MDU RESOURCES GROUP, INC
Amended and Restated
DEFERRED COMPENSATION PLAN FOR DIRECTORS
Effective January 1, 1992
I. PURPOSE
The Board of Directors of MDU Resources Group, Inc. (the
"Company") established the Deferred Compensation Plan for
Directors (the "Plan") effective as of September l, 1988. The
Plan is hereby amended and restated effective January 1, 1992,
and is substituted for the Restated Plan established by the
Company on August 1, 1991. The Plan shall continue until
terminated by the Board of Directors of the Company, subject to
the provisions of Article XII, below.
The purpose of this Plan is to aid the Company in attracting
and retaining as Directors persons whose abilities, experience
and judgment can contribute to the continued progress of the
Company. The Plan will provide a method of deferring
compensation to the Directors.
II. DEFINITIONS
A. Beneficiary. "Beneficiary" means the person or
persons designated as such in accordance with Article
XI.
B. Change in Control. "Change in Control" means the
earliest of the following to occur: (a) the public
announcement by the Company or by any person (which
shall not include the Company, any subsidiary of the
Company, or any employee benefit plan of the Company or
of any subsidiary of the Company) ("Person") that such
Person, who or which, together with all Affiliates and
Associates (within the meanings ascribed to such terms
in the Rule 12b-2 of the General Rules and Regulations
under the Exchange Act) of such Person, shall be the
beneficial owner of twenty percent (20%) or more of the
voting stock of the Company outstanding; (b) the
commencement of, or after the first public announcement
of any Person to commence, a tender or exchange offer
the consummation of which would result in any Person
becoming the beneficial owner of voting stock
aggregating thirty percent (30%) or more of the then
outstanding voting stock of the Company; (c) the
announcement of any transaction relating to the Company
required to be described pursuant to the requirements
of Item 6(e) of Schedule 14A of Regulation 14A under
the Exchange Act; (d) a proposed change in constituency
of the Board of Directors such that, during any period
of two (2) consecutive years, individuals who at the
beginning of such period constitute the Board of
Directors 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 least two-thirds
(2/3) of the Directors then still in office who were
members of the Board of Directors at the beginning of
the period; or (e) any other event which shall be
deemed by a majority of the Board of Directors to
constitute a "change in control".
C. Compensation and Deferral Amount. "Compensation"
means any cash retainer, meeting fees and any other
cash compensation payable to Eligible Directors by the
Company for services as a Director. This Deferred
Compensation Plan for Directors governs any or all of
that Compensation which the Participant elects to
credit to his Deferred Compensation Account, which is
hereafter referred to as the "Deferral Amount."
D. Deferred Compensation Account. "Deferred
Compensation Account" means the account maintained on
the books of account of the Company for each
Participant pursuant to Article VI.
E. Effective Date. "Effective Date" means January 1,
1992, the date on which the restated and amended Plan
became effective.
F. Eligible Director. "Eligible Director" means
those Directors of the Company who are not employees of
the Company.
G. Investment Units. This term shall have the
meaning defined in Article VI.B.
H. Market Price. "Market Price" means the average of
the highest and lowest transaction prices for the
Company's common stock on the New York Stock Exchange
for a given day.
I. Participant. "Participant" means an Eligible
Director participating in the Plan in accordance with
the provisions of Article IV.
J. Plan Year. "Plan Year" means the calendar year.
III. ADMINISTRATION OF THE PLAN
The Board of Directors shall be the sole administrator of
the Plan.
The Board of Directors may from time to time establish
rules and regulations for the administration of the Plan.
All determinations of the Board of Directors, irrespective
of their character or nature, including, but not limited to, all
questions of construction and interpretation, shall be final,
binding and conclusive upon all parties. Without limiting the
generality of the foregoing, the determination of the Board of
Directors as to whether a Participant has terminated his services
and the date thereof shall be final, binding and conclusive upon
all persons.
The Company and/or the Board of Directors may consult with
legal counsel, who may be counsel for the Company or other
counsel, with respect to its obligations and duties hereunder or
with respect to any claim, action or proceeding or any other
matter, and shall not be liable for any action taken or not taken
by it in good faith pursuant to the advice of such counsel.
The Chairman, at the direction of the Board of Directors
shall be responsible for maintaining books and records for the
Plan and adopting standard forms for such matters as beneficiary
designations and applications for benefits, provided such rules
and forms are not inconsistent with the provisions of the Plan.
Such books and records shall only be open for examination by a
Participant or his duly designated beneficiary to the extent that
they specifically involve the Deferred Compensation Account
created for his benefit or any payments which are to be made to
him or his beneficiary hereunder. Each Participant or his duly
designated beneficiary shall be notified no less frequently than
annually of the balance in his account.
Neither the Board of Directors nor any member of the Board
of Directors nor the Company nor any other person who is acting
on behalf of the Board of Directors or the Company shall be
liable for any act or failure to act hereunder except for gross
negligence or fraud.
