Exhibit 10.14
BLACK HILLS CORPORATION 1999
STOCK OPTION PLAN
ARTICLE 1. Establishment, Objectives, Duration
1.1 Establishment of Plan. Black Hills Corporation (hereinafter referred to as
the "Company"), hereby establishes an incentive compensation plan to be known as
the "Black Hills Corporation 1999 Stock Option Plan" (hereinafter referred to as
the "Plan"), as set forth in this document. The Plan permits the grant of
Nonqualified Stock Options and Incentive Stock Options.
Subject to approval by the Company's shareholders, the Plan shall become
effective as of May 11, 1999 (the "Effective Date") and shall remain in effect
as provided in Section 1.3 hereof.
1.2 Objectives of the Plan. The objectives of the Plan are to optimize the
profitability and growth of the Company through incentives which are consistent
with the Company's objectives and which link the interests of Participants to
those of the Company's shareholders; to provide Participants with an incentive
for excellence in individual performance; and to promote teamwork among
Participants.
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants who make
significant contributions to the Company's success and to allow Participants to
share in the success of the Company.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Board of Directors to amend or terminate the Plan at any time
pursuant to Article 11 hereof, until all Shares subject to it shall have been
purchased or acquired according the Plan's provisions. However, in no event may
an Award be granted under the Plan on or after May 11, 2009.
ARTICLE 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set forth
below, and when the meaning is intended, the initial letter of the word shall be
capitalized:
2.1 "Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options or Incentive Stock Options.
2.2 "Award Agreement" means an agreement entered into by the Company and each
Participant setting forth the terms and provisions applicable to Awards granted
under this Plan.
2.3 "Beneficial Owner" or "Beneficial Ownership" shall have the meaning ascribed
to such term in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
2.4 "Board" or "Board of Directors" means the Board of Directors of the Company.
2.5 "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 event
described in this Section 2.5 as constituting a Change in Control.
(a) An acquisition (other than directly from the Company) of any
Shares of the Company by any person immediately after which
such Person has Beneficial Ownership of thirty percent (30%)
or more of the Shares of the Company; provided, however, in
determining whether a Change in Control has occurred, Shares
which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which
would cause a Change in Control. A "Non-Control Acquisition"
shall mean an acquisition by (i) an employee benefit plan (or
a trust forming a part thereof) maintained by (A) the Company;
or (B) a Subsidiary; (ii) the Company or its Subsidiaries; or
(iii) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined);
(b) The individuals who, as of the Effective Date hereof, are
members of the Board (the "Incumbent Board") cease for any
reason to constitute at least two-thirds (2/3) 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 (2/3) 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; or
(c) Approval by shareholders of the Company of:
(i) A merger, consolidation, or reorganization involving
the Company, unless such merger, consolidation, or
reorganization is a "Non-Control Transaction." A
"Non-Control Transaction" shall mean a merger,
consolidation, or reorganization of the Company
where:
(A) the shareholders of the Company, immediately before
such merger, consolidation, or reorganization, own
directly or indirectly, immediately following such
merger, consolidation, or reorganization, at least
seventy percent (70%) of the combined voting power of
the outstanding Voting Securities of the corporation
resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership
of the Voting Securities immediately before such
merger, consolidation, or reorganization;
(B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the
agreement providing for such merger, consolidation,
or reorganization constitute at least two-thirds
(2/3) of the members of the board of directors of the
Surviving Corporation, or a corporation beneficially
directly or indirectly owning a majority of the
Voting Securities of the Surviving Corporation; and
(C) no Person other than (i) the Company; (ii) any
Subsidiary; (iii) any employee benefit plan (or any
trust forming a part thereof) maintained by the
Company, the Surviving Corporation, or any
Subsidiary; or (iv) any Person who, immediately prior
to such merger, consolidation, or reorganization had
Beneficial Ownership of thirty percent (30%) or more
of the then outstanding Voting Securities), has
Beneficial Ownership of thirty percent (30%) or more
of the combined voting power of the Surviving
Corporation's then outstanding Voting Securities.
(ii) A complete liquidation or dissolution of the Company; or
(iii) An agreement for the sale of other disposition of all or
substantially all of the assets of the Company to any Person
other than (x) a transfer to a Subsidiary; or (y) a sale or
transfer of a Subsidiary by the Company except if such sale or
transfer would be a sale or other disposition of all or
substantially all of the assets of the Company.
