MDU RESOURCES GROUP, INC.
1997 NON-EMPLOYEE DIRECTOR LONG-TERM INCENTIVE PLAN
Article 1. Establishment, Purpose and Duration
1.1 Establishment of the Plan. MDU Resources Group, Inc., a
Delaware corporation (hereinafter referred to as the "Company"),
hereby establishes an incentive plan to be known as the "MDU
Resources Group, Inc. 1997 Non-Employee Director Long-Term
Incentive Plan" (hereinafter referred to as the "Plan"), as set
forth in this document. The Plan permits the grant of
Nonqualified Stock Options (NQSO), Stock Appreciation Rights
(SAR), Restricted Stock, Performance Units, Performance Shares
and other awards.
The Plan shall become effective when approved by the
stockholders at the annual meeting on April 22, 1997, (the
"Effective Date"), and shall remain in effect as provided in
Section 1.3 herein.
1.2 Purpose of the Plan. The purpose of the Plan is to
promote the success and enhance the value of the Company by
linking the personal interests of Participants to those of
Company stockholders and customers. The Plan is further intended
to assist the Company in its ability to motivate, attract and
retain highly qualified individuals to serve as directors of the
Company.
1.3 Duration of the Plan. The Plan shall commence on the
Effective Date, as described in Section 1.1 herein, and shall
remain in effect, subject to the right of the Board of Directors
to terminate the Plan at any time pursuant to Article 14 herein,
until all Shares subject to it shall have been purchased or
acquired according to the Plan's provisions.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when such meaning is intended,
the initial letter of the word is capitalized:
2.1 "Award" means, individually or collectively, a grant
under the Plan of NQSOs, SARs, Restricted Stock, Performance
Units, Performance Shares or any other type of award permitted
under Article 10 of the Plan.
2.2 "Award Agreement" means an agreement entered into by
each Participant and the Company, setting forth the terms and
provisions applicable to an Award granted to a Participant under
the Plan.
2.3 "Base Value" of an SAR shall have the meaning set forth
in Section 7.1 herein.
2.4 "Board" or "Board of Directors" means the Board of
Directors of the Company.
2.5 "Change in Control" means the earliest of the following
to occur: (a) the public announcement by the Company or by any
person (which shall not include the Company, any subsidiary of
the Company, or any employee benefit plan of the Company or of
any subsidiary of the Company) ("Person") that such Person, who
or which, together with all Affiliates and Associates (within the
meanings ascribed to such terms in the Rule 12b-2 of the General
Rules and Regulations under the Exchange Act) of such Person,
shall be the beneficial owner of twenty percent (20%) or more of
the voting stock of the Company outstanding; (b) the commencement
of, or after the first public announcement of any Person to
commence, a tender or exchange offer the consummation of which
would result in any Person becoming the beneficial owner of
voting stock aggregating thirty percent (30%) or more of the then
outstanding voting stock of the Company; (c) the announcement of
any transaction relating to the Company required to be described
pursuant to the requirements of Item 6(e) of Schedule 14A of
Regulation 14A under the Exchange Act; (d) a proposed change in
constituency of the Board such that, during any period of two (2)
consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election or nomination for
election by the stockholders of the Company of each new Director
was approved by a vote of at least two-thirds (2/3) of the
Directors then still in office who were members of the Board at
the beginning of the period; (e) any other event which shall be
deemed by a majority of the Committee to constitute a "change in
control".
2.6 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
2.7 "Committee" means the Committee, as specified in
Article 3, appointed by the Board to administer the Plan with
respect to Awards.
2.8 "Company" means MDU Resources Group, Inc., a Delaware
corporation, or any successor thereto as provided in Article 15
herein.
2.9 "Director" means any individual who is a member of the
Board of Directors of the Company.
2.10 "Dividend Equivalent" means, with respect to Shares
subject to an Award, a right to be paid an amount equal to
dividends declared on an equal number of outstanding Shares.
2.11 "Employee" means any full-time or regularly-scheduled
part-time employee of the Company or of the Company's
Subsidiaries, who is not covered by any collective bargaining
agreement to which the Company or any of its Subsidiaries is a
party.
2.12 "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor act thereto.
2.13 "Exercise Period" means the period during which an SAR
or Option is exercisable, as set forth in the related Award
Agreement.
