MDU RESOURCES
 
 
GROUP, INC.
 
 
1200 West Century Avenue
 
Terry D. Hildestad
Bismarck, ND 58503
 
President and
Chief Executive Officer
Mailing Address:
January 22, 2011
 
P.O. Box 5650
 
Bismarck, ND 58506-5650
 
 
(701) 530-1000
 
 

                            
Mr. J. Kent Wells
18939 Camillo Court
Houston, TX 77094

Dear Kent:

Thank you for the time discussing the Fidelity Exploration & Production Company
opportunity with Harry Pearce and me. We are excited to have you join our
management team and have outlined the following offer of employment, conditioned
upon a successful background review. Please note that as an officer subject to
Section 16 of the Securities Exchange Act of 1934, your compensation will be
subject to review and approval by the MDU Resources Group, Inc. Compensation
Committee of the Board of Directors (the Compensation Committee) and the MDU
Resources Group, Inc. Board of Directors:

Title: President and Chief Executive Officer (CEO), Fidelity Exploration &
Production Company (Fidelity E&P).

Hire Date: May 2, 2011.

Reporting Relationship: This position will report to me and be a member of our
Management Policy Committee.

Duties: As President and CEO of Fidelity E&P, you will perform such duties as
the MDU Resources Group, Inc. Board of Directors may from time to time require
which are consistent with those customarily performed by a chief executive of a
business such as Fidelity E&P. You agree to devote your entire working time and
energy to the interests and business of Fidelity E&P.

Base Salary: $550,000 annually, paid on a bi-weekly basis. As a Section 16
officer, your future salary will be determined by the Compensation Committee,
which typically meets in November of each year to determine next year's base
salaries of Section 16 officers.

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MDU RESOURCES GROUP, INC.

Annual Incentive (Executive Incentive Compensation Plan) (EICP): Targeted amount
is 100% of base salary, and actual payment will range from 0% to 200% of the
targeted amount. For 2011, your EICP payment will be no less than the targeted
amount and will be pro-rated by 66.67% to reflect eight (8) months of employment
in 2011. Your 2011 EICP will be based on results weighted 75% for Fidelity E&P
and 25% for WBI Holdings, Inc.

Long-Term Incentive Plan (LTIP): Targeted amount is 200% of base salary, and you
will begin participation in the LTIP in 2012. Any payments made pursuant to the
LTIP will be made in shares of MDU Resources Group, Inc. common stock.

Recruitment Incentive: As an inducement to join Fidelity E&P, we will issue a
one-time lump-sum payment of $550,000, to be paid to you on or before June 3,
2011. This payment will be subject to payroll withholding tax.

Special Performance Bonus: If Fidelity E&P's fiscal year 2011 cash flow from
operations is above $132,000,000, and if you do not resign from your position
before January 2, 2012, we will issue you a one-time payment of $1,850,000
before March 10, 2012. The payment, after reduction for payroll withholding
taxes, will be made to you one-half in MDU Resources Group, Inc. common stock
and one-half in cash. We will use the closing share price on January 2, 2012, to
calculate the portion of the payment remitted to you in shares of MDU Resources
Group, Inc. common stock.

In the event the aforementioned 2011 cash flow level is achieved but your
employment ends before January 2, 2012, due to a change in control (as defined
under Section 409A of the Internal Revenue Code), the company will pay the
Special Performance Bonus as outlined above.

Stock Ownership Requirement: As a senior member of management you will be
required to accumulate and retain three times your base salary in MDU Resources
Group, Inc. common stock over the next five years. Our expectation is that you
retain shares paid to you under the LTIP and Special Performance Bonus until the
stock ownership requirement is met.
  
Employee Benefits: You will be eligible to participate in Fidelity E&P's
employee benefits package, including medical and dental insurance, 401(k), paid
time off, company paid life insurance, company paid disability insurance and
other benefits. A summary of Fidelity E&P's employee benefits is outlined in the
attachment.

Please note that on your first paycheck dated May 20, 2011, you will begin with
a vacation balance of 60 hours and in addition will begin a vacation accrual
rate of

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MDU RESOURCES GROUP, INC.

224 hours per year.  The 224 hours per year represents the accrual rate for a
Fidelity E&P employee with 29 years of service or higher.  You will earn
8.62 hours each pay period with an accumulated vacation cap up to one and
one-half times the annual rate which is equivalent to 336 hours.

Relocation: To facilitate your move from the Houston area to Denver, we are
offering relocation assistance. This is outlined on the attached Relocation
Summary.