(d) Notwithstanding the foregoing, (i) 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 Shares by the Company which, by reducing the
number of Shares 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 Shares by the Company, and after such stock acquisition by the
Company, the Subject Person becomes the Beneficial Owner of any additional
Shares which increases the percentage of the then outstanding Shares
beneficially owned by the Subject Person, then a Change in Control shall occur;
and (ii) a Change in Control shall not be deemed to occur unless and until all
regulatory approvals required to effect a Change in Control of the Company have
been obtained.
2.6 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
2.7 "Committee" means the Compensation Committee of the Board, as specified in
Article 3 herein, or such other Committee appointed by the Board to administer
the Plan with respect to grants of Awards.
2.8 "Company" means Black Hills Corporation, together with any and all
Subsidiaries, and any successor thereto as provided in Article 14 herein.
2.9 "Director" means any individual who is a member of the Board of Directors of
the Company.
2.10 "Disability" shall have the meaning ascribed to such term in the
Participant's governing long-term disability plan.
2.11 "Effective Date" shall have the meaning ascribed to such term in Section
1.1 hereof.
2.12 "Employee" means any full-time, active employee of the Company. Directors
who are not employed by the Company shall not be considered Employees under this
Plan.
2.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor act thereto.
2.14 "Fair Market Value" shall be determined on the basis of the closing sale
price on the principal securities exchange on which the Shares are traded or, if
there is no such sale on the relevant date, then on the last previous day on
which a sale was reported.
2.15 "Incentive Stock Option" or "ISO" means an option to purchase Shares
granted under Article 6 herein and which is designated as an Incentive Stock
Option and which is intended to meet the requirements of Code Section 422.
2.16 "Insider" shall mean an individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class of the
Company's equity securities that is registered to Section 12 of the Exchange
Act, all as defined under Section 16 of the Exchange Act.
2.17 "Nonemployee Director" means an individual who is a member of the Board of
Directors of the Company but who is not an Employee of the Company.
2.18 "Nonqualified Stock Option" or "NQSO" means an option to purchase Shares
granted under Article 6 herein and which is not intended to meet the
requirements of Code Section 422.
2.19 "Option" means an Incentive Stock Option or a Nonqualified Stock Option, as
described in Article 6 herein.
2.20 "Option Price" means the price at which a Share may be purchased by a
Participant pursuant to an Option.
2.21 "Participant" means an Employee who has outstanding an Award granted under
the Plan. The term "Participant" shall not include Nonemployee Directors.
2.22 "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of
the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
"group" as defined in Section 13(d) thereof.
2.23 "Retirement" shall have the meaning ascribed to such term in the Company's
tax-qualified defined benefit retirement plan.
2.24 "Shares" means the shares of Common Stock of the Company.
2.25 "Subsidiary" means any corporation or other Person of which a majority of
its voting power or its voting equity securities ("Voting Securities") or equity
interest is owned, directly or indirectly, by the Company.
Article 3. Administration
3.1 The Committee. The Plan shall be administered by the Compensation Committee
of the Board, or by any other Committee appointed by the Board, which Committee
shall satisfy the "disinterested administration" rules of Rule 16b-3 under the
Exchange Act, or any successor provision. The members of the Committee shall be
appointed from time to time by, and shall serve at the discretion of, the Board
of Directors.
3.2 Authority of the Committee. Subject to the provisions herein, the Committee
shall have full power to select Employees who shall participate in the Plan;
determine the sizes and types of Awards; determine the terms and conditions of
Awards in a manner consistent with the Plan; construe and interpret the Plan and
any agreement or instrument entered into under the Plan as they apply to
Employees; establish, amend, or waive rules and regulations for the Plan's
administration as they apply to Employees; and (subject to the provisions of
Article 11 herein) amend the terms and conditions of any outstanding Award to
the extent such terms and conditions are within the discretion of the Committee
as provided in the Plan. Further, the Committee shall make all other
determinations which may be necessary or advisable for the administration of the
Plan, as the Plan applies to Employees. As permitted by law, the Committee may
delegate its authority as identified herein.