2.14 "Fair Market Value" shall mean the average of the high
and low sale prices as reported in the consolidated transaction
reporting system 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 "Freestanding SAR" means an SAR that is granted
independently of any Option.
2.16 "Non-Employee Director" means any person who is elected
or appointed to the Board and who is not an Employee.
2.17 "Nonqualified Stock Option" or "NQSO" means an option
to purchase Shares, granted under Article 6 herein, which is not
intended to be an Incentive Stock Option under Section 422 of the
Code.
2.18 "Option" means a Nonqualified Stock Option.
2.19 "Option Price" means the price at which a Share may be
purchased by a Participant pursuant to an Option, as determined
by the Committee and set forth in the Option Award Agreement.
2.20 "Participant" means a Non-Employee Director who has
outstanding an Award granted under the Plan.
2.21 "Performance Unit" means an Award granted to a
Participant, as described in Article 9 herein.
2.22 "Performance Share" means an Award granted to a
Participant, as described in Article 9 herein.
2.23 "Period of Restriction" means the period during which
the transfer of Restricted Stock is limited in some way, as
provided in Article 8 herein.
2.24 "Person" shall have the meaning ascribed to such term
in Section 3(a)(9) of the Exchange Act, as used in Sections 13(d)
and 14(d) thereof, including usage in the definition of a "group"
in Section 13(d) thereof.
2.25 "Restricted Stock" means an Award of Shares granted to
a Participant pursuant to Article 8 herein.
2.26 "Shares" means the shares of common stock of the
Company.
2.27 "Stock Appreciation Right" or "SAR" means a right,
granted alone or in connection with a related Option, designated
as an SAR, to receive a payment on the day the right is
exercised, pursuant to the terms of Article 7 herein. Each SAR
shall be denominated in terms of one Share.
2.28 "Subsidiary" means any corporation that is a
"subsidiary corporation" of the Company as that term is defined
in Section 424(f) of the Code.
2.29 "Tandem SAR" means an SAR that is granted in connection
with a related Option, the exercise of which shall require
forfeiture of the right to purchase a Share under the related
Option (and when a Share is purchased under the Option, the
Tandem SAR shall be similarly canceled).
Article 3. Administration
3.1 The Committee. The Plan shall be administered by any
committee appointed by the Board or by the Board of Directors
(the "Committee").
3.2 Authority of the Committee. The Committee shall have
full power except as limited by law, the Articles of
Incorporation and the Bylaws of the Company, subject to such
other restricting limitations or directions as may be imposed by
the Board and subject to the provisions herein, to determine the
size and types of Awards; to determine the terms and conditions
of such Awards in a manner consistent with the Plan; to construe
and interpret the Plan and any agreement or instrument entered
into under the Plan; to establish, amend or waive rules and
regulations for the Plan's administration; and (subject to the
provisions of Article 14 herein) to amend the terms and
conditions of any outstanding Award. Further, the Committee
shall make all other determinations which may be necessary or
advisable for the administration of the Plan. As permitted by
law, the Committee may delegate its authorities as identified
hereunder.
3.3 Restrictions on Share Transferability. The Committee
may impose such restrictions on any Shares acquired pursuant to
Awards under the Plan as it may deem advisable, including,
without limitation, restrictions to comply with applicable
Federal securities laws, with the requirements of any stock
exchange or market upon which such Shares are then listed and/or
traded and with any blue sky or state securities laws applicable
to such Shares.
3.4 Approval. The Committee or the Board shall approve all
Awards made under the Plan and all elections made by
Participants, prior to their effective date, to the extent
necessary to comply with Rule 16b-3 under the Exchange Act.
3.5 Decisions Binding. All determinations and decisions
made by the Committee pursuant to the provisions of the Plan and
all related orders or resolutions of the Board shall be final,
conclusive and binding on all persons, including the Company, its
stockholders, Participants and their estates and beneficiaries.
3.6 Costs. The Company shall pay all costs of
administration of the Plan.
Article 4. Shares Subject to the Plan
4.1 Number of Shares. Subject to Section 4.2 herein, the
maximum number of Shares available for grant under the Plan shall
be 300,000. Shares underlying lapsed or forfeited Awards, or
Awards that are not paid in Shares, may be reused for other
Awards. Shares granted pursuant to the Plan may be (i)
authorized but unissued Shares of Common Stock, (ii) treasury
shares, or (iii) shares purchased on the open market.
