Black Hills Corporation Option Award Agreement Participant:
Black
Hills Corporation
2005
Omnibus Incentive Plan
Participant:
Date
of Grant:
Number
of Shares Covered by this Option:
Number
of above Shares intended to be
Incentive
Stock Options ("ISOs")
within
the meaning of Internal Revenue
Code
§ 422:
Number
of above shares intended to be
Nonqualified
Stock Options ("NQSOs"):
Option
Price for each Share:
Date
of Expiration:
This
document constitutes part of the prospectus covering securities that have been
registered under the Securities Act of 1933.
THIS
AGREEMENT, effective as of the Date of Grant set forth above, represents the
grant of stock options by Black Hills Corporation, a South Dakota corporation
(the "Company") to the Participant named above, pursuant to the provisions
of
the Black Hills Corporation 2005 Omnibus Incentive Plan ("Plan").
All
capitalized terms used herein shall have the meanings ascribed to them in the
Plan, unless specifically set forth otherwise herein.
The
Plan
provides a complete description of the terms and conditions governing the
Option. If there is any inconsistency between the terms of this Agreement and
the terms of the Plan, the Plan's terms shall completely supersede and replace
the conflicting terms of this Agreement. The parties hereto agree as
follows:
1
1.
Grant
of Stock Options.
The
Company hereby grants to the Participant an Option to purchase the number of
Shares set forth above, at the stated Option Price, which is 100 percent (100%)
of the Fair Market Value of a Share on the Date of Grant, in the manner and
subject to the terms and conditions of the Plan and this Agreement.
2.
Exercise
of Stock Option.
Except
as hereinafter provided, the Participant may exercise this Option at any time
after the end of one year following the Date of Grant as to those Shares which
have become vested according to the vesting schedule set forth below, provided
that no exercise may occur subsequent to the close of business on the Date
of
Expiration (as defined on page 1 of this Agreement).
VESTING
SCHEDULE
|
Date
|
Shares
for Which Option Becomes Exercisable
|
Cumulative
Number of Shares Available
for Purchase
|
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|
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This
Option may be exercised in whole or in part, but not for less than 100 Shares
at
any one time, unless fewer than 100 Shares then remain subject to the Option,
and the Option is then being exercised as to all such remaining
Shares.
3. Termination
of Employment:
| (a) |
By
death or Disability:
In the event of termination of employment by reason of death or
disability, all Shares under this Option shall become immediately
vested
(100%) and the Shares may be purchased under the terms of this Agreement
until the earlier of: (i) the expiration date of this Option; or
(ii) the
first anniversary of the date of death or Disability.
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| (b) |
By Retirement:
In the event of termination of employment by reason of retirement,
all
Shares under this Option shall become immediately vested (100%) and
the
Shares may be purchased under the terms of this Agreement until the
earlier of: (i) the expiration date of this Option; or (ii) the third
anniversary date of Retirement.
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(c)
For
other reasons:
Shares
which are vested as of the date of termination of employment of the Participant
for any reason other than those reasons set forth in 3(a) or 3(b) above may
be
purchased under the terms of this Agreement until the earlier of: (i) the
expiration date of this Option; or (ii) 90 days following the date of
termination of employment. Shares which are not vested as of the date of
termination shall immediately terminate, and shall be forfeited to the
Company.
4. Change
in Control.
In the
event of a Change in Control, all Shares under this Option shall become
immediately vested (100%) and shall remain exercisable for their entire
term.
