SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 0-692
NORTHWESTERN PUBLIC SERVICE COMPANY
A Delaware Corporation
IRS Employer Identification No. 46-0172280
33 Third Street SE
Huron, South Dakota 57350-1318
Telephone - 605-352-8411
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. [ X ] Yes [ ] No
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:
Common Stock, Par Value $3.50
8,921,262 shares outstanding at May 7, 1997
Company-Obligated Mandatorily Redeemable Preferred Securities
of Subsidiary Trust, Liquidation Amount $25.00
1,300,000 shares outstanding at May 7, 1997
<PAGE>
INDEX
Page
Part I. Financial Information
Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996
Consolidated Statements of Income -
Three months ended March 31, 1997 and 1996
Consolidated Statements of Cash Flows
Three months ended March 31, 1997 and 1996
Notes to Consolidated Financial Statements
Management's Discussion of Financial Condition
and Results of Operations
Part II. Other Information
Signatures
<PAGE>
NORTHWESTERN PUBLIC SERVICE COMPANY
CONSOLIDATED BALANCE SHEETS
(In Thousands)
March 31
1997 December 31,
ASSETS (unaudited) 1996
-------------- --------------
PROPERTY:
Electric $ 351,878 $ 350,419
Natural Gas 82,271 80,905
Propane 243,824 248,556
Manufacturing 2,166 2,142
-------------- --------------
680,139 682,022
Less-Accumulated depreciation (166,563) (162,909)
-------------- --------------
513,576 519,113
-------------- --------------
CURRENT ASSETS:
Cash and cash equivalents 30,758 36,790
Trade accounts receivable, net 53,811 89,259
Inventories 29,322 43,826
Deferred gas costs 1,420 7,007
Other 26,892 20,807
-------------- --------------
142,203 197,689
-------------- --------------
OTHER ASSETS:
Investments 145,603 159,333
Deferred charges and other 40,583 40,260
Goodwill and other intangibles, net 208,825 197,321
-------------- --------------
395,011 396,914
-------------- --------------
$ 1,050,790 $ 1,113,716
============== ==============
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock equity $ 165,143 $ 163,805
Nonredeemable cumulative preferred stock 2,600 2,600
Redeemable cumulative preferred stock 1,150 1,150
Company obligated mandatorily redeemable
security of trust holding solely
parent debentures 32,500 32,500
Long-term debt 176,350 183,850
-------------- --------------
377,743 383,905
Preferred stock of subsidiary - 2,500
Minority interest in subsidiaries 192,562 186,714
Long-term debt of subsidiaries 231,319 240,563
-------------- --------------
801,624 813,682
-------------- --------------
CURRENT LIABILITIES:
Long-term debt due within one year 5,271 1,244
Accounts payable 42,247 99,394
Accrued taxes 13,616 11,834
Accrued interest 6,813 4,762
Other 42,630 35,533
-------------- --------------
110,577 152,767
-------------- --------------
DEFERRED CREDITS:
Accumulated deferred income taxes 68,262 70,894
Unamortized investment tax credits 9,320 9,460
Other 61,007 66,913
-------------- --------------
138,589 147,267
-------------- --------------
$ 1,050,790 $ 1,113,716
============== ==============
<PAGE>
NORTHWESTERN PUBLIC SERVICE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
March 31
1997 1996
------------- -------------
OPERATING REVENUES
Propane $ 220,754 $ 41,799
Electric 20,419 19,204
Natural gas 37,391 30,190
Manufacturing 5,842 6,026
------------- -------------
284,406 97,219
------------- -------------
OPERATING EXPENSES
Propane costs 178,164 21,012
Fuel and purchased power 4,568 3,756
Purchased natural gas sold 28,044 17,659
Manufacturing cost of goods sold 3,309 3,418
Other operating expenses 31,825 19,795
Maintenance 1,486 1,537
Depreciation and amortization 7,333 4,594
Property and other taxes 1,745 1,635
------------- -------------
256,474 73,406
------------- -------------
OPERATING INCOME
Propane 15,107 8,641
Electric 6,984 6,458
Natural gas 5,495 8,470
Manufacturing 346 244
------------- -------------
27,932 23,813
------------- -------------
Interest Expense, net (7,910) (3,952)
Investment Income and Other 1,669 637
------------- -------------
Income Before Income Taxes
and Minority Interest 21,691 20,498
Income Taxes (5,133) (7,190)
------------- -------------
Income Before Minority Interest 16,558 13,308
Minority Interest (6,035) -
------------- -------------
Net Income 10,523 13,308
Minority Interest on Preferred Securities
of Subsidiary Trust (660) (660)
Dividends on Preferred Stock (69) (140)
------------- -------------
Earnings on Common Stock $ 9,794 $ 12,508
============= =============
Average Shares Outstanding 8,921 8,920
Earnings per Average Common Share $ 1.10 $ 1.40
============= =============
Dividends Declared Per Average Common
Share $ 0.46 $ 0.44
============= =============
<PAGE>
NORTHWESTERN PUBLIC SERVICE COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
Three Months Ended
March 31
----------------------------
1997 1996
------------- -------------
OPERATING ACTIVITIES:
Net income $ 10,523 $ 13,308
Items not affecting cash:
Depreciation and amortization 7,333 4,594
Deferred income taxes (341) (664)
Minority interest in net income of
consolidated subsidiaries 6,035 -
Investment tax credits (140) (141)
Changes in current assets and liabilities, net:
Accounts receivable 35,448 (3,835)
Inventories 14,504 1,601
Other current assets (498) 4,335
Accounts payable (57,147) (1,826)
Accrued taxes 1,782 8,620
Accrued interest 2,051 (2,286)
Other current liabilities (1,490) 1,358
Other, net (288) (2,667)
----------------------------
Cash flows from operating activities 17,772 22,397
----------------------------
INVESTMENT ACTIVITIES:
Property additions (4,221) (7,252)
Sale (Purchase) of noncurrent investments, net 7,088 (2,425)
Purchase of working capital, net - (2,955)
----------------------------
Cash flows from (for) investment activities 2,867 (12,632)
----------------------------
FINANCING ACTIVITIES:
Dividends on common and preferred stock (4,174) (4,065)
Minority interest on preferred securities of
subsidiary trust (660) (660)
Redemption of preferred stock of subsidiary (2,687) -
Issuance (repayment) of long-term debt and
nonrecourse subsidiary debt (11,650) 963
Repayment of long-term debt (7,500) (1,932)
Commercial paper repayments - (3,500)
----------------------------
Cash flows for financing activities (26,671) (9,194)
----------------------------
INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS (6,032) 571
Cash and Cash Equivalents, beginning of period 36,790 4,552
----------------------------
CASH AND CASH EQUIVALENTS, end of period $ 30,758 $ 5,123
============================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $ 1,792 -
Interest $ 6,689 $ 5,534
The accompanying notes to consolidated financial statements are
an integral part of these statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Reference is made to Notes to Financial Statements
included in the Company's Annual Report)
(1) Management's Statement -
The financial statements included herein have been prepared by
Northwestern Public Service Company (the Company), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. In
the opinion of the Company, all adjustments necessary for a fair
presentation of the results of operations for the interim periods have been
included. It is suggested that these financial statements be read in
conjunction with the financial statements and the notes thereto included in
the Company's latest annual report to stockholders.
(2) Subsidiaries and Principles of Consolidation -
The consolidated financial statements include the accounts of all
wholly and majority owned or controlled subsidiaries. All significant
intercompany transactions have been eliminated.
(3) Allowance for Funds Used During Construction -
The allowance for funds used during construction includes the costs of
equity and borrowed funds used to finance construction which are
capitalized in accordance with rules prescribed by the FERC. For the
quarters ended March 31, 1997 and 1996, allowance for equity funds was
$31,203 and $35,510. Allowance for borrowed funds was $69,451 and $30,264
for the quarters ended March 31, 1997 and 1996.
(4) Change in Accounting Policy for Natural Gas Demand Costs -
Effective January 1, 1997, the Company changed its method of
accounting for demand costs for natural gas supplies. Prior to 1997,
demand costs were recognized as incurred which are generally consistent and
stable throughout the course of a normal year. Beginning January 1, 1997
these costs are being recognized in proportion to natural gas volumes
purchased. The Company believes that this provides for better matching of
expenses with revenues. There is no significant effect from this change on
an annual basis, but this change does impact interim reporting periods. On
a pro forma basis, giving effect to this change, earnings per share would
have been $1.09 for the three months ended March 31, 1996.
(5) Reclassifications -
Certain 1996 amounts have been reclassified to conform to the 1997
presentation. Such reclassifications had no impact on net income and
common stock equity as previously reported.
(6) Adoption of SFAS 128
Effective December 31, 1997, the Company will adopt Statement of
Financial Accounting Standards No. 128 (SFAS 128). SFAS 128 "Earnings Per
Share", establishes new accounting standards for the calculation of
earnings per share. Adoption of SFAS 128 will not have an effect upon the
Company's current period earnings per share.
<PAGE>
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Northwestern Public Service is a diversified energy distribution
company with operations engaged in the propane, electric, and natural gas
industries. The Company generates and distributes electric energy to
56,000 customers in eastern South Dakota. It also purchases and
distributes natural gas to 78,000 customers in eastern South Dakota and
central Nebraska.
Through the acquisitions of Synergy Group Incorporated (Synergy) and
Myers Propane Gas Company (Myers) in 1995 and Empire Energy Corporation
(Energy) and CGI Holdings, Inc. (Coast) in 1996, the Company is engaged in
retail propane distribution business located throughout the United States.
On December 17, 1996, the Company's propane distribution businesses of
Coast, Energy, Myers and Synergy were combined into Cornerstone Propane
Partners, L.P. (Cornerstone), a publicly traded Delaware limited
partnership, formed to acquire and operate these propane businesses and
assets. The Company through its majority owned subsidiaries retained an
effective 2% general partner interest and a 39% subordinated limited
partnership interest in Cornerstone. A wholly owned subsidiary of the
Company serves as the general partner of Cornerstone and manages and
operates Cornerstone's business.
The Company's manufacturing operations are comprised of Lucht Inc., a
wholly owned subsidiary that develops, manufactures and markets multi-image
photographic printers and other related equipment.
Weather
Weather patterns have a material impact on the Company's operating
performance. Because propane and natural gas are heavily used for
residential and commercial heating, the demand for these products depends
heavily upon weather patterns throughout the Company's market areas. With a
larger proportion of its operations related to seasonal propane and natural
gas sales in 1997, the distribution of the Company's quarterly operating
performance will be different than in historical periods. A greater portion
of the Company's future operating income is expected to be recognized in
the first and fourth quarters related to higher revenues from the heating
season which will be partially offset by the change in accounting policy
for natural gas demand costs discussed in Note 4 of Notes to Consolidated
Financial Statements.
RESULTS OF OPERATIONS:
Earnings Comparisons -
Earnings per share for the quarter ended March 31, 1997, were $1.10
compared to $1.40 for the quarter ended March 31, 1996. Earnings per share
on a pro forma basis, giving effect to the change in accounting for natural
gas demand costs discussed in Note 4 would have been $1.09 for the quarter
ended March 31, 1996. The increase in earnings on a pro forma basis was
due to colder than normal weather in the Company's electric and natural gas
operating areas offset by substantially warmer than normal weather in the
Company's propane operating areas.
Electric and Natural Gas -
Retail electric sales and revenues both increased by 6%. Retail
natural gas sales volume increased by 5% while revenues increased 24%.
Electric and natural gas volumes increased due to colder weather in the
Company's electric and natural gas service areas as compared to the prior
year (7% on a weighted average basis). Natural gas revenues increased
significantly due to substantial increases in commodity market prices
during the winter heating season. Natural gas margins decreased compared
to the prior year due to a change in accounting for natural gas demand
costs. This change in accounting will effect interim periods but should
have no effect on an annual basis.
Propane -
Operating revenues increased significantly from $41.8 million in 1996
to $220.8 million in 1997. Gallons sold also increased from 40.7 million
in 1996 to 155.4 million in 1997. Revenues and gallons both increased due
to the acquisitions of two large retail propane distributors in late 1996
followed by the formation of Cornerstone in December 1996. The propane
operations for 1997 were effected by 13% warmer than normal weather
conditions during the principal winter heating months. The majority of
propane revenues and operating income occur in the first and fourth
quarters when propane is heavily sold for residential and commercial
heating as compared to the second and third quarters which traditionally
are net loss periods in the industry.
Manufacturing -
Manufacturing revenues are related to the Company's investment in
Lucht Inc., a firm that manufactures photographic processing and imaging
equipment used by high volume photo processing laboratories. For the first
quarter, manufacturing revenues decreased 3% from the first quarter of
1996, while operating income increased slightly. Slightly lower than
anticipated sales were offset by improvements in selling and engineering
expenses.
Other Income Statement Items -
Other operating expenses increased primarily due to the acquisition of
two large retail propane distributors in October and December 1996. Other
income increased in the first quarter of 1997 over 1996 primarily due to
higher investment income. The increase in depreciation reflects the
increase in depreciable propane assets when compared to the prior year.
The increase in interest expense is primarily related to the issuance of
$220 million nonrecourse notes by Cornerstone in December 1996 as part of
the Cornerstone partnership formation. The decrease in income taxes is due
to the minority interest effect upon the Company's consolidated net income.
Liquidity and Capital Resources -
The Company has a high degree of long-term liquidity through the
generation of operating cash flows, the availability of substantial
marketable securities, and a sound capital structure. In addition, the
Company has adequate capacity for additional financing and has maintained
its liquidity position through favorable bond ratings.
The Company has generated significant operating cash flows while
continuing to maintain substantial cash and investment balances in the form
of marketable securities. Cash flows from operating activities during the
three months ended March 31, 1997 and 1996 were $17.8 million and $22.4
million. The decrease was primarily due to working capital changes related
to larger propane operations in 1997 which was somewhat offset by increased
cash flows from propane operations. Cash equivalents and investment
securities totaled $162.2 million and $41.4 million at March 31, 1997 and
1996.
Working capital and other financial resources are also provided by
lines of credit, which are generally used to support commercial paper
borrowings, a primary source of short-term financing. At March 31, 1997,
unused short-term lines of credit totaled $24.0 million. In addition, the
Company's nonregulated businesses maintain nonrecourse credit agreements
with various banks for revolving and term loans.
Capital Requirements -
The Company's primary capital requirements include the funding of its
energy business construction and expansion programs, the funding of debt
retirements, and the funding of its corporate development and investment
activities.
