or any trust forming a
part thereof) maintained by the
Company, the Surviving Corporation, or
any Subsidiary, or (iv) any Person who,
immediately prior to such merger,
consolidation or reorganization had
Beneficial Ownership of thirty percent
(30%) or more of the then outstanding
Voting Securities), has Beneficial
Ownership of thirty percent (30%) or
more of the combined voting power of
the Surviving Corporation's then
outstanding Voting Securities.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) An agreement for the sale or other
disposition of all or substantially all of
the assets of the Company to any Person
other than (x) a transfer to a Subsidiary or
(y) a sale or transfer of a Subsidiary by
the Company except if such sale or transfer
would be a sale or other disposition of all
or substantially all of the assets of the
Company.
(4) Notwithstanding the foregoing, (i) a Change in
Control shall not be deemed to occur solely
because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted
amount of the then outstanding Common Stock as a
result of the acquisition of Common Stock by the
Company which, by reducing the number of shares of
Common Stock then outstanding, increases the
proportional number of shares Beneficially Owned
by the Subject Persons, provided that if a Change
in Control would occur (but for the operation of
this sentence) as a result of the acquisition of
Common Stock by the Company, and after such stock
acquisition by the Company, the Subject Person
becomes the Beneficial Owner of any additional
Common Stock which increases the percentage of the
then outstanding Common Stock Beneficially Owned
by the Subject Person, then a Change in Control
shall occur; and (ii) a Change in Control shall
not be deemed to occur unless and until all
regulatory approvals required to effect a Change
in Control of the Company have been obtained.
"EFFECTIVE DATE" shall mean the first date on which a
Change in Control occurs. The Effective Date does not
occur and no benefits shall be paid under this
Agreement if for any reason the Executive is not an
employee of the Company on the day prior to the
Effective Date.
"EMPLOYMENT TERM" shall mean a term of employment with
the Company which shall commence on the Effective Date
and which shall expire on the third anniversary of the
Effective Date; provided, however, that the Employment
Term shall in no event extend beyond the first day of
the month following the month in which the Executive
attains age sixty-five (65).
"GOOD CAUSE" means those events or conditions described
in paragraph 8(c)(i) through (vi) below.
"NOTICE OF TERMINATION" shall mean a notice which
indicates the specific termination provision in this
Agreement, if any, relied upon and shall set forth in
reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's
employment under the provisions so indicated. Any
purported termination by the Company or Executive shall
be communicated by written notice of termination to the
other.
"PENSION EQUALIZATION PLAN" is the Company's pension
equalization plan as amended and restated effective
January 27, 1995, and as amended from time to time
thereafter prior to the Effetive Date.
"PENSION PLAN" is the Company's tax qualified defined
benefit pension plan as amended and restated effective
October 1, 1989, and as amended from time to time
thereafter prior to the Effective Date.
"REMAINING TERM" shall mean that period of time
measured from the Termination Date through the end of
the Employment Term.
"TERMINATION DATE" shall mean the date subsequent to a
Change in Control that the Executive's employment with
the Company terminates.
"WELFARE BENEFITS" shall mean the Black Hills
Corporation Medical and Dental Plan, the Black Hills
Corporation Flexible Benefit Plan, and the Black Hills
Corporation Employee Life and Long-Term Disability Plan
as the plans and the terms and conditions thereof exist
on the day prior to the Effective Date.
3. EMPLOYMENT.
Subject to the provisions of Section 8 hereof, during the
Employment Term, the Company agrees to continue to employ the
Executive and the Executive agrees to remain in the employ of the
Company. During the Employment Term, the Executive shall be
employed as the Vice President - Power Supply of the Company or
in such executive capacity as may be mutually agreed to in
writing by the parties. Executive shall perform the duties,
undertake the responsibilities and exercise the authority
customarily performed, undertaken and exercised by persons
situated in a similar executive capacity.