Confidential Information/Non-Disclosure: You acknowledge that the business of
Fidelity E&P is highly competitive and that Fidelity E&P is providing you with
access to Confidential Information relating to its business. “Confidential
Information” means and includes Fidelity E&P's confidential and/or proprietary
information and/or trade secrets. Confidential Information includes, by way of
example and without limitation, the following: (i) Fidelity E&P's trade secrets,
inventions, formulas, designs, drawings, specifications and engineering or
production processes; (ii) information about Fidelity E&P (or other companies
within the MDU Resources Group Inc. family of companies) employees and the terms
and conditions of their employment; or (iii) business plans, oil and gas data
and related items. You acknowledge that this Confidential Information
constitutes a valuable, special and unique asset used by Fidelity E&P in its
business to obtain a competitive advantage. You further acknowledge that
protection of such Confidential Information against unauthorized disclosure and
use is of critical importance to Fidelity E&P in maintaining its competitive
position.

You agree that you will not, at any time during or after the termination of your
employment with Fidelity E&P for any reason whatsoever, make any unauthorized
disclosure of any Confidential Information, or make any use of Confidential
Information, except in the carrying out of your employment responsibilities on
behalf of the Company or as may be required by law or a court order. You also
agree to preserve and protect the confidentiality of third party Confidential
Information to the same extent, and on the same basis, as Fidelity E&P's
Confidential Information.

No Solicitation: You agree that for a period of two (2) years following the
termination of your employment with Fidelity E&P for any reason whatsoever, you
will not, directly or indirectly, solicit for employment, any person who is
employed by the Company or any of its affiliates on the date of your termination
or at any time within one (1) year or prior thereto; or cause, invite, solicit,
entire or induce any such person to terminate his employment with the Company or
any of its affiliates.

Miscellaneous: To the extent not governed by federal law, this Agreement will be
construed in accordance with the laws of the State of Colorado. A waiver of any
breach of or compliance with any provision of condition of this Agreement is not
a

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MDU RESOURCES GROUP, INC.

waiver of similar or dissimilar provisions or conditions. The invalidity or
unenforceability of any provision of this Agreement will not affect the validity
or enforceability of any other provision of this Agreement, which will remain in
full force and effect. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement.

Again, we are excited to have you on the MDU Resources Group, Inc. team and look
forward to our mutual successes and accomplishments.

Sincerely,

/s/ Terry D. Hildestad

Terry D. Hildestad
 

I agree to the terms of
Employment as described above:

/s/ J. Kent Wells
J. Kent Wells

Date: 3/9/11
 

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FIDELITY EXPLORATION & PRODUCTION COMPANY
SUMMARY OF EMPLOYEE BENEFITS
2011

This is a brief description of your benefits. Coverage under any of these plans
is not guaranteed. The Company expects to continue the benefit plans
indefinitely, but reserves the right to amend or terminate at any time.

MEDICAL
The Company offers a choice of three medical plans effective with the date of
employment. The plans and premiums vary by plan design. All plans are
self-funded and are administered by BlueCross BlueShield of Minnesota (BCBSMN).

The BlueCard PPO Plan is a managed care plan using a provider network. Services
incurred are subject to a deductible, co-payment and any applicable
co-insurance.

The Consumer Preferred Health Plan has a high-deductible that is combined with
an employer-funded health reimbursement account (HRA).

The Catastrophic Health Plan is the same as the Consumer Preferred Health Plan
without the employer-funded health reimbursement account (HRA).

Opt-Out Feature, if you elect to Opt-Out of the MDU Resources medical insurance
due to other available coverage, you will receive $100/month. This taxable
benefit will be included in your paycheck. If both you and your spouse are
employees of the Company, the Opt-Out benefit is not available if either one of
you is covered by the Company medical plan.

DENTAL
The Company offers three dental options, Dental Maintenance, Basic Dental,
Dental with Orthodontia for employees to choose from effective with the date of
employment. The plans are self-funded and are administered by Delta Dental.

Dental Maintenance Plan pays preventative expenses at 100% with no deductible.
This plan covers only diagnostic, preventative and basic restorative benefits
(cleanings, x-rays, and fillings).

Basic Dental Plan pays preventative expenses at 100% with no deductible. The
deductible for all other expenses is $50 per person per year. Basic restorative
expenses are paid at 80%; major restorative expenses are paid at 50%. The annual
maximum benefit payable from the plan is $1,500 per person.

Dental with Orthodontia Plan pays as above with an additional $1,500 lifetime
maximum orthodontia benefit per person for those under age 19.

The dental plans have a 2-year lock-in provision that requires employees to
maintain coverage in the dental plan of their choice for at least two years.
Upgrades are allowed at annual enrollment, but restarts the 2-year lock-in
requirement. As long as you see participating dentists in the Delta Dental PPO
or Premier networks, you'll take advantage of network benefits.

1/20/2011
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VISION
Vision insurance coverage is offered to employees effective with the date of
employment. The vision plan is administered by VSP Vision Services. This benefit
is not subsidized by the Company. As long as you see a participating VSP doctor,
you'll take advantage of network benefits.

