Black Hills Corporation
Black
Hills Corporation
2005
Omnibus Incentive Plan
(Performance
Period ______________ - _______________)
1
Contents
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Article
1. Performance Period
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1
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Article
2. Value of Performance Shares
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1
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Article
3. Performance Shares and Achievement of Performance
Measure
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2
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Article
4. Termination Provisions
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3
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Article
5. Change in Control
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3
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Article
6. Dividends
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3
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Article
7. Form and Timing of Payment of Performance
Shares
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3
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Article
8. Nontransferability
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4
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Article
9. Administration
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4
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Article
10. Miscellaneous
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4
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2
Black
Hills Corporation
2005
Omnibus Incentive Plan
You
have
been selected to be a participant in the Black Hills Corporation 2005
Omnibus
Incentive
Plan (the “Plan”), as specified below:
Participant:
_____________________
Target
Performance Share Award:
______
shares
Performance
Period:
_____________ to _______________
Performance
Measure:
Total
Shareholder Return (“TSR”).
Peer
Index:
S&P
MID CAP UTILITY INDEX
Alliant
Energy Corporation; DPL Inc.; Duquesne Light Holding Inc.; Great Plains Energy
Inc.; Hawaiian Electric Inds.; Idacorp Inc.; Northeast Utilities; Nstar; OGE
Energy Corporation; Pepco Holdings Inc.; PNM Resources Inc.; Puget Energy Inc.;
Wisconsin Energy Corp,; and WPS Resources Corp.
THIS
AGREEMENT (the “Agreement”) effective _______________, represents the grant of
Performance Shares by Black Hills Corporation, a South Dakota corporation (the
“Company”), to the Participant named above, pursuant to the provisions of the
Plan.
The
Plan
provides a complete description of the terms and conditions governing the
Performance Shares. 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.
All
capitalized terms shall have the meanings ascribed to them in the Plan, unless
specifically set forth otherwise herein.
The
parties hereto agree as follows:
Article
1. Performance Period
The
Performance Period commences on ______________ and ends on
________________.
Article
2. Value of Performance Shares
Each
Performance Share shall represent and have a value equal to one share of common
stock of the Company.
3
Notwithstanding
anything herein to the contrary, the Performance Shares shall have no value
whatsoever if the Ending Stock Price (as defined herein) is not greater than
Beginning Stock Price (as defined herein), taking into account any adjustments
made pursuant to Paragraph 4.3 of the Plan.
Article
3. Performance Shares and Achievement of Performance
Measure
| (a) |
The
number of Performance Shares to be earned under this Agreement shall
be
based upon the achievement of pre-established TSR performance goals
as set
by the Compensation Committee of the Board of Directors (Committee)
for
the Performance Period, based on the following
chart:
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TSR
Performance Relative to Companies in Peer Index
|
Payout
(%
of Target)
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|
80th
Percentile or Above
|
175%
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70th
Percentile
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150%
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60th
Percentile
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125%
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50th
Percentile
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100%
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40th
Percentile
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50%
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30th
Percentile or Below
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0%
|
Interpolation
shall be used to determine the percentile rank in the event the Company’s
Percentile Rank does not fall directly on one of the ranks listed in the above
chart.
For
this
purpose, Total Shareholder Return shall be determined as follows:
|
Total
Shareholder
Return
|
=
|
Change
in Stock Price + Dividends Paid
Beginning
Stock Price
|
Beginning
Stock Price shall mean the average closing price on the applicable stock
exchange of one share of stock for the twenty (20) trading days immediately
prior to the first day of the Performance Period; Ending Stock Price shall
mean
the average closing price on the applicable stock exchange of one share of
stock
for the twenty (20) trading days immediately prior to the last day of the
Performance Period; Change in Stock Price shall mean the difference between
the
Beginning Stock Price and the Ending Stock Price; and Dividends Paid shall
mean
the total of all dividends paid on one (1) share of stock during the Performance
Period.
Following
the Total Shareholder Return determination, the Company’s Percentile Rank shall
be determined as follows:
Percentile
Rank shall be determined by listing from highest Total Shareholder Return to
lowest Total Shareholder Return each company in the Peer Index (excluding the
Company). The top company would have a one hundred percentile (100%) rank and
the bottom company would have a zero percentile (0.0%) rank. Each company in
between would be one hundred divided by n minus one (100/n-1) above the company
below it. The Company percentile rank would then be interpolated based on the
Company TSR. The Companies in the Peer Index shall remain constant throughout
the entire Performance Period.
