Exhibit 10.16

 

HF FINANCIAL CORP.

2002 STOCK OPTION AND INCENTIVE PLAN

 

STOCK OPTION AGREEMENT

 

HF Financial Corp., a Delaware corporation (the “Company”), hereby grants to
«Name», (the “Optionee”), an option (the “Option”) to purchase a total of
«Number» shares of Common Stock (the “Shares”), at the price determined as
provided herein, and in all respects subject to the terms, definitions and
provisions of the 2002 Stock Option and Incentive Plan (the “Plan”) adopted by
the Company, which is incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings
herein.

 

1.             Nature of the Option. This Option is intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Internal Code.

 

2.             Exercise Price. The exercise price for each share of Common Stock
is the price at which shares subject to this Option may be purchased upon
exercise of the Option. The Exercise Price under this Agreement shall be the
Market Value (as that term is defined in the Plan) on the date of Grant,
«GrantDate», that being «GrantPrice» («Grant»).

 

3.             Exercise of Option. This Option shall be exercisable during its
term in accordance with the provisions of Section 7 of the Plan as follows:

 

(i)            Right to Exercise.

 

(a)           Subject to subsections 3(i)(b), (c), (d) and (e) below, this
Option shall be exercisable cumulatively, to the extent of thirty-three and
one-third percent (33 1/3%) of the Shares subject to the Option, commencing on
June 30, «Vdate1», and an additional thirty-three and one-third percent (33
1/3%) of the Shares subject to the Option each consecutive June 30 as more
completely described in Exhibit A.

 

(b)           This Option may not be exercised for a fraction of a share.

 

(c)           In the event of Optionee’s death, disability or other termination
of employment, the exercisability of the Option is governed by Sections 7, 8 and
9 below, subject to the limitations contained in subsections 3(i)(d) and (e).

 

(d)           In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in Section 11 below.

 

(e)           To the extent that the aggregate fair market value of the Shares
with respect to which Options designated as Incentive Stock Options are
exercisable for the first time by you during any calendar year (under all plans
of the Company) exceeds $100,000, such options shall be treated as Non-Qualified
Stock Options. For purposes of the preceding sentence, (i) Options shall be
taken into account in the order in which they were granted and (ii) the fair
market value of the Shares shall be determined as of the time the Option with
respect to such Shares is granted.

 

1

--------------------------------------------------------------------------------

 

(ii)  Method of Exercise. This Option shall be exercisable by written notice
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised, and such other representations
and agreements as to the holder’s investment intent with respect to such shares
of Common Stock as may be required by the Company pursuant to the provisions of
the Plan. Such written notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company. The
written notice shall be accompanied by payment of the exercise price. Until
certificates for the Shares are issued to the Optionee, such Optionee shall not
have any rights as a Shareholder of the Company.

 

No Shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be listed.
Assuming such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.

 

4.             Optionee’s Representations. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, concurrently with the exercise of all or any portion of this
Option, deliver to the Company an Investment Representation Statement in the
form attached hereto as Exhibit B. The Company shall not be required to deliver
any shares upon exercise of this Option prior to (i) the admission of such
shares to listing on any stock exchange on which the shares of Common Stock may
then be listed, and (ii) the completion of such registration as the Committee
shall determine to be necessary or advisable.

 

5.             Method of Payment. Payment of the exercise price shall be by (i)
cash; (ii) check, bank draft or money order; or (iii) if authorized by the Board
of Directors’ Stock Option Committee (the “Committee”), by delivery of (A)
Common Stock of the Company (valued at the fair market value thereof on the date
of exercise) or (B) a combination of cash and Common Stock. The Committee may,
in order to prevent any possible violation of law, require the Exercise Price to
be paid in cash.

 

6.             Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations (“Regulation G”) as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.

 

7.             Termination of Status as an Employee. In the event of
termination, Optionee may, but only within three months after the date of such
termination (but in no event later than the date of expiration of the term of
this Option as set forth in Section 11 below), exercise this Option to the
extent that Optionee was entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise this
Option at the date of such termination (as in the event of Optionee’s
termination of employment for cause), or if Optionee does not exercise this
Option within the time specified herein, the Option shall terminate.

 

2

--------------------------------------------------------------------------------

 

8.             Disability of Optionee. Notwithstanding the provisions of Section
7 above, in the event of termination of Optionee’s status as an employee as a
result of Optionee’s partial or total disability, Optionee may, but only within
three months from the date of termination of employment (but in no event later
than the date of expiration of the term of this Option as set forth in Section
11 below), exercise his Option to the extent Optionee was entitled to exercise
it at the date of such termination. To the extent that Optionee was not entitled
to exercise the Option at the date of termination, or if Optionee does not
exercise such Option (which Optionee was entitled to exercise) within the time
specified herein, the Option shall terminate.

