Document:

Exhibit
10.2

 

EMPLOYMENT AGREEMENT

 

This
Amended and Restated Employment Agreement (the “Agreement”),
entered into September 8, 2010 by and among General Growth Properties, Inc.,
a Delaware corporation (the “Company”),
General Growth Properties, L.P., a Delaware limited partnership (the “Partnership” and together with the Company, the “Companies”), and Thomas H. Nolan (the “Executive”),
shall be deemed to have been made and entered into as of the date of the order
of confirmation entered by the United States Bankruptcy Court for the Southern
District of New York with respect to the Companies’ Joint plan of
reorganization in the matter of In re General Growth Properties, Inc., et
al, Case No. 09-11977 (ALG) (such plan, the “Plan of
Reorganization” and such date, the “Confirmation
Date”) and shall become effective as of the effective date of the
Plan of Reorganization, or if earlier, January 1, 2011 (the “Effective Date”).

 

RECITALS

 

The
Executive is currently employed as the Company’s President and Chief Operating
Officer and the Company desires to extend the employment of the Executive on
and after the Effective Date upon and subject to the terms and conditions set
forth in this Agreement, and the Executive wishes to extend his employment upon
and subject to such terms and conditions;

 

The
parties are parties to that certain employment agreement dated November 2,
2008, effective as of October 26, 2008, and as amended effective as of March 6,
2009 (such employment agreement, together with amendments, the “Predecessor Agreement”) which remains in effect;

 

The
parties desire to enter into the Agreement and, in so doing, to amend and
restate the Predecessor Agreement in its entirety effective as of the Effective
Date;

 

The
Company has adopted and implemented or will adopt and implement an equity
incentive plan (“Equity Incentive Plan”) as of the
Confirmation Date, pursuant to the Plan of Reorganization;

 

NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1.             Employment Period.  The Company hereby agrees to continue to employ
the Executive, and the Executive hereby agrees to continue to work in the
employ of the Company, subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending on the first
anniversary of the Effective Date (the “Employment Period”).

 

2.             Terms of Employment.

 

(a)           Position and Duties.

 

(i)            During the Employment Period, the Executive shall serve as President and
Chief Operating Officer of the Company and of the Partnership, with the
appropriate authority, duties and responsibilities attendant to such position
and any other duties commensurate with the position of President and Chief
Operating Officer of the Company and of the Partnership that may be reasonably
assigned by the Company’s 

 

 

Chief
Executive Officer.  The Executive shall
report to the Company’s Chief Executive Officer.

 

(ii)           During the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
all of his business attention and time to the business and affairs of the
Company, and to use the Executive’s reasonable best efforts to perform such
responsibilities.  During the Employment
Period it shall not be a violation of this Agreement for the Executive to (A) serve
on corporate boards or committees on which he serves as of the Effective Date
and, with prior approval of the Board of Directors of the Company (the “Board”), on other corporate boards or committees, (B) serve
on civic or charitable boards or committees, and (C) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive’s responsibilities as an employee of the Company
in accordance with this Agreement; provided, however, that during the Employment
Period, the Executive shall not hold any other management positions at other
companies.

 

(b)           Compensation.

 

(i)            Annual Base Salary.  During the Employment Period, the Executive
shall receive an annual base salary (“Annual Base Salary”)
of $1,250,000 payable in equal installments in accordance with the Partnership’s
normal payroll practice for its senior executives, subject to the Executive’s
continued active employment with the Company and the Partnership.

 

(ii)           Bonus.  Commencing with the Company’s fiscal year
commencing on or immediately on or after the Effective Date and during the
Employment Period, the Executive shall be eligible under the Company’s annual
bonus plan in effect from time to time for a target annual bonus opportunity of
$2,400,000, which is the sum of the quarterly Fixed Bonus ($1.6 million per
year) and the Discretionary Bonus ($800,000 per year) amounts under the
Predecessor Agreement (the “Target Annual Bonus”),
subject to such performance measures and objectives as may be established by
the Board from time to time under the Company’s annual bonus plan, including
variations in amount based on the level of performance achieved, consistent
with the formula for other senior executives of the Company.  The Executive shall continue to participate
in the Cash Value Added Incentive Compensation Plan for the 2010 fiscal year.

 

(iii)          Equity Incentives.  Executive shall be granted 100,000 shares of
restricted common stock, par value $.01 of the Company (the “Restricted Stock Grant”) under the Equity Incentive Plan as
of the Effective Date.  Executive may
make a so-called “Section 83(b)” election with respect to the Restricted
Stock Grant within 30 days after the date of grant thereof .  The Restricted Stock Grant shall cliff vest
100% on the first anniversary of the grant date, and shall be subject to the
terms and conditions set forth in an award agreement under the Equity Incentive
Plan, which shall not be inconsistent herewith.

 

(iv)          Indemnification and Liability Insurance. 
The Company shall continue to indemnify the Executive pursuant to the
Indemnification Agreement between 

 

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the
Company and the Executive, dated as of February 25, 2009 (the “Indemnification Agreement”), and the indemnification
provided therein shall continue for a period of 6 years following the time the
Executive’s employment is terminated, or for such longer period as may be
provided in the Company’s bylaws or permitted under applicable law.

 

(c)           Benefits.  During the
Employment Period, except as otherwise expressly provided herein, the Executive
shall be entitled to participate in all employee benefit and other plans,
practices, policies and programs and fringe benefits on a basis no less
favorable than that provided to other senior officers of the Company.  The Executive shall be entitled to paid
annual vacation totaling four weeks per year in accordance with the Company’s
vacation policy in effect from time to time.

 

(d)           Expenses.  The Company
shall reimburse Executive for all reasonable and necessary expenses actually
incurred by Executive in connection with the business affairs of the Company
and the performance of Executive’s duties hereunder, in accordance with Company
policy, as in effect from time to time.

 

3.             Termination of Employment.

 

(a)           Death or Disability.  The
Executive’s employment shall terminate automatically upon the Executive’s death
during the Employment Period.  If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice, in accordance
with Section 12(b), of its intention to terminate the Executive’s
employment.  In such event, the Executive’s
employment with the Company shall terminate effective on the 30th day after the
Company’s receipt of such notice by the Executive (the “Disability Effective Date”), provided,
that within the 30 days after such receipt, the Executive shall not have returned
to full-time performance of the Executive’s duties.  For purposes of this Agreement, “Disability”
shall have the meaning ascribed under the Company’s long term disability plan
applicable to the Executive.

 

(b)           Cause.  The Company
may terminate the Executive’s employment during the Employment Period with or
without Cause.  For purposes of this
Agreement, “Cause” shall mean the Executive’s:

 

(i)            conviction by a court of competent jurisdiction of a felony under Federal
law or the law of the state in which such action occurred;

 

(ii)           willful dishonesty in the course of fulfilling the Executive’s material
employment duties;

 

(iii)          commission of a material act of fraud or embezzlement;

 

(iv)          willful failure to substantially perform the Executive’s responsibilities
under this Agreement;

 

(v)           willfully (x) impeding, (y) endeavoring to influence, obstruct
or impede or (z) failure to materially cooperate with an investigation 

 

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authorized
by the Board, a self-regulatory organization empowered with self-regulatory
responsibilities under federal securities or state laws or a governmental
department or agency;

 

unless, in the case of
clauses (ii) through (v), the event constituting Cause is curable and has
been cured to the extent possible by the Executive within 30 business days of
his receipt of notice from the Company that an event constituting Cause has
occurred and specifying the details of such event.

 

For
purposes of this provision, no act or omission on the part of the Executive
shall be considered “willful” unless it is done or omitted in bad faith or
without reasonable belief that the act or omission was in the best interests of
the Company.  Any act or omission based
upon a resolution duly adopted by the Board or advice of counsel for the
Company shall be conclusively presumed to have been done or omitted in good
faith and in the best interests of the Company. 
“Cause” shall not include bad judgment or failure of the Company or
Partnership to meet financial performance objectives.  The cessation of the Executive’s employment
shall not be deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds of the entire membership of the
Board (excluding the Executive) at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
the Board) finding that, in the opinion of the Board, the Executive is guilty
of the conduct described above, and specifying the particulars thereof in
detail.  Notwithstanding the foregoing,
if the Board reasonably believes in good faith that facts exist that may
justify a termination for Cause, the Board retains the right to (i) immediately
terminate the Executive’s employment (without any obligation to pay or provide
any benefits described in Section 4), and (ii) call the Board meeting
and comply with the other requirements described in the preceding sentence
within 90 days thereafter (the “Determination Period”);
provided that promptly following the Determination Period, the Executive shall
be paid or provided the applicable benefits described in Section 4.  If the Company does not deliver to the
Executive a Notice of Termination within 90 days after any member of the Board
who is not a party to such act or omission has had knowledge, or should have
had knowledge, that an event constituting Cause has occurred, the event will no
longer constitute Cause.

 

(c)           Resignation.  The
Executive may terminate the Executive’s employment during the Employment Period
for any reason.  For purposes of this
Agreement, “Good Reason” shall
mean (i) a material adverse change in the Executive’s duties or
responsibilities, (ii) a material reduction of the Executive’s salary, (iii) a
requirement that the Executive report to any one other than the Chief Executive
Officer of the Company;  (iv) other material negative
change in Executive’s service relationship with the Company, it being
understood that under the circumstances a requirement to report to any one
other than Adam Metz, the Chief Executive Officer of the Company would be such
a material negative change; (v) the relocation of the Executive’s
principal place of employment, as of the Effective Date, to a location that
increases the Executive’s commuting distance by more than 50 miles, (vi) a
material breach of this Agreement by the Companies, or (vii) the failure
by the Companies to obtain written assumption of this Agreement by a purchaser
or successor of the Company; provided, that, the Executive must provide a 

 

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Notice of Termination to the Company within 60 days
of the occurrence of the event constituting Good Reason, and in the event the
Executive provides notice of Good Reason pursuant to clause (i), (ii), (iii) (vi) or
(vii) above, the Company shall have the opportunity to cure such event
constituting Good Reason within 30 days of receiving such notice.

 

(d)           Notice of Termination.  Any
termination by the Company or by the Executive shall be communicated by Notice
of Termination to the other party hereto given in accordance with Section 12(b).  For purposes of this Agreement, a “Notice of Termination” means a written
notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets 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 and (iii) if
the Date of Termination (as defined below) is other than the date of receipt of
such notice, specifies the Date of Termination. 
The failure by the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Cause shall not waive
any right of the Company, hereunder, or preclude the Company, from asserting
such fact or circumstance in enforcing the Company’s rights hereunder.

