ex-10g.htm


    


      


      


      MDU
Resources Group, Inc.

      


      


      1998
Option

      Award
Program

      


      PLAN
DOCUMENT

      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      This
document constitutes part of a Prospectus covering securities that have been
registered under the Securities Act of 1933.

      


      


      


      


      


      


      


      MDU
RESOURCES GROUP, INC.


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      1998
OPTION AWARD PROGRAM

      


      


      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 the “MDU
Resources Group, Inc., 1998 Option Award Program” (hereinafter referred to as
the “Plan”), as set forth in this document.  The Plan permits the
grant of Nonqualified Stock Options.

      


      The Plan
shall become effective as of February 12, 1998 (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.

      


      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 until terminated by
the Board of Directors pursuant to Article 9 herein.

      


      


      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.

      


      2.2           “Award Agreement” or
“Option 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           “Board” or “Board of Directors”
means the Board of Directors of the Company.

      


      2.4   A “Change in Control”
shall mean:

      


      (a)           The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the
then outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that
for purposes of this subsection (a), the following acquisitions shall not
constitute a Change in Control: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company, (iii) any acquisition by


      
        
           


        

        
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      any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c) of this Section 2.4; or

      


      (b)           Individuals
who, as of February 12, 1998, which is the effective date of the Plan,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or

      


      (c)           Consummation
of a reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Company (a “Business Combination”), in
each case, unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation 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 or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the 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.

      


      For
avoidance of doubt, unless otherwise determined by the Board, the sale of a
subsidiary, operating entity or business unit of the Company shall not
constitute a Change in Control for purposes of this Agreement.

      


      2.5           “Code” means the
Internal Revenue Code of 1986, as amended from time to time.


      
        
           


        

        
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      2.6           “Committee” means the
committee, as specified in Article 3, appointed by the Board to administer the
Plan with respect to Awards.

      


      2.7           “Company” means MDU
Resources Group, Inc., a Delaware corporation (including its business units), or
any successor thereto as provided in Article 11 herein.

      


      2.8           “Director” means any
individual who is a member of the Board of Directors of the
Company.

      


      2.9           “Disability” means
“permanent and total disability” as defined under Section 22(e)(3) of the
Code.

      


      2.10           “Dividend Account” is
defined in Section 6.3 herein.

      


      2.11           “Eligible Employee”
means an Employee who is eligible to participate in the Plan, as set forth in
Section 5.1 herein.

      


      2.12           “Employee” means (i)
any full-time or regularly-scheduled part-time employee of the Company or a
Subsidiary or (ii) any bargaining unit employee covered by a collective
bargaining agreement to which the Company or any of its Subsidiaries is a
party.  Directors who are not otherwise employed by the Company or a
Subsidiary shall not be considered Employees for purposes of the
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           “Exercise Period”
means the period during which an Option is exercisable, as set forth in the
related Award Agreement.

      


      2.15           “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.

      


      2.16           “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.

      


      2.17           “Option” means a
Nonqualified Stock Option.

      


      2.18           “Option Exercise
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.

      


      2.19           “Participant” means an
Employee who has an outstanding Award granted under the Plan.


      
        
           


        

        
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      2.20           “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.

      


      2.21           “Shares” means the
shares of common stock, $1.00 par value, of the Company.

      


      2.22           “Subsidiary” means any
corporation that is a “subsidiary corporation” of the Company as that term is
defined in Section 424(f) of the Code.

      


      2.23           “Termination of
Service” means leaving the employ of the Company or any Subsidiary for
any reason.   For purposes of the Plan, transfer of employment of
a Participant among the Company and any Subsidiaries shall not be deemed a
termination of employment.

      


      


      Article
3.                      Administration

      


      3.1           The Committee. The
Plan shall be administered by a committee  (the “Commit­tee”); 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.  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 Employees to
receive Awards; to determine the size of Awards and the terms and conditions
thereof; 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 9
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 Distribution
of Shares and Share Transferability.  Notwithstanding any other
provision of the Plan, the Company shall have no liability to deliver any Shares
under the Plan unless such delivery would comply with all applicable laws
(including, without limitation, the Securities Act of 1933) and applicable
requirements of any securities exchange or similar entity and unless the
participant’s tax obligations have been satisfied as set forth in Article
10.  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           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, Employees, Participants and their
estates and beneficiaries.


      
        
           


        

        
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      3.5           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 three million seven hundred
ninety-five thousand three hundred thirty (3,795,330).  Shares
underlying lapsed or forfeited Awards 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 equity restructuring such as a
stock dividend, stock split, spinoff, rights offering or recapitalization
through a large, nonrecurring cash dividend, the Committee shall cause an
equitable adjustment to be made (i) in the number and kind of Shares that may be
delivered under the Plan and (ii) with respect to outstanding Awards, in the
number and kind of Shares subject to outstanding Awards, the Option Exercise
Price and other terms and conditions of outstanding Awards, in the case of (i)
and (ii) to prevent dilution or enlargement of rights.  In the event
of any other change in corporate capitalization, such as a merger, consolidation
or liquidation, the Committee may, in its sole discretion, cause an equitable
adjustment as described in the foregoing sentence to be made to prevent dilution
or enlargement of rights.  The number of Shares subject to any Award
shall always be rounded down to a whole number when adjustments are made
pursuant to this Section 4.2.  Adjustments made by the Committee
pursuant to this Section 4.2 shall be final, binding and
conclusive.

