Exhibit 10.1
EMPLOYMENT AGREEMENT
Agreement made, effective as of December 20, 2002, by and between Black Hills
Corporation, a South Dakota corporation, with its principal office located at
625 Ninth Street, Rapid City, South Dakota, referred to in this agreement as
Employer, Black Hills or Company, and Xxxxxx X. Xxxxxxxx, of Rapid City, South
Dakota, referred to in this agreement as Employee or Xxxxxxxx.
RECITALS
A. Employer is a public company engaged in the business of fuel production,
energy marketing, wholesale power generation, regulated electric utility
and telecommunications.
B. Employee has been employed by the Company in various capacities since 1969.
He is currently employed as its Chief Executive Officer, and is a member of
the Board of Directors, serving as its Chairman. Employee has substantial
experience in the above-designated business activities and has provided
valuable leadership for the Company in a period of remarkable growth.
Employee and Company now seek to plan for an orderly transition of
leadership in the Company during the term of this Agreement and beyond
Employee's retirement.
C. Employee is willing to continue his employment by Employer, and Employer is
willing to continue its employment of Employee, on the terms, covenants,
and conditions set forth in this Agreement.
In consideration of the matters described above, and of the mutual benefits and
obligations set forth in this agreement, the parties agree as follows:
SECTION ONE
EMPLOYMENT AND INDEPENDENT CONTRACTOR DUTIES
A. From the date of this Agreement until June 1, 2005, ("Employment Term")
Employer employs, engages, and hires employee as Chief Executive Officer,
to perform such services as are customarily performed by an executive
officer of a public company, in such position, and additional duties as
requested or directed in good faith by the Board of Directors.
B. From June 1, 2005 until May 31, 2008, ("Contractor Term") Black Hills
hereby engages and hires Xxxxxxxx as an independent contractor, in the
capacity of Senior Advisor to the Chief Executive Officer, to perform such
services as requested by the Chief Executive Officer of the Company.
Xxxxxxxx accepts and agrees to such hiring and engagement. In the capacity
of Senior Advisor, Xxxxxxxx will not be considered an officer or employee
of Black Hills or any of its subsidiaries nor shall his engagement include
any policy-making functions for the Company or its subsidiaries.
C. In the implementation of its succession plan, the Company may employ a
successor to the office of Chief Executive Officer prior to June 1, 2005,
but in such event, Employee shall nonetheless receive compensation and
benefits as provided herein. The title and duties of Employee as Senior
Advisor under
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this Agreement, in that event, shall be advanced from the dates specified
above, but the periodic compensation provided herein shall remain
unchanged.
SECTION TWO
BEST EFFORTS OF EMPLOYEE
Employee agrees that he will at all times faithfully, industriously, and to the
best of his ability, experience, and talents, perform all of the duties that may
be required of and from him pursuant to the express and implicit terms of this
Agreement, to the reasonable satisfaction of Employer, and in accordance with
Company policies, applicable law and regulations. Such duties shall be rendered
principally at 625 Ninth Street, Rapid City, South Dakota, and intermittently at
such other place or places as Employer shall in good faith require or as the
interest, needs, business, or opportunity of Employer shall require.
SECTION THREE
TERM OF EMPLOYMENT
The term of this Agreement shall be the period commencing on December 20, 2002
and terminating May 31, 2008, ("Termination Date"), except as provided in
Section Eight of the Agreement with respect to termination for cause. The
parties may extend the term of this Agreement on such terms as are provided in a
written modification of this Agreement, signed by both parties.
SECTION FOUR
COMPENSATION OF EMPLOYEE
A. Employer shall pay Employee, and Employee shall accept from Employer, in
full payment for Employee's services under this Agreement, compensation as
follows:
1. During the Employment Term, Employer shall pay, and Employee shall
accept from Employer, in full payment for Employee's services an annual salary
rate not less than $516,000.00. Subject to the evaluation and recommendation of
the Compensation Committee, the Board of Directors may approve annual increases
in Employee's salary rate as Chief Executive Officer. The Company may employ a
successor to the office of Chief Executive Officer.
2. During the Contractor Term, while Xxxxxxxx is engaged as Senior Advisor
to the Chief Executive Officer, Black Hills shall pay, and Xxxxxxxx shall accept
from Black Hills, in full payment for Landguth's services, annual payment as
follows:
a. June 1, 2005 to May 31, 2006, the sum of $300,000;
b. June 1, 2006 to May 31, 2007, the sum of $200,000;
c. June 1, 2007 to May 31, 2008, the sum of $100,000.
B. During both the Employment Term, and the Contractor Term, Employer shall
reimburse Employee for all necessary expenses incurred by Employee while
traveling on behalf of Employer. Throughout the Employment Term, Employee
shall be eligible to receive and participate in all vacation and holiday
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pay, benefit plans, perquisites, retirement, disability and deferred
compensation plans, health and life insurance, customarily provided to
executive employees of the Company, consistent with its past practices and
approved plans. During the Employment Term , Employee shall be eligible to
receive or participate in incentive and other bonus payment programs
customarily provided to executive officers of the Company, consistent with
its past practices and approved plans.