The emphasis of the Company's construction activities is to undertake
those projects that most efficiently serve the expanding needs of its
customer base, enhance energy delivery capabilities, expand its current
customer base, and provide for the reliability of energy supply.
Expenditures for construction activities during the three months ended
March 31, 1997 and 1996 were $4.2 and $7.3 million. Included in such
construction activities were nonregulated capital expenditures of $1.2
million and $1.4 million during the three months ended March 31, 1997 and
1996. Capital expenditures for 1997, excluding propane, are estimated to
be $14.5 million with a large portion of expenditures to be spent on
enhancements of the electric and natural gas distribution systems.
Electric and natural gas related capital expenditures for the years 1997
through 2001 are estimated to be $69.1 million. Nonregulated maintenance
capital expenditures for 1997 are estimated to be $4.8 million. Estimated
nonregulated maintenance capital expenditures for the years 1997 through
2001 are estimated to be $18.8 million.
Capital requirements for the mandatory retirement of long-term debt
and mandatory preferred stock sinking fund redemptions totaled $5,271,000
during the year ended March 31, 1997, and it is expected that such
mandatory retirements will be $21.5 million in 1998, $14.0 million in 1999,
$6.5 million in 2000, and $6.5 million in 2001.
The Company anticipates that future capital requirements will be met
by significant liquid investments on hand, internally generated cash flows
and available external financing.
<PAGE>
NORTHWESTERN PUBLIC SERVICE COMPANY
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is not currently involved in any pending major litigation.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The election of three Directors to Class III of the Board of Directors
was submitted to stockholders in the Company's proxy statement. At the
annual meeting of common stockholders held on May 7, 1997, the three
nominees were elected, receiving the following votes: Aelred J. Kurtenbach
7,915,509, M. D. Lewis 7,925,684, Gary Olson 7,912,596. Also submitted to
the common and preferred stockholders were two proposals to amend the
Company's Restated Certificate of Incorporation. Proposals 1 and 2 were
both approved. The results of the voting were as follows:
1. To increase the authorized shares of Common Stock to 50,000,000 shares
and to reduce the par value of the Common Stock to $1.75 per share.
6,864,727 For 1,051,607 Against 294,141 Abstain
2. To eliminate a provision (in Article Seventh) which states that
Directors need not be stockholders of the Company.
7,176,983 For 730,569 Against 280,857 Abstain
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(3) ARTICLES OF INCORPORATION AND BY-LAWS
Exhibit 3(i) - Certificate of Amendment of Restated Certificate
of Incorporation, dated May 7, 1997.
Exhibit 3(ii) - Registrant's By-Laws, as amended, dated May 7,
1997.
(10) MATERIAL CONTRACTS
Exhibit 10(i) - Long-term Incentive Compensation Plan (Phantom
Stock Unit Plan) for Directors and Officers, dated February 1,
1989, as amended May 7, 1997.
Exhibit 10(ii) - Form of Employment Agreement for Executive
Officers, including Change of Control Agreement and
Noncompetition Agreement, dated May 7, 1997.
Exhibit 10(iii) - NorthSTAR Incentive Plan for all eligible
employees, as amended May 7, 1997.
Exhibit 27 - Financial Data Schedule UT (SEC only)
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NORTHWESTERN PUBLIC SERVICE COMPANY
-----------------------------------
(Registrant)
Date: May 15, 1997 /s/ D. A. Monaghan
------------------------------------
Controller and Treasurer
Date: May 15, 1997 /s/ A. D. Dietrich
-----------------------------------
Vice President-Administration
and Corporate Secretary
Exhibit 3(i)
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION OF
NORTHWESTERN PUBLIC SERVICE COMPANY
Northwestern Public Service Company, a corporation organized and
existing under the laws of the State of Delaware (hereinafter called the
"Company"), by its Chairman of the Board of Directors, President & CEO and
its Corporate Secretary, does hereby certify as follows:
1. That the Board of Directors of the Company at meetings of said
Board duly called, convened and held on February 5, 1997, and August 7,
1996, proposed amendments to the Restated Certificate of Incorporation of
the Company, as previously amended, which amendments affected Article
FOURTH and Article SEVENTH, respectively, of said Restated Certificate of
Incorporation, and at said meetings adopted resolutions setting forth the
amendments proposed, declaring their advisability, and directing that, at
the Annual Meeting of Stockholders to be held on May 7, 1997, the
amendments hereinafter set forth be submitted to the holders of shares of
Common Stock of the Company, being the only class of stock of the Company
having voting rights in respect of said proposed amendment; and that the
amendments so proposed and declared advisable by the Board of Directors of
the Company were as follows:
a. That the first paragraph of Article FOURTH of the Restated
Certificate of Incorporation of the Company, as heretofore amended, is
hereby amended to read as follows:
"FOURTH: The total authorized capital stock of the Company is
(i) 1,000,000 shares of Cumulative Preferred Stock, of the par
value of $100 per share (hereinafter called the "New Preferred
Stock"), (ii) 1,000,000 shares of Preference Stock, of the par
value of $50 per share and (iii) 50,000,000 shares of Common
Stock, of the par value of $1.75 per share."
b. That the following language in Article SEVENTH of the Restated
Certificate of Incorporation of the Company, as heretofore amended, is
hereby amended by deleting the underlined language:
None of the directors need be a stockholder of the corporation or
a resident of the State of Delaware.
2. That thereafter pursuant to the aforesaid resolutions of its Board
of Directors, at the Annual Meeting of Stockholders of the Company duly
held on May 7, 1997, holders of the necessary number of shares of Common
Stock, as required by statute and the Restated Certificate of Incorporation
of the Company, as amended, voted in favor of the amendments hereinbefore
set forth.
3. That accordingly, the amendments of the Restated Certificate of
Incorporation of the Company, as hereinbefore set out, have been duly
adopted in accordance with the provisions of Section 242 of Title 8 of the
Delaware Code.
4. The capital of the Company will not be reduced under or by reason
of the amendments by subsequent action of the Board of Directors.
IN WITNESS WHEREOF, said Northwestern Public Service Company has
caused its corporate seal to be hereunto affixed and this certificate to be
signed by M. D. Lewis, its Chairman of the Board of Directors, President
and Chief Executive Officer, and attested by Alan D. Dietrich, its
Corporate Secretary, this 7th day of May, 1997.
NORTHWESTERN PUBLIC SERVICE COMPANY
By /s/ M. D. Lewis
______________________________________
M. D. Lewis
Chairman, President & CEO
Attest:
/s/ Alan D. Dietrich
______________________________
Alan D. Dietrich, Corporate Secretary
(Corporate Seal)
Northwestern Public Service Company
1923
Delaware
ACKNOWLEDGMENT
STATE OF SOUTH DAKOTA )
) SS
COUNTY OF BEADLE )
On this the 7th day of May, 1997, before me, Sherry L. Swanson, the
undersigned notary public in and for the State of South Dakota, personally
appeared M. D. Lewis and Alan D. Dietrich, known to me to be the Chairman
of the Board, President and Chief Executive Officer and the Corporate
Secretary, respectively, of Northwestern Public Service Company, a Delaware
corporation, and that they, as such officers of the corporation being
authorized to do so, executed the foregoing Certificate of Amendment of
Restated Certificate of Incorporation of Northwestern Public Service
Company for the purposes therein contained, by signing and attesting the
name and seal of the corporation by themselves as Chairman of the Board,
President and Chief Executive Officer and Corporate Secretary,
respectively.
In witness whereof, I hereunto set my hand and official seal.
/s/ Sherry L. Swanson
_________________________________
Sherry L. Swanson
Notary Public
State of South Dakota
Commission expires: 5/17/02
Exhibit 3(ii)
NORTHWESTERN PUBLIC SERVICE COMPANY
BY-LAWS
(As Amended to and Including May 7, 1997)
ARTICLE I
Section 1. Principal Office. The principal office of the Company
shall be located in the City of Wilmington, County of New Castle, and State
of Delaware, and the name of the agent therein and in charge thereof, and
upon whom legal process against the corporation may be served (until
otherwise determined by the Board of Directors) is the CORPORATION TRUST
COMPANY OF AMERICA.
Section 2. Other Offices. Offices of the Company where meetings of
the stockholders and directors may be held, shall be and are hereby,
established in the City of Huron, Beadle County, South Dakota, or such
other places within or without the State of Delaware, as may from time to
time be established by the Board of Directors.
ARTICLE II
Section 1. Annual Meeting. The annual meeting of stockholders for
the election of directors and for such other business as may properly be
conducted at such meeting shall be held at such time and date as the Board
of Directors shall designate from time to time and set forth in the notice
of the meeting. Such meeting shall be held at the office of the
corporation in the City of Wilmington, Delaware, or at the office of the
corporation in the City of Huron, South Dakota, or at such other place
within or without the State of Delaware, as may be designated in the notice
of the meeting.
Section 2. Special Meetings. Special meetings of the stockholders
may be called by the Chairman of the Board, the President or any Vice
President, or by order of the Board of Directors whenever they deem it
necessary, and it shall be their duty to order and call such meetings
whenever persons holding a majority of the outstanding capital stock of the
corporation entitled to be voted at such meeting, shall in writing request
the same. Such special meetings shall be held at the office of the
corporation in the City of Wilmington, Delaware, or at the office of the
corporation in the City of Huron, South Dakota, or at such other place
within or without the State of Delaware, as may be designated in the notice
of the meeting, and the business of such special meeting shall be confined
to the objects stated in the notice thereof.
Section 3. Notice of Meetings. Notice of the time and place of the
annual, and of any special meeting of the stockholders, shall be given by
the Corporate Secretary to each of the stockholders entitled to vote at
such meetings by posting the same in postage prepaid letters, addressed to
each such stockholder at the address left with the Corporate Secretary of
the Corporation, or at his last known address, or by delivering same
personally, at least ten days prior to such meeting. The notice of a
special meeting shall also set forth the objects of the meeting. Any or
all of the stockholders may waive notice of the annual or any special
meeting, and the presence of a stockholder at any meeting, in person or by
proxy, shall be deemed a waiver of notice thereof by him. Meetings of the
stockholders may be held at any time and place and for any purpose without
notice, when all of the stockholders entitled to vote at such meetings are
present in person or by proxy, or when all of such stockholders waive
notice and consent to the holding of such meeting.
Section 4. Voting at Stockholders' Meetings. At all meetings of
stockholders each holder of stock having voting power or entitled to vote
at such meetings shall be entitled to one vote for each share of stock held
by him at the time of the closing of the transfer books for said meeting,
or on the record date fixed by the Board of Directors for that purpose as
provided in Section 2 of Article VI of these By-laws, and if such transfer
books shall not have been closed or any record date fixed, then for each
share of stock standing registered in his name at the time of the meeting;
provided, always, that except when the transfer books have been closed or a
record date fixed, as aforesaid, no share of stock shall be voted at any
election which has been transferred on the books of the corporation within
twenty days next preceding such election. Such vote may be given
personally or by proxy authorized in writing. Only the persons in whose
names shares of stock shall stand on the books of the corporation at the
time aforesaid shall be entitled to vote in person or by proxy upon the
shares of stock standing in their name. No proxy shall be voted on after
three years from its date.
Section 5. Quorum. The holders for the time being of a majority of
the total number of shares of stock issued and outstanding and entitled to
be voted at any meetings represented in person or by proxy, shall
constitute a quorum for the transaction of business at such meetings unless
the representation of a larger number shall be required by law. In the
absence of a quorum, the stockholders attending or represented at the time
and place at which a meeting shall have been called, may adjourn the
meeting from time to time until a quorum shall be present. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted by a quorum of the stockholders
at the meeting as originally convened.
Section 6. Presiding Officer and Secretary. The Chairman of the
Board, or in the Chairman's absence the President, or in the President's
absence a Vice President, shall call meetings of the stockholders to order
and shall act as chairman of such meetings. The Board of Directors may
appoint any stockholder to act as chairman at any meeting in the absence of
the Chairman of the Board, the President and Vice Presidents, and, in
default of any appointment by the Board of Directors of a chairman, the
stockholders may elect a chairman to preside at the meeting. The Corporate
Secretary, or an Assistant Corporate Secretary, of the corporation shall
act as Secretary at all meetings of the stockholders, but in their absence
the stockholders or presiding officer may appoint any person to act as
Secretary of the meeting.
Section 7. Business at Annual Meeting. No business may be transacted
at an annual meeting of stockholders, other than business that is either
(a) specified in the notice of meeting (or any supplement thereto) given by
or at the direction of the Board of Directors (or any duly authorized
committee thereof), (b) otherwise properly brought before the annual
meeting by or at the direction of the Board of Directors (or any duly
authorized committee thereof) or (c) otherwise properly brought before the
annual meeting by any stockholder of the corporation (i) who is a
stockholder of record on the date of the giving of the notice provided for
in this Section 7 of this Article and on the record date for the
determination of stockholders entitled to vote at such annual meeting and
(ii) who complies with the notice procedure set forth in this Section 7.
In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such
stockholder must have given timely notice thereof in proper written form to
the Corporate Secretary.
To be timely, a stockholder's notice to the Corporate Secretary must
be delivered to or mailed and received at the principal office of the
Company not less than 90 days nor more than 120 days prior to the date of
the annual meeting of stockholders, provided, however, that in the event
that less than 100 days' notice or prior public disclosure of the date of
the meeting is given to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the
tenth (10th) day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure of the date of the
annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Corporate
Secretary must set forth as to each matter such stockholder proposes to
bring before the annual meeting (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and record
address of such stockholder, (iii) the class or series and number of shares
of capital stock of the Company that are owned beneficially or of record by
such stockholder, (iv) a description of all arrangements or understandings
between such stockholder and any other person or persons (including their
names) in connection with the proposal of such business by such stockholder
and any material interest of such stockholder in such business and (v) a
representation that such stockholder intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting.
No business shall be conducted at the annual meeting of stockholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 7, provided, however, that, once
business has been properly brought before the annual meeting in accordance
with such procedures, nothing in this Section 7 shall be deemed to preclude
discussion by any stockholder of any such business. If the chairman of an
annual meeting determines that business was not properly brought before the
annual meeting in accordance with the foregoing procedures, the chairman of
the meeting shall declare to the meeting that the business was not properly
brought before the meeting and such business shall not be transacted.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Election, Qualification and Filling of Vacancies. The
business and affairs of the Company shall be managed by or under the
direction of a Board of Directors. The number of Directors shall be no
less than nine (9) and no greater than twelve (12). Within the limits
specified above, the number of Directors constituting the Board of
Directors of the Company shall be fixed from time to time by or pursuant to
a resolution passed by the Board of Directors. However, no decrease in the
number of Directors shall have the effect of shortening the term of any
incumbent Director. The number of Directors of the Company may exceed
twelve (12) when and to the extent needed to permit the holders of shares
of the New Preferred Stock to elect a majority of Directors under
subdivision 5 of Division A of Article Fourth of the Company's Restated
Certificate of Incorporation.