LIFE
Term life insurance coverage is offered to employees effective with the date of
employment.

Non-Contributory: The Company provides at no cost to the employee one times
annual earnings rounded to the next thousand to a maximum of $100,000.

Contributory: Employees can purchase additional coverage in increments of
$25,000, $50,000, $100,000, $150,000, $200,000, $250,000 or $300,000 ($250,000
or $300,000 levels require Evidence of Insurability).

Dependent: Dependent life insurance for spouse and children is a voluntary
benefit. The employee must be the designated beneficiary and be enrolled in
Contributory Life Insurance. Employees may purchase life insurance for a spouse
in increments of $15,000, $25,000, $35,000, $50,000, $100,000, or $150,000.
Spousal life coverage cannot be elected at a higher amount than is currently
carried by the employee.

Employees may also purchase coverage for their unmarried dependent child(ren)
under age 19 or full-time students under age 25 in the amounts of $5,000 or
$10,000.

VOLUNTARY ACCIDENTAL DEATH AND DISMEMBERMENT
24-hour accidental death and dismemberment coverage is offered to employees
effective with the date of employment. Employees can purchase coverage in
increments of $25,000, $50,000, $100,000, $150,000 or $200,000.

BUSINESS TRAVEL ACCIDENT COVERAGE
Business Travel Accident Coverage is a group insurance policy that provides
24-hour accident protection while on a company business trip. The company
provides, at no cost to the employee, a principal sum coverage of $100,000.

EMPLOYEE ASSISTANCE PROGRAM
Employees and their immediate family members are eligible to utilize EAP
effective with the date of employment. EAP is a confidential assessment,
counseling, and referral service staffed by trained professionals who can help
employees and family members evaluate their personal concerns and help them take
positive action toward solving them. The first assessment of the present problem
and up to seven additional sessions is at no cost to the employee.

SICK LEAVE
In the first year of employment, up to 100 hours of sick leave can be paid. A
total of 200 hours of sick leave pay is available within the first two years of
employment. Beyond two years of employment, sick leave can be paid for up to 180
consecutive calendar days. Eligible employees will receive 100 percent of pay up
to the first 90 consecutive calendar days of approved sick leave and 80 percent
of pay for any approved sick leave thereafter not to exceed 90 consecutive
calendar days.

LONG TERM DISABILITY
The LTD plan is intended to help provide financial protection in the event an
employee is unable to work or suffers an income loss due to a disabling
condition. The LTD plan provides 60% of income if an employee continues to be
disabled after a 180 day elimination period.

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Replacement income is offset by other income such as workers compensation and
social security benefits. Employees are eligible after completing one year of
service. This plan is offered at no cost to the employee.

For employees who continue to be unable to return to work after receiving LTD
benefits for a 24-month period, employment will be terminated at the end of the
24-month period. This does not affect the employee's eligibility for continued
receipt of LTD benefits through the insurer.

TAX-FREE OPTIONS PLAN (TOP)
Employees are eligible to participate in TOP effective the latter of the first
day of employment or the date the enrollment form is signed. Premiums paid for
medical, dental and vision insurance coverage can be deducted from pay on a
pre-tax basis. Also, money can be deferred to a health care and/or dependent
care spending account on a pre-tax basis with the money being used for health
care expenses not reimbursed by insurance or otherwise, and dependent care
expenses incurred while you are at work.

401(K) PLAN
Employees are eligible to participate in the 401(k) Plan effective with the date
of employment. Employees can defer up to an annual maximum amount of their
income on a tax-deferred basis to this retirement plan. The company matches $.50
per dollar up to the first 6% of the employee's contribution (a 3% match).
Employee and Employer matching contributions to the plan are invested as
directed by each participant. Benefits are available upon termination of
employment or retirement. Additionally, benefits are subject to the IRS
contribution limits.

401(K) RETIREMENT CONTRIBUTION
Employees are also entitled to receive a 5% Retirement Contribution. This 5%
Retirement Contribution is in addition to the current 401(k) employer match, is
invested as directed by each participant, and is not dependent on employee
deferrals. Additionally, benefits are subject to the IRS contribution limits.

An employee must complete a minimum of three years of vesting service to qualify
for the Retirement Contribution benefit upon termination of employment or
retirement. A year of vesting service is generally defined as any calendar year
in which you are compensated for at least 1,000 hours of employment.

HOLIDAYS
Employees are eligible for paid scheduled holidays effective with date of
employment. There are ten scheduled holidays: New Year's Day, President's Day,
Good Friday, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, day
after Thanksgiving, Christmas Eve Day and Christmas Day.

