CHANGE IN CONTROL AGREEMENT
BETWEEN IDACORP, INC.
AND
JAN B. PACKWOOD
THIS AGREEMENT, is by and between IDACORP, Inc., an
Idaho corporation (the "Corporation") and JAN B. PACKWOOD
(the "Executive") and is effective on the date established
pursuant to Section 15 of this Agreement (the "Effective
Date").
W I T N E S S E T H:
WHEREAS, the Executive is a valuable employee of the
Corporation or any Subsidiary of the Corporation, an
integral part of its management, and a key participant in
the decision-making process relative to short-term and
long-term planning and policy for the Corporation; and
WHEREAS, the Corporation wishes to encourage the
Executive to continue his career and services with the
Corporation following a Change in Control; and
WHEREAS, the Board has determined that it would be in
the best interests of the Corporation and its shareholders
to assure continuity in the management of the Corporation's,
including Subsidiaries', administration and operations in
the event of a Change in Control by entering into this
Agreement with the Executive;
NOW THEREFORE, it is hereby agreed by and between the
parties hereto as follows:
1. Definitions.
a. "Board" shall mean the Board of
Directors of the Corporation.
b. "Cause" shall mean the Executive's fraud
or dishonesty which has resulted or is likely to result in
material economic damage to the Corporation or a Subsidiary
of the Corporation, as determined in good faith by a vote of
at least two-thirds of the non-employee directors of the
Corporation at a meeting of the Board at which the Executive
is provided an opportunity to be heard.
c. "Change in Control" shall mean:
(i) any person (as such term is used in
Section 13(d) of the Securities Exchange Act of 1934 (the
"1934 Act"), excluding a corporation or other entity owned,
directly or indirectly, by the stockholders of the
Corporation immediately prior to the transaction in
substantially the same proportions as their ownership of
stock of the Corporation ("Person")) is the beneficial
owner, directly or indirectly, of 20% or more of the
outstanding stock of the Corporation requiring the filing of
a report with the Securities and Exchange Commission under
Section 13(d) of the 1934 Act;
(ii) a purchase by any Person of
shares pursuant to a tender or exchange offer to acquire any
stock of the Corporation (or securities convertible into
stock) for cash, securities or any other consideration
provided that, after closing of the offer, such Person is
the beneficial owner (as defined in Rule 13d-3 under the
1934 Act), directly or indirectly, of 20% or more of the
outstanding stock of the Corporation (calculated as provided
in Paragraph (d) of Rule 13d-3 under the 1934 Act in the
case of rights to acquire stock);
(iii) shareholder approval of a
merger, consolidation, liquidation or dissolution of the
Corporation, or the sale of all or substantially all of the
assets of the Corporation (a "Business Combination"), in
each case, unless, following such Business Combination, all
or substantially all of the individuals and entities who
were the beneficial owners of the Corporation immediately
prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of
the corporation resulting from such Business Combination; or
(iv) a change in the majority of
the members of the Board within a 24-month period unless the
election or nomination for election by the Corporation's
shareholders of each new director was approved by the vote
of at least two-thirds of the directors then still in office
who were in office at the beginning of the 24-month period.
With respect to subparagraph 1(c)(iii), upon the
Board's determination that the transaction subject to
shareholder approval thereunder will not be closed, a Change
in Control shall not be deemed to have occurred from such
date forward and this Agreement shall continue in effect as
if no Change in Control had occurred except to the extent
termination requiring payments under this Agreemetn hereof
occurs prior to such Board's determination.
d. "Compensation" shall mean the highest
combined amount of base salary and bonus received by the
Executive during any one calender year which is one of the
five calender years preceding employment termination,
including any elective contributions made by the Corporation
on behalf of the Executive that are not includible in the
gross income of the Executive under Sections 125 or
402(a)(8) of the Internal Revenue Code of 1986, as amended
(the "Code") or any successor provision thereto.
e. "Constructive Discharge" shall mean
any of the following:
(i) any material failure by the Corporation
or any Subsidiary of the Corporation to comply with any of
the provisions of this Agreement;
(ii) the Corporation or a Subsidiary of the
Corporation requiring the Executive to be based at any
office or location more than 50 miles from the location at
which the Executive was based on the day prior to the Change
in Control;
(iii) a reduction which is more than de
minimis in (A) the Executive's annual rate of base salary or
maximum annual bonus opportunity, (B) the long-term
incentive compensation the Executive has the opportunity to
earn, determined in the aggregate if multiple long-term
incentive opportunities exist, or (C) the combined annual
benefit accrual rate under the Corporation's qualified
defined benefit pension plan and/or the Idaho Power Company
security plan for Senior Management Employees, as in effect
immediately prior to the Change in Control (except if such
reduction is a part of a reduction for all executive
officers);
(iv) the Corporation failing to require a
successor entity to assume and agree to perform the
Corporation's obligations pursuant to Section 9; or
(v) a reduction which is more than de
minimis in the long term disability and life insurance
coverage provided to the Executive under the Corporation's
life insurance and long term disability plans as in effect
immediately prior to the Change in Control.
No such event described hereunder shall constitute
Constructive Discharge unless the Executive has given
written notice to the Corporation specifying the event
relied upon for such termination within one year after the
occurrence of such event (but in no event later than the
Ending Date) and the Corporation has not remedied such
within 30 days of receipt of such notice. The Corporation
and Executive, upon mutual written agreement, may waive any
of the foregoing provisions which would otherwise constitute
a Constructive Discharge.
f. Coverage Period" shall begin on the Starting
Date and end on the Ending Date.
g. "Disability" shall mean an injury or illness
which permanently prevents the Executive from performing
services to the Corporation and which qualifies the
Executive for payments under the Corporation's long term
disability plan, which for purposes of this Agreement shall
be the Idaho Power Company Long Term Disability Plan.
h. "Ending Date" shall be the date which is 36
full calendar months following the date on which a Change in
Control occurs or if the Change in Control is shareholder
approval pursuant to Section 1(c)(iii), the date which is 36
months following the consummation of the transaction subject
to such shareholder approval.
i. "Retirement" shall mean attainment of normal
retirement age under the Idaho Power Company Security Plan.
j. "Subsidiary" means any corporation of which
more than 50% of the outstanding stock having ordinary
voting power to elect a majority of the board of directors
of such corporation is now or hereafter owned, directly or
indirectly, by the Corporation.
k. "Starting Date" shall be the date
on which a Change in Control occurs.
2. Term.
This Agreement shall be effective as of the
Effective Date and shall continue thereafter until the 36
month anniversary of the later of (i) such date, or (ii) if
the Change in Control causing the Agreement to be effective
is shareholder approval pursuant to Section 1(c)(iii), the
date of the consummation of the transaction subject to such
shareholder approval; provided, however, the Corporation's
obligations, if any, to provide payments and/or benefits
pursuant to Section 3 of this Agreement and the obligations
of the Corporation and the Executive under Section 5 of this
Agreement shall survive the termination of this Agreement.
3. Severance Benefits.
a. If the Executive's employment hereunder is
terminated by the Corporation for any reason other than
Cause, death, or Disability, or by the Executive in the
event of a Constructive Discharge or in the event of
Retirement, in any case, at any time during the Coverage
Period, then,
(i) within five business days after such
termination, the Corporation shall pay to the Executive (or
if the Executive dies after termination of employment but
before receiving all payments to which he has become
entitled hereunder, to the estate of the Executive) the
following amounts:
(A) accrued but unpaid salary and
accrued but unused vacation; and
(B) a lump sum cash amount equal to two
and one-half times the Executive's Compensation; and
(ii) the Executive shall be entitled to the
following additional severance benefits:
(A) restrictions on all restricted
stock granted prior to the Change in Control and
beneficially owned by the Executive shall lapse immediately;
(B) outplacement services commencing
within 12 months of the Starting Date and extending for a
period of not more than 12 months, the scope and provider of
which shall be selected by the Executive in his sole
discretion (but at a total cost to the Corporation of not
more than $12,000); and
(C) for a period commencing with the
month in which termination of employment shall have occurred
and ending 24 months thereafter, the Executive and, as
applicable, the Executive's covered dependants shall be
entitled to all benefits under the Corporation's welfare
benefit plans (within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as
amended), as if the Executive were still employed during
such period, at the same level of benefits and at the same
dollar cost to the Executive as is available to all of the
Corporation's senior executives generally. If and to the
extent that equivalent benefits shall not be payable or
provided under any such plan, the Corporation shall pay or
provide equivalent benefits on an individual basis. The
benefits provided in accordance with this Section
3(a)(ii)(C) shall be secondary to any comparable benefits
provided by another employer.
b. Notwithstanding anything to the contrary
contained in this Agreement, if the Executive voluntarily
terminates employment for any reason (unless, prior to such
termination, the Corporation has given notice to the
Executive that it intends to terminate the Executive's
employment for Cause) in the first full calendar month
following the one year anniversary of the Change in Control,
the Corporation shall pay to the Executive (or the
Executive's estate upon death) the amounts and provide to
the Executive the benefits provided under Section 3(a);
provided, however, the lump sum amount calculated under
Section 3(a)(i)(B)shall be multiplied by 2/3, and the
welfare benefits provided pursuant to Section 3(a)(ii)(C)
shall continue for 18 months rather than 24 months.
c. (i) If Independent Tax Counsel (as that
term is defined below) shall determine that the aggregate
payments and benefits provided to the Executive pursuant to
this Agreement and any other payments and benefits provided
to the Executive from the Corporation, any Subsidiary and/or
plans of the Corporation and/or its Subsidiaries which
constitute "parachute payments" as defined in Section 280G
of the Code, or any successor provision thereto ("Parachute
Payments") would be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then such
Parachute Payments shall be reduced (but not below zero) but
only to the extent necessary so that no portion thereof
shall be subject to the Excise Tax. The determination of
the Independent Tax Counsel under this subsection (i) shall
be final and binding on all parties hereto. Unless the
Executive gives prior written notice specifying a different
order to the Corporation to effectuate the limitations
described above, the Corporation shall reduce or eliminate
the Parachute Payments by first reducing or eliminating
those payments or benefits which are not payable in cash and
then by reducing or eliminating other Parachute Payments, in
each case in reverse order beginning with payments or
benefits which are to be paid the farthest in time from the
employment termination date. Any notice given by the
Executive pursuant to the preceding sentence shall take
precedence over the provisions of any other plan,
arrangement of agreement governing the Executive's rights
and entitlement to any benefits or compensation. For
purposes of this Section 3(c), "Independent Tax Counsel"
shall mean a lawyer, a certified public accountant with a
nationally recognized accounting firm, or a compensation
consultant with a nationally recognized actuarial and
benefits consulting firm with expertise in the area of
executive compensation tax law, who shall be selected by the
Corporation and shall be reasonably acceptable to the
Executive, and whose fees and disbursements shall be paid by
the Corporation.
(ii) The Executive shall notify the
Corporation in writing within 45 days of any claim by the
IRS that, if successful, would require the payment by the
Executive of an Excise Tax. Upon receipt of such notice,
the Corporation may, in its sole discretion, either contest
such claim, provide the Executive with an additional payment
(a "Gross-Up Payment") intended to reimburse the Executive
for any such Excise Tax and any income tax or Excise Tax
attributable to the Gross-Up Payment (including interest or
penalties with respect thereto), or do nothing. If the
Corporation notifies the Executive in writing that it
desires to contest such claim and that it will bear the
costs and provide the indemnification as required by this
sentence, the Executive shall:
(A) give the Corporation any
information reasonably requested by the Corporation relating
to such claim,
(B) take such action in connection with
contesting such claim as the Corporation shall reasonably
request in writing from time to time, including, without
limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the
Corporation,
(C) cooperate with the Corporation in
good faith in order to effectively contest such claim, and
(D) permit the Corporation to
participate in any proceedings relating to such claim;
provided, however, that the Corporation shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless,
on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto,
imposed as a result of such representation and payment of
costs and expenses. The Corporation shall control all
proceedings taken in connection with such contest; provided,
however, that if the Corporation directs the Executive to
pay such claim and sue for a refund, the Corporation shall
advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise
Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or
with respect to any imputed income with respect to such
advance.
(iii) If, after the receipt by the Executive
of an amount advanced by the Corporation pursuant to Section
3(c)(ii), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall,
within 10 days of the receipt of such refund, pay to the
Corporation the amount of such refund, together with any
interest paid or credited thereon after taxes applicable
thereto.
d. In the event of any termination of the
Executive's employment described in Section 3(a) or Section
3(b), the Executive shall be under no obligation to seek
other employment, and there shall be no offset against
amounts due the Executive under this Agreement on account of
any remuneration attributable to any subsequent employment;
provided, however, to the extent the Executive receives
medical and health benefits from a subsequent employer,
medical and health benefits provided pursuant to Section
3(a)(ii)(C) shall be secondary to those received from the
subsequent employer.
e. It is intended that the termination
provisions herein are in lieu of, and not in addition to,
termination or severance payments and benefits provided
under the Corporation's other termination or severance plans
or agreements ("Other Termination Benefits"). Unless waived
by the Executive, Other Termination Benefits the Executive
receives, or is entitled to receive in the future, shall
reduce payments and benefits provided hereunder.
4. Source of Payments.
All payments provided for in Section 3 above shall
be paid in cash from the general funds of the Corporation
provided, however, that such payments shall be reduced by
the amount of any payments made to the Executive or his
dependents, beneficiaries or estate from any trust or
special or separate fund established by the Corporation to
assure such payments. The Corporation shall not be required
to establish a special or separate fund or other segregation
of assets to assure such payments, and, if the Corporation
shall make any investments to aid it in meeting its
obligations hereunder, the Executive shall have no right,
title or interest in or to any such investments except as
may otherwise be expressly provided in a separate written
instrument relating to such investments. Nothing contained
in this Agreement, and no action taken pursuant to its
provisions, shall create or be construed to create a trust
of any kind or a fiduciary relationship between the
Corporation and the Executive or any other person. To the
extent that any person acquires a right to receive payments
from the Corporation such right shall be no greater than the
right of an unsecured creditor of the Corporation.
5. Litigation Expenses: Arbitration.
a. Full Settlement, Litigation Expenses;
Arbitration. Except as provided below, the Corporation's
obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder
shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which
the Corporation may have against the Executive or others.
The Corporation agrees to pay, upon written demand therefor
by the Executive, all legal fees and expenses the Executive
reasonably incurs as a result of any dispute or contest
(regardless of the outcome thereof) by or with the
Corporation or others regarding the validity or
enforceability of, or liability under, any provision of this
Agreement, plus in each case, interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Code.
Notwithstanding the foregoing, the Executive agrees to repay
to the Corporation any such fees and expenses paid or
advanced by the Corporation if and to the extent that the
Corporation or such others obtains a judgment or
determination that the Executive's claim was frivolous or
was without merit from the arbitrator or a court of
competent jurisdiction from which no appeal may be taken,
whether because the time to do so has expired or otherwise.
Notwithstanding any provision hereof or in any other
agreement, the Corporation may offset any other obligation
it has to the Executive by the amount of such repayment. In
any such action brought by the Executive for damages or to
enforce any provisions of this Agreement, he shall be
entitled to seek both legal and equitable relief and
remedies, including, without limitation, specific
performance of the Corporation's obligations hereunder, in
his sole discretion.
b. In the event of any dispute or difference
between the Corporation and the Executive with respect to
the subject matter of this Agreement and the enforcement of
rights hereunder, either the Executive or the Corporation
may, by written notice to the other, require such dispute or
difference to be submitted to arbitration. The arbitrator
or arbitrators shall be selected by agreement of the parties
or, if they cannot agree on an arbitrator or arbitrators
within 30 days after the Executive has notified the
Corporation of his desire to have the question settled by
arbitration, then the arbitrator or arbitrators shall be
selected by the American Arbitration Association (the "AAA")
upon the application of the Executive. The determination
reached in such arbitration shall be final and binding on
both parties without any right of appeal or further dispute.
Execution of the determination by such arbitrator may be
sought in any court of competent jurisdiction. The
arbitrators shall not be bound by judicial formalities and
may abstain from following the strict rules of evidence and
shall interpret this Agreement as an honorable engagement
and not merely as a legal obligation. Unless otherwise
agreed by the parties, any such arbitration shall take place
in Boise, Idaho, and shall be conducted in accordance with
the Rules of the AAA. The Executive's expenses for such
proceeding shall be paid, or repaid to the Corporation as
the case may be, as provided in subsection (a) of this
Section 5.
6. Tax Withholding.
The Corporation may withhold from any payments made
under this Agreement all federal, state or other taxes as
shall be required pursuant to any law or governmental
regulation or ruling.
7. Entire Understanding.
This Agreement contains the entire understanding
between the Corporation and the Executive with respect to
the subject matter hereof and supersedes any prior severance
or termination agreement between the Corporation and the
Executive, except that this Agreement shall not affect or
operate to reduce any benefit or compensation inuring to the
Executive of any kind elsewhere provided and not expressly
dealt with in this Agreement.
8. Severability.
If, for any reason, any one or more of the
provisions or part of a provision contained in this
Agreement shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or
part of a provision of this Agreement not held so invalid,
illegal or unenforceable, and each other provision or part
of a provision shall to the full extent consistent with law
continue in full force and effect.
9. Consolidation, Merger, or Sale of Assets.
If the Corporation consolidates or merges into or
with, or transfers all or substantially all of its assets
to, another entity the term "the Corporation" as used herein
shall mean such other entity and this Agreement shall
continue in full force and effect. In the case of any
transaction in which a successor would not by the foregoing
provision or by operation of law be bound by this Agreement,
the Corporation shall require such successor expressly and
unconditionally to assume and agree to perform the
Corporation's obligations under this Agreement, in the same
manner and to the same extent that the Corporation would be
required to perform if no such succession had taken place.
10. Notices.
All notices, requests, demands and other
communications required or permitted hereunder shall be
given in writing and shall be deemed to have been duly given
if delivered or mailed, postage prepaid, first class as
follows:
a. to the Corporation:
IDACORP, Inc.
Attention: General Counsel
P.O. Box 70
Boise, Idaho 83707
b. to the Executive:
Jan B. Packwood
3227 Agate Ct.
Boise, Idaho
or to such other address as either party shall have
previously specified in writing to the other.
11. No Attachment.
Except as required by law, no right to receive
payments under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge or hypothecation or to
execution, attachment, levy or similar process or assignment
by operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall be null, void
and of no effect.
12. Binding Agreement.
This Agreement shall be binding upon, and shall
inure to the benefit of, the Executive and the Corporation
and their respective permitted successors and assigns.
13. Modification and Waiver.
Prior to the date of a Change in Control or, if
earlier, the date of a public announcement of a transaction
or event which if consummated would be a Change in Control
("Pre-Change in Control Event"), this Agreement may be
terminated, modified or amended by action of a majority of
the members of the Board. After a Change in Control or Pre-
Change in Control Event, this Agreement may not be
terminated, modified or amended except by an instrument in
writing signed by the parties hereto. No term or condition
of this Agreement shall be deemed to have been waived, nor
shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument
signed by the party charged with such waiver or estoppel.
No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver
shall operate only as to the specific term or condition
waived and shall not constitute a waiver of such term or
condition for the future or as to any act other than that
specifically waived. Notwithstanding any other provision
contained in this Agreement to the contrary, if any action
taken or required to be taken pursuant to the terms of this
Agreement would preclude the use of the "pooling of
interests" accounting method with respect to any specific
transaction the consummation of which is intended to be
accounted for under the "pooling of interests" method, this
Agreement shall be modified to the extent the Corporation
deems necessary to permit such "pooling of interests"
accounting treatment.
14. Headings of No Effect.
The section headings contained in this Agreement
are included solely for convenience of reference and shall
not in any way affect the meaning or interpretation of any
of the provisions of this Agreement.
15. Effective Date and Executive Acknowledgments.
This Agreement shall become effective on the
Starting Date. The Executive acknowledges that he has read
and understands the provisions of this Agreement. The
Executive further acknowledges that he has been given an
opportunity for his legal counsel to review this Agreement
and that the provisions of this Agreement are reasonable and
that he has received a copy of this Agreement.
16. Not Compensation for Other Plans.
It is understood by all parties hereto that
amounts paid and benefits provided hereunder are not to be
considered compensation, earnings or wages for purpose of
any employee benefit plan of the Corporation or its
Subsidiaries, including, but not limited to, the qualified
retirement plan or the Idaho Power Company Security Plan.
17. Release.
Notwithstanding any provision herein to the
contrary, the Corporation shall not have any obligation to
pay any amount or provide any benefit under this Agreement
unless and until the Executive executes a release of the
Corporation, its Subsidiaries or related parties, in such
form as the Corporation may reasonably request, of all
claims against the Corporation, its affiliates and related
parties relating to the Executive's employment and
termination thereof and unless and until any revocation
period applicable to such release has expired.
18. Governing Law.
This Agreement and its validity, interpretation,
performance, and enforcement shall be governed by the laws
of Idaho.
IN WITNESS WHEREOF, the Corporation through its
officers duly authorized, and the Executive both intending
to be legally bound have duly executed and delivered this
Agreement, to be effective as of the date set forth in
Section 15.
IDACORP, INC.
Date: 8/25/99 By: /s/ Jon H. Miller
JON H. MILLER
Chairman of the Board
EXECUTIVE
Date: 9/1/99 Jan B. Packwood