The Board of Directors shall be and is divided into three classes,
Class I, Class II and Class III, which shall be as nearly equal in number
as possible. Each Director shall serve for a term ending on the date of
the third annual meeting of stockholders following the annual meeting of
stockholders at which such Director was elected; provided, however, that
each initial Director in Class I shall hold office until the annual meeting
of stockholders in 1986; each initial Director in Class II shall hold
office until the annual meeting of stockholders in 1987; and each initial
Director in Class III shall hold office until the annual meeting of
stockholders in 1988. Directors elected at the annual meeting of
stockholders shall be elected by a plurality of the votes cast for election
of Directors. In the event of any increase or decrease in the number of
Directors, (i) each Director then serving as such shall nevertheless
continue as a Director of the class of which he is a member until the
expiration of his current term, or his prior death, retirement,
resignation, or removal, and (ii) the newly created or eliminated
directorships resulting from such increase or decrease shall be apportioned
by the Board of Directors among the three classes of Directors so as to
maintain such classes as nearly equal in number as possible.
Notwithstanding any of the foregoing provisions of this Section, each
Director shall serve until his successor is elected and qualified or until
his death, resignation or removal. Should a vacancy occur or be created,
whether arising through death, resignation or removal of a Director or
through an increase in the number of Directors, such vacancy shall be
filled by a majority vote of the remaining Directors of all classes though
less than a quorum of the Board of Directors. A Director so elected to
fill a vacancy shall serve for the remainder of the then present term of
office of the class to which he was elected.
Any Director or the entire Board of Directors may be removed; however,
such removal must be for cause and must be approved as set forth in this
paragraph. Removal for cause must be approved by at least a majority of
the total number of Directors or by at least a majority vote of the shares
of the corporation then entitled to be voted at an election for that
Director. For purposes of this paragraph, the total number of Directors
will not include the Director who is the subject of the removal
determination, nor will such Director be entitled to vote thereon.
Section 2. Place of Meeting. Any meetings of the Board of Directors
may be held either within or without the State of Delaware.
Section 3. Annual, Regular and Special Meetings. The annual meeting
of the Board of Directors shall be held in each year immediately following
and at the same place as the annual meeting of stockholders, for the
election of officers and the transaction of such other business as may come
before the Board; and regular meetings of the Board shall be held on the
first Wednesday in the months of February, August and November in each year
at the hour of 10 o'clock a.m. at the office of the Company in the City of
Huron, South Dakota, or at such other time of day or such other place as
may from time to time be established by resolution of the Board or as may
be specified by the Chairman of the Board or the President with respect to
each such meeting. Special meetings of the Board may be called by the
Chairman of the Board, the President, or any two Directors, and shall be
held at such time and place as may be specified by the officer or Directors
calling the meeting, or in the absence of such specification as to place,
at the office of the Company in the City of Huron, South Dakota. Notice
stating the place, date, and hour of each meeting of the Board (other than
the annual meeting, as to which no notice need be given) shall be given to
each Director either by mail to his residence or place of business not less
than forty-eight (48) hours before the date of the meeting, or personally
by telephone, telegram, telecopy, electronic mail, or similar means of
communication on twenty-four (24) hours' notice. All or any of the
Directors may waive notice of any meeting, and the presence of a Director
at any meeting of the Board shall be deemed a waiver of notice thereof by
him.
Section 3A. Action on Written Consent Without Meetings. Unless
otherwise restricted by the Certificate of Incorporation or these By-laws,
any action required or permitted to be taken at any meeting of the Board of
Directors may be taken without a meeting, if prior to such action a written
consent thereto is signed by all members of the Board and such written
consent is filed with the minutes of proceedings of the Board.
Section 4. Quorum and Adjournment. A majority of the Directors in
office at a meeting regularly called, shall constitute a quorum. In the
absence of a quorum, the Directors present at the time and place at which a
meeting shall have been duly called, may adjourn the meeting from time to
time and place to place until a quorum shall be present.
Section 5. Submission of Acts to Approval of Stockholders. The Board
of Directors, in its discretion, may submit any contract or act for
approval or ratification at any annual meeting of the stockholders, or at
any special meeting of the stockholders called for that purpose, and any
contract or act that shall be approved or ratified by the vote of the
holders of a majority of the capital stock of the Company which is
represented in person or by proxy at such meeting, provided that a lawful
quorum of stockholders be there represented in person or by proxy, shall be
as valid and binding upon the corporation and upon all the stockholders as
if it had been approved or ratified by every stockholder of the Company.
Section 6. Compensation. Directors shall be entitled to receive such
fees and expenses, if any, for attendance at meetings of the Board of
Directors, and/or such fixed salaries for services as Directors, as may be
fixed from time to time by resolution of the Board. Nothing herein
contained shall be construed to preclude any Director from serving the
Company in any other capacity as an officer, committee member, agent or
otherwise, and receiving compensation therefor.
Section 7. Nomination of Directors. Only persons who are nominated
in accordance with the following procedures shall be eligible for election
as Directors of the Company except as may be otherwise expressly provided
in the Restated Certificate of Incorporation of the Company with respect to
the right of the holders of New Preferred Stock and Preference Stock to
nominate and elect a specified number of directors in certain
circumstances. Nominations of persons for election to the Board of
Directors may be made at any annual meeting of stockholders (a) by or at
the direction of the Board of Directors (or any duly authorized committee
thereof) or (b) by any stockholder of the Company (i) who is a stockholder
of record on the date of the giving of the notice provided for in this
Section 7 and on the record date for the determination of stockholders
entitled to vote at such annual meeting and (ii) who complies with the
notice procedures set forth in this Section 7.
In addition to any other applicable requirements, for a nomination to
be made by a stockholder, such stockholder must have given timely notice
thereof in proper written form to the Corporate Secretary.
To be timely, a stockholder's notice to the Corporate Secretary must
be delivered to or mailed and received at the principal office of the
Company not less than 90 days nor more than 120 days prior to the date of
the annual meeting of stockholders; provided, however, that in the event
that less than 100 days' notice or prior public disclosure of the date of
the meeting is given to stockholders, notice by the stockholder to be
timely must be so received not later than the close of business on the
tenth (10th) day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure of the date of the
annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Corporate
Secretary must set forth (a) as to each person whom the stockholder
proposes to nominate for election as a Director (i) the name, age, business
address and residence address of the person, (ii) the principal occupation
or employment of the person, (iii) the class or series and number of shares
of capital stock of the Company that are owned beneficially or of record by
the person and (iv) any other information relating to the person that would
be required to be disclosed in a proxy statement or other filings required
to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Securities and Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder; and (b) as to the stockholder giving this notice
(i) the name and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of the Company that are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other persons (including their names) pursuant to which the
nomination(s) are to be made by such stockholder, (iv) a representation
that such stockholder intends to appear in person or by proxy at the
meeting to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with the solicitations of proxies for election of Directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written
consent of each proposed nominee to being named as a nominee and to serve
as a director if elected.
No person shall be eligible for election as a Director of the Company
unless nominated in accordance with the procedures set forth in this
Section 7. If the chairman of the meeting determines that a nomination was
not made in accordance with the foregoing procedures, the chairman shall
declare to the meeting that the nomination was defective and such defective
nomination shall be disregarded.
ARTICLE IV
OFFICERS
Section 1. Designation, Term and Vacancies. The officers of the
corporation shall be a Chairman of the Board, a President, one or more Vice
Presidents, a Corporate Secretary and a Treasurer, all of whom shall be
elected by the Board of Directors. The Board of Directors may elect one or
more Assistant Vice Presidents, who shall have such authority and shall
perform such duties as may from time to time be prescribed by the Board.
The Board of Directors may appoint one or more Assistant Corporate
Secretaries and one or more Assistant Treasurers, and such other officers
as may be deemed necessary, who shall have such authority and shall perform
such duties as may from time to time be prescribed by the Board. Vacancies
occurring among the officers of the corporation shall be filled by the
Board of Directors. Officers elected by the Board shall hold office until
the next annual meeting of the Directors and until their successors are
elected and qualified, provided that any officer may be removed at any time
by the affirmative vote of a majority of the whole Board. All other
officers, agents and employees shall hold office during the pleasure of the
Board or the officer appointing them. Any two or more offices may be held
by the same person, with the exception that the Chairman of the Board of
Directors and President shall not also hold the office of Secretary or
Treasurer.
Section 2. Chairman of the Board and President. The Chairman of the
Board and President shall be the chief executive officer of the Company.
He shall preside at all meetings of stockholders and of the Board of
Directors. Except as otherwise provided in these By-laws or ordered by the
Board of Directors, he shall appoint all committees of the Board of
Directors. Subject to the control and direction of the Board, he shall
have general charge of the affairs and business of the Company and general
charge and supervision of all the officers, agents, and employees of the
Company. He may sign, with the Corporate Secretary or an Assistant
Corporate Secretary, any or all certificates for shares of stock of the
Company. He may sign and execute in the name of the Company all deeds,
mortgages, bonds, contracts, powers of attorney, or other instruments
authorized by the Board, except in cases where the signing and execution
thereof shall be expressly delegated by the Board or by these By-laws to
some other officer or agent of the Company, and he may, without previous
authority of the Board, make, in the name of the Company, such contracts,
leases, and other agreements as the ordinary conduct of the Company's
business requires. He may sign and endorse notes, drafts, and checks. He
shall have power to select and appoint all necessary officers and servants,
except those elected or appointed or required to be elected or appointed by
the Board, and he shall also have power to remove all such officers and
servants and to make appointments to fill the vacancies. In general, he
shall exercise all powers and perform all duties incident to the principal
executive office of the Company and such other powers and duties as may
from time to time be assigned to him by the Board or be prescribed by these
By-laws. He shall have general and active management of and exercise
general supervision over the business and property of the Company. He may
delegate any of his powers to any Vice President of the Company.
Section 3. Vice Presidents. Each Vice President shall exercise such
powers and perform such duties as may from time to time be assigned to him
by the Board of Directors or the Chairman. In the absence or disability of
the Chairman, the Executive Vice President shall exercise the powers and
perform the duties of the President.
Section 4. Treasurer. The Treasurer shall have custody of such funds
and securities of the Company as may come to his hands or be committed to
his care by the Board of Directors. When necessary or proper, he shall
endorse on behalf of the Company, for collection, checks, notes, or other
obligations, and shall deposit the same to the credit of the Company, in
such bank or banks or depositories as the Board of Directors, or the
President, may designate. He may sign receipts or vouchers for payments
made to the Company, and the Board of Directors may require that such
receipts or vouchers shall also be signed by some other officer to be
designated by them. Whenever required by the Board of Directors, he shall
render a statement of his cash accounts and such other statements
respecting the affairs of the Company as may be requested. He shall keep
proper and accurate accounts of receipts and disbursements and other
matters pertaining to his office. He shall perform all acts incident to
the office of Treasurer, subject to the control of the Board. In the
discretion of the Board of Directors, he may be required to give a bond in
such amount and containing such conditions as the Board of Directors may
approve, and such bond may be the undertaking of a surety company, and the
premium therefor may be paid by the Company.
Section 5. Corporate Secretary. The Corporate Secretary shall be
sworn to the faithful discharge of his duties. He shall record the votes
and proceedings of the stockholders and of the Board of Directors in a book
or books kept for that purpose, and shall attend all meetings of the
Directors and stockholders. He shall keep in safe custody the seal of the
Company, and, when required by the Board of Directors, or when any
instrument shall have been signed by the President, or any other officer
duly authorized to sign the same, or when necessary to attest any
proceedings of the stockholders or Directors, shall affix it to any
instrument requiring the same, and shall attest the same with his
signature. He shall attend to the giving and serving of notices of
meetings. He shall have charge of such books and papers as properly belong
to his office or as may be committed to his care by the Board of Directors.
He shall perform such other duties as appertain to his office or as may be
required by the Board of Directors. In the absence of the Corporate
Secretary, or an Assistant Corporate Secretary, from any meeting of the
Board, the proceedings of such meeting shall be recorded by such other
person as may be appointed at the meeting for that purpose.
Section 5A. Assistant Vice President. Each Assistant Vice President
shall exercise such powers and perform such duties as may be assigned to
him by the Board of Directors.
Section 6. Assistant Corporate Secretary. Each Assistant Corporate
Secretary shall be vested with the same powers and duties as the Corporate
Secretary, and any act may be done or duty performed by an Assistant
Corporate Secretary with like effect as though done or performed by the
Corporate Secretary. He shall have such other powers and perform such
other duties as may be assigned to him by the Board of Directors.
Section 7. Assistant Treasurer. Each Assistant Treasurer shall be
vested with the same powers and duties as the Treasurer, and any act may be
done or duty performed by an Assistant Treasurer with like effect as though
done or performed by the Treasurer. He shall have such other powers and
perform such other duties as may be assigned to him by the Board of
Directors.
Section 8. Execution of Checks, etc. The funds of the Company shall
be deposited in such banks or trust companies as the Board of Directors
from time to time shall designate and shall be withdrawn only on checks or
drafts of the Company for the purposes of the Company. All checks, drafts,
notes, acceptances and endorsements of the Company shall be signed in such
manner and by such officer or officers or such individual or individuals as
the Board of Directors from time to time by resolution shall determine. If
and to the extent so authorized by the Board of Directors, such signature
or signatures may be facsimile. Only checks, drafts, notes, acceptances
and endorsements signed in accordance with such resolution or resolutions
shall be the valid checks, drafts, notes, acceptances or endorsements of
the Company.
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
The corporation shall, to the fullest extent to which it is empowered
to do so by the General Corporation Law of Delaware, or any other
applicable laws, as from time to time in effect, and in the manner therein
provided, indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture,
trust or other enterprise, against all expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding.
Expenses incurred by an officer or director of the corporation in
defending a civil or criminal action, suit or proceeding shall be paid by
the corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director
or officer to repay such amount of it shall ultimately be determined that
he or she is not entitled to be indemnified as authorized by the General
Corporation Law of the State of Delaware. Expenses incurred in defending a
civil or criminal action, suit or proceeding by any other person entitled
to claim indemnification under the preceding paragraph may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon such terms and conditions as the Board of Directors of the
corporation deems appropriate.