 

9.             Death of Optionee. In the event of the death of Optionee:

 

(i)            during the term of this Option and while an employee of the
Company and having been in continuous employment (as determined by the Board in
its sole discretion) since the date of grant of the Option, the Option may be
exercised in full at any time within one (1) year following the date of death
(but in no event later than the date of expiration of the term of this Option as
set forth in Section 11 below), by Optionee’s estate or by a person who acquired
the right to exercise the Option by bequest or inheritance; or

 

(ii)           within three months after termination, the Option may be
exercised, at any time within twelve (12) months following the date of death
(but in no event later than the date of expiration of the term of this Option as
set forth in Section 11 below), by Optionee’s estate or by a person who acquired
the right to exercise the Option by bequest or inheritance, but only to the
extent of the right to exercise that had accrued at the date of termination.

 

(iii)          the Committee may, in its discretion, elect to pay to the person
to whom such Option is transferred by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order the amount by
which the Market Value per share on the date of exercise shall exceed the
Exercise Price, multiplied by the number of shares which can be properly
purchased under the Option.

 

10.           Non-Transferability of Option. This Option may not be transferred
in any manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by Optionee. The terms
of this Option shall be binding upon the Optionee and his or her personal
representatives, heirs, successors and assigns.

 

11.           Term of Option. This Option may not be exercised after
«OptionTerm», and may be exercised only in accordance with the Plan and the
terms of this Option.

 

3

--------------------------------------------------------------------------------

 

12.           Early Disposition of Stock. Optionee understands that if he or she
disposes of any Shares received under this Option within two (2) years after the
date of this Agreement or within one (1) year after such Shares were transferred
to Optionee, then Optionee may be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an amount
generally measured by the difference between the price paid for the Shares and
the lower of the fair market value of the Shares at the date of the exercise or
the fair market value of the Shares at the date of disposition. The amount of
such ordinary income may be measured differently if Optionee is an officer,
director or 10% shareholder of the Company, or if the Shares were subject to a
substantial risk of forfeiture at the time they were transferred to Optionee.
Optionee hereby agrees to notify the Company in writing within 30 days after the
date of any such disposition of the number of the Shares sold, the sales price
and the date of the sale. Optionee understands that if he or she disposes of
such Shares at any time after the expiration of both the two-year and the
one-year holding periods, any gain on such sale will be taxed as long-term
capital gain.

 

13.           Effect of Merger Combination or Consolidation. In the event of a
merger, combination or consolidation, this Option is subject to the agreement
governing such transaction in accordance with Section 13 of the Plan.

 

14.           Plan Interpretation. Optionee hereby agrees to accept as binding,
conclusive and final all decisions and interpretations of the Board of Directors
and, where applicable, the Plan Committee, upon questions arising under the
Plan.

 

15.           Withholding Taxes. As a condition to the issuance of Shares of
Common Stock of the Company under this Option, the Optionee authorizes the
Company to withhold in accordance with applicable law from any regular cash
compensation payable to Optionee any taxes required to be withheld by the
Company under federal or state law as a result of his exercise of this Option.

 

16.           Notices. Any notice to the Company hereunder shall be delivered or
mailed to the Secretary of HF Financial Corp., 225 South Main Avenue, Sioux
Falls, South Dakota 57104. Any notice to the Optionee shall be mailed or
personally delivered to the address listed below, unless the Company receives
notice of an address change.

 

DATE OF GRANT:  «GrantDate»

 

 

 

 

HF FINANCIAL CORP.

 

 

 

 

 

By:

 

 

 

 

Darrel L. Posegate

 

 

Executive Vice President & CFO

 

4

--------------------------------------------------------------------------------

 

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO SECTION
3 HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
AGREEMENT, NOR IN THE COMPANY’S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN
BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION
OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS RIGHT
OR THE COMPANY’S RIGHT TO TERMINATE HIS EMPLOYMENT AT ANY TIME, WITH OR WITHOUT
CAUSE.

 

Optionee acknowledges receipt of a copy of the Plan and certain information
related thereto and represents that Optionee is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee has reviewed the Plan and this Option in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Committee upon any questions arising under the Plan.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.