 

(e)           Date of Termination.  “Date of Termination” means (i) if the
Executive’s employment is terminated by the Company other than for Disability,
the date of receipt of the Notice of Termination or any later date specified
therein within 90 days of such notice, (ii) if the Executive’s employment
is terminated by the Executive, 30 days after receipt of the Notice of
Termination (provided, that the Company may accelerate the Date of Termination
to an earlier date by providing the Executive with notice of such action) (iii) if
the Executive’s employment is terminated by reason of death or Disability, the
Date of Termination shall be the date of the Executive’s death or the
Disability Effective Date, as the case may be, and (iv) if Executive’s
employment is terminated by expiration of this Agreement, the date of
expiration of this Agreement.

 

4.             Obligations of the Company upon Termination.

 

(a)           Other Than For Cause.  If, during
the Employment Period, the Company shall terminate the Executive’s employment
other than for Cause or Disability, or if Executive shall terminate his
employment for Good Reason, or if the Executive’s employment shall terminate
because of the expiration of the Agreement, the Company shall have no further
obligations to the Executive except as follows:

 

(i)            the Company shall pay or provide the Executive, to the extent not
theretofore paid,  (A) a lump sum in
cash within 5 days after the Date of Termination an amount equal to the sum of (1) the
Annual Base Salary (which shall be the Annual Base Salary prior to reduction if
the termination is for Good Reason because of a reduction in Annual Base
Salary) through the Date of Termination, and (2) the Annual Bonus earned
under the Cash Value Added Incentive Plan for years ending prior to the year in
which the Date of Termination occurs,  
and (B)  any other amounts or benefits required to be paid or
provided or to which the Executive is eligible to receive under any plan,
program, policy or practice or other contract or agreement of the Company and
its affiliated 

 

5

 

companies
through the Date of Termination, (the total of (A) and (B), the “Accrued Benefits”);

 

(ii)           the Company shall pay the Executive a pro rata portion of the annual
bonus for the year in which the Date of Termination occurs, in an amount
determined by multiplying the annual bonus that would have been payable if
Executive had remained employed until the payment date for such annual bonus by
a fraction, the numerator of which is the number of days in the applicable
performance year prior to and including the Date of Termination and the
denominator of which is 365;  provided
that if the Date of Termination is the last day of the Employment Period, such
additional amount shall be the full amount of bonus payable for the year in
which the Date of Termination occurs, without pro ration.  The amount described in this Section 4(a)(ii) shall
be paid at the same time as the annual bonus for such year is paid to other
executives of the Company; provided it shall be paid no later than March 15
of the year following the year in which the Date of Termination occurs.

 

(iii)          the Company shall pay the Executive a lump sum in cash within 5 days
after the Date of Termination (subject to Section 4(d)) in an amount equal
to 75% of the sum of the Annual Base Salary plus the Target Annual Bonus;

 

(iv)          the Restricted Stock Grant shall become 100% vested and, if Executive has
been granted awards under the Equity Incentive Plan, then, such awards shall become
100% vested, and such options and equity awards shall remain exercisable until
the earlier of (1) the expiration of their term and (2) the one-year
anniversary of the Date of Termination, unless the award agreement provides for
more rapid vesting or a longer exercise period (in which case the terms of the
award agreement shall apply);

 

(v)           the Company shall provide coverage or pay an amount equal to the
applicable COBRA premium rate, if any, for the Executive, his spouse and his
eligible dependents (the “COBRA Benefits”)
through the eighteen-month anniversary of the Date of Termination with respect
to any welfare benefits for which the Executive elects COBRA coverage; and

 

(vi)          the shall transfer title to Executive, and Executive shall be entitled to
keep all Company-owned electronic equipment (BlackBerry, i-pad, laptop
computer, cell phone) used by the Executive during the Employment Period.

 

(b)           Death; Disability.  If, during
the Employment Period, the Executive’s employment shall terminate on account of
death (other than via death after delivery of a valid Notice of Termination
without Cause) or Disability, the Company shall have no further obligations to
the Executive other than to provide the Executive (or his estate) (i) the
Accrued Benefits;  (ii) a pro rata
amount of the Target Annual Bonus for the year in which the Date of Termination
occurs (in the same ratio that the number of days of actual employment through
the Date of Termination bears to 365 days), paid in a lump sum in 

 

6

 

cash no later than five days after the Date of
Termination; (iii) the Restricted Stock Grant shall become 100% vested,
and (iv) unless the applicable award agreement provides for more rapid
vesting or a longer period to exercise (in which case the terms of the award
agreement shall apply), all of Executive’s outstanding stock options or other
equity-based awards shall vest, and such options and equity awards shall remain
exercisable until the earlier of (1) the expiration of their term and (2) the
one-year anniversary of the Date of Termination.

 

(c)           For Cause; Resignation Without Good Reason.  If,
during the Employment Period, the Company shall terminate the Executive’s
employment for Cause or the Executive terminates his employment other than for
Good Reason, the Company shall have no further obligations to the Executive
other than the obligation to pay to the Executive the Accrued Benefits.

 

(d)           Condition.  The Company
shall not be required to make the payments and provide the benefits specified
in Section 4(a)(ii) through (vi) unless, prior to payment, the
parties hereto have entered into a release substantially in the form attached
hereto as Attachment A (for which the applicable 7-day revocation period has
expired) within 55 days following the Date of Termination, under which the
Executive releases the Company, its affiliates and its officers, directors and
employees from all liability (other than the payments and benefits under this
Agreement, the KEIP or any option or equity award).  The Company and the Partnership shall tender
the release to the Executive within 2 business days of the Executive’s Date of
Termination, and if the period within which Executive must execute the release
would begin in one calendar year and expire in the following calendar year,
then any payments contingent on execution (and non-revocation) of such release
shall be made in such following calendar year (regardless of the year of
execution of such release) if payment in such following calendar year is
required in order to avoid taxes, interest and penalties under Section 409A
of the Internal Revenue Code of 1986, as amended (“Section 409A”).

 

(e)           Resignation from Certain Positions. 
Following the Employment Period or the termination of the Executive’s
employment for any reason, if and to the extent requested by the Board, the
Executive agrees to resign from all fiduciary positions (including as trustee)
and from all other offices and positions he holds with the Company and any of
its affiliates; provided, however, that if the Executive refuses to tender his
resignation after the Board has made such request, then the Board shall be
empowered to tender the Executive’s resignation from such offices and
positions.

 

5.             KEIP Unaffected.  Executive is entitled to payments under that
certain General Growth Properties, Inc. Key Employee Incentive Plan (the “KEIP”).  Nothing in
this Agreement shall affect Executive’s rights under the KEIP, regardless of
whether Executive terminates employment for any reason prior to or at the
expiration of this Agreement.

 

6.             Full Settlement.  The Company’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 Company may have against the
Executive or others.  In no event shall
the Executive be obligated to seek other employment, or take any other action
by way of mitigation of the amounts payable to the 

 

7

 

Executive under any of the
provisions of this Agreement, and such amounts shall not be reduced whether or
not the Executive obtains other employment.

 

7.             Section 4999 of the Code.

 

(a)           General Rules.  Anything in
this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by the Company (or
any of its affiliated entities) or any entity which effectuates a Change in
Control (or any of its affiliated entities) to or for the benefit of Executive
(whether pursuant to the terms of this Agreement or otherwise, but determined
without regard to any additional payments required under this Section 7)
(the “Payments”) would be subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”), or
any interest or penalties are incurred by Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise
Tax”), then the Company shall pay to Executive an additional payment
(a “Gross-Up Payment”) in an
amount such that after payment by Executive of all taxes (including any Excise
Tax) imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the sum of (x) the Excise Tax imposed upon the
Payments and (y) the product of any deductions disallowed because of the
inclusion of the Gross-Up Payment in Executive’s adjusted gross income and the
highest applicable marginal rate of federal income taxation for the calendar
year in which the Gross-Up Payment is to be made.  For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to (i) pay federal income
taxes at the Executive’s actual marginal rates of federal income taxation for
the calendar year in which the Gross-Up Payment is to be made, (ii) pay
applicable state and local income taxes at the Executive’s actual marginal rate
of taxation for the calendar year in which the Gross-Up Payment is to be made,
net of the actual reduction in federal income taxes which could be obtained
from deduction of such state and local taxes and (iii) have otherwise
allowable deductions for federal income tax purposes at least equal to those
which could be disallowed because of the inclusion of the Gross-Up Payment in
the Executive’s adjusted gross income. 
Notwithstanding the foregoing provisions of this Section 7(a), if
it shall be determined that Executive is entitled to a Gross-Up Payment, but
that the Payments would not be subject to the Excise Tax if the Payments were
reduced by an amount that is less than 10% of the portion of the Payments that
would be treated as “parachute payments” under Section 280G of the Code,
then the amounts payable to Executive under this Agreement shall be reduced
(but not below zero) to the maximum amount that could be paid to Executive
without giving rise to the Excise Tax (the “Safe
Harbor Cap”), and no Gross-Up Payment shall be made to
Executive.  In the event that the
Payments would be reduced as provided in this Section 7(a), then such
reduction shall be determined in a manner which has the least economic cost to
Executive and, to the extent the economic cost is equivalent, the Payments will
be reduced in the inverse order of when the Payments would have been made to
Executive until the reduction specified is achieved.  For purposes of reducing the Payments to the
Safe Harbor Cap, only amounts payable under this Agreement (and no other
Payments) shall be reduced.  If the
reduction of the amounts payable hereunder would not result in a reduction of
the Payments to the Safe Harbor Cap, no amounts payable under this Agreement
shall be reduced pursuant to this provision.