4.2 Adjustments in Authorized Shares. In the event of any
merger, reorganization, consolidation, recapitalization,
separation, liquidation, stock dividend, split-up, share
combination or other change in the corporate structure of the
Company affecting the Shares, such adjustment shall be made in
the number and class of Shares which may be delivered under the
Plan, and 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 the
Plan are any persons elected or appointed to the Board who are
not Employees.
5.2 Actual Participation. Subject to the provisions of the
Plan, the Committee may, from time to time, select from all
eligible Non-Employee Directors 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 conditions
of the Plan, Options may be granted to a Non-Employee Director at
any time and from time to time, as shall be determined by the
Committee.
The Committee shall have complete discretion in determining
the number of Shares subject to Options granted to each
Participant (subject to Article 4 herein) and, consistent with
the provisions of the Plan, in determining the terms and
conditions pertaining to such Options.
6.2 Option Award Agreement. Each Option grant shall be
evidenced by an Option Award Agreement that shall specify the
Option Price, the term of the Option, the number of Shares to
which the Option pertains, the Exercise Period and such other
provisions as the Committee shall determine, including but not
limited to any rights to Dividend Equivalents.
6.3 Exercise of and Payment for Options. Options granted
under the Plan shall be exercisable at such times and be subject
to such restrictions and conditions as the Committee shall in
each instance approve.
A Participant may exercise an Option at any time during the
Exercise Period. Options shall be exercised by the delivery of a
written notice of exercise to the Company or its designee,
setting forth the number of Shares with respect to which the
Option is to be exercised, accompanied by provisions for full
payment for the Shares.
The Option Price upon exercise of any Option shall be
payable either: (a) in cash or its equivalent, (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), (c) by Share withholding, (d) by
cashless exercise or (e)by a combination of (a),(b),(c), and/or
(d).
As soon as practicable after receipt of a written
notification of exercise of an Option and provisions for full
payment therefor, there shall be delivered 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).
6.4 Termination of Director Status. Each 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 position on the Board of the Company. Such
provisions shall be determined in the sole discretion of the
Committee, shall be included in the Option Award Agreement
entered into with Participants, need not be uniform among all
Options granted pursuant to the Plan or among Participants and
may reflect distinctions based on the reasons for termination of
director status.
6.5 Transferability of Options. Except as otherwise
determined by the Committee and set forth in the Option Award
Agreement, no Option 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, and all Options granted to a Participant under the
Plan shall be exercisable during his or her lifetime only by such
Participant or his or her legal representative.
Article 7. Stock Appreciation Rights
7.1 Grant of SARs. Subject to the terms and conditions of
the Plan, an SAR may be granted to a Non-Employee Director at any
time and from time to time as shall be determined by the
Committee. The Committee may grant Freestanding SARs, Tandem
SARs or any combination of these forms of SAR.
The Committee shall have complete discretion in determining
the number of SARs granted to each Participant (subject to
Article 4 herein) and, consistent with the provisions of the
Plan, in determining the terms and conditions pertaining to such
SARs.
The Base Value of a Freestanding SAR shall equal the Fair
Market Value of a Share on the date of grant of the SAR. The
Base Value of Tandem SARs shall equal the Option Price of the
related Option.
7.2 SAR Award Agreement. Each SAR grant shall be evidenced
by an SAR Award Agreement that shall specify the number of SARs
granted, the Base Value, the term of the SAR, the Exercise Period
and such other provisions as the Committee shall determine.
7.3 Exercise and Payment of SARs. Tandem SARs may be
exercised for all or part of the Shares subject to the related
Option upon the surrender of the right to exercise the equivalent
portion of the related Option. A Tandem SAR may be exercised
only with respect to the Shares for which its related Option is
then exercisable.
Freestanding SARs may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes upon
them.
A Participant may exercise an SAR at any time during the
Exercise Period. SARs shall be exercised by the delivery of a
written notice of exercise to the Company, setting forth the
number of SARs being exercised. Upon exercise of an SAR, a
Participant shall be entitled to receive payment from the Company
in an amount equal to the product of:
(a) the excess of (i) the Fair Market Value of a Share
on the date of exercise over (ii) the Base Value
multiplied by
(b) the number of Shares with respect to which the SAR
is exercised.
At the sole discretion of the Committee, the payment to the
Participant upon SAR exercise may be in cash, in Shares of
equivalent value, or in some combination thereof.