3.3 Decisions Binding. All determinations and decisions made by the Committee
pursuant to the provisions of the Plan and all related orders and resolutions of
the Board shall be final, conclusive and binding on all persons, including the
Company, its shareholders, Employees, Participants, and their estates and
beneficiaries.
Article 4. Shares Subject to the Plan
4.1 Number of Shares Available for Grants. Subject to adjustment as provided in
Section 4.3 herein, the number of Shares which may be issued on exercise of
Options shall be 700,000. Such Shares may be authorized but unissued Shares,
treasury Shares, Shares acquired on the open market specifically for
distribution under this Plan, or any combination thereof, as the Committee may
from time to time determine.
4.2 Lapsed Awards. If any Award granted under this Plan is canceled, terminates,
expires, or lapses for any reason any Shares subject to such Award again shall
be available for the grant of an Award under the Plan.
4.3 Adjustments in Authorized Shares. In the event of any change in corporate
capitalization, such as a stock split, or a corporate transaction, such as any
merger, consolidation, separation, including a spin-off, or other distribution
of stock or property of the Company, any reorganization (whether or not such
reorganization comes within the definition of such term in Code Section 368) or
any partial or complete liquidation of the Company, such adjustment shall be
made in the number and class of Shares which may be delivered under Section 4.1,
in the number and class of and/or price of Shares subject to outstanding Awards
granted under the Plan, as may be determined to be appropriate and equitable by
the Committee, in its sole discretion, to prevent dilution or enlargement of
rights; provided, however, that the number of Shares subject to any Award shall
always be a whole number.
Article 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in this Plan include all
Employees of the Company, including Employees who are members of the Board.
5.2 Actual Participation. Subject to the provisions of the Plan, the Committee
may, from time to time, select from all eligible Employees, those to whom Awards
shall be granted and shall determine the nature and amount of each Award.
Article 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options
may be granted to Participants in such number, and upon such terms, and at any
time and from time to time as shall be determined by the Committee.
6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement
that shall specific the Option Price, the duration of the Option, the number of
Shares to which the Option pertains, and such other provisions as the Committee
shall determine. The Award Agreement also shall specify whether the Option is
intended to be an ISO within the meaning of Code Section 422, or an NQSO whose
grant is intended not to fall under the provisions of Code Section 422.
6.3 Option Price. The Option Price for each grant of an Option under this Plan
shall be at least equal to one hundred percent (100%) of the Fair Market Value
of a Share on the date the Option is granted or a higher amount. No repricing of
Options by any method shall be allowed, including, without limitation,
cancellation and reissuance.
6.4 Duration of Options. Each Option granted to an Employee shall expire at such
time as the Committee shall determine at the time of the grant; provided,
however, that no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.
6.5 Exercise of Options. Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.
6.6 Payment. Options granted under this Article 6 shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be payable to the Company in
full either (a) in cash or its equivalent; (b) if permitted in the governing
Award Agreement, 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) if permitted in the governing Award Agreement, by a
combination of (a) and (b).
In addition, if permitted in the Award Agreement, the Participant may also be
permitted to exercise Options pursuant to a "cashless exercise" procedure as
permitted under the Federal Reserve Board's Regulation T, subject to securities
law restrictions. In the event the Participant exercises pursuant to a "cashless
exercise" procedure, any net gain on the "cashless exercise," after appropriate
tax withholdings, shall be distributed to the Participant in the form of Shares.
As soon as practicable after receipt of a written notification of exercise and
full payment, the Company shall deliver to the Participant, in the Participant's
name, Share certificates in an appropriate amount based upon the number of
Shares purchased under the Option(s). If either the purchase price or the Shares
of Common Stock upon exercise of any Option or the tax withholding requirement
is satisfied by tendering or withholding of Shares of Common Stock, only the
number of Shares of Common Stock to be issued net of the Shares of Common Stock
tendered or withheld shall be delivered.
6.7 Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 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.
6.8 Termination of Employment. Each Participant's Option Award Agreement shall
set forth the extent to which the Participant shall have the right to exercise
the Option following termination of the Participant's employment with the
Company. Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with each
Participant, need not be uniform among all Options issued pursuant to this
Article 6, and may reflect distinctions based on the reasons for termination of
employment.
