Document:

ex104.htm

EXHIBIT 10.4

LANCE, INC.

1995 NONQUALIFIED STOCK OPTION PLAN

FOR NON-EMPLOYEE DIRECTORS

(As amended through September 30, 2010)

1.           Purpose.  This Plan is intended to provide Directors who are not employees of the Company a sense of proprietorship and personal involvement in the development and financial success of the Company and to encourage such Directors to remain with and to devote their best efforts to the Company.

2.           Definitions.  Whenever used in the Plan, unless the context clearly indicates otherwise, the following terms shall have the following meanings:

(a)           “Act” means the Securities Exchange Act of 1934, as amended.

(b)           “Board” or “Board of Directors” means the Board of Directors of the Company.

(c)           “Common Stock” means the Common Stock, $.83-1/3 par value, of the Company and any other stock or securities resulting from the adjustment thereof or substitution therefor as described in Section 8 below.

(d)           “Company” means Lance, Inc., a North Carolina corporation, and any corporation succeeding to the Company’s rights and obligations hereunder.

(e)           “Director” means a member of the Board of Directors of the Company who is not a regular employee of the Company or its subsidiaries.

(f)           “Disability” means the condition which results when an individual has become permanently and totally disabled within the meaning of Section 105(d)(4) of the Internal Revenue Code of 1986.

(g)           “Fair Market Value”, with respect to a share of the Common Stock on a particular date, shall be (i) if such Common Stock is listed on a national securities exchange or a foreign securities exchange or traded on the National Market System, the closing sale price of the Common Stock on said date on the national securities exchange, the foreign securities exchange or the National Market System on which the Common Stock is principally traded, or, if no sales occur on said date, then on the next preceding date on which there were such sales of Common Stock, or (ii) if the Common Stock shall not be listed on a national securities exchange or a foreign securities exchange or traded on the National Market System, the mean between the closing bid and asked prices last reported by the National Association of Securities Dealers, Inc. for the over-the-counter market on said date or, if no bid and asked prices are reported on said date, then on the next preceding date on which there were such quotations, or (iii) if at any time quotations for the Common Stock shall not be reported by the National Association of Securities Dealers, Inc.  for the over-the-counter market and the Common Stock shall not be listed on any national securities exchange or any foreign securities exchange or traded on the National Market System, the fair market value based on quotations for the Common Stock by market makers or other securities dealers as determined by the Board of Directors in such manner as the Board may deem reasonable.

(h)           “Option” means a stock option granted pursuant to this Plan.

(i)           “Optionee” means the person to whom an Option is granted.

(j)           “Option Price” is defined in Section 6.

(k)           “Plan” means this 1995 Nonqualified Stock Option Plan for Non-Employee Directors, as in effect from time to time.

(l)           “Retirement” means retirement as a member of the Board of Directors as provided in its Governance Principles that no person shall be nominated for election to the Board of Directors for a term beginning after the Director’s 70th birthday.

(m)           “Stock Option Agreement” means the written agreement between an Optionee and the Company evidencing the grant of an Option under the Plan and setting forth or incorporating the terms and conditions thereof.

3.           Administration.  The Plan shall be administered by the Board of Directors.  The Board shall have all of the powers necessary to enable it properly to carry out its duties under the Plan, including but not limited to the power and duty to construe and interpret the Plan and to determine all questions that shall arise under the Plan, which interpretations and determinations shall be conclusive and binding upon all persons.  Subject to the express provisions of the Plan, the Board may establish from time to time such regulations, provisions and procedures which in its opinion may be advisable in the administration of the Plan.

Notwithstanding the foregoing or any other provision of this Plan to the contrary, no discretion concerning decisions regarding the Plan shall be afforded to a person who is not a “disinterested person” (as defined in the rules and regulations of the Securities and Exchange Commission under Section 16 of the Act, as in effect from time to time).  In the event that it is necessary for the proper administration of the Plan to exercise any such discretion, and the Board is so precluded from exercising such discretion, the Board may delegate any authority to exercise such discretion to a person or committee of persons, each of whom is a “disinterested person” as so defined.