During the Employment Term, excluding periods of vacation
and sick leave to which Executive is entitled, Executive agrees
to devote reasonable attention and time during usual business
hours to the business and affairs of the Company to the extent
necessary to discharge the responsibilities assigned to Executive
hereunder. It is expressly understood and agreed that to the
extent that any outside activities have been conducted by
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature
and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of
Executive's responsibilities to the Company.
4. COMPENSATION.
During the Employment Term, the Company agrees to pay or
cause to be paid to Executive annual compensation at a rate at
least equal to the highest rate of the Executive's annual
compensation as in effect at any time within one year preceding
the Effective Date, and as may be increased from time to time.
Such annual compensation shall be payable in accordance with the
Company's customary practices applicable to its executives. For
purposes of this Agreement, "annual compensation" shall mean all
compensation paid to the Executive by the Company during a
calendar year, which amounts are includable in the gross income
of the Executive for federal income tax purposes, including, but
not limited to, overtime, bonus, commission or incentive
compensation ("Annual Compensation").
5. EMPLOYEE WELFARE AND PENSION BENEFITS.
During the Employment Term, the Company shall provide to the
Executive the Welfare Benefits and the Pension Plan or other
substantially similar employee welfare and pension benefits, but
in no event on a basis less favorable in terms of benefit levels
and coverage than the Welfare Benefits and the Pension Plan.
6. PENSION EQUALIZATION PLAN.
During the Employment Term, the Company shall continue to
provide to Executive coverage and participation under the Pension
Equalization Plan or a substantially similar supplemental
retirement plan, but in no event on a basis less favorable in
terms of benefit levels and coverage than the Pension
Equalization Plan.
7. OTHER BENEFITS.
(a) Fringe Benefits, Perquisites, Vacation and Sick
Leave. During the Employment Term, Executive shall be entitled
to all fringe benefits, perquisites, vacation and sick leave
generally made available by the Company to its executives.
Unless otherwise provided herein, the fringe benefits,
perquisites, vacation and sick leave provided to Executive shall
be on the same basis and terms as other similarly situated
executives of the Company, but in no event shall be less
favorable than the most favorable fringe benefits, perquisites,
vacation and sick leave applicable to Executive at any time
within one year preceding the Effective Date, or if more
favorable, at any time thereafter.
(b) Expenses. Executive shall be entitled to receive
prompt reimbursement of all expenses reasonably incurred by him
in connection with the performance of his duties hereunder or for
promoting, pursuing or otherwise furthering the business or
interests of the Company.
8. TERMINATION.
During the Employment Term, Executive's employment hereunder
may be terminated under the following circumstances:
(a) Cause. The Company may terminate Executive's
employment for "Cause." A termination of employment is for
"Cause" if Executive (1) has been convicted of a felony or (2)
intentionally engaged in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise;
provided, however, that no termination of Executive's employment
shall be for Cause as set forth in clause (2) above until (i)
there shall have been delivered to Executive a copy of a written
notice setting forth that Executive was guilty of the conduct set
forth in clause (2) and specifying the particulars thereof in
detail, and (ii) Executive shall have been provided an
opportunity to be heard by the Board (with the assistance of
Executive's counsel if Executive so desires). No act, nor
failure to act, on Executive's part shall be considered
"intentional" unless he has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his
action or failure to act was in the best interest of the Company.
Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by Executive after a Notice of
Termination is given by Executive shall constitute Cause for
purposes of this Agreement.
(b) Disability. The Company may terminate Executive's
employment after having established Executive's Disability. For
purposes of this Agreement, "Disability" means a physical or
mental infirmity which impairs Executive's ability to
substantially perform his duties under this Agreement which
continues for a period of at least one hundred eighty (180)
consecutive days to be determined by a physician selected by
Company and acceptable to Executive. Executive shall be entitled
to the compensation and benefits provided for under this
Agreement for any period during Employment Term and prior to the
establishment of Executive's Disability during which Executive is
unable to work due to a physical or mental infirmity.