      


      


      Article
5.                      Eligibility
and Participation

      


      5.1           Eligibility.  Persons
eligible to participate in the Plan (“Eligible Employees”) include all
Employees, as determined by the Committee.

      


      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.

      


      


      Article
6.                      Stock
Options

      


      6.1           Grant of
Options.  Subject to the terms and conditions of the Plan,
Options may be granted to Eligible Employees, 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 Exercise Price, which shall be the
Fair Market Value of a Share on the date of grant, 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.


      
        
           


        

        
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      6.3           Dividend
Account.  At the time of the Award, a Dividend Account (the
“Dividend Account”) shall be established for each Participant.  If a
dividend is declared by the Board on the Common Stock of the Company, an
equivalent amount shall be accrued in the Dividend Account of each Participant
for each share of Common Stock underlying all unvested Options held by the
Participant.  When the Award vests, all amounts in the Dividend
Account shall be paid in cash to the Participant.  If the Award is
forfeited, all amounts in the Dividend Account shall also be
forfeited.

      


      6.4           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, in whole but not in part (subject to the
Committee’s right to determine otherwise), 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 provision for
full payment for the Shares; provided, however, that the Committee shall have
the right in its sole discretion to establish other procedures for the exercise
of Options.

      


      The
Committee shall have the authority to establish procedures for payment upon the
exercise of Options which may include, in the Committee’s sole discretion,
payment (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 Exercise 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 Exercise Price), (c) by broker-assisted
cashless exercise or (d) by a combination of (a), (b) and/or (c).

      


      As soon
as practicable after receipt of a notification of exercise of an Option and
provision 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).

      


      6.5           Termination of
Service.

      


      (a)           Upon
any Termination of Service, unvested Options and any amounts accrued in a
Participant’s Dividend Account shall be forfeited.

      


      (b)           Death

      


      If the
Participant dies while still employed, any vested Options, to the extent that
they are then exercisable, may be exercised, at any time within one (1) year
(even if this extends the term of the Options) after the date of the
Participant’s death by the person designated in the Participant’s last will and
testament or by the personal representative of the Participant’s
estate.


      
        
           


        

        
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      (c)           Disability

      


      If the
Participant suffers Disability, any vested Options, to the extent that they are
then exercisable, may be exercised at any time within one (1) year (even if this
extends the term of the Options) after the date of Disability by the Participant
or by a person qualified or authorized to act on behalf of the
Participant.

      


      (d)           Other
Termination of Service

      


      If the
Participant’s Termination of Service is for any reason other than Death or
Disability, any vested Options, to the extent that they are then exercisable,
may be exercised at any time within the three (3) months (even if this extends
the term of the Options) following the date of Termination of
Service.

      


      6.6           Transferability of
Options.  All Options granted to a Participant under the Plan
shall be exercisable during the Participant’s lifetime only by such Participant,
and 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.

      


      


      Article
7.                      Rights
of Employees

      


      7.1           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, for any reason or no reason
in the Company’s sole discretion, nor confer upon any Participant any right to
continue in the employ of the Company.

      


      7.2           Participation.  No
Employee shall have the right to be selected to receive an Award.

      


      7.3           Limitation of Implied
Rights.  Neither a Participant nor any other Person shall, by
reason of the Plan, acquire any right in or title to any assets, funds or
property of the Company or any Subsidiary whatsoever, including, without
limitation, any specific funds, assets or other property which the Company or
any Subsidiary, in their sole discretion, may set aside in anticipation of a
liability under the Plan.  A Participant shall have only a contractual
right to the Shares or amounts, if any, payable under the Plan, unsecured by any
assets of the Company or any Subsidiary.  Nothing contained in the
Plan shall constitute a guarantee that the assets of such companies shall be
sufficient to pay any benefits to any Person.

      


      Except as
otherwise provided in the Plan, no Award under the Plan shall confer upon the
holder thereof any right as a stockholder of the Company prior to the date on
which the individual fulfills all conditions for receipt of such
rights.

      


      



      
        
           


        

        
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      Article
8.                      Change
in Control

      


      The terms
of this Article 8 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, any and all Options granted hereunder shall become
immediately exercisable.

      


      


      Article
9.                      Amendment,
Modification and Termination

      


      9.1           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.

      


      9.2           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
and except as otherwise provided herein.

      


      


      Article
10.                      Tax
Withholding

      


      10.1           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 (including the
Participant’s FICA obligation) required by law to be withheld with respect to an
Award made under the Plan.

      


      10.2           Share
Withholding.  The Committee shall have the authority to
establish procedures with respect to tax withholding required upon the exercise
of Options, which may include payment by Participants (a) by tendering
previously owned Shares held by the Participant at least six (6) months prior to
their tender or (b) 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 imposed on the transaction.

      


      


      Article
11.                      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.

      


      



      
        
           


        

        
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      Article
12.                      Legal
Construction

      


      12.1           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.

      


      12.2           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.

      


      12.3           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.

      


      12.4           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.


      
        
           


        

        
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