4.           Eligibility; Option Grants.  Each Director serving on May 1 of each calendar year beginning May 1, 1995 shall automatically be granted an option to purchase shares of the Common Stock on May 1 of such calendar year.  The first such Option for a Director shall be for 2,500 shares and each subsequent Option shall be for 4,000 shares with the number of shares being subject to adjustment or substitution as provided in Section 8 hereof; provided, however, that such automatic grants shall be made pro rata to all Directors if on the date of a grant there shall not be a sufficient number of shares of Common Stock available under the Plan to make all such grants.

5.           Shares Available for Option.  The Board of Directors shall reserve for the purposes of the Plan, and by adoption of the Plan does hereby reserve, out of the authorized but unissued Common Stock, a total of 300,000 shares of Common Stock of the Company, subject to adjustment or substitution as provided in Section 8 hereof.  In the event that an Option expires or is terminated unexercised as to any shares covered thereby, such shares shall not thereafter be available for the granting of Options under the Plan and the reserve for such shares shall be terminated.

6.           Option Price.  The price at which each share of Common Stock, subject to adjustment as provided in Section 8 hereof, may be purchased upon the exercise of an Option (the “Option Price”) shall be the Fair Market Value of the shares of Common Stock subject to the Option on the date such Option is granted.

7.           Exercise of Options.

(a)           Each Option by its terms shall require the Optionee granted such Option to remain available to serve as a Director of the Company for one year from the date of the grant of such Option before the right to exercise any part of such Option will accrue; provided, however, the first such Option granted to a Director by its terms shall require the Optionee to remain available to serve as a Director of the Company for only six months from the date of grant of such Option before the right to exercise any part of such Option will accrue.  The Optionee may thereafter exercise any or all of such option until the expiration or termination of the option; provided, that not less than 100 shares may be purchased at any one time unless the number of shares purchased is the total number at such time purchasable under the Option.  Subject to earlier termination as provided herein, all Options granted shall expire ten years from the date of grant thereof.

(b)           If an Optionee shall cease to be a Director otherwise than by such Optionee’s death, Disability or Retirement, then, subject to Subsection 7(a) hereof, the Option shall be exercisable at any time prior to the earlier of (i) the expiration date of such Option or (ii) that date which is three months from the date such Optionee ceases to be a Director, such three month period to include the date on which such termination occurs.  If an Optionee ceases to be a Director as a result of such Optionee’s death or Disability, then, subject to Subsection 7(a) hereof, the Option shall be exercisable at any time prior to the earlier of (i) the expiration date of such option or (ii) that date which is one year from the date such Optionee ceases to be a Director.  If an Optionee ceases to be a Director as a result of such Optionee’s Retirement, then, subject to Subsection 7(a) hereof, the Option shall be exercisable  at any time prior to the earlier of (i) the expiration date of such Option or (ii) that date which is three years from the date such Optionee ceases to be a Director.

(c)           Each Option by its terms shall not be transferable by the Optionee otherwise than by will, or if the Optionee dies intestate, by the laws of descent and distribution, and such Option shall be exercisable during such Optionee’s lifetime only by such Optionee.  In the event of the death of an Optionee, then such Optionee’s Options shall be exercisable to the extent herein provided by the executor or personal representative of the Optionee’s estate or by any person who acquired the right to exercise such Option by bequest under the Optionee’s will or by inheritance.

(d)           Each Option shall be confirmed by a Stock Option Agreement.

(e)           The Option Price for each share of Common Stock purchased pursuant to the exercise of each Option shall, at the time of the exercise of the Option, be paid in full in cash or equivalent.  An Option shall be deemed exercised only when written notice of such exercise, together with payment of the Option Price, is received from the Optionee by the Company at its principal office.  No Optionee shall have any rights as a shareholder of the Company with respect to Common Stock issuable pursuant to such Optionee’s Option until such Option is duly exercised.

