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.
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 last
business 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, Investment Units in the
Participant's Deferred Compensation Account
shall be converted into dollars, on the
dates set forth below, based on the Market
Price of the Company's common stock on the
date of conversion. 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 the period before conversion, 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 then remaining credited and not
converted. Such amounts shall be converted
into additional Investment Units.
B. Payment. On the day that is six full
calendar months after the Participant's
date of leaving the Board, death or
disability, 20 percent of the value of the
Investment Units credited to the
Participant's Deferred Compensation Account
shall be converted to dollars and paid to
the Participant in substantially equal
monthly payments over a one-year period
(the "First Year Payout"). On the day that
is one year after the date of the first
conversion, 25 percent of the remaining
value of the Investment Units shall be
converted to dollars and paid to the
Participant in substantially equal monthly
payments over a one-year period (the
"Second Year Payout"). The following year,
33 1/3 percent of the remaining value shall
be converted and paid out as above (the
"Third Year Payout"), the fourth year, 50
percent of the remaining value shall be
paid out as the "Fourth Year Payout", and
the fifth year, the remaining balance shall
be paid out as the "Fifth Year Payout." As
indicated above, "dividends" shall be
credited on Investment Units before they
are converted, which shall be converted
into additional Investment Units. No
interest will be paid on amounts in the
Deferred Compensation Account.
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 nontransferable. 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.