The provisions of this Article shall be deemed to be a contract
between the corporation and each director or officer who serves in any such
capacity at any time while this Article and the relevant provisions of the
General Corporation Law of Delaware, or other applicable law, if any, are
in effect, and any repeal or modification of any such law shall not affect
any rights or obligations then existing with respect to any state of facts
then or theretofore existing or any action, suit or proceeding theretofore
or thereafter brought or threatened based in whole or in part upon any such
state of facts.
Persons who are not covered by the foregoing provisions of this
Article and who are employees or agents of the corporation, or are serving
at the request of the corporation as employees or agents of another
corporation, partnership, joint venture, trust or other enterprise, may be
indemnified to the extent authorized at any time or from time to time by
the Board of Directors of the corporation.
The indemnification and advancement of expenses provided or permitted
by this Article shall not be deemed exclusive of any other rights to which
those indemnified or entitled to advancement of expenses may be entitled
under any other by-law or any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office,
and shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
The corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising
out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under the provisions of this
Article.
ARTICLE VI
SHARES OF STOCK
Section 1. Certificates of Stock. All certificates for shares of the
capital stock of the Company shall be in such form, not inconsistent with
the Certificate of Incorporation of the Company, as shall be approved by
the Board of Directors, and shall be signed by the Chairman of the Board of
Directors, the President, or a Vice President, and Treasurer or an
Assistant Treasurer, or the Corporate Secretary or an Assistant Corporate
Secretary of the Company, and shall not be valid unless so signed;
provided, however, that where such certificate is signed (1) by a transfer
agent or an assistant transfer agent or (2) by a transfer clerk acting on
behalf of the Company and a registrar, the signature of any such Chairman
of the Board of Directors, President, Vice President, Treasurer, Assistant
Treasurer, Corporate Secretary or Assistant Corporate Secretary, may be
facsimile. In case any officer or officers who shall have signed, or whose
facsimile signature or signatures shall have been used on, any such
certificate or certificates, shall cease to be such officer or officers of
the Company, whether because of death, resignation, or otherwise, before
such certificate or certificates shall have been delivered by the Company,
such certificate or certificates may nevertheless be adopted by the Company
and be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures
shall have been used thereon had not ceased to be such officer or officers
of the Company. All certificates shall be consecutively numbered and the
name of the person owning the shares represented thereby, with the number
of such shares, and the date of issue, shall be entered on the Company's
books. All certificates surrendered shall be cancelled, and no new
certificates issued until the former certificates for the same number of
shares shall have been surrendered and cancelled, except in cases provided
for in Section 4 of this Article.
Section 2. Transfer of Shares. (a) Transfers of stock shall be made
upon the books of the Company by the holder in person or by attorney, upon
the surrender and cancellation of the certificate or certificates for such
shares. But the Board of Directors may appoint one or more suitable banks
and/or trust companies as transfer agents and/or registrars of transfers,
for facilitating transfers of any class of stock of the Company by the
holders thereof under such regulations as the Board of Directors may from
time to time prescribe. Upon such appointment being made, all certificates
of stock of such class thereafter issued shall be countersigned by one of
such transfer agents and/or one of such registrars of transfer, and shall
not be valid unless so countersigned. (b) The stock transfer books may be
closed, by order of the Board of Directors, for a period not exceeding
fifty (50) days preceding the date of any meeting of stockholders or the
date for the payment of any dividend or the date for the allotment of
rights or the date when any change or conversion or exchange of capital
stock shall go into effect or for a period of not exceeding fifty (50) days
in connection with obtaining the consent of stockholders for any purpose;
provided, however, that, in lieu of closing the stock transfer books as
aforesaid, the Board of Directors, in its discretion, may fix and is hereby
authorized to fix in advance a date, not exceeding sixty (60) days
preceding the date of any meeting of stockholders or the date for the
payment of any dividend or the date for the allotment of rights or the date
when any change or conversion or exchange of capital stock shall go into
effect or a date in connection with obtaining such consent, as a record
date, for the determination of the stockholders entitled to notice of and
to vote at any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend, or to any such allotment of rights,
or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, or to give such consent, and in such case such
stockholders and only such stockholders as shall be stockholders of record
on the date so fixed shall be entitled to such notice of and to vote at
such meeting and any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such
rights, or to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the corporation after any such record
date fixed as aforesaid.
Section 3. Addresses of Stockholders. Every stockholder shall
furnish the Corporate Secretary with an address to which notices of
meetings and all other notices may be served upon or mailed to him, and in
default thereof notices may be addressed to him at his last known address
or at the office of the Company in Huron, South Dakota.
Section 4. Lost and Destroyed Certificates. The Board of Directors
may direct that a new certificate or certificates may be issued in place of
any certificate or certificates theretofore issued by the Company, alleged
to have been lost or destroyed, and the Board of Directors, when
authorizing the issuance of such new certificate or certificates, may, in
their discretion, and as a condition precedent thereto, require the owner
of such lost or destroyed certificate or certificates or his legal
representatives to give to the Company a bond in such sum as they may
direct, as indemnity against any claim that may be made against the
Company.
Section 5. Regulations. The Board of Directors shall have power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue, transfer and registration of certificates for shares
of the capital stock of the Company.
ARTICLE VII
DIVIDENDS AND WORKING CAPITAL
The Board of Directors may declare dividends from the surplus or net
profits of the corporation over and above the amount which from time to
time may be fixed by the Board of Directors as the amount to be reserved as
a working capital, as they may in their discretion, from time to time
determine. Such dividends may be declared by the Board at any meeting,
either regular or special, at which a quorum is present. The dividends
upon the preferred stock, if and when declared, shall be payable quarterly
on the first days of December, March, June and September in each year. Any
dividends so declared upon the common stock shall be payable upon such
dates as may from time to time be fixed by the Board. The power to fix the
working capital of the corporation shall be, and is hereby conferred upon
the Board of Directors, and the Board of Directors may from time to time
fix the sum which shall be set aside or reserved, over and above the
corporation's capital stock paid in, as a working capital for the
corporation, and from time to time may increase, diminish and vary the same
in their absolute discretion.
ARTICLE VIII
SEAL
The common corporate seal is, and until otherwise ordered, and
directed by the Board of Directors shall be, an impression upon paper or
wax, bearing the name of the corporation and the words "Corporate Seal -
Delaware." One or more duplicate dies for impressing such seal may be kept
and used.
ARTICLE IX
AMENDMENT TO BY-LAWS
These By-laws may be altered, amended or repealed by a vote of a
majority of all the Directors at any regular or special meeting of the
Board, provided notice of such proposed alteration, amendment or repeal
shall have been included in the notice of such meeting or shall have been
waived by all the Directors. These By-laws may also be altered, amended or
repealed at any annual meeting of the stockholders, or at any special
meeting of the stockholders, provided notice of the proposed alteration,
amendment or repeal shall have been included in the notice of such special
meeting or shall have been waived by all the stockholders.
Exhibit 10(i)
NORTHWESTERN PUBLIC SERVICE COMPANY
PHANTOM STOCK UNIT PLAN
1. Objectives
The objective of the Northwestern Public Service Company Phantom Stock
Unit Plan (the "Plan") is to assist officers and directors ("Eligible
Individuals") in building financial security through capital accumulation
by providing them with deferred remuneration based upon the award of
Phantom Stock Units, the value of which is related to the value of the
common stock ("Common Stock") of Northwestern Public Service Company
("Company"). The Plan is also intended to: (1) create incentives to
participating Eligible Individuals related to the long-term performance of
the Common Stock, (2) encourage continued employment with, or service on
the Board of Directors ("Board") of, the Company, and (3) promote awareness
of the performance of the Common Stock.
2. Administration
The Plan shall be administered by the Company. Subject to the
provisions of the Plan, the Board shall have exclusive power to select the
Eligible Individuals to be granted Phantom Stock Units, to determine the
number of Phantom Stock Units to be granted as described in Section 3, to
determine the time or times when Phantom Stock Units will be granted and to
determine such terms and conditions, in addition to the terms and
conditions set forth in the Plan, that shall apply to the grant of Phantom
Stock Units. The authority granted to the Board by the preceding sentence
will be exercised based upon annual recommendations received from the
Nominating and Compensation Committee ("Committee") of the Board. In
determining the number of Phantom Stock Units to be granted to an Eligible
Individual, the Board shall consider an Eligible Individual's position and
responsibilities, the nature and value to the Company of an Eligible
Individual's services, an Eligible Individual's present and potential
contribution to the Company's success, and the Company's financial
performance. Determinations by the Board shall be made by majority vote
and shall be final and binding on all parties with respect to all matters
relating to the Plan.
The Committee shall have authority to interpret the Plan, to adopt and
revise rules and regulations relating to the Plan, and to make any other
determinations which it believes necessary or advisable for the
administration of the Plan.
3. Grants
Eligible Individuals to whom Phantom Stock Units are granted shall
hereafter be referred to as "Participants." Phantom Stock Units shall be
granted at the meeting of the Board in May, each year to Participants who
are Executive Officers of the Company in such amounts as the Board shall
determine based on the recommendations of the Committee. The Committee
shall recommend awards, in amounts based upon the criteria set forth in
paragraph 2 above, up to a maximum of 35% of base salary for the Chairman
of the Board, the President and Chief Executive Officer and the Executive
Vice President and up to a maximum of 15% of base salary for the other
Executive Officer Participants. The award shall be made in Phantom Stock
units at the closing price of the Company's Common Stock on the date of the
award. Annual awards of 200 units shall be made to each of the Director
Participants who are not Executive Officers of the Company.
4. Phantom Stock Units and Dividend Equivalents
(a) Phantom Stock Units granted to a Participant shall be credited to
a Phantom Stock Unit Account ("Account") established and maintained for
such Participant on the books of the Company. The Account of a
Participant, which shall be the record of Phantom Stock Units granted to
him under the Plan, and dividend equivalents related thereto, is solely for
accounting purposes and shall not require a segregation of any Company
assets. Each grant of Phantom Stock Units under the Plan to a Participant
shall be communicated by the Board in writing to the Participant within
thirty (30) days after the date of grant.
(b) Additional credits will be made to each Participant's Account in
amounts equal to the dividends the Participant would have received from
time to time had he been the owner on the record dates with respect thereto
of the number of shares of Common Stock equal to the number of Phantom
Stock Units in his Account on such dates. Such dividend credit amounts
shall be converted to Phantom Stock Units at the closing price of the
Common Stock on the New York Stock Exchange on the date that dividends are
paid.
5. Vesting
(a) A Participant shall have a nonforfeitable right to the Phantom
Stock Units granted in a given year and dividend equivalents thereon on May
1st of the year five years following the date that such Phantom Stock Units
were granted (the "Fifth Anniversary Date").
(b) A Participant shall have a nonforfeitable right to one hundred
percent (100%) of the Phantom Stock Units and other amounts credited to his
Account upon the Participant's termination of employment with the Company
due to death, permanent disability or retirement on or after the age of
sixty-five (65) years or such earlier date as the Board, in its discretion,
shall designate. The Participant or his Beneficiary may choose vesting
under paragraph 5(a) or the full vesting under the preceding sentence.
(c) For purposes of this Section 5 a Participant will be considered
to terminate employment by reason of "permanent disability" if, in the
determination of the Board, he is subject to a physical or mental condition
which is expected to render the Participant unable to perform his usual
duties or any comparable duties for the Company.
6. Payment for Phantom Stock Units
(a) Upon a Fifth Anniversary Date the Participant shall be entitled
to receive from the Company an amount equal to the sum of (1) the total
value (as determined by the Board pursuant to Section 7) of the Phantom
Stock Units credited to his Account that vest on such Date and (2) related
reinvested dividend equivalents credited to his Account pursuant to Section
4 as of such Date. Upon the date the Participant vests in 100% of the
Phantom Stock Units and related amounts credited to his Account pursuant to
paragraph 5(b) (the "Automatic Vesting Date"), the Participant shall be
entitled to receive from the Company an amount equal to the sum of (1) the
total value (as determined by the Board pursuant to Section 7) of the
Phantom Stock Units credited to the Participant's Account as of the
Automatic Vesting Date, and (2) the value of dividend equivalents thereon
credited to his Account pursuant to Section 4, as of the Automatic Vesting
Date.
(b) Payment to a Participant of any amount set forth in paragraph
6(a) shall be made in cash in a lump sum within thirty (30) days after the
applicable Fifth Anniversary Date and, unless otherwise elected by the
Participant or his Beneficiary, after the Automatic Vesting Date.
(c) Notwithstanding any other provision of the Plan, all Phantom
Stock Units and other amounts credited to the Account of a Participant, and
all right to any payment hereunder to the Participant, will be forfeited,
and the Company will have no further obligation hereunder to such
Participant, if any of the following circumstances occur:
(i) The Participant at any time is discharged from employment
with the Company for cause ("Cause"). "Cause" shall mean (A) a
Participant's conviction of any criminal violation involving dishonesty,
fraud, or breach of trust, or (B) a Participant's willful engagement in any
misconduct in the performance of his duty that materially injures the
Company, or (C) failure to adequately perform his duties; or
(ii) The Participant at any time prior to the Fifth Anniversary
Date or the Automatic Vesting Date voluntarily terminates employment with
the Company.
The Board shall have sole discretion with respect to the application
of the provisions of this paragraph (c) and such exercise of discretion
shall be conclusive and binding upon the Participant, and all other
persons.
(d) Notwithstanding any other provision of the Plan, one-half of the
payment under paragraph 6(a) for Participants who are active Executive
Officers of the Company will be used to purchase Common Stock of the
Company. Those Participants may elect to make such purchase in a lump sum
at the time of award payout each year, through payroll deduction during the
year, or a combination thereof.
7. Valuation of Phantom Stock Units
For all purposes of the Plan other than for the purposes of paragraph
4(b), the value of a Phantom Stock Unit upon a Fifth Anniversary Date or
the Automatic Vesting Date for purposes of Section 6 will be an amount
equal to the average of the closing prices of the Common Stock on the
Composite Tape of the New York Stock Exchange for the ten (10) consecutive
trading days immediately preceding such Date; or
8. Changes in Capital and Corporate Structure
In the event of any change in the outstanding shares of Common Stock
of the Company by reason of an issuance of additional shares,
recapitalization, reclassification, reorganization, stock split, reverse
stock split, combination of shares, stock dividend or similar transaction,
the Board shall proportionately adjust, in an equitable manner, the number
of Phantom Stock Units held by Participants under the Plan. The foregoing
adjustment shall be made in a manner that will cause the relationship
between the aggregate appreciation in outstanding Common Stock and earnings
per share of the Company and the increase in value of each Phantom Stock
Unit granted hereunder to remain unchanged as a result of the applicable
transaction.