IV. PARTICIPATION
All Eligible Directors, including any person who becomes a
Director after the effective date hereof, shall be Participants
in the Plan.
Each Participant in the Plan shall have the right to elect
to defer the payment of all or any part of his Compensation, with
such Deferral Amount to be payable at the time or times and in
the manner hereinafter stated. A Participant must defer at least
$1,000 per year.
Each Participant who elects to defer the payment of all or
any part of his Compensation shall execute and deliver to the
Board of Directors a "Notice of Election." Such Notice will
provide the percentage of his Compensation to be deferred, the
date such deferral is to commence and the beneficiary
designations of the Director. Such deferral election shall be
applicable only to Compensation earned by reason of services
rendered after the date of such Notice.
An election to defer Compensation shall continue in effect
until revoked or modified by a subsequent "Notice of Election,"
provided however, (1) that every election to defer shall be
irrevocable as to Compensation earned prior to the date of
revocation and (2) that such election may be changed no more
often than annually. Revocation or modification shall be made in
writing to the Board of Directors and shall be effective upon the
date stated therein.
V. VESTING OF DEFERRED COMPENSATION ACCOUNT
A Participant's interest in his Deferred Compensation
Account shall vest immediately with regard to Deferral Amounts
and earnings thereon.
VI. ACCOUNTS AND VALUATIONS
A. Deferred Compensation Accounts. The Board of
Directors shall establish and maintain a separate
Deferred Compensation Account for each Participant. The
Participant's Deferral Amount shall be credited to the
Participant's Deferred Compensation Account quarterly
on the first day of March, June, September and December
in amounts as nearly equal as possible.
B. Conversion to Investment Units. At the time a
Deferral Amount is credited to the Deferred
Compensation Account, it shall be converted to
Investment Units, by dividing the amount deferred by
the Market Price of the Company's stock on the first
trading day immediately preceding the deferral.
Fractional share Investment Units will be maintained in
the Account.
VII. DIVIDEND EQUIVALENTS
If a dividend is declared on the common stock of the
Company, an equivalent amount shall be credited to the
Participant's Deferred Compensation Account for each Investment
Unit. Such amounts shall be converted to additional Investment
Units, pursuant to Article VI.B.
VIII. DISTRIBUTION
A. Conversion of Investment Units to Dollars. When a
Participant leaves the Board of Directors, dies, or
becomes disabled, the number of Investment Units in his
Deferred Compensation Account shall be multiplied by
the Market Price of the Company's common stock on the
day that is six full calendar months after the date of
his leaving, death, or disability. If the New York
Stock Exchange is not open that day then it shall be
the Market Price on the next day the New York Stock
Exchange is open. During this six month period, if a
dividend is declared on common stock of the Company, an
equivalent amount shall be credited to the
Participant's Deferred Compensation Account for each
Investment Unit. Such amounts shall be credited in cash
and shall not be converted to additional Investment
Units.
B. Payment. The dollar value of the Investment Units
contained in the Participant's Deferred Compensation
Account shall be paid to him in substantially equal
monthly payments over five years, with interest at a
fixed rate over the five-year period. The fixed rate
shall be the prime rate plus 1 percentage point on the
day the value of the Investment Units is determined
according to this Article VIII. The "prime rate," for
purposes of this paragraph, shall be the base rate on
corporate loans posted by at least 75 percent of the
nation's 30 largest banks as reported daily in The Wall
Street Journal.
C. Change in Control. The terms of this Article
VIII. C 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 the Plan.
Upon a Change in Control, all Investment Units in
a Participant's Deferred Compensation Account shall be
multiplied by the Market Price of the Company's common
stock on such day. If the New York Stock Exchange is
not open on that day, then it shall be the Market Price
on the next day the New York Stock Exchange is open.
The dollar value of the Investment Units contained in
each Participant's Deferred Compensation Account shall
be paid out immediately thereafter to the Participant
(a "Change in Control Payment").
In addition, the Company shall pay to the
Participant an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the
Participant of all federal and state income taxes
(including, without limitation, any and all federal and
state income taxes imposed upon the Gross-Up Payment)
the Participant retains an amount of the Gross-Up
Payment equal to the federal and state income taxes
imposed upon the Change in Control Payment.
All determinations required to be made under this
Article VIII.C, including when a Gross-Up Payment is
required, the amount of such Gross-Up Payment, and the
assumptions to be utilized in arriving at such
determination, shall be made by a certified public
accounting firm designated by the Participant (the
"Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and the
Participant within 15 business days of the receipt of
notice from the Participant that there has been a
Change in Control Payment (or such earlier time as is
requested by the Company). All fees and expenses of
the Accounting Firm related to the calculations
required by this Article VIII.C shall be borne solely
by the Company. Any Gross-Up Payment, as determined
pursuant to this Article VIII.C, shall be paid by the
Company to the Participant within five days of the
receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding
upon the Company and the Participant.
IX. TAX WITHHOLDING UPON DISTRIBUTION
To the extent required by law, the Company shall withhold
from payments made hereunder any taxes required to be withheld by
the federal or any state or local government.