 

8

 

(b)           Determinations.  Subject to
the provisions of Section 7(a), all determinations required to be made
under this Section 7, including whether and when a Gross-Up Payment is
required, the amount of such Gross-Up Payment, the amount of any Option
Redetermination (as defined below), the reduction of the Payments to the Safe
Harbor Cap and the assumptions to be utilized in arriving at such
determinations, shall be made by the public accounting firm that is retained by
the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”) which shall provide
detailed supporting calculations both to the Company and Executive within 15
business days of the receipt of notice from the Company or the Executive that
there has been a Payment, or such earlier time as is requested by the Company
(collectively, the “Determination”).  For the avoidance of doubt, the Accounting
Firm may use the Option Redetermination amount in determining the reduction of
the Payments to the Safe Harbor Cap. 
Notwithstanding the foregoing, in the event (i) the Board shall
determine prior to the Change in Control that the Accounting Firm is precluded
from performing such services under applicable auditor independence rules or
(ii) the Audit Committee of the Board determines that it does not want the
Accounting Firm to perform such services because of auditor independence
concerns or (iii) the Accounting Firm is serving as accountant or auditor
for the individual, entity or group effecting the Change in Control, the Board
shall appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). 
All fees and expenses of the Accounting Firm shall be borne solely by
the Company and the Company shall enter into any agreement requested by the
Accounting Firm in connection with the performance of the services
hereunder.  The Gross-Up Payment under
this Section 7 with respect to any Payments shall be made no later than 30
days following such Payment.  If the
Accounting Firm determines that no Excise Tax is payable by Executive, it shall
furnish Executive with a written opinion to such effect, and to the effect that
failure to report the Excise Tax, if any, on Executive’s applicable federal
income tax return will not result in the imposition of a negligence or similar
penalty.  In the event the Accounting
Firm determines that the Payments shall be reduced to the Safe Harbor Cap, it
shall furnish Executive with a written opinion to such effect.  The Determination by the Accounting Firm
shall be binding upon the Company and Executive.  As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the Determination,
it is possible that Gross-Up Payments which will not have been made by the
Company should have been made (“Underpayment”)
or Gross-Up Payments are made by the Company which should not have been made (“Overpayment”), consistent with the
calculations required to be made hereunder. 
In the event that the Executive thereafter is required to make payment
of any Excise Tax or additional Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such Underpayment
(together with interest at the rate provided in Section 1274(b)(2)(B) of
the Code) shall be promptly paid by the Company to or for the benefit of
Executive.  In the event the amount of
the Gross-Up Payment exceeds the amount necessary to reimburse the Executive
for his or her Excise Tax, the Accounting Firm shall determine the amount of
the Overpayment that has been made and any such Overpayment (together with
interest at the rate provided in Section 1274(b)(2) of the Code)
shall be promptly paid by Executive (to the extent he or she has received a
refund if the applicable Excise Tax has been paid to the Internal Revenue
Service) to or for the benefit of the Company. 
Executive shall cooperate, to the extent his or her expenses are
reimbursed by the Company, with any reasonable requests by the 

 

9

 

Company in connection with any contests or disputes
with the Internal Revenue Service in connection with the Excise Tax.  In the event that the Company makes a
Gross-Up Payment to the Executive and subsequently the Company determines that
the value of any accelerated vesting of stock options held by Executive shall
be redetermined within the context of Treasury Regulation §1.280G-1 Q/A 33 (the
“Option Redetermination”),
Executive shall (i) file with the Internal Revenue Service an amended
federal income tax return that claims a refund of the overpayment of the Excise
Tax attributable to such Option Redetermination and (ii) promptly pay the
refunded Excise Tax to the Company; provided that the Company shall pay all
reasonable professional fees incurred in the preparation of Executive’s amended
federal income tax return.  In the event
that amounts payable to Executive under this Agreement were reduced pursuant to
the third sentence of Section 7(a) and subsequently Executive
determines there has been an Option Redetermination that reduces the value of
the Payments attributable to such options, the Company shall promptly pay to
Executive any amounts payable under this Agreement that were not previously
paid solely as a result of the third sentence of Section 7(a) up to
the Safe Harbor Cap.

 

8.             Covenants Not to Solicit Company Employees; Confidential Information.

 

(a)           Non-Solicit.  During the
Employment Period, and for a one-year period after the Executive’s employment
is terminated for any reason, the Executive shall not (except in connection
with the performance of his duties for the Companies) in any manner, directly
or indirectly (without the prior written consent of the Company) Solicit anyone
who is then an employee of the Company or its affiliates (or who was an
employee of the Company or its affiliates within the prior 12 months) to resign
from the Company or its affiliates or to apply for or accept employment with
any other business or enterprise.  For
purposes of this Agreement, “Solicit”
means any direct or indirect communication of any kind, regardless of who
initiates it, that in any way invites, advises, encourages or requests any
person to take or refrain from taking any action.

 

(b)           Confidential Information.  The
Executive hereby acknowledges that, as an employee of the Company, he will be
making use of, acquiring and adding to confidential information of a special
and unique nature and value relating to the Company and its affiliates and
their strategic plan and financial operations. 
The Executive further recognizes and acknowledges that all confidential
information is the exclusive property of the Company and its affiliates, is
material and confidential, and is critical to the successful conduct of the
business of the Company and its affiliates. 
Accordingly, the Executive hereby covenants and agrees that he will use
confidential information for the benefit of the Company and its affiliates only
and shall not at any time, directly or indirectly, during the term of this
Agreement and thereafter divulge, reveal or communicate any confidential
information to any person, firm, corporation or entity whatsoever, or use any
confidential information for his own benefit or for the benefit of others.  Notwithstanding the foregoing, the Executive
shall be authorized to disclose confidential information (i) as may be
required by law or legal process after providing the Company with prior written
notice and an opportunity to respond to such disclosure (unless such notice is
prohibited by law), (ii) in any criminal proceeding against him after
providing the Company with prior written notice and (iii) with the prior
written consent of the Company.

 

10

 

 

(c)           Survival. 
Any termination of the Executive’s employment or of this Agreement (or
breach of this Agreement by the Executive or the Company) shall have no effect
on the continuing operation of this Section 7.

 

(d)           Cease Payments.  In the event that the Executive materially
breaches Section 7(a), 7(b) or 7(i), the Company’s obligation to make
or provide payments or benefits under Section 4 or 6 shall cease.

 

(e)           Non-disparagement.  During the Employment Period and thereafter,
the Executive shall not, in any manner, directly or indirectly make any
intentionally false or any disparaging or derogatory statements about the
Company, any of its affiliates or any of their employees, officers or
directors.  The Company, in turn, agrees
that it will not make, in any authorized corporate communications to third
parties, and it will direct the members of the Board, the Chief Executive
Officer, and his direct reports, not to in any manner, directly or indirectly
make any intentionally false or any disparaging or derogatory statements about
the Executive; provided, however, that nothing herein shall prevent either
party from giving truthful testimony, from otherwise making good faith
statements in connection with legal investigations or other proceedings, or
from responding to disparaging or derogatory remarks made by the other party
whether or not in breach of this Section 7.

 

9.             Successors.

 

(a)           This
Agreement is personal to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. 
This Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal representatives.

 

(b)           This
Agreement shall inure to the benefit of and be binding upon the Companies and
their respective successors and assigns.

 

(c)           The
Companies 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 assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Companies would be
required to perform it if no such succession had taken place.  As used in this Agreement, “Company” shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid.

 

10.           Disputes.

 

(a)           Jurisdiction and Choice of Forum.  All disputes arising under or related to the
employment of the Executive or the provisions of this Agreement shall be settled
by arbitration under the rules of the American Arbitration Association
then in effect, such arbitration to be held in Chicago, Illinois, as the
sole and exclusive remedy of either party. The arbitration shall be heard by
one arbitrator mutually agreed upon by the parties, who must be a former
judge.  In the event that the parties
cannot agree upon the selection of the arbitrator within 10 days, each party
shall select one arbitrator and those arbitrators shall select a third
arbitrator who will serve as the sole arbitrator.  The 

 

11

 

arbitrator shall have the authority to order
expedited discovery, hearing and decision, including the ability to set outside
time limits for such discovery, hearing and decision.  The parties shall direct the arbitrator to
render a decision not later than 90 days following the arbitration
hearing.  Judgment on any arbitration
award may be entered in any court of competent jurisdiction.

 

(b)           Governing Law.  This Agreement will be governed by and
construed in accordance with the law of the State of Illinois applicable to
contracts made and to be performed entirely within that State.

 

(c)           Costs. 
The Company shall reimburse all reasonable legal fees and expenses in
connection with (i) the negotiation of this Agreement and (ii) any
dispute, arbitration or legal proceeding relating to the employment of the
Executive or the provisions of this Agreement if the Executive substantially
prevails on any claim in any such dispute, arbitration or legal proceeding.

 

11.           Section 409A
of the Code.

 

(a)           This
Agreement shall be construed to avoid the imposition of additional taxes,
interest and penalties pursuant to Section 409A.  To the extent that the Executive would
otherwise be entitled to any payment under this Agreement or any plan or
arrangement of the Company or its affiliates that constitutes “deferred
compensation” subject to Section 409A, and that if paid during the six
months beginning on the Date of termination would be subject to the Section 409A
additional tax because the Executive is a “specified employee” (within the
meaning of Section 409A and as determined by the Company), the payment
will be paid to the Executive on the earlier of the six-month anniversary of
the Date of Termination, a change in ownership or effective control of the
Company (within the meaning of Section 409A) or the Executive’s
death.  In addition, any payment or
benefit due upon a termination of employment that represents a “deferral of
compensation” within the meaning of Section 409A shall be paid or provided
to the Executive only upon a “separation from service” as defined in Treas.
Reg. 1.409A-1(h).  To the extent
applicable, each severance payment made under this Agreement shall be deemed to
be separate payments, amounts payable under Section 4 of this Agreement
shall be deemed not to be a “deferral of compensation” subject to Section 409A
to the extent provided in the exceptions in Treas. Reg. 1.409A-1(b)(4) (“short-term
deferrals”) and (b)(9) (“separation pay plans,” including the exception
under subparagraph (iii)) and other applicable provisions of Treas. Reg.
1.409A-1 through 1.409A-6.

 

(b)           Notwithstanding
anything to the contrary in this Agreement or elsewhere, any payment or benefit
under this Agreement or otherwise that is exempt from Section 409A
pursuant to Treas. Reg. 1.409A-1(b)(9)(v)(A) or (C) shall be paid or
provided to the Executive only to the extent that the expenses are not
incurred, or the benefits are not provided, beyond the last day of the
Executive’s second taxable year following the Executive’s taxable year in which
the “separation from service” occurs; and provided further that such expenses
shall be reimbursed no later than the last day of the Executive’s third taxable
year following the taxable year in which the Executive’s “separation from
service” occurs.  Except as otherwise
expressly provided herein, to the extent any expense reimbursement or the
provision of any in-kind benefit under this 

 

12

 

Agreement is determined to be subject to Section 409A,
the amount of any such expenses eligible for reimbursement, or the provision of
any in-kind benefit, in one calendar year shall not affect the expenses
eligible for reimbursement in any other calendar year (except for any life-time
or other aggregate limitation applicable to medical expenses), in no event
shall any expenses be reimbursed after the last day of the calendar year
following the calendar year in which the Executive incurred such expenses, and
in no event shall any right to reimbursement or the provision of any in-kind
benefit be subject to liquidation or exchange for another benefit.