(f)           To the extent that an Option is not exercised within the period of time prescribed therefor as set forth in the Plan, the Option shall lapse and all rights of the Optionee thereunder shall terminate.

8.           Adjustment of Number of Shares.  In the event that a dividend shall be declared on the Common Stock payable in shares of the Common Stock, the number of shares of Common Stock subject to grant to each Director each calendar year, the number of shares then subject to any Option and the number of shares reserved for issuance pursuant to the Plan shall be adjusted by adding to each such share the number of shares which would be distributable thereon if such share had been outstanding on the date fixed for determining the shareholders entitled to receive such stock dividend.  In the event that the outstanding shares of Common Stock generally shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, or changed into or exchanged for cash or property or the right to receive cash or property (but not including any regular cash dividend), whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation, then there shall be substituted for each share of Common Stock subject to grant to each Director each calendar year and subject to any Option, and for each share of Common Stock reserved for issuance pursuant to the Plan, the number and kind of shares of stock or other securities or cash or property or right to receive cash or property into which each outstanding share of Common Stock shall be so changed or for which each such share shall be exchanged.  In the case of any such substitution or adjustment as provided for in this Section 8, the Option Price for each share covered thereby prior to such substitution or adjustment shall be the Option Price for all shares of stock or other securities or cash or property or right to receive cash or property which shall have been substituted for such share or to which such share shall have been adjusted pursuant to this Section 8.  No adjustment or substitution provided for in this Section 8 shall require the Company in any Stock Option Agreement to issue a fractional share and the total substitution or adjustment with respect to each Stock Option Agreement shall be limited accordingly.

9.           Amendment of Plan.  The Board of Directors shall have the right to amend, suspend or terminate the Plan at any time; provided that, except as and to the extent authorized and permitted by Section 8 above, (a) no amendment, suspension or termination shall adversely affect the rights of any Optionee as to any outstanding Option without the consent of such Optionee, subject to any limitation on such rights set forth in the Plan or such Optionee’s Stock Option Agreement except for any amendment the Board deems necessary to preserve or provide exemptions from the applicability of Section 16(b) of the Act to the grant, lapse, disposition, cancellation or exercise of Options; and (b) no amendment relating to the determination of the Optionees or of the grant dates or of the number of Options granted to any Optionee, or of the requirement that no discretion concerning decisions regarding the Plan shall be afforded to a person who is not a “disinterested person,” shall be made more than once every six months, other than to comport with changes in the Internal Revenue Code of 1986 or the rules thereunder.

10.           Resales of Shares.  The Company may impose such restrictions on the sale or other disposition of shares issued pursuant to the exercise of Options as the Board deems necessary to comply with applicable securities laws.  Certificates for shares issued upon the exercise of Options may bear such legends as the Company deems necessary to give notice of such restrictions.

11.           Compliance with Law and Other Conditions.  No shares shall be issued pursuant to the exercise of any Option prior to compliance by the Company, to the satisfaction of its counsel, with any applicable laws.  The Company shall not be obligated to (but may in its discretion) take any action under applicable federal or state securities laws (including registration or qualification of the Plan, the Options or the Common Stock) necessary for compliance therewith in order to permit the issuance of shares upon the exercise of Options or the immediate resale thereof by Optionees, except for actions (other than registration or qualification) that may be taken by the Company without unreasonable effort or expense and without the incurrence of any material exposure to liability.

12.           Nonqualified Options.  Options granted under the Plan will not be treated as “incentive stock options” under Section 422 of the Internal Revenue Code of 1986.

13.           Effective Date.  The Plan shall be effective on February 21, 1995, subject to approval of the Plan by a plurality of the shares voting on the approval of the Plan at the 1995 Annual Meeting of Stockholders.  Until such approval shall be obtained, no Options shall be exercisable and if such approval shall not be obtained prior to the completion of the 1995 Annual Meeting of Stockholders, this Plan and all Options granted hereunder shall be void.exhibit10a.htm

 

MDU RESOURCES GROUP, INC.