9. Non-Transferability
Phantom Stock Units granted under the Plan, and other amounts credited
to a Participant's Account, and any rights and privileges pertaining
thereto, may not be transferred, assigned, pledged or hypothecated in any
manner, by operation of law or otherwise, other than by will or by the laws
of descent and distribution, and shall not be subject to execution,
attachment or similar process.
10. Death of a Participant
In the event of a Participant's death, payment of any amount due under
the Plan shall be made to the Participant's designated Beneficiary. In the
event the Participant has not designated a Beneficiary, or if no designated
Beneficiary is living at the date of death of the Participant, payment of
any amount due under the Plan shall be paid as promptly as practicable to
the duly appointed and qualified executor or administrator of the
Participant's estate. "Beneficiary" shall mean the individual,
corporation, partnership, association, trust or unincorporated organization
designated by a Participant in writing filed with the Company as the
recipient of any payment to be made to a Participant hereunder in the event
of the Participant's death prior to payment. Such designation may be
changed by a Participant at any time by writing filed with the Company
without the consent of or notice to any Beneficiary previously designated.
11. Withholding
The Company shall have the right to deduct from all amounts paid
pursuant to the Plan any taxes required by law to be withheld with respect
to such amounts.
12. Voting and Dividend Rights
Except as provided in Sections 4, 6, and 8, no Participant shall be
entitled to any voting rights or to receive any dividends or other
distributions with respect to the Common Stock of the Company as a result
of his participation in the Plan.
13. Miscellaneous Provisions
(a) No Participant or other person shall have any claim or right to
be granted an award under the Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any Participant any right to be
retained in the employ of the Company or to continue to serve as a member
of the Board.
(b) The Plan shall at all times be entirely unfunded and no
provisions shall at any time be made with respect to segregating assets of
the Company for payment of any benefits hereunder. No Participant or other
person shall have any interest in any particular assets of the Company by
reason of the right to receive a benefit under the Plan and any such
Participant or other person shall have only the rights of a general
unsecured creditor of the Company with respect to any rights under the
Plan.
(c) Except when otherwise required by the context, any masculine
terminology in this document shall include the feminine, and any singular
terminology shall include the plural.
(d) This Plan shall be governed by the laws of the State of South
Dakota.
14. Effectiveness and Term of Plan
The effective date of the Plan shall be May 3, 1989, and the Plan
shall terminate with awards made in May, 1999. No Phantom Stock Units
shall be granted pursuant to the Plan after the date of termination of the
Plan, although after such date payments shall be made with respect to
Phantom Stock Units granted prior to the date of termination.
IN WITNESS WHEREOF, the Company has executed this Plan as of the 1st
day of May, 1996.
NORTHWESTERN PUBLIC SERVICE COMPANY
By /s/ M. D. Lewis
______________________________________
M. D. Lewis
President & CEO
By /s/ Aelred J. Kurtenbach
______________________________________
Aelred J. Kurtenbach, Chairman
Nominating and Compensation Committee
<PAGE>
RESOLUTION
NORTHWESTERN PUBLIC SERVICE COMPANY
PHANTOM STOCK PLAN
AMENDMENT NO. 1
WHEREAS, the Board of Directors of Northwestern Public Service Company
("Company") did on May 1, 1996, amend and restate the Phantom Stock Plan
("Plan"); and
WHEREAS, the Board of Directors wishes to further revise the Plan;
NOW THEREFORE, the Plan is further amended, effective May 7, 1997 by
amending Section 3 as follows:
3. Grants
Eligible individuals to whom Phantom Stock Units are granted shall
hereafter be referred to as "Participants". Phantom Stock Units shall be
granted at the meeting of the Board in May, each year to Participants who
are Executive Officers of the Company in such amounts as the Board shall
determine based on the recommendations of the Committee. The Committee
shall recommend awards, in amounts based upon the criteria set forth in
paragraph 2 above and other plan opportunities for long term equity
incentives. The award shall be made in Phantom Stock units at the closing
price of the Company's Common Stock on the date of the award. Annual
awards of 200 units shall be made to each of the Director Participants who
are not Executive Officers of the Company.
IN WITNESS WHEREOF, the Company has executed this Amendment No. 1 of
the Plan as of the 7th day of May, 1997.
NORTHWESTERN PUBLIC SERVICE COMPANY
By /s/ M. D. Lewis
______________________________________
M. D. Lewis
Chairman, President & CEO
By______________________________________
Chairman
Nominating and Compensation Committee
Exhibit 10(ii)
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into by and between
________________________, an individual ("Executive"), and Northwestern
Public Service Company (Northwestern).
AGREEMENT:
1. Employment by Northwestern and Duration.
a. Full Time and Best Efforts. Subject to the terms set forth
herein, Northwestern agrees to employ Executive to provide management
services for Northwestern as _____________________________, and Executive
hereby accepts such employment. During the duration of his employment with
Northwestern, Executive will devote his best efforts and substantially all
of his business time and attention to the performance of his duties
hereunder, except for vacation periods as set forth herein and reasonable
absences due to injury, illness as permitted by Northwestern's general
policies or serving on outside Boards of Directors and participating in
normal civic activities.
b. Duties. Executive shall serve as _____________________________
for Northwestern and shall perform such duties as are customarily
associated with his current title, consistent with the Bylaws of
Northwestern and as required by Northwestern's Board of Directors (the
"Board").
c. Northwestern Policies. The employment relationship between the
parties shall be governed by the general employment policies and practices
of Northwestern, including, but not limited to, those relating to
protection of confidential information, except that when the terms of this
Agreement differ from or are in conflict with Northwestern's general
employment policies or practices, this Agreement shall control.
d. Duration. The duration of employment hereunder shall commence
simultaneously with the execution of this Agreement and end on May 31,
1999, subject to the provisions for termination set forth herein.
e. Locations of Performance. Executive shall be domiciled in the
vicinity of Huron or Sioux Falls, South Dakota. The parties acknowledge,
however, that the Executive will be required to undertake reasonable travel
to Northwestern's market areas in connection with the performance of his
duties hereunder and that Executive may be requested by Northwestern, with
Executives' mutual consent, to move the domicile of Executives' performance
during the term of this agreement.
2. Compensation and Benefits.
a. Salary. Executive shall receive for services to be rendered
hereunder annual base compensation included in schedule A hereto.
b. Bonus. Executive shall receive such discretionary bonuses, if
any, as the Board in its sole discretion and from time to time may deem
appropriate.
c. Annual Incentive Plans. Executive shall be eligible to
participate in the Annual Incentive Plans on the terms and conditions set
forth in Schedule B attached hereto.
d. Long-Term Equity Incentive Plans. Executive shall be eligible to
participate in the Long-Term Equity Incentive Plans for Northwestern on the
terms and conditions set forth in Schedule C attached hereto.
e. Participation in Benefit Plans. During the duration of
employment hereunder, Executive shall be entitled to participate in the
plans and programs as set forth in Schedule D attached hereto, or those
established by Northwestern hereafter to the extent that he is eligible
under the general provisions thereof. (If any such hereafter-established
plan is intended as a substitute for or alternative to one or more Schedule
D plans, Executive shall be eligible to participate in only one, not both,
of the plans in question.) Northwestern may, in its sole discretion and
from time to time, establish additional senior management benefit programs
as it deems appropriate.
f. Participation in Change of Control Plan. Executive shall be
entitled to participate in Northwestern's Change of Control Plan set forth
on Schedule E attached hereto (herein referred to as Change of Control
Agreement).
g. Withholding. All payments and benefits under this Section 2 for
which withholding is required under applicable law will be made subject to
the required withholding.
3. Reasonable Business Expenses and Support.
Executive shall be reimbursed for documented and reasonable business
expenses in connection with the performance of his duties hereunder.
4. Termination of Employment.
The date on which Executive's employment by Northwestern ceases, under
any of the following circumstances, shall be defined herein as the
"Termination Date".
a. Termination Without Cause.
i. Termination Payment. Upon notice to Executive,
Northwestern's Board may terminate Executive's employment with Northwestern
at will at any time for any reason and without "cause", as defined below.
In the event Executive's employment is terminated by Northwestern without
cause, Executive shall receive payment for all accrued salary and vacation
time through the Termination Date, and Northwestern shall pay Executive
within 90 days of the Termination Date as severance an amount that is equal
to the compensation of Executive under this Agreement for the remaining
term of employment under this Agreement. For purposes of this section 4(a)
(i) the term compensation shall be defined to include (1) all base
compensation and benefits to Executive provided in Section 2(a) and 2(e)
for the remaining term of this agreement, (2) the most recent annual
bonuses provided under Section 2(b) and 2(c) for the remaining term of this
agreement, and (3) the amount of all long term equity incentive plan
benefits, as if fully vested, provided under Section 2(d).
ii. Fundamental Changes. In the event that Northwestern makes a
fundamental change as defined herein below, Executive may at any time
thereafter terminate his employment, provided, however that Executive shall
provide Northwestern ten (10) days notice prior to any such termination,
and
Northwestern shall have a reasonable period of time not to exceed thirty
(30) days to cure such fundamental change. "Fundamental change" shall be
defined as any of the following:
(a) Diminution in the Executive's duties, authority, responsibility
and/or compensation;
(b) Northwestern moves Executive's primary office more than fifty
(50) miles from either Huron or Sioux Falls, South Dakota without
Executive's consent.
(c) A Change of Control or Major Transaction as defined in the Change
of Control Agreement.
A termination by Executive in the event of a fundamental change
shall be treated as a Northwestern termination without cause, and Executive
shall be entitled to the termination payments as provided in paragraph
4(a)(i) of this agreement, or the payments provided in the Change of
Control Agreement, whichever is greater.
b. Termination for Cause.
i. Termination Payments. Northwestern's Board may terminate
Executive's employment with Northwestern at any time for "cause" as defined
below, immediately upon notice to Executive of the circumstances leading to
such termination for cause. In the event that Executive's employment is
terminated for cause, Executive shall receive payment for all accrued
salary and vacation time through the Termination Date, which in this event
shall be the date upon which notice of termination is given. Executive
shall also receive any vested compensation benefits or incentives as
provided under the benefit plans included in paragraphs 2(c), (d) and (e).
Northwestern shall pay all amounts due under this paragraph 4(b)(i) within
90 days of the Termination Date and shall have no further obligation to pay
severance of any kind nor to make any payment in lieu of notice.
ii. Definition of Cause. "Cause" means the occurrence or
existence of any of the following with respect to Executive, as determined
by a majority of the Directors of the Board: (a) any act of dishonesty,
misappropriation, embezzlement, intentional fraud or similar conduct
involving Northwestern; (b) the conviction or the plea of nolo contendere
or the equivalent in respect to a felony involving moral turpitude; (c) any
intentional damage of a material nature to any property of Northwestern; or
(d) conduct by Executive which demonstrates gross negligence in serving in
his capacity as employee of Northwestern.
c. Termination Upon Disability. Northwestern may terminate
Executive's employment in the event Executive suffers a disability that
renders Executive unable to perform the essential functions of his
position, even with reasonable accommodation, for nine (9) months within
any twelve (12) month period. Commencing on the Termination Date, which in
this event shall be the date upon which notice of termination is given,
Northwestern shall pay Executive within 90 days of the Termination Date an
amount that is equal to the compensation of Executive under this agreement
for the remaining term of employment under this Agreement in the same
amounts as provided under section 4 (a)(i).
d. Benefits Upon Termination. All benefits provided under paragraph
2(e) hereof shall be extended, to the extent permitted by Northwestern's
insurance policies and benefit plans, for one (1) year after Executive's
Termination Date, except (a) as required by law (e.g., COBRA health
insurance continuation election), or (b) in the event of a termination
described in paragraph 4(b) if Northwestern does not decide to require the
noncompetition agreement as described in section 6.
e. Termination Upon Death. If Executive dies prior to the
expiration of the duration of employment under this Agreement, Northwestern
shall continue coverage of Executive's dependents (if any) under all
benefit plans or programs of the type listed above in paragraph 2(e) herein
for a period of twelve (12) months. In addition, Executive's estate shall
receive all long term equity incentive plan benefits, as if fully vested,
provided under Section 2(d) within 90 days of Executive's death.
5. Proprietary Information Obligations. During the duration of
employment under this Agreement, Executive will have access to and become
acquainted with confidential and proprietary information of Northwestern
and its subsidiaries, including but not limited to information or plans
regarding customer relationships, personnel, sales, marketing, and
financial operations and methods, trade secrets, formulas, devices, secret
inventions, processes, and other compilations of information, records, and
specifications (collectively, except to the extent it was already known
from other sources, or is or becomes general knowledge, in each case
without known violation of any confidentiality obligation, "Proprietary
Information"). Executive shall not disclose any of the Proprietary
Information directly or indirectly, or use it in any way, either during the
duration of this Agreement or at any time thereafter, except as required in
the course of his employment with Northwestern or as authorized in writing
by Northwestern. All files, records, documents, computer-recorded
information, drawings specifications, equipment and similar items relating
to the business of Northwestern, whether prepared by Executive or otherwise
coming into his possession, shall remain the exclusive property of
Northwestern, respectively, and shall not be removed under any
circumstances whatsoever without the prior written consent of the Chairman
of Northwestern, except when (and only for the period) necessary to carry
out Executive's duties hereunder, and if removed shall be immediately
returned to Northwestern upon any termination of his employment and no
copies thereof shall be kept by Executive; provided, however, that
Executive shall be entitled to retain documents that were personally owned
or acquired.
6. Covenant Not to Compete, Noninterference. Executive shall be subject
to the covenant not to compete and noninterference terms as provided in the
noncompetition agreement set forth in Schedule F attached hereto.
7. Arbitration of Disputes.
a. Scope. Any disputes of any kind regarding this Agreement,
including, but not limited to, its termination shall be subject to final
and binding arbitration, to the extent permitted by law, pursuant to the
Employment Dispute Resolution Rules and Regulations of the American
Arbitration Association. Such disputes shall include, but are not limited
to, claims for breach of contract (express or implied), tort claims, claims
for discrimination, and claims for violation of any federal or state law or
regulation.
b. Request. Any request for arbitration must be made in writing
within 365 calendar days of the occurrence giving rise to the dispute.
c. Applicable Law. The arbitrator shall apply the substantive law
(and the law of remedies, if applicable) of Delaware, or federal law, or
both, as applicable to the claim or claims asserted.
d. Final and Binding. The arbitration shall be final and binding
upon all of the parities and shall be enforceable to the extent permitted
by law.