 

12.           Miscellaneous.

 

(a)           Amendment. 
This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective successors
and legal representatives.

 

(b)           Notices. 
All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:

 

If
to the Executive:

 

at
the Executive’s primary residential address

as shown on the records of the Company

 

If
to the Company:

 

General
Growth Properties, Inc.

110 North Wacker Drive

Chicago, IL 60606

Telecopy Number:  312-960-5485

Attention:  Office of the General Counsel

 

or
to such other address as either party shall have furnished to the other in
writing in accordance herewith.  Notice
and communications shall be effective when actually received by the addressee.

 

(c)           Severability.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.

 

(d)           Tax Withholding.  The Company may withhold from any amounts
payable under this Agreement such federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.

 

(e)           No Waiver. 
The Executive’s or the Company’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the Company’s right to terminate the Executive for Cause pursuant
to Section 3(b) (subject to 

 

13

 

the limitation in the last sentence of Section 3(b)),
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.

 

(f)            No Strict Construction.  It is the parties’ intention that this
Agreement not be construed more strictly with regard to the Executive or the
Company.

 

(g)           Entire Agreement.  From and after the Effective Date, this
Agreement shall supersede any other employment or severance agreement or
similar arrangements between the parties, and shall supersede any prior
understandings, agreements or representations by or among the parties, written
or oral, whether in term sheets, presentations or otherwise, relating to the subject
matter hereof.

 

(h)           Section References; Captions.  Any reference to a Section herein is a
reference to a section of this Agreement unless otherwise stated.  The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.

 

IN
WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from their respective Boards of Directors or
other duly authorized governing body, the Companies have caused these presents
to be executed in its name on their behalf, all as of the Effective Date.

 

	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
  /s/
  Thomas H. Nolan

  
	
   

  	
  Thomas
  H. Nolan

  
	
   

  	
   

  
	
   

  	
  GENERAL
  GROWTH PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ronald Gern

  
	
   

  	
   

  	
  Name:

  	
  Ronald
  Gern

  
	
   

  	
   

  	
  Title:

  	
  General
  Counsel

  
	
   

  	
   

  
	
   

  	
  GGP
  LIMITED PARTNERSHIP

  
	
   

  	
  By:

  	
  General
  Growth Properties, Inc., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ronald Gern

  
	
   

  	
   

  	
  Name:

  	
  Ronald
  Gern

  
	
   

  	
   

  	
  Title:

  	
  General Counsel

  

 

14

 

ATTACHMENT A

 

WAIVER AND RELEASE AGREEMENT

 

This
Waiver and Release Agreement (hereinafter “Release”) is entered into among
Thomas H. Nolan (hereinafter “Executive”), General Growth Properties, Inc.,
a Delaware corporation (the “Company”), and General Growth Properties, L.P., a
Delaware limited partnership (the “Partnership” and collectively, the “Companies”).

 

The
parties previously entered into an employment agreement dated
                      
      , 2010 pursuant to which Executive is
entitled to certain payments and benefits upon termination of employment
subject to the execution and non-revocation of this Release.  Executive has had a termination of employment
pursuant to such employment agreement.

 

NOW
THEREFORE, in consideration of certain payments and benefits under his
employment agreement, Executive and the Companies agree as follows:

 

1.             Executive expressly waives and
releases the Companies, their respective affiliates and related entities,
parent corporations and subsidiaries, and all current and former directors,
administrators, supervisors, managers, agents, officers, partners,
stockholders, attorneys, insurers and employees of the Companies and their
affiliates, related entities, parent corporations and subsidiaries, and their
successors and assigns, from any and all claims, actions and causes of action,
at law or in equity, known or unknown, including those directly or indirectly
relating to or connected with Executive’s employment with the Companies or
termination of such employment, including but not limited to any and all claims
under the Illinois Human Rights Act, the Employee Retirement Income Security
Act of 1974, Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act (“ADEA”), the Americans with Disabilities Act, as such Acts
have been amended, and all other forms of employment discrimination whether
under federal, state or local statute or ordinance, wrongful termination,
retaliatory discharge, breach of express, implied, or oral contract,
interference with contractual relations, defamation, intentional infliction of
emotional distress and any other tort or contract claim under common law of any
state or for attorneys’ fees, based on any act, transaction, circumstance or
event arising up to and including the date of Executive’s execution of this
Release; provided, however, nothing herein shall limit or impede Executive’s
right to file or pursue an administrative charge with, or participate in, any
investigation before the Equal Employment Opportunity Commission (“EEOC”), or
any similar local, state or federal agency, or, to file a claim for
unemployment compensation benefits, and/or any causes of action which by law
Executive may not legally waive.  Executive agrees, however, that if
Executive or anyone acting on Executive’s behalf, brings any action concerning
or related to any cause of action or liability released in this Agreement,
Executive waives any right to, and will not accept, any payments, monies,
damages, or other relief, awarded in connection therewith.

 

15

 

4.             Executive acknowledges:  (a) that Executive has been advised in
writing hereby to consult with an attorney before signing this Release, and (b) that
Executive has had at least twenty-one (21) days after receipt of this
information and Release to consider whether to accept or reject this
Release.  Executive understands that
Executive may sign this Release prior to the end of such twenty-one (21) day
period, but is not required to do so.  In
addition, Executive has seven (7) days after Executive signs this Release
to revoke it.  Such revocation must be in
writing and delivered either by hand or mailed and postmarked within the seven (7) day
revocation period. If sent by mail, it is requested that it be sent by
certified mail, return receipt requested to the Company, in care of the office
of the General Counsel.  If Executive
revokes this Release as provided herein, it shall be null and void.  If Executive does not revoke this Release
within seven (7) days after signing it, this Release shall become
enforceable and effective on the eighth (8th) day after the Executive signs
this Release (“Effective Date”).

 

5.             Executive and the Companies agree
that neither this Release nor the performance hereunder constitutes an
admission by either the Company or the Partnership of any violation of any
federal, state or local law, regulation, or common law, or any breach of any
contract or any other wrongdoing of any type.

 

6.             This Release shall be construed and
enforced pursuant to the laws of the State of Illinois as to substance and procedure,
including all questions of conflicts of laws.

 

7.             This Release constitutes the entire
agreement between the parties concerning the subject matter hereof and
supersedes all prior and contemporaneous agreements, if any, between the
parties relating to the subject matter thereof; provided that this Release does
not apply to: (a) any claims under employee benefit plans subject to the
Employee Retirement Income Security Act of 1974 (“ERISA”) in accordance with
the terms of the applicable employee benefit plan, the General Growth
Properties, Inc. Key Employee Incentive Plan, or any option agreement or
other agreement pursuant to which Executive may exercise rights after
termination of employment to acquire stock or other equity of the Company or
the Partnership, (b) any claim under or based on a breach of this Release
or Sections 4, 5, 8(e), 9, or 10 of the Employment Agreement after the date
that Executive signs this release; (c) rights or claims that may arise
under the Age Discrimination in Employment Act or otherwise after the date that
Executive signs this Release; or (d) any right to indemnification or
directors and officers liability insurance coverage to with the Executive is
otherwise entitled in accordance with Executive’s Employment Agreement.

 

9.             EXECUTIVE ACKNOWLEDGES THAT
EXECUTIVE HAS FULLY READ AND FULLY UNDERSTANDS THIS RELEASE; AND THAT EXECUTIVE
ENTERED INTO IT FREELY AND VOLUNTARILY AND WITHOUT COERCION OR PROMISES NOT
CONTAINED IN THIS RELEASE.

 

16

 

	
  EXECUTIVE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Thomas
  H. Nolan

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GENERAL
  GROWTH PROPERTIES, INC.

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Ronald
  Gern

  	
   

  	
   

  
	
   

  	
  Title:

  	
  General
  Counsel

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  GGP
  LIMITED PARTNERSHIP

  	
   

  	
   

  
	
  By:

  	
  General
  Growth Properties, Inc., its general partner

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Ronald
  Gern

  	
   

  	
   

  
	
   

  	
  Title:

  	
  General
  Counsel

  	
   

  	
   

  

 

17exhibit10-1.htm

Exhibit 10.1

 

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (“Agreement”) dated as of September 7, 2010 is entered into by and between Black Hills Corporation (“Company”) and David R. Emery (“Employee”).

1.           RECITALS.

The Board of Directors of the Company (“Board”) has determined that it is in the best interests of the Company and its shareholders to encourage the Employee’s full attention and dedication to the Company currently and in the event of any threatened or pending Change in Control (as defined below).  Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement.

2.           DEFINITIONS.

 

“AFFILIATE” shall have the meaning ascribed to such term in rule 12b-2 of the General Rules and Regulations of the Exchange Act.

“BENEFICIAL OWNER” or “BENEFICIAL OWNERSHIP” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

 

“CAUSE” means those events or conditions described in subsections 9(a)(1) and (2).

“CHANGE IN CONTROL” shall mean any of the following events:

(a)   The acquisition in a transaction or series of transactions by any Person of Beneficial Ownership of thirty percent (30%) or more of the combined voting power of the then outstanding shares of common stock of the Company; provided, however, that for purposes of this Agreement, the following acquisitions will not constitute a Change in Control: (A) any acquisition by the Company; (B) any acquisition of common stock of the Company by an underwriter holding securities of the Company in connection with a public offering thereof; and (C) any acquisition by any Person pursuant to a transaction which complies with subsections (c)(i), (ii) and (iii);

(b)   Individuals who, as of December 31, 2009 are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the election, or nomination for election by the Company’s common shareholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened “Election Contest” (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest;

  

  

  

(c)   Consummation, following shareholder approval, of a reorganization, merger, or consolidation of the Company and/or its subsidiaries, or a sale or other disposition (whether by sale, taxable or non-taxable exchange, formation of a joint venture or otherwise) of fifty percent (50%) or more of the assets of the Company and/or its subsidiaries (each a “Business Combination”), unless, in each case, immediately following such Business Combination, (i) all or substantially all of the individuals and entities who were beneficial owners of shares of the common stock of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding shares of the entity resulting from the Business Combination or any direct or indirect parent corporation thereof (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one (1) or more subsidiaries) (the “Successor Entity”) (ii) no Person (excluding any Successor Entity or any employee benefit plan or related trust, of the Company or such Successor Entity) owns, directly or indirectly, thirty percent (30%) or more of the combined voting power of the then outstanding shares of common stock of the Successor Entity, except to the extent that such ownership existed prior to such Business Combination; and (iii) at least a majority of the members of the Board of Directors of the entity resulting from such Business Combination or any direct or indirect parent corporation thereof were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such Business Combination; or

(d)    Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that complies with subsections (c)(i), (ii), and (iii) above.