7.4 Termination of Director Status. Each SAR Award
Agreement shall set forth the extent to which the Participant
shall have the right to exercise the SAR following termination of
the Participant's position on the Board of the Company. Such
provisions shall be determined in the sole discretion of the
Committee, shall be included in the SAR Award Agreement entered
into with Participants, need not be uniform among all SARs
granted pursuant to the Plan or among Participants and may
reflect distinctions based on the reasons for termination of
director status.
7.5 Transferability of SARs. Except as otherwise
determined by the Committee and set forth in the SAR Award
Agreement, no SAR 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, and all SARs granted to a Participant under the
Plan shall be exercisable during his or her lifetime only by such
Participant or his or her legal representative.
Article 8. Restricted Stock
8.1 Grant of Restricted Stock. Subject to the terms and
conditions of the Plan, Restricted Stock may be granted to a Non-
Employee Director at any time and from time to time, as shall be
determined by the Committee.
The Committee shall have complete discretion in determining
the number of shares of Restricted Stock granted to each
Participant (subject to Article 4 herein) and, consistent with
the provisions of the Plan, in determining the terms and
conditions pertaining to such Restricted Stock.
8.2 Restricted Stock Award Agreement. Each Restricted
Stock grant shall be evidenced by a Restricted Stock Award
Agreement that shall specify the Period or Periods of
Restriction, the number of Restricted Stock Shares granted and
such other provisions as the Committee shall determine.
8.3 Transferability. Restricted Stock granted hereunder
may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period
of Restriction established by the Committee and specified in the
Restricted Stock Award Agreement. All rights with respect to the
Restricted Stock granted to a Participant under the Plan shall be
available during his or her lifetime only to such Participant or
his or her legal representative.
8.4 Certificate Legend. Each certificate representing
Restricted Stock granted pursuant to the Plan may bear
a legend substantially as follows:
"The sale or other transfer of the shares of stock
represented by this certificate, whether voluntary,
involuntary or by operation of law, is subject to
certain restrictions on transfer as set forth in MDU
Resources Group, Inc. 1997 Non-Employee Director Long-
Term Incentive Plan, and in a Restricted Stock Award
Agreement. A copy of such Plan and such Agreement may
be obtained from MDU Resources Group, Inc."
The Company shall have the right to retain the certificates
representing Restricted Stock in the Company's possession until
such time as all restrictions applicable to such Shares have been
satisfied.
8.5 Removal of Restrictions. Restricted Stock shall become
freely transferable by the Participant after the last day of the
Period of Restriction applicable thereto. Once Restricted Stock
is released from the restrictions, the Participant shall be
entitled to have the legend referred to in Section 8.4 removed
from his or her stock certificate.
8.6 Voting Rights. During the Period of Restriction,
Participants holding Restricted Stock may exercise full voting
rights with respect to those Shares.
8.7 Dividends and Other Distributions. Subject to the
Committee's right to determine otherwise at the time of grant,
during the Period of Restriction, Participants holding Restricted
Stock shall receive all regular cash dividends paid with respect
to all Shares while they are so held. All other distributions
paid with respect to such Restricted Stock shall be credited to
Participants subject to the same restrictions on transferability
and forfeitability as the Restricted Stock with respect to which
they were paid and shall be paid to the Participant within forty-
five (45) days following the full vesting of the Restricted Stock
with respect to which such distributions were made.
8.8 Termination of Director Status. Each Restricted Stock
Award Agreement shall set forth the extent to which the
Participant shall have the right to receive unvested Restricted
Stock following termination of the Participant's position on the
Board of the Company. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the
Restricted Stock Award Agreement entered into with Participants,
need not be uniform among all grants of Restricted Stock or among
Participants and may reflect distinctions based on the reasons
for termination of director status.
Article 9. Performance Units and Performance Shares
9.1 Grant of Performance Units and Performance Shares.
Subject to the terms and conditions of the Plan, Performance
Units and/or Performance Shares may be granted to a Non-Employee
Director at any time and from time to time, as shall be
determined by the Committee.
The Committee shall have complete discretion in determining
the number of Performance Units and/or Performance Shares granted
to each Participant (subject to Article 4 herein) and, consistent
with the provisions of the Plan, in determining the terms and
conditions pertaining to such Awards.