8. Miscellaneous.
a. Notices. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by fax) or the third day after mailing by first class
mail to the recipient at the address indicated below:
To Executive:
________________
_________________
Huron, SD 57350
Voice: 605-________
To Northwestern:
Corporate Secretary
Northwestern Public Service
600 Market Street West
Huron, South Dakota 57350-1500
Voice: 605-353-7606
Fax: 605-353-7631
or to such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party.
b. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or
unenforceablility will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable
provisions had never been contained herein.
c. Entire Agreement. This document constitutes the final, complete,
and exclusive embodiment of the entire agreement and understanding between
the parties related to the subject matter hereof and supersedes and
preempts any prior or contemporaneous understandings, agreements, or
representations by or between the parties, written or oral.
d. Counterparts. This Agreement may be executed on separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement.
e. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and Northwestern,
and their respective successors and assigns, except that Executive may not
assign any of his duties hereunder and he may not assign any of his rights
under without the written consent of Northwestern, which shall not be
withheld unreasonably.
f. Attorneys' Fees. If any legal proceeding is necessary to enforce
or interpret the terms of this Agreement, or to recover damages for breach
hereof, the prevailing party shall be entitled to reasonable attorneys'
fees, in an amount up to $50,000, as well as costs and disbursements, in
addition to any other relief to which he or it may be entitled.
g. Amendments. No amendments or other modifications to this
Agreement may be made except by a writing signed by both parties. Nothing
in this Agreement, express or implied, is intended to confer upon any third
person any rights or remedies under or by reason of this Agreement. No
amendment or waiver of this Agreement requires the consent of any
individual, partnership, corporation or other entity not a party to this
Agreement.
h. Choice of Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the
internal law, and not the law of conflicts, of the State of Delaware.
9. Effective Date. This Agreement shall be effective at the commencement
of the duration hereof referred to in Section 1(d) hereof.
Northwestern Public Service Company __________________________
________________
"Executive"
By /s/ M. D. Lewis Date: May 7, 1997
__________________________ --------------
Title: M. D. Lewis
Chairman, President & CEO
Date: May 7, 1997
-----------
<PAGE>
Schedule E
CHANGE OF CONTROL
AGREEMENT
BETWEEN
NORTHWESTERN PUBLIC SERVICE COMPANY
AND
________________
JUNE 1, 1997
TABLE OF CONTENTS
Page
1. Defined Terms
2. Term of Agreement
3 Company's Covenants Summarized
4. The Executive's Covenants
5. Compensation Other Than Severance Payments
6. Severance Payments
7. Termination Procedures and Compensation During Dispute
8. No Mitigation
9. Successors; Binding Agreement
10. Notices
11. Miscellaneous
12. Validity
13. Counterparts
14. Settlement of Disputes; Arbitration
15. Definitions
<PAGE>
AGREEMENT
THIS AGREEMENT dated June 1, 1997, is made by and between Northwestern
Public Service Company, a Delaware Corporation (the "Company"), and
________________ (the "Executive"), and supersedes any prior Change of
Control Agreements between the parties to this agreement.
WHEREAS the Company considers it essential to the best interests of
its shareholders to foster the continuous employment of key management
personnel; and WHEREAS the Board of Directors of the Company (the
"Board") recognizes that, as is the case with many publicly-held companies,
the possibility of a Change in Control or a Major Transaction (as defined
in the last Section hereof) exists and that such possibility, and the
uncertainty and questions which it may raise among management, may result
in the departure or distraction of management personnel to the detriment of
the Company and its shareholders; and
WHEREAS the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the management of the Company, including the Executive, to their
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control or a
Major Transaction;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definition of capitalized terms used in this
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through May 31, 2000; provided,
however, that commencing on June 1, 1998 and each June 1 thereafter, the
term of this Agreement shall automatically be extended for one additional
year unless, not later than March 30 of such year, the Company or the
Executive shall have given notice not to extend this Agreement or a Change
in Control or a Major Transaction shall have occurred prior to such June 1
of such year; provided, however, if a Change in Control or a Major
Transaction shall have occurred during the term of this Agreement, this
Agreement shall continue in effect for a period of thirty-six (36) months
beyond the month in which such Change in Control or Major Transaction
occurred.
3. Company's Covenants Summarized. In order to induce the Executive
to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 4 hereof, the Company agrees,
under the conditions described herein, to pay the Executive the "Severance
Payments" described in Section 6.1 hereof and the other payments and
benefits described herein in the event the Executive's employment with the
Company is terminated following a Change in Control or a Major Transaction
and during the term of this Agreement. No amount or benefit shall be
payable under this Agreement unless there shall have been (or, under the
terms hereof, there shall be deemed to have been) a termination of the
Executive's employment with the Company following a Change in Control or a
Major Transaction. This Agreement shall not be construed as creating an
express or implied contract of employment and, except as otherwise agreed
in writing between the Executive and the Company, the Executive shall not
have any right to be retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that, subject to
the terms and conditions of this Agreement, in the event of a Potential
Change in Control or a Potential Major Transaction during the term of this
Agreement, the Executive will remain in the employ of the Company until the
earliest of (i) a date which is twelve (12) months from the date of such
Potential Change of Control or Potential Major Transaction, (ii) the date
of a Change in Control or a Major Transaction, (iii) the date of
termination by the Executive of the Executive's employment for Good Reason
(determined by treating the Potential Change in Control or Potential Major
Transaction as a Change in Control or a Major Transaction, as applicable,
in applying the definition of Good Reason), by reason of death or
Disability or Retirement, or (iv) the termination by the Company of the
Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.1 Following a Change in Control or a Major Transaction and during
the term of this Agreement, during any period that the Executive fails to
perform the Executive's full-time duties with the Company as a result of
incapacity due to physical or mental illness, the Company shall provide the
Executive with disability benefits equivalent to those under the Company's
disability insurance plan (without regard to any amendment to such plan
made subsequent to the Change in Control or Major Transaction which
amendment adversely affects the Executive's rights thereunder) until the
Executive's employment is terminated by the Employer for Disability.
5.2 If the Executive's employment shall be terminated for any reason
following a Change in Control or a Major Transaction and during the term of
this Agreement, the Company shall pay the Executive's full salary to the
Executive through the Date of Termination at the rate in effect at the time
the Notice of Termination is given, together with all compensation and
benefits payable to the Executive through the Date of Termination under the
terms of any compensation or benefit plan, program or arrangement
maintained by the Company during such period; except to the extent that the
Executive is receiving payments with respect to such period, or a portion
thereof, in accordance with Section 5.1.
5.3 If the Executive's employment shall be terminated for any reason
following a Change in Control or a Major Transaction and during the term of
this Agreement, the Company shall pay to the Executive the normal post-
termination compensation and benefits due the Executive as such payments
become due. Such post-termination compensation and benefits shall be
determined under, and paid in accordance with, the Company's applicable
retirement, insurance and other compensation or benefit plans, programs
and arrangements.
6. Severance Payments.
6.1 Subject to Section 6.2(b) hereof, the Company shall pay the
Executive the payments described in this Section 6.1 (the "Severance
Payments") upon the termination of the Executive's employment following a
Change in Control or a Major Transaction and during the term of this
Agreement, in addition to the payments and benefits described in Section 5
hereof, unless such termination is (i) by the Company for Cause, (ii) by
reason of death, Disability or Retirement, or (iii) by the Executive
without Good Reason. The Executive's employment shall be deemed to have
been terminated following a Change in Control or a Major Transaction by
the Employer without cause or by the Executive with Good Reason if the
Executive's employment is terminated prior to a Change in Control or a
Major Transaction without Cause at the direction of a Person who has
entered into an agreement with the Company the consummation of which would
constitute a Change in Control or a Major Transaction, or if the Executive
terminates his employment with Good Reason prior to a Change in Control or
a Major Transaction (determined by treating a Potential Change in Control
or Potential Major Transaction as a Change in Control or a Major
Transaction, as applicable, in applying the definition of Good Reason) if
the circumstance or event which constitutes Good Reason occurs at the
direction of such Person.
(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Company shall pay
to the Executive a lump sum severance payment, in cash, equal to three
times the sum of (i) the higher of the Executive's annual base salary
in effect as of the Date of Termination or in effect immediately prior
to the Change in Control or Major Transaction, and (ii) the higher of
the average amount paid to the Executive pursuant to the Company's
annual bonus plan with respect to the three years preceding the year
in which the Date of Termination occurs or the average amount so paid
with respect to the three years preceding the year in which the Change
in Control or Major Transaction occurs.
(B) In addition to the retirement benefits to which the
Executive is entitled under each Pension Plan or any successor plan
thereto, the Company shall pay the Executive a lump sum amount, in
cash, equal to the excess of (x) the actuarial equivalent of the
retirement pension (taking into account any early retirement subsidies
associated therewith and determined as a straight life annuity
commencing at Normal Retirement Age or any earlier date, but in no
event earlier than the third anniversary of the Date of Termination,
whichever annuity the actuarial equivalent of which is greatest) which
the Executive would have accrued under the terms of each such Pension
Plan (without regard to any amendment to such Pension Plan made
subsequent to a Change in Control or a Major Transaction, which
amendment adversely affects in any manner the computation of
retirement benefits thereunder), determined as if the Executive were
fully vested thereunder and had accumulated (after the Date of
Termination) thirty-six (36) additional months of service credit
thereunder and had been credited under each such Pension Plan during
such period with compensation at the higher of (a) Executive's
compensation (as defined in such Pension Plan) during the twelve (12)
months immediately preceding the Date of Termination or (b)
Executive's compensation (as defined in such Pension Plan) during the
twelve (12) months immediately preceding the Change in Control or
Major Transaction, over (y) the actuarial equivalent of the retirement
pension (taking into account any early retirement subsidies associated
therewith and determined as a straight life annuity commencing at
Normal Retirement Age or any earlier date, but in no event earlier
than the Date of Termination, whichever annuity the actuarial
equivalent is greatest) which the Executive had accrued pursuant to
the provisions of each such Pension Plan as of the Date of
Termination. For purposes of this Section 6.1(B), "actuarial
equivalent" shall be determined using the same methods and assumptions
utilized under each of the Pension Plans, as applicable, immediately
prior to the Date of Termination (without regard to any amendment of
such methods and assumptions made subsequent to a Change in Control or
a Major Transaction, which amendment results in a lower payment under
this Section 6.1(B)). To the extent additional actuarial assumptions
are required for the purpose of calculating benefits under this
Section 6.1(B), such assumptions shall be as set forth in Schedule I
hereto.
(C) If the Executive would have become entitled to benefits
under the Company's post-retirement health care or life insurance
plans had his employment terminated at any time during the period of
thirty-six (36) months after the Date of Termination, the Company
shall pay such benefits to the Executive commencing on the later of
(a) the date that such coverage would have first become available and
(b) the date the benefits described in (D) below terminate.
(D) For the thirty-six (36) month period immediately following
the Date of Termination, the Company shall arrange to provide the
Executive with life, disability, accident and health insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change
in Control or a Major Transaction which reduction constitutes Good
Reason). Benefits otherwise receivable by the Executive pursuant to
this Section 6.1(D) shall be reduced to the extent comparable benefits
are actually received by or made available to the Executive without
cost during the thirty-six (36) month period following the Executive's
termination of employment (and any such benefits actually received by
the Executive shall be reported to the Company by the Executive). If
the benefits provided to the Executive under this Section 6.1(D) shall
result in a decrease, pursuant to Section 6.2(b), in the Severance
Payments and these Section 6.1(D) benefits are thereafter reduced
pursuant to the immediately preceding sentence because of the receipt
of comparable benefits, the Company shall, at the time of such
reduction, pay to the Executive the lesser of (a) the amount of the
decrease made in the Severance Payments pursuant to Section 6.2(b), or
(b) the maximum amount which can be paid to the Executive without
being, or causing any other payment to be, nondeductible by reason of
section 28OG of the Code.
6.2 (a) In the event that any payment or benefit received or to be
received by the Executive in connection with a Change in Control or the
termination of the Executive's employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the
Company, any Person whose actions result in a Change in Control or any
Person affiliated with the Company or such Person) (all such payments and
benefits, including the Severance Payments, being hereinafter called "Total
Payments") will be subject (in whole or part) to the Excise Tax, then,
subject to the provisions of subsection (b) of this Section 6.2, the
Company shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Total Payments and any federal, state
and local income tax and Excise Tax upon the payment provided for by this
Section 6.2, shall be equal to the Total Payments. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be
made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive's residence on the Date
of Termination, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes.
(b) In the event that, after giving effect to any redeterminations
described in subsection (d) below, a reduction in the Severance Payments,
to the largest amount that would result in no portion of the Total Payments
being subject to the Excise Tax (after taking into account any reduction in
the Total Payments provided by reason of section 28OG of the Code in such
other plan, arrangement or agreement), would produce a net amount (after
deduction of the net amount of federal, state and local income tax on such
reduced Total Payments) that would be greater than the net amount of
unreduced Total Payments (after deduction of the net amount of federal,
state and local income tax and the amount of Excise Tax to which the
Executive would be subject in respect of such Total Payments), then
subsection (a) of this Section 6.2 shall not apply and the Severance
Payments shall be so reduced.
(c) For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i)
all of the Total Payments shall be treated as "parachute payments" within
the meaning of section 28OG(b)(2) of the Code, unless in the opinion of tax
counsel selected by the Company's independent auditors and reasonably
acceptable to the Executive ("Tax Counsel"), such other payments or
benefits (in whole or in part) do not constitute parachute payments,
including by reason of section 28OG(b)(4)(A) of the Code, (ii) all
"excess parachute payments" within the meaning of section 28OG(b)(1) of the
Code shall be treated as subject to the Excise Tax, unless in the opinion
of Tax Counsel such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered, within
the meaning of section 28OG(b)(4)(B) of the Code, in excess of the Base
Amount allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax, and (iii) the value of any noncash benefits or
any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections
28OG(d)(3) and (4) of the Code. Prior to the payment date set forth in
Section 6.3 hereof, the Company shall provide the Executive with its
calculation of the amounts referred to in this Section 6.2(b) and such
supporting .materials as are reasonably necessary for the Executive to
evaluate the Company's calculations. If the Executive disputes the
Company's calculations (in whole or in part), the reasonable opinion of Tax
Counsel with respect to the matter in dispute shall prevail.