 

DATE OF GRANT:  «GrantDate»

 

 

 

 

Optionee:

 

 

 

 

 

 

 

 

«Name»

 

«Title»

 

 

 

Residence Address:

 

 

 

«Street»

 

 

«CitySTZIP»

 

 

5

--------------------------------------------------------------------------------

 

EXHIBIT A

 

EMPLOYEE OPTION AND VESTING DATA

 

Name of Employee:     «Name»

 

Date of Commencement of Employment:     «EmploymentDate»

 

Number of Shares Subject to Option:     «Number»

 

Date of Grant:     «GrantDate»

 

INCENTIVE STOCK OPTION VESTING SCHEDULE

 

 

 

NO. OF SHARES

 

NO. OF SHARES

 

DATE

 

VESTING

 

EXERCISABLE

 

 

 

 

 

 

 

June 30, «Vdate1»

 

«Vesting1Yr»

 

«Vesting1»

 

June 30, «Vdate2»

 

«Vesting2Yr»

 

«Vesting2»

 

June 30, «Vdate3»

 

«Vesting3Yr»

 

«Vesting3»

 

 

The above vesting schedule assumes continuous employment. Your rights to
exercise the unvested portion of your option will cease upon termination of
employment. Reference is made to Sections 7, 8 and 9 of this Agreement and
Section 7 and 14 of the 2002 Stock Option and Incentive Plan for your rights to
exercise the vested portion of your option in the event of termination of
employment during lifetime or upon death. The above vesting schedule is in all
respects subject to the terms of the Plan.

 

A-1

--------------------------------------------------------------------------------

 

EXHIBIT B

 

INVESTMENT REPRESENTATION STATEMENT

 

PURCHASER:

«Name»

 

 

ISSUER:

HF Financial Corp.

 

 

SECURITY:

COMMON STOCK

 

 

AMOUNT:

«Number» STOCKS

 

 

DATE OF GRANT:

«GrantDate»

 

In connection with the purchase of the Common Stock (“Securities”) of HF
FINANCIAL CORP. (the “Company”), the undersigned represents to the Company the
following:

 

(a)           I am aware of the Company’s business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Securities. I am
purchasing these Securities for my own account for investment purposes only and
not with a view to, or for the resale in connection with, any “distribution”
thereof for purposes of the Securities Act of 1933, as amended (the “Securities
Act”)

 

(b)           I understand that the Securities have not been registered under
the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein. In this connection, I understand that, in
the view of the Securities and Exchange Commission (the “SEC”), the statutory
basis for such exemption may be unavailable if my representation was predicated
solely upon a present intention to hold these Securities for the minimum capital
gains period specified under tax statutes, for a deferred sale, for or until an
increase or decrease in the market price of the Securities, or for a period of
one year or any other fixed period in the future.

 

(c)           I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. Moreover, I understand that the
Company is under no obligation to register the Securities. In addition, I
understand that the certificate evidencing the Securities will be imprinted with
a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel for
the Company.

 

(d)           I am familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of “restricted securities” acquired, directly or indirectly, from the
issuer thereof, in a non-public

 

B-1

--------------------------------------------------------------------------------

 

offering subject to the satisfaction of certain conditions. Rule 701 provides
that if the issuer qualifies under Rule 701 at the time of issuance of the
Securities, such issuance will be exempt from registration under the Securities
Act. In the event the Company later becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
ninety (90) days thereafter the securities exempt under Rule 701 may be resold,
subject to the satisfaction of certain of the conditions specified by Rule 144,
including among other things:  (1) the sale being made through a broker in an
unsolicited “broker’s transaction” or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and,
in the case of an affiliate, (2) the availability of certain public information
about the Company, and the amount of securities being sold during any three
month period not exceeding the limitations specified in Rule 144(e), if
applicable. Notwithstanding this paragraph (d), I acknowledge and agree to the
restrictions set forth in paragraph (e) hereof.

 

In the event that the Company does not qualify under Rule 701 at the time of
issuance of the Securities, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires among other
things:  (1) the availability of certain public information about the Company,
(2) the resale occurring not less than two years after the party has purchased,
and made full payment for, within the meaning of Rule 144, the securities to be
sold; and, in the case of an affiliate, or of a non-affiliate who has held the
securities less than three years, (3) the sale being made through a broker in an
unsolicited “broker’s transaction” or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934) and
the amount of securities being sold during any three month period not exceeding
the specified limitations stated therein, if applicable.

 

(e)           I further understand that in the event all of the applicable
requirements of Rule 144 or Rule 701 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 and
Rule 701 are not exclusive, the Staff of the SEC has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 or Rule 701 will
have a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their own
risk.

 

 

DATE OF GRANT: «GrantDate»

 

 

 

Signature of Purchaser:

 

 

 

 

 

 

 

 

«Name»

 

«Title»

 

B-2

--------------------------------------------------------------------------------