Document:

1998 Option Award Program

    

    

    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
       “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) 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 changed
      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) the sale or other disposition of all or substantially all of
      the
      assets of Montana-Dakota Utilities Co., other than to a Subsidiary of the
      Company; or (f) any other event that shall be deemed by a majority of the Board
      of Directors to constitute a “change in control.”

    

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

    

    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.

    

    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.

    

    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 merger, reorganization, consolidation, recapitalization,
      liquidation, stock dividend, split-up, spin-off, share combination, share
      exchange or other change in the corporate structure of the Company affecting
      the
      Shares, such adjustment shall be made in the outstanding Awards, 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.

    

    

    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.

    

    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 (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.

    

    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.

    

    

    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.

    

    

    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.Group Genius Innovation Plan

    

      MDU
        RESOURCES GROUP, INC.

      GROUP
        GENIUS INNOVATION 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 for employees, to be known
        as
        the "MDU Resources Group, Inc. Group Genius Innovation Plan" (hereinafter
        referred to as the "Plan"), as set forth in this document. The Plan permits
        the
        grant of nonqualified stock options (NQSOs), stock appreciation rights (SARs),
        restricted stock, restricted stock units, performance units, performance
        stock
        and other awards.

      

      The
        Plan
        shall become effective on May 17, 2001 (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 encourage employees to share ideas for new business
        directions
        for the
        Company and to reward them when the idea becomes profitable.

      

      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 13 herein, until all Stock
        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, Restricted Stock Units, Performance Units, Performance Stock 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) that such Person, who or which,
        together with all Affiliates and Associates (within the meanings ascribed
        to
        such terms in Rule 12b-2 of the Exchange Act) of such Person, shall be the
        beneficial owner of twenty percent (20%) or more of the voting stock of the
        Company then 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 the 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; or

      

      (e)
        any
        other event which shall be deemed by a majority of the Board 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  Disability
        means
        "permanent and total disability" as defined under Section 22(e)(3) of the
        Code.

      

      2.11 Dividend
        Equivalent
        means,
        with respect to Stock subject to an Award, a right to be paid an amount equal
        to
        dividends declared on an equal number of outstanding shares of
        Stock.

      

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

      

      2.13 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. For purposes of the
        Plan,
        transfer of employment of a Participant between the Company and any one of
        its
        Subsidiaries (or between Subsidiaries) shall not be deemed a termination
        of
        employment.

      

      2.14 Exchange
        Act
        means
        the Securities Exchange Act of 1934, as amended from time to time, or any
        successor act thereto.

      

      2.15 Exercise
        Period
        means
        the period during which an SAR or Option is exercisable, as set forth in
        the
        related Award Agreement.

      

      2.16 Fair
        Market Value
        means
        the average of the high and low sale prices as reported in the consolidated
        transaction reporting system, or, if there was no such sale on the relevant
        date, then on the last previous day on which a sale was reported.

      

      2.17 Freestanding
        SAR
        means an
        SAR that is granted independently of any Option.

      

      2.18 Nonqualified
        Stock Option
        or
NQSO
        means an
        option to purchase Stock, granted under Article 6 herein, which is not intended
        to be an incentive stock option under Section 422 of the Code.

      

      2.19 Option
        means a
        Nonqualified Stock Option.

      

      2.20 Option
        Exercise Price
        means
        the price at which Stock may be purchased by a Participant pursuant to an
        Option, as determined by the Committee and set forth in the Option Award
        Agreement.

      

      2.21 Participant
        means an
        Eligible Employee who has outstanding an Award granted under the
        Plan.

      

      2.22 Performance
        Period
        means
        the time period during which Performance Unit/Performance Stock performance
        goals must be met.

      

      2.23 Performance
        Stock
        means an
        Award described in Article 9 herein.

      

      2.24 Performance
        Unit
        means an
        Award described in Article 9 herein.

      

      2.25 Period
        of Restriction
        means
        the period during which the transfer of Restricted Stock or Restricted Stock
        Units is limited in some way, as provided in Article 8 herein.

      

      2.26 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.