X. COMMENCEMENT OF PAYMENTS
Except as otherwise provided in this Plan, commencement of
payments under this Plan shall begin as soon as administratively
feasible after the value of the Investment Units is determined
according to Article VIII.
XI. BENEFICIARY DESIGNATION
Each Participant shall have the right at any time to
designate any person or persons as Beneficiary or Beneficiaries
(both principal and contingent) to whom payment under this Plan
shall be paid in the event of death prior to complete
distribution of the deferred amounts under the Plan. Each
beneficiary designation shall become effective only when filed in
writing with the Board of Directors during the Participant's
lifetime on a form provided by the Board of Directors.
The filing of a new beneficiary designation form will cancel
all beneficiary designations previously filed. Any finalized
divorce of a Participant subsequent to the date of filing of a
beneficiary designation form shall revoke such designation. The
spouse of a married Participant domiciled in a community property
jurisdiction shall join in any designation of Beneficiary or
Beneficiaries other than the spouse.
If a Participant fails to designate a Beneficiary as
provided above or if the beneficiary designation is revoked by
divorce, or otherwise, without execution of a new designation, or
if all designated Beneficiaries predecease the Participant or die
prior to complete distribution of the Participant's benefits,
then the distribution of such benefits shall be made to the
Participant's estate.
If any distribution to a Beneficiary is to be made in
installments, and the primary Beneficiary dies before receiving
all installments, the remaining installments, if any, shall be
paid to the estate of the primary Beneficiary in a lump sum.
XII. AMENDMENT AND TERMINATION OF PLAN
A. Amendment. The Company may at any time amend the
Plan in whole or in part, provided, however, that
except as provided in Article XII.B., no amendment
shall act to reduce the benefits under the Plan payable
to any Participant with respect to any Deferral Amount
credited to the Participant's Deferred Compensation
Account prior to the date of the amendment. Written
notice of any amendments shall be given to each
Participant.
B. Termination of Plan
1. Company's Right to Terminate. The Board
of Directors may at any time terminate the Plan.
2. Payments Upon Termination. Upon any
termination of the Plan under this section no
additional Deferral Amounts will be credited to
the Participant's Deferred Compensation Account.
The Investment Units recorded in such Account
shall be converted into dollars pursuant to
Article VIII.A. and paid in a lump sum to the
Participant or the Participant's Beneficiary.
XIII. MISCELLANEOUS
A. Unsecured General Creditor. Participants and
their beneficiaries, heirs, successors, and assigns
shall have no legal or equitable rights, interests, or
other claims in any property or assets of the Company,
nor shall they be beneficiaries of, or have any rights,
claims, or interests in any specified assets of the
Company. Any and all of the Company's assets shall be
and remain general, unpledged, unrestricted assets of
the Company. The Company's obligation under the Plan
shall be that of an unfunded and unsecured promise of
Company to pay money in the future.
B. Obligations to the Company. If a Participant
becomes entitled to a distribution of benefits under
the Plan, and if at such time the Participant has
outstanding any debt, obligation, or other liability
representing an amount owed to the Company, then the
Company may offset such amounts owing it or an
affiliate against the amount of benefits otherwise
distributable. Such determination shall be made by the
Board of Directors.
Establishment of this Plan and the participation
by any person shall not be construed to confer any
right on the part of such person to be nominated for
reelection, or to be reelected, to the Board of
Directors of the Company.
C. Nonassignability. Neither a Participant nor any
other person shall have any right to commute, sell,
assign, transfer, pledge, anticipate, mortgage, or
otherwise encumber, transfer, hypothecate, or convey in
advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be
unassignable and nontransfer-able. No part of the
amounts payable shall, prior to actual payment, be
subject to seizure or sequestration for the payment of
any debts, judgments, alimony or separate maintenance
owed by a Participant or any other person, nor be
transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or
insolvency.
D. Protective Provisions. A Participant will
cooperate with the Company by furnishing any and all
information requested by the Company in order to
facilitate the payment of any amounts hereunder. If a
Participant refuses to cooperate, the Company shall
have no further obligation to the Participant under the
Plan.
E. Gender, Singular and Plural. Wherever the context
so requires, words in the masculine include the
feminine and words in the feminine include the
masculine and the definition of any term in the
singular may include the plural.
F. Captions. The captions to the articles, sections,
and paragraphs of this Plan are for convenience only
and shall not control or affect the meaning or
construction of any of its provisions.
G. Applicable Law. This Plan shall be construed,
administered and governed in accordance with the laws
of the State of North Dakota.
H. Validity. In the event any provision of this Plan
is held invalid, void, or unenforceable, the same shall
not affect, in any respect whatsoever, the validity of
any other provision of this Plan.
I. Notice. Any notice or filing required or
permitted to be given to the Board of Directors shall
be sufficient if in writing and hand delivered, or sent
by registered or certified mail, to the principal
office of the Company, directed to the attention of the
Secretary of the Company. Such notice shall be deemed
given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on
the receipt for registration or certification.