(d) In the event that (i) the Excise Tax is subsequently determined
to be less than the amount taken into account hereunder at the time of
termination of the Executive's employment and (ii) after giving effect to
such redetermination, the Severance Payments are not reduced pursuant to
Section 6.2(b) hereof, the Executive shall repay to the Company, at the
time that the amount of such reduction in Excise Tax is finally determined,
the portion of the Gross-Up Payment attributable to such reduction (plus
that portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the Gross-Up Payment being
repaid by the Executive to the extent that such repayment results in a
reduction in the Excise Tax and/or a federal, state or local income tax
deduction) plus interest on the amount of such repayment at the rate
provided in section 1274(b)(2)(B) of the Code. In the event that (x) the
Excise Tax is determined to exceed the amount taken into account hereunder
at the time of the termination of the Executive's employment (including by
reason of any payment the existence or amount of which cannot be determined
at the time of the Gross-Up Payment) and (y) after giving effect to such
redetermination, the Severance Payments are not reduced pursuant to Section
6.2(b) hereof, the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions payable
by the Executive with respect to such excess) at the time that the amount
of such excess is finally determined.
6.3 The payments provided for in Section 6.1 (other than Section
6.1(C) and Section 6.1(D)) and Section 6.2 hereof shall be made not later
than the fifth day following the Date of Termination, provided, however,
that if the amounts of such payments, and the limitation on such payments
set forth in Section 6.2(b) hereof, cannot be finally determined on or
before such day, the Company shall pay to the Executive on such day an
estimate, as determined in good faith by the Executive, of the minimum
amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest at the
rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth (30th)
day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to the Executive,
payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of
the Code).
6.4 The Company also shall pay to the Executive all legal fees and
expenses incurred by the Executive in disputing in good faith any
termination of his employment hereunder or in seeking in good faith to
obtain or enforce any benefit or right provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of section 4999 of the Code to any payment or benefit
provided hereunder. Such payments shall be made within five (5) business
days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
7. Termination Procedures and Compensation During Dispute.
7.1 Notice of Termination. After a Change in -Control or a Major
Transaction and during the term of this Agreement, any purported
termination of the Executive's employment (other than by reason of death)
shall be communicated by written Notice of Termination from one party
hereto to the other party hereto in accordance with Section 10 hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly
adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, the Executive was
guilty of conduct set forth in clause (i) or (ii) of the definition of
Cause herein, and specifying the particulars thereof in detail.
7.2 Date of Termination. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in
Control or a Major Transaction and during the term of this Agreement, shall
mean (i) if the Executive's employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and (ii) if the Executive's
employment is terminated for any other reason, the date specified in the
Notice of Termination (which, in the case of a termination by the Company,
shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, from the date such Notice of Termination is given).
7.3 Dispute Concerning Termination. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this Section 7.3), the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be
the date on which the dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or decree of a court
of competent jurisdiction (which is not appealable or with respect to which
the time for appeal therefrom has expired and no appeal has been
perfected); provided further that the Date of Termination shall be extended
by a notice of dispute only if such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence.
7.4 Compensation During Dispute. If a purported termination occurs
following a Change in Control or a Major Transaction and during the term of
this Agreement, and such termination is disputed in accordance with Section
7.3 hereof, the Company shall pay the Executive the full compensation in
effect when the notice giving rise to the dispute was given (including, but
not limited to, salary) and continue the Executive as a participant in all
compensation, benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved in accordance with Section 7.3 hereof.
Amounts paid under this Section 7.4 are in addition to all other amounts
due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment with the Company terminates during the term of this Agreement,
the Executive is not required to seek other employment or to attempt in any
way to reduce any amounts payable to the Executive by the Company pursuant
to this Agreement. Further, the amount of any payment or benefit provided
for in this Agreement (other than in Section 6.1(D) hereof) shall not be
reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against
any amount claimed to be owed by the Executive to the Company, or
otherwise.
9. Successors; Binding Agreement.
9.1 In addition to any obligations imposed by law upon any successor
to the Company, the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms as
the Executive would be entitled to hereunder if the Executive were to
terminate the Executive's employment for Good Reason after a Change in
Control or a Major Transaction, except that, for purposes of implementing
the foregoing, the date on which any such succession becomes effective
shall be deemed the Date of Termination.
9.2 This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
the Executive shall die while any amount would still be payable to the
Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be
effective only upon actual receipt:
To The Company:
Corporate Secretary
Northwestern Public Service Company
600 Market Street West
Huron, South Dakota 57350-1500
Voice: 605-353-7606
Fax: 605-353-7631
To the Executive:
________________
________________
Huron, South Dakota 57350
Voice: 605-________
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with,
any condition .or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. This Agreement
supersedes any other agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof. The
validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of South Dakota. All references to sections
of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal,
state or local law and any additional withholding to which the Executive
has agreed. The obligations of the Company and the Executive under
Sections 6 and 7 shall survive the expiration of the term of this
Agreement.
12. Validity. The invalidity or unenforceability or any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to and
determined by the Board and shall be in writing. Any denial by the Board of
a claim for benefits under this Agreement shall be delivered to the
Executive in writing and shall set forth the specific reasons for the
denial and the specific provisions of this Agreement relied upon. The Board
shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim and shall further allow the Executive to appeal to
the Board a decision of the Board within sixty (60) days after notification
by the Board that the Executive's claim has been denied. Any further
dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration in the State of South Dakota,
in accordance with the rules of the American Arbitration Association then
in effect. Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided, however, that the Executive shall be
entitled to seek specific performance of the Executive's right to be paid
until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
15. Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
(A) "Base Amount" shall have the meaning defined in section
28OG(b)(3) of the Code.
(B) "Beneficial Owner" shall have the meaning defined in Rule
13d-3 under the Exchange Act.
(C) "Board" shall mean the Board of Directors of the Company.
(D) "Cause" for termination by the Employer of the Executive's
employment, after any Change in Control or Major Transaction, shall
mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination for Good Reason by the
Executive pursuant to Section 7.1) after a written demand for
substantial performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the
Executive's duties, or( ii) the willful engaging by the Executive in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Executive's part shall
be deemed "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the
Executive's act, or failure to act, was in the best interest of the
Company.
(E) A "Change in Control" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs shall
have been satisfied:
(I) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates)
representing 20% or more of the combined voting power of the
Company's then outstanding securities; or
(II) during any period of not more than two consecutive
years (not including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a director
whose original assumption of office is in connection with an
actual or threatened election of directors, as such terms are
used in Rule 14a-11 of Regulation 14A under the Exchange Act)
whose election by the Board or nomination for election by the
Company's shareholders was approved or recommended by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved or
recommended, cease for any reason to constitute a majority
thereof.
(F) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(G) "Company" shall mean Northwestern Public Service Company
and any successor to its business and/or assets which assumes and
agrees to perform this Agreement by operation of law, or otherwise
(except in determining, under Section 15(E) or 15(0) hereof, whether
or not any Change in Control or Major Transaction has occurred in
connection with such succession).
(H) "Date of Termination" shall have the meaning stated in
Section 7.2 hereof.
(I) "Disability" shall be deemed the reason for the termination
by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the
Executive shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6)
consecutive months, the Company shall have given the Executive a
Notice of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive shall not
have returned to the full-time performance of the Executive's duties.
(J) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(K) "Excise Tax" shall mean any excise tax imposed under section
4999 of the Code.
(L) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(M) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the
Executive's express written consent) of any one of the following acts
by the Company, or failures by the Company, to act, unless, in the
case of any act or failure to act described in paragraph (V), (VI) or
(VII) below, such act or failure to act is corrected prior to the Date
of Termination specified in the Notice of Termination given in respect
thereof:
(I) the assignment to the Executive of duties substantially
inconsistent with the Executive's status as an executive
officer of the Company;
(II) a reduction in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(III) requiring the Executive to be based at a location
more than 100 miles from Huron, South Dakota, except for required
travel on the Company's business to an extent substantially
consistent with the Executive's present business travel
obligations;
(IV) the failure by the Company, to pay to the Executive
any portion of the Executive's compensation within seven (7) days
of the date such compensation is due;
(V) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately
prior to the Change in Control or the Major Transaction which is
material to the Executive's total compensation, including but not
limited to the Supplemental Income Security Plan, the Phantom
Stock Unit Plan and the Family Protector Plan, or any substitute
plans adopted prior to the Change in Control or Major
Transaction, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to continue
the Executive's participation therein (or in such substitute or
alternative plan) on a basis not substantially less favorable,
both in terms of the amount of benefits provided and the level of
the Executive's participation relative to other participants, as
existed at the time of the Change in Control or Major
Transaction;
(VI) the failure by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medical, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
or the Major Transaction, the taking of any action by the company
which would directly or indirectly materially reduce any of
such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control or Major Transaction, or the failure by the Company to
provide the Executive with the number of paid vacation days to
which the Executive is entitled on the basis of years of service
with the Company in accordance with the Company's normal vacation
policy in effect at the time of the Change in Control or Major
Transaction; or
(VII) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7.1; for
purposes of this Agreement, no such purported termination shall
be effective.
The Executive's right to terminate the Executive's employment for
Good Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment
shall not constitute consent to, or a waiver of rights with respect
to, any act or failure to act constituting Good Reason hereunder.
(N) A "Gross-up Payment" shall have the meaning given in Section
6.02 hereof.
(0) A "Major Transaction" shall be deemed to have occurred if
the conditions set forth in any one of the following paragraphs shall
have been satisfied:
(I) the shareholders of the Company approve a merger or
consolidation of the Company with any corporation or business
trust, other than (i) a merger or consolidation which would
result in the individuals who prior to such merger or
consolidation constitute the Board constituting at least two-
thirds (2/3) of the board of directors of the Company or the
surviving or succeeding entity immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person acquires more than 20% of the
combined voting power of the Company's then outstanding
securities; or
(II) the shareholders of the Company approve a plan of
complete liquidation of the Company; or
(III) the shareholders of the Company approve an agreement
for the sale or disposition by the Company of all or
substantially all the Company's assets, other than a sale or
disposition which would result in the individuals who prior to
such sale or disposition constitute the Board constituting at
least two-thirds (2/3) of the board of directors of the Person
purchasing such assets immediately after such sale or
disposition.
(P) "Normal Retirement Age" shall mean the earliest age at which
the Executive may commence Retirement and become entitled to an
unreduced pension under the IRS qualified Pension Plan.
(Q) "Notice of Termination" shall have the meaning stated in
Section 7.1 hereof.
(R) "Pension Plan" shall mean the Company's IRS Qualified Plan
and any successor thereto and any other agreement entered into between
the Executive and the Company which is designed to provide the
Executive with supplemental retirement benefits.
(S) "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof; however, a Person shall not include (i) the Company, (ii) a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of
shares of the Company.
(T) "Potential Change in Control" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(II) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(III) any Person who is or becomes the Beneficial owner,
directly or indirectly, of securities of the Company representing
10%. or more of the combined voting power of the Company's then
outstanding securities, increases such Person's beneficial
ownership of such securities by 5% or more over the percentage so
owned by such Person on the date hereof unless such Person has
reported or is required to report such ownership (but less than
25%) on Schedule 13G under the Exchange Act (or any comparable or
successor report) or on Schedule 13D under the Exchange Act (or
any comparable or successor report) which Schedule 13D does not
state any intention to or reserve the right to control or
influence the management or policies of the Company or engage in
any of the actions specified in Item 4 of such Schedule (other
than the disposition of the common shares) and, within 10
business days of being requested by the Company to advise it
regarding the same, certifies to the Company that such Person
acquired such securities of the Company in excess of 14.9%
inadvertently and who, together with its affiliates, thereafter
does not acquire additional securities while the Beneficial Owner
of 15% or more of the securities then outstanding; provided,
however, that if the Person requested to so certify fails to do
so within 10 business days, then such occurrence shall become a
Potential Change in Control immediately after such 10 business
day period; or
(IV) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
(U) "Potential Major Transaction" shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(I) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Major Transaction;
(II) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if
consummated, would constitute a Major Transaction; or
(III) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Major Transaction has
occurred.
(V) "Retirement" shall be deemed the reason for the termination
by the Company or the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's written
mandatory retirement policy, if any, as in effect immediately prior to
the Change in Control or Major Transaction, or in accordance with any
retirement arrangement established with the Executive's written
consent with respect to the Executive.
(W) "Severance Payments" shall mean those payments described in
Section 6.1 hereof.
(X) "Total Payments" shall mean those payments described in
Section 6.2 hereof.
NORTHWESTERN PUBLIC SERVICE COMPANY
By______________________________________
Chairman, President and CEO
Nominating and Compensation Committee
________________________________________
Executive
<PAGE>
SCHEDULE F
NONCOMPETITION AGREEMENT
THIS AGREEMENT is made as of this 6th day of May, 1997 by and between
Northwestern Public Service Company ("Company"), and ________________
("Executive").
RECITALS
1. The Company and Executive have entered into an Employment
Agreement dated the date hereof ("Employment Agreement"),
2. The Company and Executive desire to enter arrangements to
preclude Executive from engaging in activities during his employment and
upon his termination of employment with the Company which compete with the
Company and its subsidiaries or any of their predecessors.
NOW THEREFORE, in consideration of the mutual covenants and promises
herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Executive,
each intending to be legally bound, agree as follows:
1. COVENANTS CONCERNING COMPETITION
(a) Covenant Not To Compete. During the term of Executive's
employment with the Company and for a period of two years thereafter,
Executive will not in any manner, directly or indirectly:
(i) manage, consult, be employed by, operate, join, promote, be
compensated by, render advice to, control or participate in the business of
any individual, firm, corporation, institution or company engaged in the
Same or Similar Activities (as defined below) carried on by the Company or
its subsidiaries or any of their predecessors in the United States; or
(ii) own or have any ownership interest in any privately-held
corporation, firm, institution or company engaged in the Same or Similar
Activities carried on by the Company or its subsidiaries or any of their
predecessors in the United States; or
(iii) own or have an ownership interest of more than 2% of the
publicly-traded securities of any public corporation, firm, institution or
company engaged in the Same or Similar Activities carried on by the Company
or its subsidiaries or any of their predecessors in the United States.
For purposes of the Agreement, Same or Similar Activities shall mean
the operation of electric, natural gas and propane distribution, steel
fabrication, photographic printing and energy services.