C. From and after the expiration of the Employment Term, Employee shall be
deemed to have retired from his employment with the Company for purposes of
determining his eligibility for benefits under Company benefit plans
relating to retirees.
D. The Company shall approve payment of undiscounted Pension Equalization Plan
(PEP) Benefits to Employee, at the rate and terms that would have been
payable commencing at the age of 62, such that full PEP Benefits will
commence on June 1, 2005.
SECTION FIVE
EXCLUSIVE EMPLOYMENT
During the Employment Term, Employee shall devote all of his time, attention,
knowledge, and skills solely to the business and interest of Employer, and
Employer shall be entitled to all of the benefits, profits, or other issues
arising from or incident to all work, services, and advice of Employee. Employee
shall not, during the Employment Term, be interested directly or indirectly, as
partner, officer, shareholder, employee, in any other business similar to
Employer's business or any allied trade; provided, however, that nothing
contained in this section shall be deemed to prevent or to limit the right of
Employee to invest any of his money in the capital stock or other securities of
any corporation whose stock or securities are publicly owned or are regularly
traded on any public exchange. Employee may accept appointment as a director of
another public or private corporation, provided that he complies with the
Company's Governance Guidelines, including the requirement for Board approval of
such assignments.
SECTION SIX
STRATEGIC, FINANCIAL AND SUCCESSION PLANNING
During the Employment Term, Employee shall render all services required by the
Company, and provide counsel, strategic and financial planning and direction to
the Company, for the benefit of Employer and its shareholders, in full
compliance with applicable laws and regulations. Employee shall provide services
as requested, to support and make recommendations to the Board of Directors
concerning an orderly transition to succeeding leadership in the office of Chief
Executive Officer. In addition, for the remainder of his employment as Chief
Executive Officer, Employee shall continue to oversee the design, direction, and
implementation of a succession planning program. Consistent with guidelines
established by the Board of Directors, the program shall, among other
provisions: establish and revise policies and procedures; define present and
future corporate work requirements and competencies; identify key positions and
performance requirements; appraise and evaluate participants; establish
individual development plans; and identify challenges and undertake steps to
ensure the timely implementation of the program.
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SECTION SEVEN
CONFIDENTIALITY AND TRADE SECRETS
Except as required by law, Employee shall not at any time or in any manner,
either directly or indirectly, divulge, disclose or communicate to any person,
firm, corporation, or other entity in any manner whatsoever any information
concerning any matters affecting or relating to the business of Employer,
including but not limited to any of its customers, counter-party arrangements,
the prices it obtains or has obtained from the sale of, or at which it sells or
has sold, its products, or any other information concerning the business of
Employer, its manner of operation, its plans, processes, financial or business
strategy or other similar data. Employer and Employee specifically and expressly
stipulate that as between them, such matters are important, material, and
confidential and gravely affect the effective and successful conduct of the
business of Employer, and Employer's good will, and that any breach of the terms
of this section shall be a material breach of this agreement.
SECTION EIGHT
TERMINATION
A. Termination without Cause. This Agreement may be terminated by either
party, for any reason, without just cause, on thirty (30) days' written
notice to the other. If Employer shall so terminate this Agreement,
Employee shall be entitled to receive payment of compensation and benefits
as provided in this Agreement through and including the Termination Date.
If Employee shall so terminate this Agreement, Employee shall receive
compensation and benefits as provided in this Agreement through the
effective date of such termination of employment. In the event that
Employee's employment is terminated (actually or constructively) as a
result of a "Change of Control" , as defined in Company-approved Change of
Control Agreements, the parties agree that Employee shall be deemed to have
been terminated without cause for purposes of this Agreement.
B. Termination by Employer for Cause. In the event of any violation by
Employee of any of the terms of this Agreement, or for other just cause,
Employer may terminate this Agreement and Employee's employment upon thirty
(30) days' written notice and with compensation and benefits paid to
employee through the date of such termination. The written notice shall
state the grounds for termination. For purposes of this Agreement, "Cause"
or "Just Cause" means (i) an act or acts of dishonesty on Employee's part
which are intended to result in his substantial personal enrichment at the
expense of Black Hills; (ii) repeated violations by Employee of his
obligations under this Agreement which are demonstrably willful and
deliberate on his part and which result in material injury to Black Hills;
(iii) conduct of a criminal nature which has or which is more likely than
not to have a material adverse effect on Black Hills's reputation or
standing in the community or on its continuing relationships with its
customers or those who purchase or use its products; or (iv) fraudulent
conduct in connection with the business or affairs of Black Hills,
regardless of whether said conduct is designed to defraud Black Hills or
others.