      

      2.27 Plan
        means
        the MDU Resources Group, Inc. Group Genius Innovation Plan.

      

        2.28 Restricted
          Stock
          means an
          Award described in Article 8 herein.

      

       

      2.29 Restricted
        Stock Unit
        means an
        Award described in Article 8 herein.

      

      2.30 Securities
        Act
        means
        the Securities Act of 1933, as amended.

      

      2.31 Stock
        means
        the common stock, $1.00 par value, of the Company.

      

      2.32 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
        of Stock. 

      

      2.33 Subsidiary
        means
        any corporation (other than the Company) in an unbroken chain of corporations
        ending with the Company if each of the corporations other than the last
        corporation in the chain owns stock possessing 50 percent or more of the
        total
        combined voting power of all classes of stock in one of the other corporations
        in such chain.

      

      2.34 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 of Stock under
        the
        related Option (and when a share of Stock 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 the Compensation Committee or by any other
        committee (the "Committee") 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 or 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 Eligible Employees to receive Awards;
        to
        determine the size and types of Awards; to determine the terms and conditions
        of
        such Awards; 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
        13
        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 Stock and Stock Transferability.
        Notwithstanding any other provision of the Plan, the Company shall have no
        liability to deliver any Stock or benefits under the Plan unless such delivery
        would comply with all applicable laws (including, without limitation, the
        Securities Act) 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 14. The Committee may impose such restrictions on
        any
        Stock 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 Stock is then listed and/or traded and with any blue sky or state
        securities laws applicable to such Stock.

      

      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.

      

      3.5 Costs.
        The
        Company shall pay all costs of administration of the Plan.

      

      

      Article
        4. Stock
        Subject to the Plan

      

      4.1 Number
        of Shares of Stock.
        Subject
        to Section 4.2 herein, the maximum number shares of Stock available for grant
        under the Plan shall be 223,150. Stock underlying lapsed or forfeited Awards,
        or
        Awards that are not paid in Stock, may be reused for other Awards. Stock
        granted
        pursuant to the Plan may be (i) authorized but unissued shares of Stock,
        (ii) treasury Stock or (iii) Stock purchased on the open
        market.

      

      4.2 Adjustments
        in Authorized Stock and Awards.
        In the
        event of any merger, reorganization, consolidation, recapitalization,
        liquidation, stock dividend, split-up, spin-off, stock split, reverse stock
        split, share combination, share exchange or other change in the corporate
        structure of the Company affecting the Stock, such adjustment shall be made
        in
        the number and class of Stock which may be delivered under the Plan, and
        in the
        number and class of and/or price of Stock 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 of Stock 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 ("Eligible Employees") include all Employees
        except officers and directors, 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 an Eligible
        Employee 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
        Stock subject to Options granted to each Eligible Employee (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, the term of the Option, the number of shares of
        Stock
        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 shall 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, setting forth the number of shares of Stock with respect to
        which
        the Option is to be exercised, accompanied by provision for full payment
        for the
        Stock.

      

      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 of Stock having an aggregate Fair Market Value at the time
        of
        exercise equal to the total Option Exercise Price (provided that the Stock
        that
        is tendered must have been held by the Participant for at least six (6) months
        prior to its tender), (c) by broker-assisted cashless exercise or (d) by a
        combination of (a), (b) and/or (c).

      

      6.4 Termination.
        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
        employment with the Company and its Subsidiaries. Such provisions shall be
        determined in the sole discretion of the Committee (subject to applicable
        law),
        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.
        

      

      6.5 Transferability
        of Options.
        Except
        as otherwise determined by the Committee, all Options granted to a Participant
        under the Plan shall be exercisable during his or her 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. Stock
        Appreciation Rights

      

      7.1 Grant
        of SARs.
        Subject
        to the terms and conditions of the Plan, an SAR may be granted to an Eligible
        Employee 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 SARs.

      

      The
        Committee shall have complete discretion in determining the number of SARs
        granted to each Eligible Employee (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
        of
        Stock on the date of grant of the SAR. The Base Value of Tandem SARs shall
        equal
        the Option Exercise 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 Stock 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 Stock
        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 of Stock on the
                  date of
                  exercise over (ii) the Base Value multiplied
                  by

              

      

      

      
        	 	
                (b)

              	
                the
                  number of shares of Stock 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 Stock of equivalent value or in some combination
        thereof.

      

      7.4 Termination.
        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
        employment with the Company and its Subsidiaries. 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.

      

      7.5 Transferability
        of SARs.
        Except
        as otherwise determined by the Committee, 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, and 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.

      

      

      Article
        8. Restricted
        Stock and Restricted Stock Units

      

      8.1 Grant
        of Restricted Stock and Restricted Stock Units.
        Subject
        to the terms and conditions of the Plan, Restricted Stock and/or Restricted
        Stock Units may be granted to an Eligible Employee 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 and/or Restricted Stock Units granted to each Eligible Employee
        (subject to Article 4 herein) and, consistent with the provisions of the
        Plan,
        in determining the terms and conditions pertaining to such Awards.

      

      8.2 Restricted
        Stock/Restricted Stock Unit Award Agreement.
        Each
        grant of Restricted Stock and/or Restricted Stock Units grant shall be evidenced
        by a Restricted Stock and/or Restricted Stock Unit Award Agreement that shall
        specify the number of shares of Restricted Stock and/or Restricted Stock
        Units
        granted, the initial value (if applicable), the Period or Periods of
        Restriction, and such other provisions as the Committee shall
        determine.

      

      8.3 Transferability.
        Except
        as otherwise determined by the Committee, during the applicable Period of
        Restriction, a Participant's rights with respect to the Restricted Stock
        and
        Restricted Stock Units granted under the Plan shall be available during the
        Participant's lifetime only to such Participant or the Participant's legal
        representative, and Restricted Stock and Restricted Stock Units may not be
        sold,
        transferred, pledged, assigned, or otherwise alienated or hypothecated other
        than by will or by the laws of descent and distribution.

      

      8.4 Certificates.
        No
        certificates representing Stock shall be issued to a Participant until such
        time
        as all restrictions applicable to such Stock 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 receive
        a certificate. Payment of Restricted Stock Units shall be made after the
        last
        day of the Period of Restriction applicable thereto. The Committee, in its
        sole
        discretion, may pay Restricted Stock Units in cash or in Stock (or in a
        combination thereof), which has an aggregate Fair Market Value equal to the
        value of the Restricted Stock Units.

      

      8.6 Voting
        Rights.
        During
        the Period of Restriction, Participants may exercise full voting rights with
        respect to the Restricted Stock.

      

      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 shall receive all regular cash dividends
        paid with respect to the Restricted Stock while it is 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 promptly after the full vesting of the
        Restricted Stock with respect to which such distributions were
        made.

      

      Rights,
        if any, to Dividend Equivalents on Restricted Stock Units shall be established
        by the Committee at the time of grant and set forth in the Award
        Agreement.

      

      8.8 Termination.
        Each
        Restricted Stock/Restricted Stock Unit Award Agreement shall set forth the
        extent to which the Participant shall have the right to receive Restricted
        Stock
        and/or a Restricted Stock Unit payment following termination of the
        Participant's employment with the Company and its Subsidiaries. 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 Restricted Stock/Restricted Stock Units or among Participants
        and
        may reflect distinctions based on the reasons for termination.

      

      

      Article
        9. Performance
        Units and Performance Stock

      

      9.1 Grant
        of Performance Units and Performance Stock.
        Subject
        to the terms and conditions of the Plan, Performance Units and/or Performance
        Stock may be granted to an Eligible Employee 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 shares of Performance Stock granted to each Eligible
        Employee (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 Stock Award Agreement.
        Each
        grant of Performance Units and/or Performance Stock shall be evidenced by
        a
        Performance Unit and/or Performance Stock Award Agreement that shall specify
        the
        number of Performance Units and/or shares of Performance Stock 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 Stock.
        Each
        Performance Unit shall have an initial value that is established by the
        Committee at the time of grant. The value of a share of Performance Stock
        shall
        be equal to the Fair Market Value of a share of Stock. 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
        Stock that will be paid out to the Participants. 

      

      9.4 Earning
        of Performance Units/Performance Stock.
        After
        the applicable Performance Period has ended, the Participant shall be entitled
        to receive a payout with respect to the Performance Units/Performance Stock
        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 Stock.
        Payment
        of earned Performance Units/Performance Stock shall be made following the
        close
        of the applicable Performance Period. The Committee, in its sole discretion,
        may
        pay earned Performance Units/Performance Stock in cash or in Stock (or in
        a
        combination thereof), which has an aggregate Fair Market Value equal to the
        value of the earned Performance Units/Performance Stock at the close of the
        applicable Performance Period. Such Stock may be granted subject to any
        restrictions deemed appropriate by the Committee.

      

      9.6 Termination.
        Each
        Performance Unit/Performance Stock Award Agreement shall set forth the extent
        to
        which the Participant shall have the right to receive a Performance
        Unit/Performance Stock payment following termination of the Participant's
        employment with the Company and its Subsidiaries 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 Stock or
        among
        Participants and may reflect distinctions based on reasons for
        termination.

      

      9.7 Transferability.
        Except
        as otherwise determined by the Committee, a Participant's rights with respect
        to
        Performance Units/Performance Stock granted under the Plan shall be available
        during the Participant's lifetime only to such Participant or the Participant's
        legal representative and Performance Units/Performance Stock may not be sold,
        transferred, pledged, assigned or otherwise alienated or hypothecated, other
        than by will or by the laws of descent and distribution. 

      

      

      Article
        10. Other
        Awards

      

      The
        Committee shall have the right to grant other Awards which may include, without
        limitation, the grant of Stock based on attainment of performance goals
        established by the Committee, the payment of Stock in lieu of cash or cash
        based
        on attainment of performance goals established by the Committee and the payment
        of Stock in lieu of cash under other Company incentive or bonus programs.
        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. Rights
        of Participants

      

      11.1 Termination.
        Nothing
        in the Plan shall interfere with or limit in any way the right of the Company
        or
        any Subsidiary to terminate any Participant's employment or other relationship
        with the Company or any Subsidiary at any time, for any reason or no reason
        in
        the Company's or the Subsidiary's sole discretion, nor confer upon any
        Participant any right to continue in the employ of, or otherwise in any
        relationship with, the Company or any Subsidiary.

      

      11.2 Participation.
        No
        Eligible Person shall have the right to be selected to receive an Award under
        the Plan, or, having been so selected, to be selected to receive a future
        Award.

      

      11.3 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 Stock 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.

      

      

      Article
        12. Change
        in Control

      

      The
        terms
        of this Article 12 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
                  vested
                  and exercisable;

              

      

      

      
        	 	
                (b)

              	
                Any
                  restriction periods and restrictions imposed on Restricted Stock
                  or
                  Restricted Stock Units shall be deemed to have expired; such Restricted
                  Stock shall become immediately vested in full and Stock certificates
                  shall
                  be delivered to Participants, and such Restricted Stock Units shall
                  be
                  paid out in cash; and

              

      

      

      
        	 	
                (c)

              	
                The
                  target payout opportunity attainable under all outstanding Awards
                  of
                  Performance Units and Performance Stock and any 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. All Awards shall
                  become
                  immediately vested. All Performance Stock and other Awards denominated
                  in
                  Stock shall be paid out in Stock, and all Performance Units and
                  other
                  Awards shall be paid out in cash.

              

      

      

      

      Article
        13. Amendment,
        Modification and Termination

      

      13.1 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.

      

      13.2 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
        14. Withholding

      

      14.1 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 (including any Stock withheld
        as
        provided below) 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.

      

      14.2 Stock
        Withholding.
        With
        respect to tax withholding required upon the exercise of Options or SARs,
        upon
        the lapse of restrictions on Restricted Stock, or upon any other taxable
        event
        arising out of or as a result of Awards granted hereunder, Participants may
        elect to satisfy the withholding requirement, in whole or in part, by tendering
        Stock held by the Participant or by having the Company withhold Stock having
        a
        Fair Market Value equal to the minimum statutory total tax which could be
        imposed on the transaction. All elections shall be irrevocable, made in writing
        and signed by the Participant.

      

      

      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 Stock 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, without regard to conflicts of law provisions.

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