(b) Non-Solicitation. During the term of Executive's employment
with the Company and for a period of two years thereafter, Executive will
not in any manner, directly or indirectly, cause, persuade, solicit, induce
or attempt to do any of the foregoing in order to;
(i) cause any person, business or entity which is a supplier or
customer of the Company or its subsidiaries at any time during the term of
his employment to terminate any written or oral agreement or understanding
with the Company or its subsidiaries; or
(ii) cause any person employed by the Company or its subsidiaries
at any time during the term of his employment to terminate their employment
with the Company or its subsidiaries to terminate their employment in order
to work for any individual, firm, corporation, institution or company
engaged in the Same or Similar Activities carried on by the Company or its
subsidiaries in the United States.
(c) Judicial Modification of Covenants Concerning Competition. If
any provision contained in this Section 1 shall for any reason be held
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of
this Section 1, rather this Section 1 shall be construed as if such
invalid, illegal or unenforceable provision had never been contained
herein. It is the intention of the parties that if any of the restrictions
or covenants contained herein is held to cover a geographic area or to be
of a duration of time which is not permitted by applicable law, or in any
way construed to be too broad or to any extent invalid, such provisions
shall not be construed to be null, void or of no effect, but, to the extent
such provision would be valid or enforceable under applicable law if
limited in scope or duration, a court of competent jurisdiction shall
construe and interpret or reform this Section 1 to provide for a covenant
having the maximum enforceable geographic area, time period and other
provisions (not greater than those contained herein) as shall be valid and
enforceable under such applicable law.
(d) Company's Interest. Executive acknowledges that the Company and
its subsidiaries have a legitimate interest which the provisions of this
Section 1 are reasonably necessary to protect, that the restrictions on
competition contained in this Section 1 are reasonable and that the
consideration set forth in Section 2 is sufficient for purposes of this
Section 1.
(e) Survival of Obligations. If Executive's employment with the
Company is terminated for any reason, Executive's duties, obligations and
responsibilities under this Agreement shall survive and shall continue as
set forth herein.
2. CONSIDERATION
In consideration of Executive entering into this Agreement, Executive
shall be paid compensation as defined under the provisions of Employment
Agreement between Company and Executive.
3. BREACH
Executive acknowledges that the Company would be irreparably harmed by
any breach of Section 1 and that there would be no adequate remedy at law
or in damages to compensate the Company for any such breach. Accordingly,
the Company will be entitled, in addition to any other rights or remedies
it may have at law or in equity, to apply for an injunction enjoining and
restraining Executive from doing or continuing to do any such act or any
other violations or threatened violations of Section 1.
4. NOTICES
Any notice or communication given pursuant to this Agreement must be
in writing and shall be effective only if delivered personally; or sent by
facsimile transmission; or delivered by overnight courier service; or sent
by certified mail, postage paid, return receipt requested, to the recipient
at the address indicated below or to such other address as the party being
notified may have previously furnished to the other party by written notice
pursuant to this Section 4:
To Executive:
________________
________________
Huron, SD 57350
Voice: 605-_______
To Northwestern:
Corporate Secretary
Northwestern Public Service
600 Market Street West
Huron, South Dakota 57350-1500
Voice: 605-353-7606
Fax: 605-353-7631
Notices under this Agreement shall be effective and deemed received on
the date of personal delivery or facsimile transmission (as evidenced by
facsimile confirmation of transmission); on the day after sending by
overnight courier service (as evidenced by the shipping Invoice signed by a
representative of the recipient); or on the date of actual delivery to the
party to whom such notice or communication was sent by certified mail,
postage prepaid, return receipt requested (as evidenced by the return
receipt signed by a representative of such party).
5. ENTIRE AGREEMENT: AMENDMENT
This Agreement and the Employment Agreement represent the entire
agreement of the Company and Executive with respect to the matters set
forth in it. No amendment or modification of the terms of this Agreement
shall be binding upon the parties unless reduced to writing and signed by
each of the parties.
6. SEVERABILITY
Any provision of this Agreement prohibited by law or deemed
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions.
7. GOVERNING LAW
This Agreement shall be interpreted and construed under the laws of
the State of Delaware, and the parties consent to the jurisdiction of
Delaware state and federal courts located in the State of Delaware over all
matters relating to this Agreement.
8. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of the Company and its
successors and assigns.
9. WAIVER
No waiver by any party at any time of any breach by the other party
of, or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of any other
provisions or conditions at the same time or at any prior or subsequent
time.
10. SURVIVAL OF AGREEMENT
This Agreement shall survive the termination of Executive's employment
with the Company and the expiration or termination of this Agreement.
11. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original.
Northwestern Public Service Company
By /s/ M. D.Lewis
______________________ __________________
Title: M. D. Lewis __________________
Chairman, President & CEO "Executive"
Date May 7, 1997 Date May 7, 1997
Exhibit 10(iii)
Schedule B-1
1997 RESTATEMENT OF
NORTHWESTERN PUBLIC SERVICE COMPANY
NorthSTAR PLAN
I. Objective
The Northwestern Public Service Company NorthSTAR Plan ("Plan") is
established to accomplish the following objectives: (1) to motivate and
reward outstanding performance by Northwestern Public Service Company (the
"Company") and its employees by providing additional compensation to
eligible employees who influence the profitability of the Company; (2) to
compare the Company's performance with a group of regional utilities; (3)
to compare the Company's performance to established annual objectives; (4)
to compare individual performance to established annual objectives; (5) to
focus on stockholder and ratepayer interests and (6) to support long-term
objectives by achieving short-term goals.
II. Administration
The Plan shall be administered by the Company. The Compensation
Committee ("Committee") of the Company's Board of Directors ("Board"),
shall have responsibility and authority with respect to the Plan, including
the following: (1) approving performance measures, the measurement scale
used, and the comparison utilities selected; (2) reviewing eligibility for
Plan participation; (3) approving the size of the performance fund
("Performance Fund") and individual levels of award opportunities; and (4)
reviewing and approving awards for all Executive Officers.
III. Eligibility for Participation
Employees eligible to participate in the Plan are those full-time
employees who have completed one year of service with the Company. To be
eligible for an award, an employee must be employed with the Company on
December 31st of the year for which the award is based, except as hereafter
provided in Subsection (b).
All Participants will be eligible to participate in the Plan for that
calendar year unless any of the following circumstances occur:
(a) The Participant at any time is discharged from employment with
the Company for cause ("Cause"). "Cause" shall mean (i) a Participant's
conviction of any criminal violation involving dishonesty, fraud, or breach
of trust, or (ii) a Participant's willful engagement in any misconduct in
the performance of his duty that materially injures the Company, or (iii)
failure to adequately perform his duties; or
(b) The Participant's employment with the Company has terminated for
any reason other than death, permanent disability, or retirement on or
after the age of sixty-five (65) years or such earlier date as the Board,
in its discretion, shall designate. For the purposes of this Section, a
Participant will be considered to terminate employment by reason of
"permanent disability" if, in the determination of the Board, he is subject
to a physical or mental condition which is expected to render the
Participant unable to perform his usual duties or any comparable duties for
the Company.
In the event that an eligible Participant is not employed for an
entire plan year, or for the first year of eligibility, his award shall be
pro-rated to reflect the proportionate part of the plan year during which
he was actually employed or eligible.
IV. Determination of Performance Award Amounts
(a) A Performance Award ("Award") shall be awarded under the Plan to
each Participant, within the Range of Award Opportunities set forth on
Exhibit I attached hereto, based on performance for the applicable calendar
year which shall be determined by reference to the measures of performance
for that year and weighting as set forth on Exhibit II attached hereto and
detailed as follows:
(i) Company Performance vs. Peer Utilities (50% weight)
The Company will compare itself against peer utilities set
forth on Exhibit II for (1) Change in Average Rates, defined as
total retail revenues, divided by retail sales in kilowatt-hours,
for electric operations, and total revenue from ultimate
customers, divided by volume of gas sold to ultimate customers,
for gas operations, and for (2) Change in Operating Expenses,
defined as total operating expenses per unit of energy furnished
to customers. The results of both electric and gas computations,
in relation to a peer group, will be weighted in proportion to
the Company's operating income from each source.
The Company will rank itself percentile-wise against the
peer utilities in terms of each of the above two measures. The
average percentile ranking will determine the overall degree of
achievement of peer-based goals and the degree to which this
portion of the annual incentive is earned. If the average
percentile ranking is fifty percent (50%), the target award level
will be earned on the peer-based measures. If the Company ranks
first among peers in terms of both measures (100th percentile),
then the maximum award will be earned. If the average percentile
ranking is twenty-five percent (25%), then the threshold award
level will be earned with respect to the peer-based portion of
the annual incentive. A ranking below the twenty-fifth
percentile will eliminate this portion of the bonus.
(ii) Company Performance vs. Annual Objective (25% Weight)
Under this objective, Earnings Per Share, will be the
primary earnings per share of the Company as it appears in the
approved budget for the Company.
Company management will develop a schedule for translating
results of the objective into threshold, target and maximum
achievement levels. This schedule must be approved by the
Compensation Committee.
(iii) Performance vs. Individual Objectives (25% Weight)
Each year, Participants will establish three or four major
individual and department goals for review and approval by their
supervisor and by the Chief Executive Officer. At the end of
each year, Participants will provide to their supervisor and to
the Chief Executive Officer an explanation regarding the degree
to which each goal has been achieved. The supervisor and the
Chief Executive Officer will review the Participant's
explanations and will then determine the achievement level for
each Participant.
(b) At the end of each calendar year, percentages will be computed
and totaled for each Participant for each of the Measures of Performance in
Exhibit II. Each Participant will receive an Award for the applicable
calendar year equal to a percentage of his base salary as shown on Exhibit
I. Threshold is defined as a composite twenty-five percentage level,
Target as a composite fifty percentage level, and Maximum as a composite
one hundred percentage level.
The total amount of all awards made to Participants shall not exceed
seven percent (7%) of the Company's net after tax income for that year.
(c) All Executive Officer Awards shall be reviewed, and must be
approved, by the Compensation Committee. All Awards for other Company
employees shall be reviewed, and must be approved, by the Chief Executive
Officer of the Company.
(d) Annual base salary adjustments, as appropriate, will continue to
be made by the Company to individual employees predicated on merit,
performance, cost-of-living and such other factors as the Company normally
has considered without regard to Awards awarded under the Plan.
(e) Awards shall be paid to each Participant in a single sum as
promptly as practicable after approved.
V. Participant's Death
(a) In the event of the death of the Participant, any unpaid Award
held for the Participant shall be paid as promptly as practicable in a
single sum to the Participant's designated Beneficiary.
(b) In the event the Participant has not designated a Beneficiary, or
if no designated Beneficiary is living at the date of death of the
Participant, the unpaid Award shall be paid as promptly as practicable in a
single sum to the duly appointed executor or administrator of the
Participant's estate.
(c) For purposes of this Section, "Beneficiary" shall mean any
individual, corporation, partnership, association, trust or unincorporated
organization designated by a Participant in writing filed with the Company
as the recipient of the Participant's Award in the event of the
Participant's death prior to its payment. Such designation may be changed
by the Participant at any time in writing filed with the Company without
the consent of or notice to any Beneficiary previously designated.
VI. Continuity of the Plan
Although it is the present intention of the Company to continue the
Plan in effect for an indefinite period of time, the Board reserves the
right to terminate the Plan in its entirety as of the end of any calendar
year or other fiscal year of the Company or to modify the Plan as it exists
from time to time, provided that no such action shall adversely affect any
Awards previously awarded under the Plan.
VII. Miscellaneous Provisions
(a) No Award payable under the Plan shall be subject in any manner to
transfer, assignment, pledge, or hypothecation in any manner by operation
of law or otherwise, other than by will or by the laws of descent and
distribution nor be subject to execution, attachment or similar process.
(b) Neither the Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employ
of the Company.
(c) The Plan shall at all times be entirely unfunded and no provision
shall at any time be made with respect to segregating assets of the Company
for payment of any Awards hereunder. No Participant or any other person
shall have any interest in any particular assets of the Company by reason
of the right to receive an Award under the Plan and any such Participant or
any other person shall have only the rights of a general unsecured creditor
of the Company with respect to any rights under the Plan.
(d) Except when otherwise required by the context, any masculine
terminology in this document shall include the feminine, and any singular
terminology shall include the plural.
(e) This Plan shall be governed by the laws of the State of South
Dakota.
IN WITNESS WHEREOF, the Company has executed this revised and restated
Annual Performance Incentive Plan as of the 6th day of May, 1997.
NORTHWESTERN PUBLIC SERVICE COMPANY
By /s/ M. D. Lewis
______________________________________
M. D. Lewis
Chairman, President & CEO
By______________________________________
Chairman
Nominating and Compensation Committee
EXHIBIT I
May 6, 1997
Range of Award Opportunities
(% of Base Salary)
Position Threshold Target Maximum
Executive Corporate Officers To be established annually by the
Nomination and Compensation Committee of the Board of
Directors.
Manager Level Employees 5% 10% 15%
Salaried-Non Manager 2.5% 5% 7.5%
Hourly 2% 4% 6%
EXHIBIT II
May 6, 1996
MEASURES OF PERFORMANCE
Performance will be measured in the following three ways for purposes of
determining awards under the Plan, with weightings placed on each as
indicated.
1. Company performance vs. peer utilities* (50% weight)
2. Company performance vs. annual objectives (25% weight)
3. Individual performance vs. objectives (25% weight)
* Peer Utility Companies
Black Hills Corporation
Interstate Energy
Madison Gas & Electric Company
MDU Resources Group, Inc.
MidAmerican Energy Holdings Company
Minnesota Power
Otter Tail Power Company
St. Joseph Light & Power Company
Southern Indiana Gas & Electric Company
WPS Resources
<PAGE>
RESOLUTION
NORTHWESTERN PUBLIC SERVICE COMPANY
NorthSTAR PLAN
1997 RESTATEMENT
WHEREAS, the Board of Directors of Northwestern Public Service Company
("Company") did on February 1, 1989, adopt a Performance Incentive Plan
(now known as the NorthSTAR Plan) which has been amended on May 3, 1989;
May 31, 1990; May 1, 1991; February 2, 1994; May 3, 1995 and May 1, 1996;
and
WHEREAS, the Board of Directors wishes to further revise and restate
the Plan;
NOW THEREFORE, the NorthSTAR Plan is further amended and restated,
effective with the 1997 Plan year by adopting a revised Exhibit I and
Exhibit II, dated May 6, 1997.
IN WITNESS WHEREOF, the Company has executed this Restatement of the
NorthSTAR Plan as of the 6th day of May, 1997.
NORTHWESTERN PUBLIC SERVICE COMPANY
By /s/ M. D. Lewis
______________________________________
M. D. Lewis
Chairman, President & CEO
By______________________________________
Chairman
Nominating and Compensation Committee
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