SEVERANCE AND RELEASE AGREEMENT

This Severance and Release Agreement (the “Agreement”) is between Mark T. Thies
(“Employee”), and Black Hills Corporation, a South Dakota corporation, the
(“Employer”). Effective January 18, 2008 (the “Separation Date”), the employment
relationship between Employer and Employee shall be terminated.

Employee acknowledges and agrees that, except for the payment set forth below,
Employer has paid or provided to Employee all wages, benefits, bonuses, stock,
stock vesting, stock options, and other compensation, including earned unused
vacation, due to Employee by reason of his employment with Employer, or
otherwise. Employee shall receive all vested retirement benefits payable in the
future under Employer’s Pension Plan, Pension Restoration Plan, and Pension
Equalization Plan.

Employee acknowledges and agrees that Employee has returned all property,
documents, and data belonging to Employer that previously was in Employee’s
possession.

Employee owns certain stock options that, according to the Company’s policies,
must be exercised within ninety (90) days of the Termination Date. The parties
agree, however, that if the Company deems Employee to be in possession of
material, non-public information at the time he seeks to exercise his options,
and therefore is ineligible to do so, the Company will extend the exercise
period for ninety (90) days after the termination of any “black-out” period.

Employer agrees to pay additional consideration to Employee as a severance
benefit in exchange for Employee’s promises as set forth in this Agreement. If
Employee signs and does not revoke this Agreement, then Employer shall pay to
Employee a one-time, lump sum payment equal to Three Hundred Fifty Thousand
Dollars ($350,000.00), less applicable withholdings and deductions (the
“Severance Amount”).

Employee’s termination of employment is considered a qualifying event allowing
Employee to continue medical/health insurance coverage and dental coverage
(COBRA) for up to eighteen (18) months. If Employee signs and does not revoke
this Agreement and Employee elects such COBRA coverage in accordance with the
requirements of each such employee plan, Employer will provide Employee with the
initial twelve (12) months’ coverage, January 19, 2008 through January 18, 2009,
at no cost to the Employee. Employee will be responsible for any tax
consequences associated with the premium payments. At the end of the twelve (12)
months, Employee will be responsible for payment of all premiums associated with
continuation of coverage for the remaining months of eligibility. Should
Employee obtain insurance coverage through any other source during the initial
twelve (12) months, Employee must notify Employer immediately in writing, and
Employer will cease paying for continuation coverage.

If Employee signs and does not revoke this Agreement, Employee will also be
provided with an opportunity to receive outplacement services though Personnel
Decisions International (PDI). Employer will provide an allowance of up to
$7,500.00

 

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for this service. This amount will include associated fees and pre-approved
expenses. Patricia Ebner, Human Resource Director, will assist Employee in
securing these services. Employee will have up to ninety (90) days from the date
Employee signs this Agreement to begin to receive these services. If Employee
does not elect to receive the services within this timeframe, it will be
determined that Employee elected to not take advantage of the services.

In consideration of receiving Severance Amount, twelve (12) months of COBRA, and
outplacement assistance, (collectively the “Severance Benefits”), Employee
hereby waives, releases and discharges all rights, remedies, claims and causes
of action, known or unknown, that he may have against Employer. This release
includes, but is not limited to any claim, right, remedy or cause of action
arising under:

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any common law theory;

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any federal, state or local statute, ordinance or regulation, including any
cause of action pertaining to employment or employment discrimination (race,
color, sex or marital status, religion, national origin or ancestry, disability,
or any other status or classification protected by law);

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any tort theory;

 

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any contract theory;

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any statute, ordinance or regulation authorizing the recovery of attorney’s
fees, liquidated damages, punitive damages or interest.

             This release includes claims of every nature and kind, known or
unknown, suspected or unsuspected. Employee hereby acknowledges that Employee
may hereafter discover facts different from, or in addition to, those which
Employee now knows or believes to be true with respect to this Agreement, and
Employee agrees that this Agreement and the releases contained herein shall be
and remain effective in all respects, notwithstanding such different or
additional facts or the discovery thereof.