(e)    A Change in Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the then outstanding Common Stock as a result of the acquisition of Common Stock by the Company which, by reducing the number of shares of Common stock then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Common Stock by the Company, and after such stock acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Common Stock which increases the percentage of the then outstanding common Stock Beneficially Owned by the Subject Person, then a Change in Control shall occur.

(f)    A Change in Control shall not be deemed to occur unless and until all regulatory approvals required in order to effectuate a Change in Control of the Company have been obtained and the transaction constituting the Change in Control has been consummated.

“CODE” means the Internal Revenue Code of 1986, as amended.

“DISABILITY” means a physical or mental infirmity because of which Employee is receiving benefits under the Company sponsored long-term disability plan in which the Employee participates.

“DISABILITY DATE” means the date subsequent to a Change in Control on which the Employee is determined to have a Disability.

  

2

  

 

“EFFECTIVE DATE” means the first date on which a Change in Control occurs.  The Effective Date does not occur and no benefits shall be paid under this Agreement if for any reason the Employee is not an employee of the Company on the day prior to the Effective Date.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

“GOOD REASON” means those events or conditions described in subsections 9(c)(i) through (vi) below.

“NONQUALIFIED DEFERRED COMPENSATION PLAN” means the Company’s Nonqualified Deferred Compensation Plan as amended and restated effective January 1, 2010, and as amended or replaced from time to time thereafter prior to the Effective Date.

“NOTICE OF TERMINATION” means a notice which indicates the specific termination provision in this Agreement, if any, relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee’s employment under the provisions so indicated.  Any purported termination by the Company or Employee shall be communicated by written notice of termination to the other.

“OMNIBUS INCENTIVE COMPENSATION PLAN” means the incentive compensation plan known as the “Black Hills Corporation 2005 Omnibus Incentive Compensation Plan” as effective May 25, 2005, and as amended or replaced from time to time thereafter prior to the Effective Date.

“2005 PENSION EQUALIZATION PLAN” means the Company’s 2005 Pension Equalization Plan as in effect on January 1, 2008 and as amended or replaced from time to time thereafter prior to the Effective Date.

“PENSION PLAN” means the Company’s tax qualified defined benefit pension plan as amended and restated effective October 1, 2000, and as amended from time to time thereafter prior to the Effective Date.

“PERSON” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d).

“PROTECTION PERIOD” means the time period beginning on the Effective Date and which shall expire on the third anniversary of the Effective Date; provided, that the Protection Period shall in no event extend beyond the first day of the month following the month in which the Employee attains age 65, if Employee is an executive officer of the Company of the Effective Date.

“RELATED COMPANY” means any business organization or legal entity that directly or indirectly, controls, is controlled by or is under common control with the Company.  For purposes of this definition, the term “control” (including the terms “controlling”,

  

3

  

“controlled by”, and “under common control with”) includes the possession, direct or indirect, of the power to vote 50 percent or more of the voting equity securities, membership interest, or other voting interest, or to direct or cause the direction of the management and policies of such business organization or other legal entity, whether through the ownership of voting equity securities, membership interest, by contract, or otherwise.

“RESTORATION PLAN” means the Company’s Restoration Plan as in effect on January 1, 2008 and as amended or replaced from time to time thereafter prior to the Effective Date.

“RETIREE HEALTHCARE PLAN” means the Company’s Retiree Healthcare Plan as amended and restated effective January 1, 2010, and as further amended from time to time thereafter prior to the Effective Date.

“RETIREMENT SAVINGS PLAN” means the Black Hills Corporation Retirement Savings Plan (401K) as amended and restated effective January 1, 2000, and as further amended from time to time thereafter prior to the effective date.

“SEVERANCE COMPENSATION” means the Employee’s base salary and annual incentive target on the date of the Change in Control.

“SUBSIDIARY” means any corporation, partnership, limited liability company, joint venture, or other entity in which the Company has a majority voting interest.

“SUCCESSOR EMPLOYER” means any Successor Entity (as defined in the definition of “Change in Control” herein) or any other successor in interest or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) of the business and/or assets of the Company.

“TERMINATION DATE” means the date, subsequent to the Effective Date, of the Employee’s separation from service (as defined for purposes of Code Section 409A) with the Company and all Related Companies.

“WELFARE BENEFITS” means the Black Hills Corporation Medical and Dental Plan, the Black Hills Corporation Flexible Benefit Plan, and the Black Hills Corporation Employee Life and long-Term Disability Plan, and the Short-Term Disability Plan, as the plans and the terms and conditions thereof exist on the day prior to the Effective Date.  Following the Employee’s Termination Date, the term Welfare Benefits shall not include a “flexible spending arrangement” (within the meaning of Proposed Regulation Section 1.125-5(a) or subsequent authoritative guidance).

	
3.

	
TERM OF AGREEMENT.

The Term of this Agreement shall commence on the date of execution and shall continue in effect until November 15, 2013.  If no Change in Control shall have occurred during the Term, this Agreement shall expire.  If a Change in Control occurs during the Term, this Agreement shall remain in effect for full performance according to its terms.  Upon expiration of this Agreement, the Company, by action of its Board of Directors, may elect to renew or not renew this Agreement, or may offer to renew the Agreement subject to modifications of any term or condition, at its discretion.  The Board of Directors may, in its discretion, terminate this

  

4

  

Agreement prior to the expiration of the Term, in the event that Employee, for any reason, ceases to be employed with the Company in a position as an executive officer within the meaning of the Exchange Act.

	
4.

	
EMPLOYMENT.

Subject to the provisions of this Agreement, during the Protection Period the Company agrees to continue to employ the Employee and the Employee agrees to remain in the employ of the Company.  During the Protection Period, the Employee shall be employed at a position substantially similar to Employee’s position prior to the Change in Control or in such other capacity as may be mutually agreed to in writing by the parties.  Employee shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in a similar capacity.

During the Protection Period, excluding periods of vacation, sick leave or another approved leave of absence, Employee agrees to devote full attention and time during usual business hours to the business and affairs of the Company to the extent necessary to discharge the responsibilities assigned to Employee hereunder.  It is expressly understood and agreed that to the extent that any civic, charitable or industry-related activities have been conducted by Employee prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of Employee’s responsibilities to the Company.  In addition, if Employee serves on a public Board of Directors prior to the effective date, the Employee shall retain the right to continue to serve on that particular Board.

5.           COMPENSATION.

During the Protection Period, the Company agrees to pay or cause to be paid to Employee Annual Compensation at a rate at least equal to the highest rate of the Employee’s Annual Compensation as in effect at any time within one year preceding the Effective Date, and as may be increased from time to time.  Such Annual Compensation shall be payable in accordance with the Company’s customary practices applicable to its officers and employees.  For purposes of this Agreement, Annual Compensation shall mean all of the following compensation paid to the Employee by the Company during a calendar year including: (a) base salary, targeted annual incentive bonus, targeted long-term incentive grants and awards; and (b) Company Matching Contributions and Company Retirement Contributions or other benefits payable under the Retirement Savings Plan and Supplemental Matching Contributions, Supplemental Retirement Contributions and Supplemental Target Contributions under the Nonqualified Deferred Compensation Plan.

6.           EMPLOYEE WELFARE AND PENSION BENEFITS.

During the Protection Period, the Company or the Successor Employer shall provide to the Employee the Welfare Benefits (including Retiree Healthcare Plan credits for purposes of this Section 6) and the Pension Plan, including supplemental medical insurance, travel accident insurance, short-term disability, long-term disability or life insurance benefits, or other substantially similar employee welfare and pension benefits, but in no event on a basis less favorable in terms of benefit levels and coverage than the Welfare Benefits and the Pension Plan.  Subsequent to the Protection Period, the Company or Successor Employer shall provide to the Employee ongoing Welfare Benefits (whether in active or subsequent inactive status) under terms at least as favorable as provided to other Company or Successor Employer employees.  In the

  

5

  

event Employee is not a participant in a Welfare Benefits plan or the Pension Plan prior to the Effective Date, then Company shall have no obligation to provide that Welfare Benefits plan or the Pension Plan or other substantially similar employee welfare and pension benefits as provided in this Section 6.  For purposes of this Section 6, if the Employee is not entitled to any future benefit accruals in the Pension Plan as of the Effective Date the Employee shall not be treated as a participant in the Pension Plan for purposes of accruing benefits under the Pension Plan.

7.           2005 PENSION EQUALIZATION PLAN; RESTORATION PLAN.

If Employee was a participant in the 2005 Pension Equalization Plan prior to the Effective Date, then during the Protection Period, the Company or Successor Employer shall continue to provide Employee with coverage and participation under the 2005 Pension Equalization Plan or a substantially similar supplemental retirement plan.

If Employee was a participant in the Restoration Plan prior to the Effective Date, then during the Protection Period, the Company or Successor Employer shall continue to provide Employee with coverage and participation under the Restoration Plan or a substantially similar supplemental retirement plan.  For purposes of this Section 7, if the Employee is not entitled to any future benefit accruals in the Restoration Plan as of the Effective Date the Employee shall not be treated as a participant in the Restoration Plan for purposes of accruing benefits under the Restoration Plan.

In no event shall coverage during the Protection Period be on a basis less favorable in terms of benefit levels and coverage than the 2005 Pension Equalization Plan and the Restoration Plan.

8.           OTHER BENEFITS.

(a)   Fringe Benefits, Perquisites, Vacation and Sick Leave.  During the Protection Period, Employee shall be entitled to all fringe benefits, perquisites, and paid-time-off generally made available by the Company and Successor Employer to its executives or other employees.  Unless otherwise provided herein, the fringe benefits, perquisites, and paid-time-off provided to Employee shall be on the same basis and terms as other similarly situated employees of the Company, but in no event shall be less favorable than the most favorable fringe benefits, perquisites, or paid-time-off to Employee at any time within one year period preceding the Effective Date, or if more favorable, at any time thereafter.