2
"Change in Control" of the Company shall be deemed to have occurred (as of a particular day, as specified by the Board) upon the occurrence of any of the following events:
| (a) |
The
acquisition in a transaction or series of transactions by any Person
of
Beneficial Ownership of thirty percent (30%) or more of the combined
voting power of the then outstanding shares of common stock of the
Company; provided, however, that for purposes of this Agreement,
the
following acquisitions will not constitute a Change in Control: (A)
any
acquisition by the Company; (B) any acquisition of common
stock of
the Company by an underwriter holding securities of the Company in
connection with a public offering thereof; and (C) any acquisition
by any
Person pursuant to a transaction which complies with subsections
(c) (i),
(ii) and (iii), below;
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(b) Individuals
who, as of December 31, 2004 are members of the Board (the "Incumbent Board"),
cease for any reason to constitute at least a majority of the members of the
Board; provided, however, that if the election, or nomination for election
by
the Company's common shareholders, of any new director was approved by a vote
of
at least two-thirds of the Incumbent Board, such new director shall, for
purposes of this Plan, be considered as a member of the Incumbent Board;
provided further, however, that no individual shall be considered a member
of
the Incumbent Board if such individual initially assumed office as a result
of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board (a
"Proxy Contest") including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest;
(c)
Consummation,
following shareholder approval, of a reorganization, merger, or consolidation
of
the Company and/or its subsidiaries, or a sale or other disposition (whether
by
sale, taxable or non-taxable exchange, formation of a joint venture or
otherwise) of fifty percent (50%) or more of the assets of the Company and/or
its subsidiaries (each a “Business Combination”), unless, in each case,
immediately following such Business Combination, (i) all or substantially all
of
the individuals and entities who were beneficial owners of shares of the common
stock of the Company immediately prior to such Business Combination beneficially
own, directly or indirectly, more that fifty percent (50%) of the combined
voting power of the then outstanding shares of the entity resulting from the
Business Combination or any direct or indirect parent corporation thereof
(including, without limitation, an entity which as a result of such transaction
owns the Company or all or substantially all of the Company’s assets either
directly or through one (1) or more subsidiaries)(the “Successor Entity”); (ii)
no Person (excluding any Successor entity or any employee benefit plan or
related trust, of the Company or such Successor Entity) owns, directly or
indirectly, thirty percent (30%) or more of the combined voting power of the
then outstanding shares of common stock of the Successor Entity, except to
the
extent that such ownership existed prior to such Business Combination; and
(iii)
at least a majority of the members of the Board of Directors of the entity
resulting from such Business Combination or any direct or indirect parent
corporation thereof were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for such
Business Combination; or
3
(d)
Approval
by the shareholders of the Company of a complete liquidation or dissolution
of
the Company, except pursuant to a Business Combination that complies with
subsections (c) (i), (ii), and (iii) above.
(e)
A
Change
in Control shall not be deemed to occur solely because any Person (the "Subject
Person") acquired Beneficial Ownership of more than the permitted amount of
the
then outstanding Common Stock as a result of the acquisition of Common Stock
by
the Company which, by reducing the number of shares of Common Stock then
outstanding, increases the proportional number of shares Beneficially Owned
by
the Subject Persons, provided that if a Change in Control would occur (but
for
the operation of this sentence) as a result of the acquisition of Common Stock
by the Company, and after such stock acquisition by the Company, the Subject
Person becomes the Beneficial Owner of any additional Common Stock which
increases the percentage of the then outstanding Common Stock Beneficially
Owned
by the Subject Person, then a Change in Control shall occur.
(f)
A
Change
in Control shall not be deemed to occur unless and until all regulatory
approvals required in order to effectuate a Change in Control of the Company
have been obtained and the transaction constituting the Change in Control has
been consummated.
5. Restrictions
on Transfer.
This
Option may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and distribution.
Further, this Option shall be exercisable during the Participant's lifetime
only
by the Participant or the Participant's legal representative.
6. Recapitalization.
In the
event there is any change in the Company's Shares through the declaration of
stock dividends or through recapitalization resulting in stock splits or through
merger, consolidation, exchange of Shares, or otherwise, the number and class
of
Shares subject to this Option, as well as the Option Price, may be equitably
adjusted by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights.
7. Procedure
for Exercise of Option.
This
Option may be exercised by delivery of written notice to the Company at its
executive offices, addressed to the attention of its Secretary. Such notice:
(a)
shall be signed by the Participant or his or her legal representative; (b)
shall
specify the number of full Shares then elected to be purchased with respect
to
the Option; (c) unless a Registration Statement under the Securities Act of
1933
is in effect with respect to the Shares to be purchased, shall contain a
representation of the Participant that the Shares are being acquired by him
or
her for investment and with no present intention of selling or transferring
them, and that he or she will not sell or otherwise transfer the Shares except
in compliance with all applicable securities laws and requirements of any stock
exchange upon which the Shares may then be listed; and (d) shall be accompanied
by payment in full of the Option Price of the Shares to be purchased, and the
Participant's copy of this Agreement.
4
The
Option Price upon exercise of this Option shall be payable to the Company in
full either: (a) in cash or its equivalent (acceptable cash equivalents shall
be
determined at the sole discretion of the Committee); or (b) by tendering
previously acquired Shares having an aggregate Fair Market Value at the time
of
exercise equal to the total Option Price (provided that the Shares which are
tendered must have been held by the Participant for at least six (6) months
prior to their tender to satisfy the Option Price); or (c), by a combination
of
(a) and (b).