Notwithstanding anything contained in this Agreement to the
contrary, until the Termination Date specified in a Notice of
Termination relating to Executive's Disability, Executive shall
be entitled to return to his position with the Company as set
forth in this Agreement in which event no Disability of Executive
will be deemed to have occurred.
(c) Good Reason. During the Employment Term, the
Executive may terminate his employment for "Good Reason." For
purposes of this Agreement, "Good Reason" shall mean the
occurrence after the Effective Date of any of the events or
conditions described below:
(i) a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities), which, in the Executive's reasonable
judgment, represent an adverse change from his status,
title, position or responsibilities as in effect prior
to the Effective Date or any other action by the
Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for
this purpose an isolated, unsubstantial and inadvertent
action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof by
Executive;
(ii) a reduction in the Executive's Annual
Compensation as defined in paragraph 4 or any failure
to pay the Executive any compensation or benefits to
which he is entitled within seven (7) days of the date
due;
(iii) any material breach by the Company of any
provision of this Agreement, including, but not limited
to, the Company's failure to provide the Employee
Welfare and Pension Benefits and Pension Equalization
Plan as set forth in paragraphs 5 and 6 above;
(iv) The Company's requiring the Executive to be
based outside a 50-mile radius from Rapid City, South
Dakota, except for reasonably required travel on the
Company's business which is not substantially greater
than such travel requirements prior to the Effective
Date;
(v) Any purported termination of the Executive's
employment for Cause by the Company which does not
comply with the terms of Section 8(a) above; or
(vi) The failure of the Company to obtain an
agreement, satisfactory to the Executive, from any
successor or assign of the Company to assume and agree
to perform this Agreement, as contemplated in Section
12 hereof.
(d) Voluntary Termination. The Executive may
voluntarily terminate his employment hereunder at any time.
9. COMPENSATION UPON TERMINATION.
Upon termination of Executive's employment during the
Employment Term, Executive shall be entitled to the following
benefits:
(a) If Executive's employment with the Company shall
be terminated (i) by the Company for Cause or Disability, or
(ii) by reason of Executive's death, or (iii) by Executive
without "Good Reason," the Company shall pay Executive all
amounts earned or accrued through the Termination Date but not
paid as of the Termination Date, including all Annual
Compensation, reimbursement for reasonable and necessary expenses
incurred by Executive on behalf of the Company during the period
ending on the Termination Date, vacation pay and sick leave
(collectively "Accrued Compensation").
(b) If the Executive's employment with the Company
shall be terminated (other than by reason of death) (i) by the
Company other than for Cause or Disability, or (ii) by Executive
for Good Reason, Executive shall be entitled to the following:
(i) The Company shall pay Executive all Accrued
Compensation;
(ii) The Company shall pay Executive as severance
pay and in lieu of any further compensation for periods
subsequent to the Termination Date an amount in cash
equal to (w) 2.99 times (x) the Executive's average
Annual Compensation for the most recent five taxable
years ending prior to the Change in Control times (y) a
ratio, the numerator of which shall be the number of
months in the Remaining Term (a partial month being
considered a full month) and the denominator of which
shall be the number of months in the Employment Term
times (z) a ratio, the numerator of which shall be the
number of months in the Employment Term and the
denominator of which shall be 36 months;
(iii) During the "Remaining Term," the Company
shall at its expense continue on behalf of Executive
and his dependents and beneficiaries the Welfare
Benefits or similar benefits no less favorable than the
benefit levels and coverages provided in the Welfare
Benefits; provided, however, that the Company's
obligation with respect to the foregoing benefits shall
be limited to the extent that Executive obtains any
such benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide
Executive hereunder so long as the aggregate coverages
and benefits of the combined benefit plans is no less
favorable to Executive than the Welfare Benefits;
(iv) Executive shall be entitled to an amount of
credited service for vesting purposes under the Pension
Equalization Plan equal to the period of time in the
Remaining Term, and it shall be assumed for purposes of
determining benefits under the Pension Equalization
Plan, that Executive's employment continued during the
Remaining Term at the compensation level provided for
in Section 4 above. In addition, the Executive shall
be entitled to a supplemental Pension Plan benefit,
which shall be the excess, if any, of (x) the amount
that Executive would have been entitled to receive
under the Pension Plan as if (i) Executive received
additional credited service under the Pension Plan for
the Remaining Term and (ii) Executive's Annual
Compensation as defined in Section 4 above remained in
effect during the Remaining Term over (y) the amount
that Executive will actually receive under the Pension
Plan. This supplemental benefit shall be determined
using the same factors, actuarial or otherwise, as used
in determining Executive's Pension Plan benefit and
shall be payable at like terms and in like manner as
the Pension Plan benefit. This supplemental benefit is
not payable unless and until the Executive receives
Pension Plan benefits.