(b)   Expenses.  Employee shall be entitled to receive prompt reimbursement of all expenses reasonably incurred by him in connection with the performance of his duties hereunder or for promoting, pursuing or otherwise furthering the business or interests of the Company or Successor Employer.  All reimbursements under this Section 8(b) will be paid as promptly as administratively practicable, but in no event later than by December 31st of the year next following the calendar year in which the expense was incurred.

(c)   Indemnity.  If, at the time of a Change in Control, the Employee was covered by an Indemnity Agreement and/or Directors’ and Officers’ Insurance (D & O) coverage, then the Indemnity Agreement and D & O coverage shall continue in full force and effect throughout the Protection Period, and beyond the Protection Period, with respect to claims arising out of acts or omissions of the Employee prior to a Change in Control.  If,

  

6

  

following a Change in Control, Company or the Successor Employer adopts substitute Indemnity Agreements, and/or D & O coverage, for employees having substantially the same authority, duties, and responsibilities as Employee, then Employee shall be entitled to receive the benefit of such protection with respect to claims arising from acts or omissions of Employee following a Change in Control.  Payment for expenses to be reimbursed under this Section 8(c) shall be made in accordance with the time specified under the Indemnity Agreement or D & O coverage, but in no event later than by December 31st of the year next following the year in which the expense was incurred.

	
9.

	
TERMINATION.

During the Protection Period, Employee’s employment hereunder may be terminated under the following circumstances:

(a)   Cause.  The Company may terminate Employee’s employment for “Cause.”  A termination of employment is for “Cause” if Employee (1) enters a guilty plea, pleads nolo contendre to, or is convicted of a felony offense that is demonstrably injurious to the Company; (2) intentionally engages in other conduct which is demonstrably injurious to the Company, monetarily or otherwise; or (3) fails, after reasonable request, to cooperate with the Company or governmental authorities in connection with a civil or criminal regulatory investigation or proceeding, or other civil litigation involving the company; provided, however, that no termination of Employee’s employment shall be for Cause as set forth in clauses (2) or (3), unless (i) there shall have been delivered to Employee a copy of a written Notice of Termination, at least thirty (30) days in advance of the Termination Date, setting forth that Employee was guilty of the conduct set forth in such applicable clause and specifying the particulars thereof in detail; and (ii) Employee shall have been provided an opportunity to be heard by the Board (with the assistance of Employee’s counsel if Employee so desires).  No act, nor failure to act, on Employee’s part shall be considered “intentional” unless he has acted, or failed to act, with an absence of good faith and without a reasonable belief that his action or failure to act was in the best interest of the Company.  Notwithstanding anything contained in this Agreement to the contrary, no failure to perform by Employee after a Notice of Termination is given to the Employee shall constitute Cause for purposes of this Agreement.

(b)   Disability.  The Company may terminate Employee’s employment after the Employee’s Disability Date.  Employee shall be entitled to the compensation and benefits provided for under this Agreement for any period during the Protection Period and prior to the Employee’s Disability Date, during which Employee is unable to work due to a physical or mental infirmity, and up to the Employee’s Disability Date.  Notwithstanding anything contained in this Agreement to the contrary, and subject to applicable law and the provisions of the Company’s long-term disability policy, until the Termination Date specified in a Notice of Termination relating to Employee’s Disability, Employee shall be entitled to return to his position with the Company as set forth in this Agreement, in which event no Disability Date will be deemed to have occurred.

(c)   Good Reason.  During the Protection Period, the Employee may terminate his employment for “Good Reason.”  For purposes of this Agreement, “Good Reason” shall mean the occurrence after the Effective Date of any of the events or conditions described below.

  

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(i)   A material reduction of the Employee’s authority, duties, or responsibilities from those in effect immediately prior to the Effective Date; provided that, any reduction in the foregoing resulting merely from the acquisition of the Company, or any Business Combination, by reason of which the Company thereafter exists as a subsidiary or division of another entity, shall not constitute Good Reason;

(ii)   A material reduction in the Employee’s “base compensation” within the meaning of such term under the Final Treasury Regulations issued under Code Section 409A, or a failure to pay the Employee any compensation or benefits to which he is entitled within a reasonable period after the date due, provided that such failure to pay constitutes a material breach under subsection 9(c)(vi) (unless otherwise specified in authority under Code Section 409A, a material reduction in base compensation for this purpose shall occur if the Employee’s base compensation is reduced by two percent (2%) or more of the base compensation as in effect immediately prior to such reduction);

(iii)   Any material breach by the Company of any provision of this Agreement, including, but not limited to, the Company’s failure to provide the Employee Welfare and Pension Benefits or the Pension Equalization Plan or Restoration Plan benefits, as set forth in Sections 6 and 7, provided that such failure constitutes a material breach under subsection 9(c)(vi);

(iv)   The Company’s requiring the Employee to be based outside a 50-mile radius from Employee’s usual and normal place of work prior to the Change in Control, except for reasonably required travel on the Company’s business which is not substantially greater than such travel requirements prior to the Effective Date;

(v)   Any purported termination of the Employee’s employment for Cause by the Company which does not comply with the terms of Section 9(a), provided that such termination constitutes a material breach under subsection 9(c)(vi); or

(vi)    Any other action or inaction that constitutes a material breach by the Company of the agreements under which the Employee provides services including, but not limited to, the failure of the Company to obtain an agreement, satisfactory to the Employee, from any Successor Employer or assign of the Company, to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be obligated to perform under this Agreement, as contemplated in Section 14.

 

In order to effectuate a termination for Good Reason under this Section 9(c), the Employee shall, within 90 days after the initial existence of the condition, deliver written notice to the Company stating the grounds for Good Reason in support of termination.  The Company may, within 30 days after receipt of such notice, remedy the condition, in which case the Good Reason for termination shall be deemed not to have occurred.  For purposes of determining the amount of any cash payment payable to the Employee in accordance with Section 10, any reduction in compensation or benefit that would constitute Good Reason hereunder shall be deemed not to have occurred.

  

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10.

	
COMPENSATION UPON TERMINATION.

Upon termination of Employee’s employment, prior to the end of the Protection Period, Employee shall be entitled to the following compensation and benefits:

(a)   If Employee’s employment with the Company shall be terminated (i) by the Company for Cause or Disability, or (ii) by reason of Employee’s death, or (iii) by Employee without “Good Reason” pursuant to Section 9(c), the Company shall pay Employee all amounts earned or accrued through the Termination Date, but not paid as of the Termination Date, including all Annual Compensation, reimbursement for reasonable and necessary expenses incurred by Employee on behalf of the Company during the period ending on the Termination Date, together with accrued vacation pay, and paid time off (collectively “Accrued Compensation”).  In addition to the foregoing, if the Employee’s employment is terminated by the Company for Disability or by reason of the Employee’s death, the Company shall pay to the Employee or his beneficiaries an amount equal to the “Pro Rata Bonus” shall mean an amount equal to 100% of the target bonus that the Employee would have been eligible to receive for the Company’s fiscal year in which the Employee’s employment terminates, multiplied by a fraction, the numerator of which is the number of days in such fiscal year through the Termination Date and the denominator of which is 365.  All amounts payable under this Section 10(a) shall be paid in a lump sum within 60 days following the Employee’s Termination Date.

(b)   If the Employee’s employment with the Company shall be terminated (other than by reason of death) (i) by the Company other than for Cause or Disability, or (ii) by Employee for Good Reason, then following his Termination Date, the Employee shall be entitled to the following:

(i)   he Company shall pay Employee all Accrued Compensation and a Pro Rata Bonus.

(ii)   The Company shall pay Employee, in lieu of any further compensation for periods subsequent to the Termination Date, a lump sum severance payment, in cash, in an amount equal to 2.99 times (2.99x) the Employee’s Severance Compensation.  Notwithstanding the foregoing, if the Employee is an executive officer who has attained the age of 62 on the Termination Date, the severance payment to be paid under this subsection shall be the amount described above multiplied by a fraction, the numerator of which shall be the number of days remaining until the Employee’s 65th birthday, and the denominator of which shall be 1095.  The lump sum severance payment described in this paragraph shall be paid within 60 days after the Employee’s Termination Date (unless the Company’s deduction for the payment is restricted by Code Section 162(m), in which case payment must be made as soon as practicable or as soon as the payment becomes deductible).

(iii)   Within ten (10) business days after the Termination Date, and as a condition of receiving payments provided in subsection 10(b)(ii) above, Employee shall execute and deliver to Company the Waiver and Release Agreement (“Release”) in the same form as attached hereto as Exhibit A.  The severance payment shall not be paid unless the Employee has executed and delivered the Release, and the Release has become irrevocable as provided therein.  Prior to the Effective Date, the Company may revise the Release to

  

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conform to applicable law, so long as the Release does not increase the obligations of Employee thereunder.

(iv)   If Employee, prior to the Termination Date, was a participant in any Welfare Benefits, the Company or the Successor Employer, or any affiliate of the Successor Employer as determined under the rules of Code Sections 414(b) and (c), shall at its expense continue on behalf of Employee and his dependents and beneficiaries, for a period of three (3) years following the Termination Date, the Welfare Benefits or similar benefits no less favorable than the benefit levels and coverage provided to Employee prior to the Termination Date.  Following the three year period, the Company or the Successor Employer shall provide to the Employee Welfare Benefits (whether in active or subsequent inactive status) under terms at least as favorable as provided to other Company or Successor Employer employees.  Employee shall pay the employee portion of applicable premiums required to be paid by similarly-situated active employees (or retired employees in the case that the Employee is retired) of the Company.  At its election, the Company may provide Employee and his dependents with equivalent benefits outside the Welfare Benefits plans (though not by method of direct cash payment).  The Company’s obligation with respect to the foregoing benefit shall be discontinued in the event that Employee becomes covered under the health insurance coverage of a subsequent employer, other than the Successor Employer or any affiliate thereof, which does not contain any exclusion or limitation with respect to any preexisting condition of the Employee and his dependents.  For purposes of this provision, Employee shall have a duty to inform Company as to the terms and conditions of any subsequent employment and the corresponding benefits earned from such employment.  The continued coverage or provision of equivalent benefits under this subsection 10(b)(iv) or subsection 10(b)(v) shall be provided in a manner that is intended to satisfy an exception to Code Section 409A, and therefore not treated as an arrangement providing for nonqualified deferred compensation that is subject to taxation under Code Section 409A, including (i) providing such benefits on a nontaxable basis to Employee, (ii) providing for the reimbursement of medical expenses incurred during the time period during which Employee would be entitled to continuation coverage under a group health plan of the Company pursuant to Code Section 4980B (i.e., COBRA continuation coverage), (iii) providing that such benefits constitute the reimbursement or provision of in-kind benefits payable at a specified time or pursuant to a fixed schedule as permitted under Code Section 409A, or (4) such other manner as determined to be in compliance with an exception from being treated as nonqualified deferred compensation that is subject to taxation under Code Section 409A.

(v)           If Employee was a participant in the Retiree Healthcare Plan immediately prior to a Change in Control, then as of Employee’s Termination Date, the Employee’s benefit under the Retiree Healthcare Plan shall be determined as if (i) Employee had completed an additional three (3) Years of Plan Participation (as defined in the Retiree Healthcare Plan), and (ii) Employee were three (3) years older for determining eligibility for plan benefits. Furthermore, if the Employee is not eligible for benefits after the age and participation adjustment, then the Retirement Medical Savings Account (after adjustment for three years of participation) will be considered vested, and upon attainment of age 55 the Employee shall be deemed eligible for Retiree

  

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Healthcare Plan benefits, with the vested Retirement Medical Savings Account available to offset premiums.  At its election, the Company may provide Employee and his dependents with equivalent benefits outside the Retiree Healthcare Plan (though not by method of direct cash payment).

 (vi)           If Employee was a participant in the 2005 Pension Equalization Plan immediately prior to a Change in Control, then as of Employee’s Termination Date, the Employee’s benefit under the 2005 Pension Equalization Plan shall be determined as if (i) Employee had completed an additional three (3) Years of Plan Participation (as defined in the 2005 Pension Equalization Plan), and (ii) Employee received Annual Compensation (as defined in Section 5) during each additional Year of Plan Participation.

If Employee was a participant in the Restoration Plan and the Pension Plan immediately prior to a Change in Control, then as of Employee’s Termination Date, Employee’s Restoration Plan benefit shall be determined as if (i) Employee completed three (3) additional years of Credited Service under the Pension Plan, and (ii) the Employee received Annual Compensation (as defined in Section 5) during each additional year of Credited Service.  For purposes of this subsection 10(b)(vi), if the Employee is not entitled to any future benefit accruals in the Restoration Plan as of the Effective Date the Employee shall not receive any additional Credited Service or Annual Compensation when determining their Restoration benefit.

Furthermore, the Employee shall be made 100% vested for purposes of both the 2005 Pension Equalization Plan and Restoration Plan, if the Employee is a participant in such plans (for purposes of this subsection) and is not already fully vested.

(vii)           If Employee was a participant in the Nonqualified Deferred Compensation Plan immediately prior to a Change in Control, then as of Employee’s Termination Date, Employee’s Non-Elective Account in the Nonqualified Deferred Compensation Plan shall become immediately vested and be determined as if (i) Employee had completed three (3) additional Plan Years of participation and earned the related Supplemental Matching Contributions, Supplemental Retirement Contributions, and Supplemental Target Contributions (all as defined in the Nonqualified Deferred Compensation Plan); no investment earnings shall be attributed for this additional period, and (ii) Employee received Annual Compensation (as defined in Section 5) during each additional Plan Year of participation.

For purposes of this subsection 10(b)(vii), the additional contributions under the Nonqualified Deferred Compensation Plan (Supplemental Matching Contributions, Supplemental Retirement Contributions, and Supplemental Target Contributions) shall be determined without regard to any offsets from the Retirement Savings Plan.  (This has the same effect as if the Supplemental Matching Contributions and Supplemental Retirement Contributions were determined on total pay rather than only on pay over IRS pay limits.)

  

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(viii)    Notwithstanding any provision herein to the contrary, if the Employee is a “specified employee” (as defined for purposes of Code Section 409A), no payment under this Agreement shall be made before the date which is six (6) months after the date of the Employee’s Termination Date, or such earlier date upon which such amount can be paid or provided under Code Section 409A without being subject to additional taxes thereunder, if such payment constitutes deferred compensation subject to Code Section 409A.  To the extent that the Agreement provides for such nonqualified deferred compensation, it is intended to be compliant with Code Section 409A, and shall be interpreted and administered accordingly.

	
11.

	
OFFSET.

Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and except as provided in Section 10(b)(iv), such payments shall not be reduced whether or not Employee obtains other employment.

	
12.

	
TAX EFFECT.

No additional payments shall be made to the Employee to account for any excise taxes, income taxes, interest or penalties the employee may incur due to receipt of any Severance Compensation payment or distribution of any type by the Company.

In the event it shall be determined that any Severance Compensation payment or distribution of any type by the Company, or by any Affiliate of the Company, or by any Person who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Code Section 280G) or any Affiliate of such Person, to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”) (including but not limited to distribution of stock or options which vest upon a Change in Control pursuant to the Omnibus Incentive Stock Plan), is or will be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), and the Total Payments after reducing for the Excise Tax does not exceed the largest amount that would result in no portion of the Total Payments being subject to the Excise Tax (the “Safe Harbor Amount”), the Employee’s Total Payments shall be reduced to an amount equal to the Safe Harbor Amount.  However, if the amount of the Total Payments after reducing for the Excise Tax exceeds the Safe Harbor Amount, then no reduction shall be applied to the Total Payments.  In applying any reduction required herein, Employee may elect whether the non-cash severance benefits or the cash severance benefits shall first be reduced.

	
13.

	
OUTPLACEMENT SERVICES.

The Company shall, at its expense, permit the Employee to participate in outplacement assistance services, as determined by the Company, which are: (a) as to executive officers, at a level appropriate for senior management of a public company; and (b) not more than six (6) months in duration.  Outplacement services shall be provided in kind; cash shall not be paid in lieu thereof, nor will cash compensation be increased if Employee declines or does not use outplacement services.  All outplacement services shall be provided by the last day of the second calendar year beginning after the Employee’s Termination Date.

  

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14.

	
SUCCESSORS AND ASSIGNS.

This Agreement shall be fully binding upon any Successor Employer or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to the business and/or assets of the Company, in the same manner and to the same extent that the Company would be obligated under this Agreement as if no succession had taken place.  In the case of any transaction in which a successor or assign would not by the foregoing provision, or by operation of law, be bound by this Agreement, the Company shall require such successor or assign to expressly and unconditionally assume and agree to perform all the obligations of the Company and each Employer under this Agreement, in the same manner and to the same extent that the Company and each Employer would be required to perform it if no such succession or assignment had taken place.  Any failure to obtain such assumption and continuation of this Agreement shall constitute a material breach hereof.

Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Employee, his beneficiaries or legal representatives, except by will or by the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Employee’s legal personal representative.

15.           FEES AND EXPENSES.

The company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) reasonably and in good faith incurred by the Employee as they become due as a result of (a) the Employee’s termination of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (b) the Employee seeking to obtain or enforce any right or benefit provided by this Agreement or by any other plan or arrangement maintained by the Company under which the Employee is or may be entitled to receive benefits; provided, however, that the circumstances set forth in clauses (a) and (b) of this Section (other than as a result of the Employee’s termination of employment at the expiration of the Protection Period) occurred on or after the Effective Date.  For purposes of this Section 15, the Employee will not be deemed to have incurred legal fees or expenses reasonably or in good faith if, following resolution of a dispute under this Agreement, he has failed to prevail on at least one material issue in dispute.  In addition, only with regard to claims by the Employee based on wrongful termination, employment discrimination, the Fair Labor Standards Act, or worker’s compensation statutes, in no event shall the Company pay any legal fees or related expenses in accordance with this Section 15 unless (i) such fees and expenses are incurred with respect to a bona fide claim by the Employee and (ii) no payment of legal fees or related expenses shall be made with respect to such claims to the extent that they are incurred with respect to benefits that would have been paid regardless of a claim by the Employee, even if such amounts are paid or modified as part of a settlement or award resolving an actual bona fide claim.

16.           NOTICE.

For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other.  All notices and communications shall be deemed to have been received on the date of delivery thereof on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt.

  

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17.           NONEXCLUSIVITY OF RIGHTS.

Except as expressly provided herein, nothing in this Agreement shall prevent or limit Employee’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its subsidiaries or affiliates and for which Employee may qualify, nor shall anything herein limit or reduce such rights as Employee may have under any other agreements with the Company or any of its subsidiaries or affiliates.  Amounts which are vested benefits or which Employee is otherwise entitled to receive under any plan or program of the Company or any of its subsidiaries or affiliates shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement; provided, however, and notwithstanding anything contained in this Agreement, in the event that Employee is not a participant in or eligible to participate in any Welfare Benefits or the Pension Plan, then nothing contained in this Agreement shall be deemed to provide for or suggest the right in Employee to be a participant in or be eligible to participate in the Welfare Benefits or the Pension Plan.

18.           CONFIDENTIAL INFORMATION.

The Employee shall hold in a fiduciary capacity of the benefit of the Company all material proprietary information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Employee during the Employee’s employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the employee or representatives of the Employee in violation of this Agreement).  After termination of the Employee’s employment with the Company, the Employee shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.

19.           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 Employee and the Company.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

20.           GOVERNING LAW.

This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of South Dakota.

21.           SEVERABILITY.

The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

  

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22.           NO GUARANTEED EMPLOYMENT.

Employee and the Company acknowledge that, except as may otherwise be provided under any other written agreement between Employee and the Company, the employment of Employee by the Company is “at will” and, prior to the Effective Date, may be terminated by either Employee or the Company at any time.  Moreover, if prior to the Effective Date, Employee’s employment with the Company terminates, Employee shall have no further rights under this Agreement.

23.           NO ADMINISTRATION.

The parties hereto understand and agree that this Agreement shall not be subject to a separate ongoing administrative scheme to administer the benefits of this Agreement, as the parties agree that the benefits provided hereunder that are not subject to the terms of a separate plan are capable of simple or mechanical determination upon the happening or a required event or events.

	
24.

	
SUBSIDIARY DEEMED TO BE COMPANY FOR PORTIONS OF AGREEMENT.

In the event that subsequent to the date of this Agreement the Employee becomes an employee of a subsidiary or Affiliate of the Company, or in the event that any Employee is an employee of a subsidiary or Affiliate of the Company, the references to “Company” in this Agreement shall be deemed to be a reference to the subsidiary or Affiliate which may employ the Employee to the full extent necessary or appropriate to preserve the intent of this Agreement; provided, however, nothing herein shall mean or suggest that any benefits are applicable hereunder upon a Change in Control of a subsidiary or Affiliate rather than the Company.

25.           ENTIRE AGREEMENT.

This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof.

Dated this 7th day of September, 2010.

BLACK HILLS CORPORATION

By: /s/ Steven J. Helmers 

Steven J. Helmers

Senior Vice President

and General Counsel

EMPLOYEE

/s/ David R. Emery 

David R. Emery

  

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EXHIBIT A

WAIVER AND RELEASE AGREEMENT

This Waiver and Release Agreement (the “Waiver and Release”) is entered into by and among Black Hills Corporation (“Company”) and David R. Emery (“Employee”) this ____ day of ____________, _____.

1.           General Waiver and Release.  For and in consideration of the agreement of Company to provide Employee the severance benefits described in that certain Change in Control Agreement, dated as of ________________, 20__, between Employee and the Company (the “Agreement”), Employee, with the intention of binding himself and all of his heirs, executors, administrators and assigns, does hereby release, remise, acquit and forever discharge the Company, and all of their respective past and present officers, directors, stockholders, employees, agents, parent corporations, predecessors, subsidiaries, affiliates, estates, successors, assigns and attorneys (hereinafter collectively referred to as “Released Parties”) from any and all claims, charges, actions causes of action, sums of money due, suites, debts, covenants, contracts, agreements, rights, damages, promises, demands or liabilities (hereinafter collectively referred to as “Claims”) whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected, which Employee, individually or as a member of any class, now has, owns or holds or has at any time heretofore ever had, owned or held against the Released Parties, which arise out of or are in any way connected with Employee’s employment with the Company or any of the Released Parties or the termination of any such employment relationship, including, but not by way of limitation, Claims pursuant to federal, state or local statute, regulation, ordinance or common-law for (i) employment discrimination; (ii) wrongful discharge; (iii) breach of contract; (iv) tort actions of any type, including those for intentional or negligent infliction of emotional harm; and (v) unpaid benefits, wages, compensation, commissions, bonuses or incentive payments of any type, except as follows:

	
  

	
a.

	
Those obligations of the Company and its affiliates under the Agreement, pursuant to which this Waiver and Release is being executed and delivered;

	
  

	
b.

	
Claims, if any, for Employee’s accrued or vested benefits under the retirement plans, savings plans, investment plans and employee welfare benefit plans, if any, of the Released Parties (within the meaning of Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), as amended; provided, however, that nothing herein is intended to or shall be construed to require the Released Parties to institute or continue in effect any particular plan or benefit sponsored by the Released Parties and the Company and all other Released Parties hereby reserve the right to amend or terminate any such plan or benefit at any time; and

	
  

	
c.

	
Any rights to indemnification or advancement of expenses to which Employee may otherwise be entitled pursuant to the Articles of Incorporation or Bylaws of any of the Released Parties, or by contract or applicable law, as a result of Employee’s service as an officer or director of any of the Released Parties.

 A-1

  

  

  

    Employee further understands and agrees that he has knowingly relinquished, waived and forever released any and all remedies arising out of the aforesaid employment relationship or the termination thereof, including, without limitation, claims for backpay front pay, liquidated damages, compensatory damages, general damages special damages, punitive damage, exemplary damages, costs, expenses and attorneys’ fees.

2.           Waiver and Release of ADEA Claims.  Without limiting the generality of the foregoing, and also for and in consideration of the Company’s agreement to provide Employee severance payments and benefits as described in the Agreement, Employee specifically acknowledges and agrees that he does hereby knowingly and voluntarily release the Company and all other Released Parties from any and all claims arising under the Age Discrimination in Employment Act, 29 U.S.C. Section 621, et seq. (“ADEA”), which Employee ever had or now has from the beginning of time up to the date this Waiver and Release is executed, including, but not by way of limitation, those ADEA Claims which are in any way connected with any employment relationship or the termination of any employment relationship which existed between the Company or any other Released Parties and Employee.  Employee also acknowledges that he has been provided with a notice, as required by the Older Workers Benefit Protection Act of 1990, that contains (i) information about the individuals covered under the Agreement, (ii) the eligibility factors for participation in the Agreement, (iii) the time limits applicable to the Agreement, (iv) the job titles and ages of the employees designated to participate in the Agreement, (v) and the ages of the employees in the same job classification who have not been designated to participate in the Agreement.  Employee further acknowledges and agrees that he has been advised to consult with an attorney prior to executing this Waiver and Release and that he has been given forty-five (45) days to consider this Waiver and Release prior to its execution.  Employee agrees that in the event that he executes this Waiver and Release prior to the expiration of the forty-five (45) day period, he shall waive the balance of said period.  Employee also understands that he may revoke this Waiver and Release of ADEA Claims at any time within seven (7) days following its execution and that, if Employee revokes this waiver and Release of ADEA Claims within such seven (7) day period, it shall not be effective or enforceable and he will not receive the above-described consideration or any payments provided for in the Agreement that have not been paid.

3.           Covenant Not to Sue.  Employee acknowledges and agrees that this Waiver and Release may not be revoked at any time after the expiration of the seven (7) day revocation period and that he will not institute any suit, action, or proceeding, whether at law or equity, challenging the enforceability of this Waiver and Release.  Should Employee ever attempt to challenge the terms of this Waiver and release, attempt to obtain an order declaring this Waiver and release to be null and void, or institute litigation against any of the released Parties based upon a Claim other than an ADEA Claim which is covered by the terms of this Waiver and Release, Employee will as a condition precedent to such action repay all monies paid to him under the terms of this Waiver and Release.  Furthermore, if Employee does not prevail in an action to challenge this Waiver and Release, to obtain an order declaring this Waiver and release to be null and void, or in any action against any of the Released Parties based upon a Claim other than an ADEA Claim which is covered by the Waiver and release set forth herein, Employee shall pay to the Company and/or the appropriate Released Parties all their costs and attorneys’ fees incurred in their defense of Employee’s action.

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Provided, however that it is understood and agreed by the parties that Employee shall not be required to repay the monies paid to him under the terms of this Waiver and Release or pay the Company and/or the appropriate Released Parties all their costs and attorneys’ fees incurred in their defense of Employee’s action (except those attorneys’ fees or costs specifically authorized under federal law) in the event that Employee seeks to challenge his Waiver and Release of Claims under the ADEA.

4.           Denial of Liability.  Employee acknowledges and agrees that neither the payment of severance payments or benefits under the Agreement nor this Waiver and release is to be construed in any way as an admission of any liability whatsoever by Company or any of the other released Parties, by whom liability is expressly denied.

5.           Agreement Not to Seek Further Relief.  Employee acknowledges and agrees that he has not, with respect to any transaction or state of facts existing prior to the date of execution of this Waiver and Release, filed any complaints, charges or lawsuits against any of the Released Parties with any governmental agency or any court or tribunal, and that he will not do so at any time hereafter.  Employee further acknowledges and agrees that he hereby waives any right to accept any relief or recovery, including costs and attorneys’ fees that may arise from any charge or complaint before any federal, state or local court or administrative agency against the Released Parties.

6.           Company Property.  Employee agrees that he will not retain or destroy, and will immediately return to the Company, any and all property of the Company in his possession or subject to his control, including, but not limited to, keys, credit and identification cards, personal items or equipment provided for his use, customer files and information, all other files and documents relating to the Company and its business, together with all written or recorded materials, documents, computer disks, plans, records or notes or other papers belonging to the Company.  Employee further agrees not to make, distribute or retain copies of any such information or property.

7.           Confidentiality Agreement.  Employee acknowledges that the terms of this Waiver and Release must be kept confidential.  Accordingly, Employee agrees not to disclose or publish to any person or entity, except as required by law or as necessary to prepare tax returns, the terms and conditions or sums being paid in connection with this Waiver and Release.

8.           Cooperation.  Employee agrees to cooperate with the Company and its attorneys in connection with all lawsuits, claims, investigations, or similar proceedings, including the provision of testimony as my reasonably be required, arising out of or in any way related to Employee’s employment by the Company or any of its Subsidiaries.

9.           Acknowledgement.  Employee acknowledges that he has carefully read and fully understands the terms of this Waiver and Release and the Agreement and that this Waiver and Release is executed by Employee voluntarily and is not based upon any representations or statements of any kind made by the Company or any of the other Released Parties as to the merits, legal liabilities or value of his claims.  Employee further acknowledges that he has had a full and reasonable opportunity to consider this waiver Release and that he has not been pressured or in any way coerced into executing this Waiver and Release.

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10.           Choice of Laws.  This Waiver and Release and the rights and obligation so the parties hereto shall be governed and construed in accordance with the laws of the State of South Dakota.

11.           Severability.  With the exception of the waiver and releases contained in Sections 1 and 2 hereof, if any provision of this waiver and Release is unenforceable or is held to be unenforceable, such provision shall be fully severable, and this Waiver and Release and its terms shall be construed and enforced as if such unenforceable provision had never comprised a part hereof, the remaining provisions hereof shall remain in full force and effect, and the court construing the provisions shall add as a part hereof a provision as similar in terms and effect to such unenforceable provision as may be enforceable, in lieu of the unenforceable provision In the event that both of the releases contained in Sections 1 and 2 are unenforceable or are held to be unenforceable, the parties understand and agree that the remaining provisions of this Waiver and Release shall be rendered null and void and that neither party shall have any further obligation under any provision of this Waiver and Release.

12.           Entire Agreement.  This document contains all terms of the Waiver and Release and supersedes and invalidates any previous agreements or contracts regarding the same subject matter.  No representations, inducements, promises or agreements, oral or otherwise, which are not embodies herein shall be of any force or effect.

Please read this document carefully, as it includes a release of claims.

IN WITNESS WHEREOF, the undersigned acknowledges that he has read this Waiver and Release Agreement and sets his hand and seal this ______ day of ____________, 20__.

EMPLOYEE

_____________________________

David R. Emery

BLACK HILLS CORPORATION

By:___________________________

Title:

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