This release does not include or waive any indemnification rights to which
Employee may be entitled under the Articles of Incorporation, or By-Laws of
Black Hills Corporation, or under the Indemnification Agreement Employee
currently has with Black Hills Corporation.

This release does not extinguish or limit any rights, remedies, claims and
causes of action that may arise after the date of the execution of this
Agreement, although Employee’s agreement, if any, to perform future actions
remain in effect. This release is not given in exchange for consideration of
anything of value to which Employee already is entitled. Employee has been
advised in writing to consult with an attorney before executing this Agreement.
Employee has been given a reasonable period of time to consider this Agreement
before executing it.

Employee shall not disclose to any person or entity any confidential information
and/or trade secrets concerning Employer’s (or its subsidiaries’ and
affiliates’) business operations, financial status or condition, strategic
plans, personnel, or other matters. Nothing contained in this Agreement shall
restrict Employee from working as an

 

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employee, officer, consultant or director, after January, 18, 2008, for any
business that competes with Black Hills Corporation, so long as Employee does
not use or disclose Employer’s confidential information or trade secrets in his
new employment.

Employee agrees not to make any statement orally or in writing that is
disparaging to, or reflects negatively upon, Employer or its subsidiaries,
affiliates, including but not limited to: statements regarding the financial
condition, business or employment practices of Black Hills Corporation or any of
its subsidiaries or affiliates, or statements regarding the officers, directors
or employees of Black Hills Corporation. Employer shall direct its officers,
directors and employees not to make any statement that disparages Employee.
Employer agrees that in response to requests from prospective employers of
Employee, Employer shall only confirm the positions held and dates of employment
of Employee.

Employee agrees to exercise reasonable efforts to cooperate with Employer in any
pending or future legal proceedings, whether civil, criminal or administrative,
including without limitation, meeting with in-house and outside defense counsel
for interviews and consultation, to prepare for and provide deposition
testimony, affidavits, hearing testimony or trial testimony; provided, that the
time commitments requested of Employee for litigation support shall be
reasonable under the circumstances, and shall be coordinated through Employer’s
General Counsel. Employer shall reimburse Employee for his reasonable out of
pocket expenses associated with these activities, but Employer will not pay a
fee or otherwise reimburse Employee for his time expended with respect to legal
proceeding activities.

Nothing in this Agreement shall be construed to constitute an admission of fault
or liability on the part of either Employee or Employer for any purpose, or of
any fact that might give rise to liability for any purpose whatsoever.

The parties will prepare to their mutual satisfaction any press releases or
public disclosures required by law with respect to the termination on Employee’s
employment.

This Agreement is made and entered into in the state of South Dakota, and shall
in all respects be interpreted, enforced and governed by the laws of the state
of South Dakota.

It is the intention of the parties that the Severance Benefits payable under
this Agreement not be subject to the additional tax imposed pursuant to Section
409A of the Internal Revenue Code of 1986, as amended. To the extent such
benefits could become subject to such Section, the parties shall cooperate to
amend this Agreement with the goal of giving Employee the economic benefits
described herein in a manner that does not result in such tax being imposed.

If any part of this Agreement is determined by a court of last resort to be
unlawful, invalid or otherwise unenforceable, the balance of this Agreement
shall remain in full force and effect, and the offending provisions shall be
deemed amended to the extent necessary to conform to the law. This Agreement
constitutes the entire agreement

 

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of the parties and supersedes any previous agreement, written or oral, as well
as any other representation or understanding relating to the employment of
Employee or the termination of such employment. No purported modification or
waiver of any provision of this Agreement shall be binding unless in writing and
signed by both parties.

By signing this Agreement, I acknowledge that I have read this Agreement
carefully, had the opportunity to consult with counsel, that I understand the
terms of this Agreement, and voluntarily agree to them.

Dated this 18th day of January 2008.

BLACK HILLS CORPORATION

By: /s/ David R. Emery  

David R. Emery

Chairman, President and CEO

EMPLOYEE

/s/ Mark T. Thies

 

 

 

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