9.2 Performance Unit/Performance Share Award Agreement.
Each grant of Performance Units and/or Performance Shares shall
be evidenced by a Performance Unit and/or Performance Share Award
Agreement that shall specify the number of Performance Units
and/or Performance Shares granted, the initial value (if
applicable), the Performance Period, the performance goals and
such other provisions as the Committee shall determine, including
but not limited to any rights to Dividend Equivalents.
9.3 Value of Performance Units/Performance Shares. Each
Performance Unit shall have an initial value that is established
by the Committee at the time of grant. The value of a
Performance Share shall be equal to the Fair Market Value of a
Share. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met,
will determine the number and/or value of Performance
Units/Performance Shares that will be paid out to the
Participants. The time period during which the performance goals
must be met shall be called a "Performance Period."
9.4 Earning of Performance Units/Performance Shares. After
the applicable Performance Period has ended, the holder of
Performance Units/Performance Shares shall be entitled to receive
a payout with respect to the Performance Units/Performance Shares
earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding
performance goals have been achieved.
9.5 Form and Timing of Payment of Performance
Units/Performance Shares. Payment of earned Performance
Units/Performance Shares shall be made following the close of the
applicable Performance Period. The Committee, in its sole
discretion, may pay earned Performance Units/Performance Shares
in cash or in Shares (or in a combination thereof), which have an
aggregate Fair Market Value equal to the value of the earned
Performance Units/Performance Shares at the close of the
applicable Performance Period. Such Shares may be granted
subject to any restrictions deemed appropriate by the Committee.
9.6 Termination of Director Status. Each Performance
Unit/Performance Share Award Agreement shall set forth the extent
to which the Participant shall have the right to receive a
Performance Unit/Performance Share payment following termination
of the Participant's position on the Board of the Company during
a Performance Period. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Award
Agreement entered into with Participants, need not be uniform
among all grants of Performance Units/Performance Shares or among
Participants and may reflect distinctions based on reasons for
termination of director status.
9.7 Transferability. Except as otherwise determined by the
Committee and set forth in the Performance Unit/Performance Share
Award Agreement, Performance Units/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, and a Participant's rights with respect to
Performance Units/Performance Shares granted under the Plan shall
be available during the Participant's lifetime only to such
Participant or the Participant's legal representative.
Article 10. Other Awards
The Committee shall have the right to grant other Awards
which may include, without limitation, the grant of Shares based
on certain conditions and the payment of Shares in lieu of cash,
or cash based on performance criteria established by the
Committee. Payment under or settlement of any such Awards shall
be made in such manner and at such times as the Committee may
determine.
Article 11. 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 receives 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.
The spouse of a married Participant domiciled in a community
property jurisdiction shall join in any designation of
beneficiary or beneficiaries other than the spouse.
Article 12. Deferrals
The Committee may permit a Participant to defer the
Participant's receipt of the payment of cash or the delivery of
Shares that would otherwise be due to such Participant under the
Plan. If any such deferral election is permitted, the Committee
shall, in its sole discretion, establish rules and procedures for
such payment deferrals.
Article 13. Change in Control
The terms of this Article 13 shall immediately become
operative, without further action or consent by any person or
entity, upon a Change in Control, and once operative shall
supersede and take control over any other provisions of this
Plan.
Upon a Change in Control
(a) Any and all Options and SARs granted hereunder
shall become immediately exercisable;
(b) Any restriction periods and restrictions imposed
on Restricted Shares shall be deemed to have expired
and such Restricted Shares shall become immediately
vested in full; and
(c) The target payout opportunity attainable under all
outstanding Awards of Performance Units, Performance
Shares and other Awards shall be deemed to have been
fully earned for the entire Performance Period(s) as of
the effective date of the Change in Control. The
vesting of all Awards denominated in Shares shall be
accelerated as of the effective date of the Change in
Control, and there shall be paid out in cash to
Participants immediately following the effective date
of the Change in Control the full amount of the
targeted cash payout opportunities associated with
outstanding cash-based Awards.
Article 14. Amendment, Modification and Termination
14.1 Amendment, Modification and Termination. The Board
may, at any time and from time to time, alter, amend, suspend or
terminate the Plan in whole or in part.
14.2 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, unless
such termination, modification or amendment is required by
applicable law.
Article 15. 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, merger, consolidation or
otherwise, of all or substantially all of the business and/or
assets of the Company.
Article 16. Legal Construction
16.1 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.
16.2 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.
16.3 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.
16.4 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
Delaware.