6.9 Nontransferability of Options.
(a) Incentive Stock Options. No ISO granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Further,
all ISOs granted to a Participant under the Plan shall be exercisable
during his or her lifetime only by such Participant.
(b) Nonqualified Stock Options. Except as otherwise provided in a
Participant's Award Agreement, no NQSO granted under this Article 6 may
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in a Participant's
Award Agreement, all NQSOs granted to a Participant under this Article
6 shall be exercisable during his or her lifetime only by such
Participant.
Article 7. Beneficiary Designation
Each Participant under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she received any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Company, and will be effective only when filed by the Participant in writing
with 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.
Article 8. Deferrals
The Committee may permit or require a Participant to defer such Participant's
receipt of the payment of cash or the delivery of Shares that would otherwise be
due to such Participant by virtue of the exercise of an Option. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
Article 9. Rights of Employees
9.1 Employment. Nothing in the Plan shall interfere with or limit in any way the
right of the Company to terminate any Participant's employment at any time, nor
confer upon any Participant any right to continue in the employ of the Company.
9.2 Participation. No Employee shall have the right to be selected to receive an
Award under this Plan, or, having been so selected, to be selected to receive a
future Award.
Article 10. Change in Control
10.1 Treatment of Outstanding Awards. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited under applicable laws, or by
the rules and regulations of any governing governmental agencies or national
securities exchanges, any and all Options granted hereunder shall become
immediately exercisable, and shall remain exercisable throughout their entire
term.
10.2 Termination, Amendment, and Modifications of Change-in-Control Provisions.
Notwithstanding any other provision of this Plan or any Award Agreement
provision, the provisions of this Article 10 may not be terminated, amended, or
modified on or after the date of a Change in Control to affect adversely any
Award theretofore granted under the Plan without the prior written consent of
the Participant with respect to said Participant's outstanding Awards.
Article 11. Amendment, Modification, and Termination
11.1 Amendment, Modification, and Termination. Subject to Section 10.2 herein,
the Board may at any time and from time to time, alter, amend, suspend or
terminate the Plan in whole or in part; provided, however, that no amendment
which requires shareholder approval in order for the Plan to continue to comply
with Rule 16b-3 under the Exchange Act, including any successor to such Rule,
shall be effective unless such amendment shall be approved by the requisite vote
of shareholders of the Company entitled to vote thereon.
The Committee shall not have the authority to cancel outstanding Awards and
issue substitute Awards in replacement thereof.
11.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. The Committee may make adjustments in the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation the events described in Section 4.3
hereof) affecting the Company or the financial statements of the Company or of
changes in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan.
11.3 Awards Previously Granted. No termination, amendment, or modification of
the Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Participant holding such
Award.
Article 12. Withholding
12.1 Tax Withholding. The Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.
12.2 Share Withholding. With respect to withholding required upon the exercise
of Options, Participants may elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could be withheld on
the transaction. All such elections shall be irrevocable, made in writing,
signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems appropriate.
Article 13. Indemnification
Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
Article 14. Successors
All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase, of
all or substantially all of the business and/or assets of the Company, or a
merger, consolidation, or otherwise.
Article 15. Miscellaneous Provisions
15.1 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
15.2 Severability. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.
15.3 Requirements of Law. The granting of Awards and the issuance of Shares
under the Plan 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.
15.4 Securities Law Compliance. With respect to Insiders, transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3 or
its successors under the Exchange Act. To the extent any provision of the plan
or action by the Committee fails to so comply, it shall be deemed null and void,
to the extent permitted by law and deemed advisable by the Committee.
15.5 Governing Law. To the extent not preempted by Federal law, the Plan, and
all agreements hereunder, shall be construed in accordance with and governed by
the laws of the state of South Dakota.
15.6 Unfunded Status of the Plan. The Plan is intended to constitute an
"unfunded" Plan. With respect to any payments or deliveries of Shares not yet
made to a Participant by the Company, nothing contained herein shall give any
rights that are greater than those of a general creditor of the Company.
15.7 Purchase for Investment. The Committee may require each Participant
purchasing or receiving Shares pursuant to an Option to represent to and agree
with the Company in writing that such person is acquiring the Shares for
investment and without a view to distribution or resale.