The
Participant may also be permitted to exercise pursuant to a "cashless exercise"
procedure as permitted under the Federal Reserve Board's Regulation T, subject
to securities law restrictions.
As
promptly as practicable after receipt of notice and payment upon exercise,
the
Company shall cause to be issued and delivered to the Participant or his or
her
legal representative, as the case may be, certificates for the Shares so
purchased, which may, if appropriate, be endorsed with appropriate restrictive
legends. The Share certificates shall be issued in the Participant's name (or,
at the discretion of the Participant, jointly in the names of the Participant
and the Participant's spouse). The Company shall maintain a record of all
information pertaining to the Participant's rights under this Agreement,
including the number of Shares for which their Option is exercisable. If the
Option shall have been exercised in full, this Agreement shall be returned
to
the Company and canceled.
8. Beneficiary
Designation.
The
Participant may, from time to time, name any beneficiary or beneficiaries (who
may be named contingently or successively) to whom any benefit under this
Agreement is to be paid in case of his or her death before he or she receives
any or all of such benefit. Each such designation shall revoke all prior
designations by the Participant, shall be in a form prescribed by the Company,
and will be effective only when filed by the Participant in writing with the
Secretary of the Company during the Participant's lifetime. In the absence
of
any such designation, benefits remaining unpaid at the Participant's death
shall
be paid to the Participant's estate.
9. Rights
as a Shareholder.
The
Participant shall have no rights as a shareholder of the Company with respect
to
the Shares subject to this Option Agreement including, without limitation,
any
right to dividends, until such time as the purchase price has been paid, and
the
Shares have been issued and delivered to him or her.
10. Continuation
of Employment.
This
Option Agreement shall not confer upon the Participant any right to continuation
of employment by the Company, nor shall this Option Agreement interfere in
any
way with the Company's right to terminate the Participant's employment at any
time. A transfer of the Participant's employment between the Company and any
one
of its Subsidiaries (or between Subsidiaries) shall not be deemed a termination
of employment.
11. Limitation.
Participant shall not exercise any shares which are intended to be ISOs
hereunder if and to the extent that the Participant would thereby be entitled
to
purchase Shares in any one calendar year, the value of which, determined at
the
time of the Date of Grant, would exceed $100,000.
5
12. Miscellaneous.
| (a) |
This
Option Agreement and the rights of the Participant hereunder are
subject
to all the terms and conditions of the Plan, as the same may be amended
from time to time, as well as to such rules and regulations as the
Committee may adopt for administration of the Plan. The Committee
shall
have the right to impose such restrictions on any Shares acquired
pursuant
to the exercise of this Option, as it may deem advisable, including,
without limitation, restrictions under applicable Federal securities
laws,
under the requirements of any stock exchange or market upon which
such
Shares are then listed and/or traded, and under any blue sky or state
securities laws applicable to such Shares. It is expressly understood
that
the Committee is authorized to administer, construe, and make all
determinations necessary or appropriate to the administration of
the Plan
and this Option Agreement, all of which shall be binding upon the
Participant.
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| (b) |
With
the approval of the Board, the Committee may terminate, amend, or
modify
the Plan; provided, however, that no such termination, amendment,
or
modification of the Plan may in any material way adversely affect
the
Participant's rights under this Agreement, without the written consent
of
the Participant.
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| (c) |
The
Company shall have the power and the right to deduct or withhold,
or
require the Participant to remit to the Company, an amount sufficient
to
satisfy federal, state, and local taxes (including Participant's
FICA
obligation) required by law to be withheld with respect to any
exercise of
the Participant's rights under this
Agreement.
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|
The
Participant may elect, subject to any procedural rules adopted by
the
Committee, to satisfy the withholding requirement, in whole or in
part, by
having the Company withhold Shares having an aggregate Fair Market
Value
on the date the tax is to be determined, equal to the amount required
to
be withheld.
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(d)
The Participant agrees to take all steps necessary to comply with all applicable
provisions of federal and state securities law in exercising
his or
her
rights under this Agreement.
(e)
This
Agreement shall be subject to all applicable laws, rules, and regulations,
and
to such approvals by any governmental agencies or national securities exchanges
as may be required.
(f)
All
obligations of the Company under the Plan and this Agreement, with respect
to
this Option, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
6
(g)
To the extent not preempted by federal law, this Agreement shall be governed
by,
and construed in accordance with, the laws of the State of South
Dakota.
The
following parties have caused this Agreement to be executed as of the Date
of
Grant.
BLACK
HILLS CORPORATION
By________________________________________
___________________________________________
Participant