4
Article
4. Termination Provisions
Except
as
provided below, a Participant shall be eligible for payment of awarded
Performance Shares, as determined in Section 3, only if the Participant’s
employment with the Company continues through the end of the Performance
Period.
If
participant retires, suffers a Disability, or dies during the Performance
Period, the Participant (or the Participant’s estate) shall be entitled to that
proportion of the number of Performance Shares as such Participant is entitled
to under Section 3 for such Performance Period that the number of full months
of
participation during the Performance Period bears to the total number of months
in the Performance Period. The form and timing of the payment of such
Performance Shares shall be as set forth in Article 7.
Termination
of employment for any reason other than Retirement, Disability, or death during
the Performance Period shall require forfeiture of this entire award, with
no
payment to the Participant.
Article
5. Change in Control
Notwithstanding
anything herein to the contrary, upon a Change in Control, the Participant
shall
be entitled to that proportion of the number of Performance Shares as such
Participant is entitled to under Section 3 for such Performance Period that
the
number of full months of participation during the Performance Period (as of
the
effective date of the Change in Control) bears to the total number of months
in
the Performance Period. When there is a Change in Control, the TSR shall be
calculated as set forth in Article 3, except that the Ending Stock Price shall
mean the average closing price on the applicable stock exchange of one share
of
stock for the twenty (20) trading days immediately prior to the Change in
Control. Performance Shares shall be paid out to the Participant in cash within
thirty (30) days of the effective date of the Change in Control.
"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;
(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;
5
(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
(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.
6
(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.
Article
6. Dividends
During
the Performance Period, all dividends and other distributions paid with respect
to the shares of Common Stock shall accrue for the benefit of the Participant
to
be paid out to the Participant pursuant to Article 7.
Article
7. Form and Timing of Payment of Performance Shares
Payment
of the Performance Shares, including accrued dividends, shall be made fifty
percent (50%) in cash and fifty percent (50%) in shares of Company stock.
Payment
of Performance Shares shall be made within sixty (60) calendar days following
the close of the Performance Period, subject to the following:
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(a)
The Participant shall have no right with respect to any Award or
a portion
there of, until such award shall be paid to such Participant.
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(b)
If the Committee determines, in its sole discretion, that a Participant
at
any time has willfully engaged in any activity that the Committee
determines was or is harmful to the Company, any unpaid pending Award
will
be forfeited by such Participant.
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(c) All
appropriate taxes will be withheld from the cash portion of the
award.
Article
8. Nontransferability
Performance
Shares 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, except as otherwise provided in a Participant’s Award Agreement, a
Participant’s rights under the Plan shall be exercisable during the
Participant’s lifetime only by the Participant or the Participant’s legal
representative.
Article
9. Administration
This
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
by the Board of Directors, as well as to such rules and regulations as the
Committee may adopt for administration of the Plan. 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 Agreement, in its sole discretion, all of which shall be binding upon
the
Participant.
Any
inconsistency between the Agreement and the Plan shall be resolved in favor
of
the Plan.
7
Article
10. Miscellaneous
(a) The
selection of any employee for participation in the Plan shall not give such
Participant any right to be retained in the employ of the Company. The right
and
power of the Company to dismiss or discharge any Participant at-will, is
specifically reserved. Such Participant or any person claiming under or through
the Participant shall not have any right or interest in the Plan or any Award
thereunder, unless and until all terms, conditions, and provisions of the Plan
that affect such Participant have been complied with as specified herein.
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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 way adversely affect the
Participant’s rights under this Agreement without the Participant’s
written consent.
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(c)
Participant shall not have voting rights with respect to the Performance
Shares. Participant shall obtain voting rights upon the settlement
of
Performance Shares and distribution into shares of common stock of
the
Company.
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(d) The
Participant may defer such Participant’s receipt of the payment of cash and the
delivery of shares of common stock, that would otherwise be due to such
Participant by virtue of the satisfaction of the performance goals with respect
to the Performance Shares, pursuant to the rules of the Black Hills Corporation
Nonqualified Deferred Compensation Plan and the procedures set forth by the
Compensation Committee. If the Participant elects to defer the receipt of the
award, the Participant will be required to pay any necessary taxes from their
own funds. They will not be allowed to have their deferred award reduced for
tax
withholding.
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(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.
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(f)
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.
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(g) Any
awards received by Participant are subject to the provisions of the Stock
Ownership Guidelines approved by the Board of Directors.
The
following parties have caused this Agreement to be executed effective as of
_______________.
Black
Hills Corporation
By:
_______________________
___________________________
Participant