DIRECTORS' COMPENSATION POLICY

Each Director who is not a full-time employee of the Company shall receive compensation made up of annual cash retainers and common stock.  Each Director is also eligible for awards under the Non-Employee Director Long-Term Incentive Compensation Plan.

Director Compensation

	
Annual Cash Retainers

	  	  	  
	  	
Base Retainer

 

	
$55,000

 

	  	
Additional Retainers:

 

	  
	  	
Non-Executive Chairman of the Board

 

	
75,000

 

	  	
Lead Director, if any

 

	
33,000

 

	  	
Chairman of Audit Committee

 

	
10,000

 

	  	
Chairman of Compensation Committee

 

	
5,000

 

	  	
Chairman of Nominating and Governance Committee

 

	
5,000

 

Such cash retainers shall be paid in monthly installments.

The MDU Resources Group, Inc. Deferred Compensation Plan for Directors (as amended and restated effective May 15, 2008) permits a Director to defer all or any portion of the annual cash retainers.  The amount deferred is recorded in each participant's deferred compensation account and credited with income in the manner prescribed in the Plan.  For further details, reference is made to the Plan, a copy of which is attached.

Common Stock

Each person who is a Director of the Company at any time during the calendar year shall receive 4,050 shares of Common Stock on or about the Wednesday following the Board of Directors’ regularly-scheduled November meeting, pursuant to the Non-Employee Director Stock Compensation Plan.  The stock payment shall be prorated for any Director who does not serve the entire calendar year by multiplying 4,050 by a fraction, the numerator of which is the number of actual or expected months (with a partial month counted as a full month) of service on the Board during the calendar year and the denominator of which is twelve.

By written election a Director may reduce his or her annual cash retainers and have that amount applied to the purchase of additional shares pursuant to the Non-Employee Director Stock Compensation Plan.  The election must be made on a form provided by the administrative committee and returned to the committee by

 

  

  

  

the last business day of the year prior to the year in which the election is to be effective.  The election remains in effect until changed or revoked.  No election may be changed or revoked for the current year, but may be changed for a subsequent year.  For further details, reference is made to the Non-Employee Director Stock Compensation Plan, a copy of which is attached.

Travel Expense Reimbursement

All Directors will be reimbursed for reasonable travel expenses incurred while serving as a Director, including spouse’s expenses, in connection with attendance at meetings of the Company’s Board of Directors and its committees.  If the travel expense is related to the reimbursement of commercial airfare, such reimbursement will not exceed full-coach rate.  If the travel expense is related to reimbursement of non-commercial airfare, such reimbursement will not exceed the rate for comparable travel by means of commercial airline at the first-class rate.  Spousal travel expenses paid by the Company are treated as taxable income to the Director.  See the paragraph below entitled "Code Section 409A" for further rules relating to travel expense reimbursements.

Directors' Liability

Article Seventeenth of the Company's Restated Certificate of Incorporation provides that no Director of the Company shall be liable to the Company or its stockholders for breach of fiduciary duty as a Director, with certain exceptions stated below.  Section 7.07 of the Company's Bylaws requires the Company to indemnify fully a Director against expenses, attorneys fees, judgments, fines and amounts paid in settlement of any suit, action or proceeding, whether civil or criminal, arising from an action of a Director by reason of the fact that the Director was a Director of MDU Resources Group, Inc.

There are exceptions to the protections under Article Seventeenth of the Company’s Restated Certificate of Incorporation:  breaches of the Directors' duty of loyalty to the Company or its stockholders, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, violation of Section 174 of the Delaware General Corporation Law (relating to unlawful declaration of dividends and unlawful purchase of the company's stock), and transactions from which the Director derived an improper personal benefit (including short-swing profits under Section 16(b) of the Securities Exchange Act of 1934).