C. Termination by Employee for Good Reason. Employee may terminate his
employment at any time for Good Reason. For purposes of this Agreement,
"Good Reason" means the good faith determination by Employee that any one
or more of the following have occurred: (i) without the express written
consent of Employee, any change(s) in any of the duties, or
responsibilities of Employee which is (are) inconsistent in any substantial
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respect with Employee's position, duties, or responsibilities as
contemplated by this Agreement; (ii) any failure by Employer to comply with
any of the provisions of this Agreement, other than an insubstantial and
inadvertent failure remedied by Employer promptly after receipt of notice
thereof given by Employee; (iii) without Employee's consent, any
requirement by Employer that Employee be based at any office or location
other than an office or location in Rapid City, South Dakota, except for
travel reasonably required in the performance of Employee's
responsibilities; (iv) any proposed termination by Employer of Employee's
employment otherwise than as permitted by this Agreement
D. It is further agreed that any breach or evasion of any of the terms of this
Agreement by either party will result in immediate and irreparable injury
to the other party and will authorize recourse to injunction and or
specific performance as well as to all other legal or equitable remedies to
which such injured party may be entitled under this Agreement.
E. In the event of termination by Employer without cause, or by Employee for
good reason, Employee shall be entitled to receive compensation and
benefits as provided in this Agreement through and including the
Termination Date, and he shall receive credit for thirty-five (35) years of
service with the Company for purposes of determining his eligibility for
benefits under the Company's retirement and pension plans.
SECTION NINE
TERMINATION FOR DEATH OR DISABILITY
A. Notwithstanding anything in this Agreement to the contrary, Employer may
terminate this Agreement in the event that Employee shall, during the term
of this Agreement, die or become permanently disabled. Employer shall
provide written notice to Employee or his personal representative of its
election to terminate this Agreement for these reasons. On the giving of
such notice, this Agreement shall cease on the last day of the month in
which the notice is delivered. In the event of termination for reasons
specified in this Section, Employee shall be given credit for years of
service through the Termination Date, for purposes of determining his
eligibility for benefits under the Company's retirement and pension plans.
B. For the purposes of this Agreement, Employee shall be deemed to have become
permanently disabled according to the terms of Employer's Short Term and
Long Term Disability Plans currently in effect at the time of disability.
SECTION TEN
CHOICE OF LAW AND VENUE
It is the intention of the parties that the terms of this Agreement and the
parties' performance under this Agreement, shall be construed and determined in
accordance with and pursuant to the laws of the State of South Dakota. Any
action, special proceeding or other proceeding that may be brought arising out
of, in connection with, or by reason of this Agreement, shall be brought or
filed exclusively in the state or federal courts located in Xxxxxxxxxx County,
South Dakota.
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SECTION ELEVEN
MISCELLANEOUS PROVISIONS
A. Complete Agreement. This Agreement contains the complete agreement
concerning the employment arrangement between the parties and shall, as of
the effective date of this Agreement, supersede all other agreements
between the parties. The parties agree that the Change of Control Agreement
between them shall be cancelled upon the execution of this Agreement. The
parties stipulate that neither of them has made any representation with
respect to the subject matter of this Agreement or any representations
including the execution and delivery of this Agreement except such
representations as are specifically set forth in this Agreement. Employee
has relied on his own judgment in entering into this Agreement. The parties
further acknowledge that any payments or representations that may have been
made by either of them to the other prior to the date of executing this
Agreement are of no effect and that neither of them has relied on such
payments or representations in connection with its dealings with the other.
B. Partial Invalidity. The invalidity of any portion of this Agreement will
not and shall not be deemed to affect the validity of any other provision.
In the event that any provision of this Agreement is held to be invalid,
the parties agree that the remaining provisions shall continue in full
force and effect as if they were executed by both parties subsequent to the
avoidance of the invalid provision.
C. Non-Waiver. The failure of either party to this Agreement to insist upon
the performance of any of the terms and conditions of this Agreement, or
the waiver of any breach of any of the terms and conditions of this
Agreement, shall not be construed as thereafter waiving any such terms and
conditions, but the same shall continue and remain in full force and effect
as if no such forebearance or waiver had occurred.
D. Modification and Assignment. Any modification of this agreement or
additional obligation assumed by either party in connection with this
Agreement shall be binding only if evidenced in writing signed by each
party or an authorized representative of each party. This Agreement may not
be assigned by either party without the written consent of the other.
E. Binding upon Successors. This Agreement shall be binding upon and inure to
the benefit of the parties, their heirs, personal representatives,
successors and assigns.
F. Notices. All notices required under this Agreement shall be delivered as
follows:
If to Employee:
Xxxxxx X. Xxxxxxxx
00000 Xxxx Xx.
Xxxxx Xxxx, XX 00000
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If to Employer:
Black Hills Corporation
000 Xxxxx Xxxxxx
X.X. Xxx 0000
Xxxxx Xxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, General Counsel
In witness of the above, each party to this Agreement has caused it to be
executed at Rapid City, South Dakota, on the date indicated below.
Black Hills Corporation Xxxxxx X. Xxxxxxxx
By: /s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxxx
Its: General Counsel and Corporate Secretary Date: December 20, 2002
Date: December 20, 2002
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