WORKERS COMPENSATION
Workers' Compensation insurance provides coverage for on the job accidents that
result in an injury, your disability or death. It is funded 100% by employer
contributions.

SOCIAL SECURITY
The amount of benefit you receive through Social Security will be based on your
earnings record. You are fully insured (for the benefits your earning record
qualifies you for) after completing 40 calendar quarters (10 years) in covered
employment.

To determine your eligibility for Social Security and to receive an estimate of
your projected retirement benefits, contact the Social Security Administration
at 1-800-772-1213 or their web site: www.ssa.gov/mystatement.

1/20/2011
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The cost of this program is shared by yourself and your employer. The company
contributes 6.2% of your gross income up to an annual maximum.

MEDICARE
Medicare is our country's health insurance program for individuals age 65 or
older and certain individuals with disabilities.

As with Social Security, Medicare is funded equally by yourself and your
employer, at 1.45% of gross income with no annual maximum.

UNEMPLOYMENT
Unemployment taxes provide benefits for qualifying unemployed persons on a
national scale. It is funded 100% by employer contribution to the Federal and
State government agencies.

ADDITIONAL BENEFITS
There are a number of other benefits of significant value which are part of your
compensation package, including the following:

Health Reimbursement:
Recognizing that every employee has unique motivators to healthy living,
wellness, and fitness, the Company has established a $150 maximum annual
(calendar year) reimbursement subject to individual income taxes for any of the
following health, wellness, or fitness options of the employee's choice.
•
Fitness Facility Membership

•
Participation in a Weight-Loss or Personal Coaching Program

•
Fitness Equipment

•
Resource Materials

Incentive Compensation Plan:
The Company offers an incentive compensation plan based on eligibility
requirements should certain financial, safety, production and individual/team
goals be met.

Training and Education Assistance:
To assist employees in their career development, the company will provide
financial support for employee training and education that is beneficial to both
the individual and the company.

Jury Duty:
Employees will be provided with regular pay for time served on jury duty during
the employee's regularly scheduled hours of work.

Bereavement Leave:
Up to four consecutive days may be granted with pay based on the relationship of
the deceased.

Military Leave:
Employees will be granted a leave of absence without pay for required military
training or volunteer service. Regular full-time employees called to active
duty, shall be paid the difference between military base pay and up to 40 hours
per week of company pay on a straight time basis, for the tour of duty but not
to exceed one year.

Service Award Program:
Employees are recognized with a service award in 5 year increments.

1/20/2011
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Relocation Benefits
You are being offered the following benefits associated with your employment as
the President and CEO of Fidelity Exploration and Production Co.
House Finding - Reasonable expenses incurred for two (2) house or apartment
finding trips for you and your spouse.
Temporary Living - The Company will reimburse you up to $3,000 per month for six
(6) months of temporary living. Please note that this reimbursement will be made
from our payroll department and will be taxable to you.
En Route Expenses - Reasonable expenses incurred during the actual move from the
Houston area to the Denver location.
Moving of Household Goods and Personal Effects - The Company will pay actual and
reasonable costs incurred in moving your household goods and personal effects.
Relocation Allowance - One (1) month's salary subject to normal withholding
taxes.
Disposal of Current Home - We will reimburse you for the following home sale
expenses:
a.
Reasonable attorney's fees;

b.
Federal, State, and local transfer taxes;

c.
Search fees and title insurance;

d.
Brokerage commission of a licensed real estate broker;

e.
Mortgage prepayment penalties;

f.
Recording fees;

g.
Any other fees or expense approved in advance in writing by the Company.

Also, the Company will pay a bonus of three percent (3%) of the sales prices, up
to a maximum of $15,000, subject to normal withholding taxes;
Acquiring a New Home - The Company will reimburse you for the following expenses
associated with acquiring a new home. In order to qualify for this benefit, a
new home must be purchased at the new location within eighteen (18) months of
beginning work at the new location.
a.
Title search and title insurance;

b.
Mortgage service charges and mortgage taxes;

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c.
Bank applications and processing and appraisal fees;

d.
Recording and notary fees;

e.
State and local transfer taxes;

f.
Termite inspection;

g.
Land survey;

h.
Attorney's fees up to a maximum of one percent (1%) of the new mortgage amount;

i.
Origination fees or points up to a maximum of two percent (2%) of the new
mortgage amount;

j.
Any other fees or expenses approved in advance in writing by the Company.

Spouse Career Assistance - Available to your spouse in a professional position
or for dual income families.
Resignation - Should you resign from the Company within one year of the movement
of your household goods and personal effects to the Denver area you will be
required to reimburse the Company for all payments made to you or any third
parties associated with the relocation.

Note, any monies paid over and above your normal salary will be taxed at the
higher IRS supplemental income rate. Additionally, reimbursement for some of the
items listed above may be taxable to you.

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