10. OFFSET.
Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other
employment or otherwise, and except as provided in Section
9(b)(iii), such payments shall not be reduced whether or not
Executive obtains other employment.
11. TAX EFFECT.
Notwithstanding anything contained in this Agreement to the
contrary, if any payment received or to be received by Executive
pursuant to the terms of this Agreement or otherwise and in
connection with, or arising out of, Executive's employment with
the Company or a Change in Control ("Total Payments"), would not
be deductible by the Company (in whole or in part) as the result
of Section 280G of the Internal Revenue Code (the "Code"), the
amount determined under Section 9(b)(ii) shall be reduced until
no portion of the Total Payments is not nondeductible.
For purposes of determining whether any of the Total
Payments would not be deductible by the Company (1) Total
Payments will be treated as "Parachute Payments" within the
meaning of Section 280G(b)(2) of the Code and all Parachute
Payments in excess of the base amount within the meaning of
Section 280G(b)(3) will be treated as nondeductible unless, in
the opinion of tax counsel selected by the Company's independent
auditors and acceptable to Executive, such Total Payments (in
whole or in part) are not Parachute Payments, or such Parachute
Payments in excess of the base amount (in whole or in part) are
otherwise not nondeductible and (2) the value of any noncash
benefits or any deferred payment or benefit will be determined by
the Company's independent auditors in accordance with Section
280G(d)(3) and (4) of the Code.
12. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the
Company shall require any successor or assign to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession or assignment had taken place. The term
"Company" as used herein shall include such successors and
assigns. The term "successors and assigns" as used herein shall
mean a corporation or other entity acquiring all or substantially
all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his
beneficiaries or legal representatives, except by will or by the
laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal
personal representative.
13. FEES AND EXPENSES.
The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred
by the Executive subsequent to the Effective Date as they become
due as a result of the Executive seeking to obtain or enforce any
right or benefit provided by this Agreement.
14. NOTICE.
For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the
Notice of Termination) shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to
the other. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the
third business day after the mailing thereof, except that notice
of change of address shall be effective only upon receipt.
15. NONEXCLUSIVITY OF RIGHTS.
Nothing in this Agreement shall prevent or limit Executive's
continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any
of its subsidiaries and for which Executive may qualify, nor
shall anything herein limit or reduce such rights as Executive
may have under any other agreements with the Company or any of
its subsidiaries. Amounts which are vested benefits or which
Executive is otherwise entitled to receive under any plan or
program of the Company or any of its subsidiaries shall be
payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
16. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing and signed by Executive and the Company. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this
Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the state of South
Dakota.
20. SEVERABILITY.
The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions
hereof.
18. NO GUARANTEED EMPLOYMENT.
Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between
Executive and the Company, the employment of Executive by the
Company is "at will" and, prior to the Effective Date, may be
terminated by either Executive or the Company at any time.
Moreover, if prior to the Effective Date, Executive's employment
with the Company terminates, Executive shall have no further
rights under this Agreement.
19. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the
parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the
parties hereto with respect to the subject matter hereof.
Dated the day and year first above written.
BLACK HILLS CORPORATION
By /c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman, President and Chief Executive
ATTEST:
/c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary and Treasurer
By /c/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive
