Exhibit 10(a)(6)
AGREEMENT
BETWEEN
NORTHWESTERN PUBLIC SERVICE COMPANY
AND
______________________________
November 1, 1995
TABLE OF CONTENTS
Page
1. Defined Terms 1
2. Term of Agreement 2
3 Company's Covenants Summarized 2
4. The Executive's Covenants 3
5. Compensation Other Than Severance Payments 3
6. Severance Payments 4
7. Termination Procedures and Compensation During Dispute 12
8. No Mitigation 14
9. Successors; Binding Agreement 15
10. Notices 16
11. Miscellaneous 16
12. Validity 17
13. Counterparts 17
14. Settlement of Disputes; Arbitration 17
15. Definitions 18
AGREEMENT
THIS AGREEMENT dated November 1, 1995, is made by and between
Northwestern Public Service Company, a Delaware Corporation (the
"Company"), and ______________________________ (the "Executive").
WHEREAS the Company considers it essential to the best interests of
its shareholders to foster the continuous employment of key management
personnel; and WHEREAS the Board of Directors of the Company (the
"Board") recognizes that, as is the case with many publicly-held companies,
the possibility of a Change in Control or a Major Transaction (as defined
in the last Section hereof) exists and that such possibility, and the
uncertainty and questions which it may raise among management, may result
in the departure or distraction of management personnel to the detriment of
the Company and its shareholders; and
WHEREAS the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the management of the Company, including the Executive, to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control or a
Major Transaction;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definition of capitalized terms used in this
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1997; provided,
however, that commencing on January 1, 1996 and each January 1 thereafter,
the term of this Agreement shall automatically be extended for one
additional year unless, not later than September 30 of the preceding year,
the Company or the Executive shall have given notice not to extend this
Agreement or a Change in Control or a Major Transaction shall have occurred
prior to such January 1; provided, however, if a Change in Control or a
Major Transaction shall have occurred during the term of this Agreement,
this Agreement shall continue in effect for a period of thirty-six (36)
months beyond the month in which such Change in Control or Major
Transaction occurred.
3. Company's Covenants Summarized. In order to induce the Executive
to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the Company agrees,
under the conditions described herein, to pay the Executive the "Severance
Payments" described in Section 6.1 hereof and the other payments and
benefits described herein in the event the Executive's employment with the
Company is terminated following a Change in Control or a Major Transaction
and during the term of this Agreement. No amount or benefit shall be
payable under this Agreement unless there shall have been (or, under the
terms hereof, there shall be deemed to have been) a termination of the
Executive's employment with the Company following a Change in Control or a
Major Transaction. This Agreement shall not be construed as creating an
express or implied contract of employment and, except as otherwise agreed
in writing between the Executive and the Company, the Executive shall not
have any right to be retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that, subject to
the terms and conditions of this Agreement, in the event of a Potential
Change in Control or a Potential Major Transaction during the term of this
Agreement, the Executive will remain in the employ of the Company until the
earliest of (i) a date which is twelve (12) months from the date of such
Potential Change of Control or Potential Major Transaction, (ii) the date
of a Change in Control or a Major Transaction, (iii) the date of
termination by the Executive of the Executive's employment for Good Reason
(determined by treating the Potential Change in Control or Potential Major
Transaction as a Change in Control or a Major Transaction, as applicable,
in applying the definition of Good Reason), by reason of death or
Disability or Retirement, or (iv) the termination by the Company of the
Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.1 Following a Change in Control or a Major Transaction and during
the term of this Agreement, during any period that the Executive fails to
perform the Executive's full-time duties with the Company as a result of
incapacity due to physical or mental illness, the Company shall provide the
Executive with disability benefits equivalent to those under the Company's
disability insurance plan (without regard to any amendment to such plan
made subsequent to the Change in Control or Major Transaction which
amendment adversely affects the Executive's rights thereunder) until the
Executive's employment is terminated by the Employer for Disability.
5.2 If the Executive's employment shall be terminated for any reason
following a Change in Control or a Major Transaction and during the term of
this Agreement, the Company shall pay the Executive's full salary to the
Executive through the Date of Termination at the rate in effect at the time
the Notice of Termination is given, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of any compensation or benefit plan, program or arrangement
maintained by the Company during such period; except to the extent that the
Executive is receiving payments with respect to such period, or a portion
thereof, in accordance with Section 5.1.
5.3 If the Executive's employment shall be terminated for any reason
following a Change in Control or a Major Transaction and during the term of
this Agreement, the Company shall pay to the Executive the normal post-
termination compensation and benefits due the Executive as such payments
become due. Such post-termination compensation and benefits shall be
determined under, and paid in accordance with, the Company's applicable
retirement, insurance and other compensation or benefit plans, programs
and arrangements.
6. Severance Payments.
6.1 Subject to Section 6.2(b) hereof, the Company shall pay the
Executive the payments described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment following a
Change in Control or a Major Transaction and during the term of this
Agreement, in addition to the payments and benefits described in Section 5
hereof, unless such termination is (i) by the Company for Cause, (ii) by
reason of death, Disability or Retirement, or (iii) by the Executive
without Good Reason. The Executive's employment shall be deemed to have
been terminated following a Change in Control or a Major Transaction by
the Employer without cause or by the Executive with Good Reason if the
Executive's employment is terminated prior to a Change in Control or a
Major Transaction without Cause at the direction of a Person who has
entered into an agreement with the Company the consummation of which would
constitute a Change in Control or a Major Transaction, or if the Executive
terminates his employment with Good Reason prior to a Change in Control or
a Major Transaction (determined by treating a Potential Change in Control
or Potential Major Transaction as a Change in Control or a Major
Transaction, as applicable, in applying the definition of Good Reason) if
the circumstance or event which constitutes Good Reason occurs at the
direction of such Person.
(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Company shall pay
to the Executive a lump sum severance payment, in cash, equal to three
times the sum of (i) the higher of the Executive's annual base salary
in effect as of the Date of Termination or in effect immediately prior
to the Change in Control or Major Transaction, and (ii) the higher of
the average amount paid to the Executive pursuant to the Company's
annual bonus plan with respect to the three years preceding the year
in which the Date of Termination occurs or the average amount so paid
with respect to the three years preceding the year in which the Change
in Control or Major Transaction occurs.
(B) In addition to the retirement benefits to which the
Executive is entitled under each Pension Plan or any successor plan
thereto, the Company shall pay the Executive a lump sum amount, in
cash, equal to the excess of (x) the actuarial equivalent of the
retirement pension (taking into account any early retirement subsidies
associated therewith and determined as a straight life annuity
commencing at Normal Retirement Age or any earlier date, but in no
event earlier than the third anniversary of the Date of Termination,
whichever annuity the actuarial equivalent of which is greatest) which
the Executive would have accrued under the terms of each such Pension
Plan (without regard to any amendment to such Pension Plan made
subsequent to a Change in Control or a Major Transaction, which
amendment adversely affects in any manner the computation of
retirement benefits thereunder), determined as if the Executive were
fully vested thereunder and had accumulated (after the Date of
Termination) thirty-six (36) additional months of service credit
thereunder and had been credited under each such Pension Plan during
such period with compensation at the higher of (a) Executive's
compensation (as defined in such Pension Plan) during the twelve (12)
months immediately preceding the Date of Termination or (b)
Executive's compensation (as defined in such Pension Plan) during the
twelve (12) months immediately preceding the Change in Control or
Major Transaction, over (y) the actuarial equivalent of the retirement
pension (taking into account any early retirement subsidies associated
therewith and determined as a straight life annuity commencing at
Normal Retirement Age or any earlier date, but in no event earlier
than the Date of Termination, whichever annuity the actuarial
equivalent is greatest) which the Executive had accrued pursuant to
the provisions of each such Pension Plan as of the Date of
Termination. For purposes of this Section 6.1(B), "actuarial
equivalent" shall be determined using the same methods and assumptions
utilized under each of the Pension Plans, as applicable, immediately
prior to the Date of Termination (without regard to any amendment of
such methods and assumptions made subsequent to a Change in Control or
a Major Transaction, which amendment results in a lower payment under
this Section 6.1(B)). To the extent additional actuarial assumptions
are required for the purpose of calculating benefits under this
Section 6.1(B), such assumptions shall be as set forth in Schedule I
hereto.
(C) If the Executive would have become entitled to benefits
under the Company's post-retirement health care or life insurance
plans had his employment terminated at any time during the period of
thirty-six (36) months after the Date of Termination, the Company
shall pay such benefits to the Executive commencing on the later of
(a) the date that such coverage would have first become available and
(b) the date the benefits described in (D) below terminate.
(D) For the thirty-six (36) month period immediately following
the Date of Termination, the Company shall arrange to provide the
Executive with life, disability, accident and health insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change
in Control or a Major Transaction which reduction constitutes Good
Reason). Benefits otherwise receivable by the Executive pursuant to
this Section 6.1(D) shall be reduced to the extent comparable benefits
are actually received by or made available to the Executive without
cost during the thirty-six (36) month period following the Executive's
termination of employment (and any such benefits actually received by
the Executive shall be reported to the Company by the Executive). If
the benefits provided to the Executive under this Section 6.1(D) shall
result in a decrease, pursuant to Section 6.2(b), in the Severance
Payments and these Section 6.1(D) benefits are thereafter reduced
pursuant to the immediately preceding sentence because of the receipt
of comparable benefits, the Company shall, at the time of such
reduction, pay to the Executive the lesser of (a) the amount of the
decrease made in the Severance Payments pursuant to Section 6.2(b), or
(b) the maximum amount which can be paid to the Executive without
being, or causing any other payment to be, nondeductible by reason of
section 28OG of the Code.
6.2 (a) In the event that any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the
Company, any Person whose actions result in a Change in Control or any
Person affiliated with the Company or such Person) (all such payments and
benefits, including the Severance Payments, being hereinafter called "Total
Payments") will be subject (in whole or part) to the Excise Tax, then,
subject to the provisions of subsection (b) of this Section 6.2, the
Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Total Payments and any federal, state
and local income tax and Excise Tax upon the payment provided for by this
Section 6.2, shall be equal to the Total Payments. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive's residence on the Date
of Termination, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes.
(b) In the event that, after giving effect to any redeterminations
described in subsection (d) below, a reduction in the Severance Payments,
to the largest amount that would result in no portion of the Total Payments
being subject to the Excise Tax (after taking into account any reduction in
the Total Payments provided by reason of section 28OG of the Code in such
other plan, arrangement or agreement), would produce a net amount (after
deduction of the net amount of federal, state and local income tax on such
reduced Total Payments) that would be greater than the net amount of
unreduced Total Payments (after deduction of the net amount of federal,
state and local income tax and the amount of Excise Tax to which the
Executive would be subject in respect of such Total Payments), then
subsection (a) of this Section 6.2 shall not apply and the Severance
Payments shall be so reduced.
(c) For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i)
all of the Total Payments shall be treated as "parachute payments" within
the meaning of section 28OG(b)(2) of the Code, unless in the opinion of tax
counsel selected by the Company's independent auditors and reasonably
acceptable to the Executive ("Tax Counsel"), such other payments or
benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 28OG(b)(4)(A) of the Code, (ii) all
"excess parachute payments" within the meaning of section 28OG(b)(1) of the
Code shall be treated as subject to the Excise Tax, unless in the opinion
of Tax Counsel such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered, within
the meaning of section 28OG(b)(4)(B) of the Code, in excess of the Base
Amount allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax, and (iii) the value of any noncash benefits or
any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections
28OG(d)(3) and (4) of the Code. Prior to the payment date set forth in
Section 6.3 hereof, the Company shall provide the Executive with its
calculation of the amounts referred to in this Section 6.2(b) and such
supporting .materials as are reasonably necessary for the Executive to
evaluate the Company's calculations. If the Executive disputes the
Company's calculations (in whole or in part), the reasonable opinion of Tax
Counsel with respect to the matter in dispute shall prevail.
(d) In the event that (i) the Excise Tax is subsequently determined
to be less than the amount taken into account hereunder at the time of
termination of the Executive's employment and (ii) after giving effect to
such redetermination, the Severance Payments are not reduced pursuant to
Section 6.2(b) hereof, the Executive shall repay to the Company, at the
time that the amount of such reduction in Excise Tax is finally determined,
the portion of the Gross-Up Payment attributable to such reduction (plus
that portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the Gross-Up Payment being
repaid by the Executive to the extent that such repayment results in a
reduction in the Excise Tax and/or a federal, state or local income tax
deduction) plus interest on the amount of such repayment at the rate
provided in section 1274(b)(2)(B) of the Code. In the event that (x) the
Excise Tax is determined to exceed the amount taken into account hereunder
at the time of the termination of the Executive's employment (including by
reason of any payment the existence or amount of which cannot be determined
at the time of the Gross-Up Payment) and (y) after giving effect to such
redetermination, the Severance Payments are not reduced pursuant to Section
6.2(b) hereof, the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions payable
by the Executive with respect to such excess) at the time that the amount
of such excess is finally determined.
6.3 The payments provided for in Section 6.1 (other than Section
6.1(C) and Section 6.1(D)) and Section 6.2 hereof shall be made not later
than the fifth day following the Date of Termination, provided, however,
that if the amounts of such payments, and the limitation on such payments
set forth in Section 6.2(b) hereof, cannot be finally determined on or
before such day, the Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Executive, of the minimum
amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth (30th)
day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to the Executive,
payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of
the Code).
6.4 The Company also shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any
termination of his employment hereunder or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code to any payment or benefit
provided hereunder. Such payments shall be made within five (5) business
days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in -Control or a Major
Transaction and during the term of this Agreement, any purported
termination of the Executive's employment (other than by reason of death)
shall be communicated by written Notice of Termination from one party
hereto to the other party hereto in accordance with Section 10 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, the Executive was
guilty of conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in
Control or a Major Transaction and during the term of this Agreement, shall
mean (i) if the Executive's employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and (ii) if the Executive's
employment is terminated for any other reason, the date specified in the
Notice of Termination (which, in the case of a termination by the Company,
shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, from the date such Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this Section 7.3), the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be
the date on which the dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or decree of a court
of competent jurisdiction (which is not appealable or with respect to which
the time for appeal therefrom has expired and no appeal has been
perfected); provided further that the Date of Termination shall be extended
by a notice of dispute only if such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination occurs
following a Change in Control or a Major Transaction and during the term of
this Agreement, and such termination is disputed in accordance with Section
7.3 hereof, the Company shall pay the Executive the full compensation in
effect when the notice giving rise to the dispute was given (including, but
not limited to, salary) and continue the Executive as a participant in all
compensation, benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment with the Company terminates during the term of this Agreement,
the Executive is not required to seek other employment or to attempt in any
way to reduce any amounts payable to the Executive by the Company pursuant
to this Agreement. Further, the amount of any payment or benefit provided
for in this Agreement (other than in Section 6.1(D) hereof) shall not be
reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against
any amount claimed to be owed by the Executive to the Company, or
otherwise.
9. Successors; Binding Agreement.
9.1 In addition to any obligations imposed by law upon any successor
to the Company, the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company 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 had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms as
the Executive would be entitled to hereunder if the Executive were to
terminate the Executive's employment for Good Reason after a Change in
Control or a Major Transaction, except that, for purposes of implementing
the foregoing, the date on which any such succession becomes effective
shall be deemed the Date of Termination.
9.2 This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive shall die while any amount would still be payable to the
Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon actual receipt:
To The Company:
Northwestern Public Service Company
33 Third Street SE
P. O. Box 1318
Huron, South Dakota 57350-1318
Attention: General Counsel
To the Executive:
_________________________________
_________________________________
_________________________________
11. 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 the Executive and such officer as may be
specifically designated by the Board. 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. This Agreement
supersedes any other agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of South Dakota. All references to sections
of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal,
state or local law and any additional withholding to which the Executive
has agreed. The obligations of the Company and the Executive under
Sections 6 and 7 shall survive the expiration of the term of this
Agreement.
12. Validity. The invalidity or unenforceability or any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of
a claim for benefits under this Agreement shall be delivered to the
Executive in writing and shall set forth the specific reasons for the
denial and the specific provisions of this Agreement relied upon. The Board
shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim and shall further allow the Executive to appeal to
the Board a decision of the Board within sixty (60) days after notification
by the Board that the Executive's claim has been denied. Any further
dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration in the State of South Dakota,
in accordance with the rules of the American Arbitration Association then
in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that the Executive shall be
entitled to seek specific performance of the Executive's right to be paid
until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
(A) "Base Amount" shall have the meaning defined in section
28OG(b)(3) of the Code.
(B) "Beneficial Owner" shall have the meaning defined in Rule
13d-3 under the Exchange Act.
(C) "Board" shall mean the Board of Directors of the Company.
(D) "Cause" for termination by the Employer of the Executive's
employment, after any Change in Control or Major Transaction, shall
mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination for Good Reason by the
Executive pursuant to Section 7.1) after a written demand for
substantial performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the
Executive's duties, or( ii) the willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Executive's part shall
be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of the
Company.
(E) A "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs shall
have been satisfied:
(I) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates)
representing 20% or more of the combined voting power of the
Company's then outstanding securities; or
(II) during any period of not more than two consecutive
years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
whose original assumption of office is in connection with an
actual or threatened election of directors, as such terms are
used in Rule 14a-11 of Regulation 14A under the Exchange Act)
whose election by the Board or nomination for election by the
Company's shareholders was approved or recommended by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved or
recommended, cease for any reason to constitute a majority
thereof.
(F) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(G) "Company" shall mean Northwestern Public Service Company
and any successor to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or otherwise
(except in determining, under Section 15(E) or 15(0) hereof, whether
or not any Change in Control or Major Transaction has occurred in
connection with such succession).
(H) "Date of Termination" shall have the meaning stated in
Section 7.2 hereof.
(I) "Disability" shall be deemed the reason for the termination
by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6)
consecutive months, the Company shall have given the Executive a
Notice of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive shall not
have returned to the full-time performance of the Executive's duties.
(J) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(K) "Excise Tax" shall mean any excise tax imposed under section
4999 of the Code.
(L) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(M) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the
Executive's express written consent) of any one of the following acts
by the Company, or failures by the Company, to act, unless, in the
case of any act or failure to act described in paragraph (V), (VI) or
(VII) below, such act or failure to act is corrected prior to the Date
of Termination specified in the Notice of Termination given in respect
thereof:
(I) the assignment to the Executive of duties substantially
inconsistent with the Executive's status as an executive
officer of the Company;
(II) a reduction in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(III) requiring the Executive to be based at a location
more than 100 miles from Huron, South Dakota, except for required
travel on the Company's business to an extent substantially
consistent with the Executive's present business travel
obligations;
(IV) the failure by the Company, to pay to the Executive
any portion of the Executive's compensation within seven (7) days
of the date such compensation is due;
(V) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately
prior to the Change in Control or the Major Transaction which is
material to the Executive's total compensation, including but not
limited to the Supplemental Income Security Plan, the Phantom
Stock Unit Plan and the Family Protector Plan, or any substitute
plans adopted prior to the Change in Control or Major
Transaction, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to continue
the Executive's participation therein (or in such substitute or
alternative plan) on a basis not substantially less favorable,
both in terms of the amount of benefits provided and the level of
the Executive's participation relative to other participants, as
existed at the time of the Change in Control or Major
Transaction;
(VI) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medical, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
or the Major Transaction, the taking of any action by the company
which would directly or indirectly materially reduce any of
such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control or Major Transaction, or the failure by the Company to
provide the Executive with the number of paid vacation days to
which the Executive is entitled on the basis of years of service
with the Company in accordance with the Company's normal vacation
policy in effect at the time of the Change in Control or Major
Transaction; or
(VII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; for
purposes of this Agreement, no such purported termination shall
be effective.
The Executive's right to terminate the Executive's employment for
Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment
shall not constitute consent to, or a waiver of rights with respect
to, any act or failure to act constituting Good Reason hereunder.
(N) A "Gross-up Payment" shall have the meaning given in Section
6.02 hereof.
(0) A "Major Transaction" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs shall
have been satisfied:
(I) the shareholders of the Company approve a merger or
consolidation of the Company with any corporation or business
trust, other than (i) a merger or consolidation which would
result in the individuals who prior to such merger or
consolidation constitute the Board constituting at least two-
thirds (2/3) of the board of directors of the Company or the
surviving or succeeding entity immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person acquires more than 20% of the
combined voting power of the Company's then outstanding
securities; or
(II) the shareholders of the Company approve a plan of
complete liquidation of the Company; or
(III) the shareholders of the Company approve an agreement
for the sale or disposition by the Company of all or
substantially all the Company's assets, other than a sale or
disposition which would result in the individuals who prior to
such sale or disposition constitute the Board constituting at
least two-thirds (2/3) of the board of directors of the Person
purchasing such assets immediately after such sale or
disposition.
(P) "Normal Retirement Age" shall mean the earliest age at which
the Executive may commence Retirement and become entitled to an
unreduced pension under the IRS qualified Pension Plan.
(Q) "Notice of Termination" shall have the meaning stated in
Section 7.1 hereof.
(R) "Pension Plan" shall mean the Company's IRS Qualified Plan
and any successor thereto and any other agreement entered into between
the Executive and the Company which is designed to provide the
Executive with supplemental retirement benefits.
(S) "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof; however, a Person shall not include (i) the Company, (ii) a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of
shares of the Company.
(T) "Potential Change in Control" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(II) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(III) any Person who is or becomes the Beneficial owner,
directly or indirectly, of securities of the Company representing
10%. or more of the combined voting power of the Company's then
outstanding securities, increases such Person's beneficial
ownership of such securities by 5% or more over the percentage so
owned by such Person on the date hereof unless such Person has
reported or is required to report such ownership (but less than
25%) on Schedule 13G under the Exchange Act (or any comparable or
successor report) or on Schedule 13D under the Exchange Act (or
any comparable or successor report) which Schedule 13D does not
state any intention to or reserve the right to control or
influence the management or policies of the Company or engage in
any of the actions specified in Item 4 of such Schedule (other
than the disposition of the common shares) and, within 10
business days of being requested by the Company to advise it
regarding the same, certifies to the Company that such Person
acquired such securities of the Company in excess of 14.9%
inadvertently and who, together with its affiliates, thereafter
does not acquire additional securities while the Beneficial Owner
of 15% or more of the securities then outstanding; provided,
however, that if the Person requested to so certify fails to do
so within 10 business days, then such occurrence shall become a
Potential Change in Control immediately after such 10 business
day period; or
(IV) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
(U) "Potential Major Transaction" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Major Transaction;
(II) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if
consummated, would constitute a Major Transaction; or
(III) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Major Transaction has
occurred.
(V) "Retirement" shall be deemed the reason for the termination
by the Company or the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's written
mandatory retirement policy, if any, as in effect immediately prior to
the Change in Control or Major Transaction, or in accordance with any
retirement arrangement established with the Executive's written
consent with respect to the Executive.
(W) "Severance Payments" shall mean those payments described in
Section 6.1 hereof.
(X) "Total Payments" shall mean those payments described in
Section 6.2 hereof.
NORTHWESTERN PUBLIC SERVICE COMPANY
By______________________________________
M. D. Lewis
President & CEO
________________________________________
Executive