Additional protection is provided through individual indemnification agreements with each Director.

The Company has and does maintain Directors' and Officers' liability insurance coverage with a $125 million limit.

  

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Insurance Coverages

The Company maintains the following insurance for protection of its Directors as they carry out the business of MDU Resources Group, Inc., which shall be provided while serving as a Director:

	
  

	
1.

	
General liability and automobile liability insurance:

	
  

	
If driving a personal vehicle, the Directors are afforded automobile liability coverage excess of their own personal automobile insurance under a combination of policies with program limits to $100 million after a self-insured retention of $500,000.  If driving a vehicle owned by the Company, personal automobile insurance does not apply.

	
  

	
For general liability, coverage is provided to Directors under a combination of policies with program limits to $100 million after a self-insured retention of $500,000.

	
  

	
2.

	
Fiduciary and employee benefit liability insurance:

	
  

	
The Directors are afforded coverage under the fiduciary and crime liability insurance policies.  The fiduciary policy has a limit of $35 million and the crime policy has a limit of $10 million.

	
  

	
3.

	
Aircraft liability insurance:

	
  

	
The Company's existing aircraft liability insurance extends coverage while a hired, non-owned* aircraft is used by a Director in traveling to and from Director or Board committee meetings.  This insurance coverage is excess of any underlying policy that may exist and provides limits of $200 million.

	
  

	
*Non-owned aircraft is defined as:  1) any aircraft registered under a “standard” airworthiness certificate issued by the FAA; 2) aircraft with a seating capacity not exceeding 40 seats; 3) aircraft that are not owned by MDU Resources Group, Inc. or any of its subsidiaries; 4) aircraft that are not partly or wholly owned by or registered in the Director’s name or the name of any Director’s household member.

  

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4.

	
Travel and sojourn insurance:

	
  

	
All Directors are protected by a group insurance policy with coverage of $250,000 that provides 24-hour accident protection while traveling on Company business.

	
  

	
Coverage in all instances begins at the actual start of a business trip and ends when the Director returns to his/her home or regular place of employment.

	
  

	
The beneficiary of the insurance will be that beneficiary recorded on a beneficiary designation card provided by the Company.

	
  

	
5.

	
Group life insurance:

	
  

	
All outside Directors are protected by a non-contributory group life insurance policy with coverage of $100,000.

	
  

	
The coverage begins the day the Director is elected to the Board of Directors and terminates when the Director ceases to be an outside Director.

	
  

	
A Certificate of Insurance shall be provided to the Director and the beneficiary of the insurance will be that beneficiary recorded on a beneficiary designation card provided by the Company.

	
  

	
This protection is considered taxable compensation under current tax laws.  Consequently, the Company will provide each Director annually on Form 1099 the amount of taxable income related to this coverage.

Hedging Stock Ownership

 

Directors are not permitted to hedge their ownership of Company common stock.  Hedging strategies include but are not limited to zero-cost collars, equity swaps, straddles, prepaid variable forward contracts, security futures contracts, exchange funds, forward sale contracts and other financial transactions that allow the Director to benefit from devaluation of the Company's stock.  Hedging strategies may allow Directors to own stock technically but without the full benefits and risks of such ownership.  Therefore, Directors are prohibited from engaging in any such transactions.

  

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Code Section 409A

To the extent any reimbursements or in-kind benefits provided to a Director pursuant to this policy constitute “deferred compensation” under Internal Revenue Code Section 409A, any such reimbursement or in-kind benefit shall be paid in a manner consistent with Treasury Regulation Section 1.409A-3(i)(1)(iv), including the requirements that the amount of reimbursable expenses or in-kind benefits provided during a year may not affect the expenses eligible for reimbursement or in-kind benefits provided in any other year and that any reimbursement be made on or before the last day of the calendar year following the calendar year in which the expense was incurred.

  

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