def_comp-dire.htm


    MDU
RESOURCES GROUP, INC.

    DEFERRED
COMPENSATION PLAN FOR DIRECTORS

    


    (as
amended and restated effective May 15, 2008)

    


    


    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 May 15, 2008.  The Plan shall
continue until terminated by the Board of Directors of the Company, subject to
the provisions of Article XI, 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
      X.

            


    

    


    
      	
               
      

            	
              B.

            	
              Change in
      Control.  “Change in Control” means the earliest of the
      following to occur: (a) 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") or group (as that term is
      defined in Treasury Regulation Section 1.409A-3(i)(5)(v)(B)) acquires (or
      has acquired during the 12-month period ending on the date of the most
      recent acquisition by such Person or Persons) ownership of stock of the
      Company possessing 30% or more of the total voting power of the stock of
      the Company; (b) any Person or group (as that term is defined in Treasury
      Regulation Section 1.409A-3(i)(5)(v)(B)) acquires ownership of the stock
      of the Company that, together with stock held by such Person or group,
      constitutes more than 50% of the total fair market value or total voting
      power of the stock of the Company (this part (b) applies only when there
      is a transfer of stock of the Company and the Company's stock remains
      outstanding after the transaction); (c) a majority of the members of the
      Board of Directors of the Company is replaced during any 12-month period
      by directors whose appointment or election is not endorsed by a majority
      of the members of the Board of Directors of
      the Company; or (d) any Person or group (as that term is defined in
      Treasury Regulation Section 1.409A-3(i)(5)(v)(B)) acquires (or has
      acquired during the 12-month period ending on the date of the most recent
      acquisition by such Person or Persons) assets from the Company that have a
      gross fair market value equal to or more than 40% of the total gross fair
      market value of all of the assets of the Company immediately before such
      acquisition or acquisitions. 

            



      
         

        
          1

          
            

          

        

         

      

    

    
      Notwithstanding
anything contained herein to the contrary, no transaction or event shall
constitute a Change in Control for purposes of the Plan unless the transaction
or event constitutes a change in the ownership of a corporation (as defined in
Treasury Regulation Section 1.409A-3(i)(5)(v)), a change in effective control of
a corporation (as defined in Treasury Regulation Section 1.409A-3(i)(5)(vi)) or
a change in the ownership of a substantial portion of the assets of a
corporation (as defined in Treasury Regulation Section 1.409A-3(i)(5)(vii)) and
the term Change in Control shall be interpreted in a manner consistent with the
proper interpretation of the similar provisions in the Section 409A Treasury
Regulations.

       

    

    
      	
               
      

            	
              C.

            	
              Code.  “Code”
      means the Internal Revenue Code of 1986, as
  amended.

            


    

    


    
      	
               
      

            	
              D.

            	
              Compensation.  “Compensation”
      means any cash retainer, meeting fees and any other cash compensation
      payable to Eligible Directors by the Company for services as a
      Director.

            


    

    


    
      	
               
      

            	
              E.

            	
              Deferral
      Amount.  “Deferral Amount” means the Compensation
      Participants elect to defer and have credited to their Deferred
      Compensation Accounts.

            


    

    


    
      	
               
      

            	
              F.

            	
              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.

            


    

    


    
      	
               
      

            	
              G.

            	
              Disability.  “Disability”
      means those circumstances where the Participant is unable to engage in any
      substantial gainful activity by reason of any medically determinable
      physical or mental impairment that can be expected to result in death or
      can be expected to last for a continuous period of not less than twelve
      (12) months.

            


    


    
       

      
        2

        
          

        

      

       

    

     

    
      	
               
      

            	
              H. 

            	
              Effective
      Date.  “Effective Date” means May 15, 2008, the date on which
      the amendment and restatement of the Plan became
      effective.

            


    

     

    
      	
               
      

            	
              I.

            	
              Eligible
      Director.  “Eligible Director” means those Directors of
      the Company who are not employees of the
  Company.

            


    

     

    
      	
               
      

            	
              J.

            	
              Investment
      Units.  This term shall have the meaning defined in
      Article VI.B.

            


    

    


    
      	
               
      

            	
              K.

            	
              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.

            


    

    


    
      	
               
      

            	
              L.

            	
              Participant.  “Participant”
      means an Eligible Director participating in the Plan in accordance with
      the provisions of Article IV.

            


    

    


    
      	
               
      

            	
              M.

            	
              Separation from
      Service.  “Separation from Service” means a Participant's
      separation from service (as that term is used in Section 409A(a)(2)(A)(i)
      of the Code) with the Company.

            


    

    


    


    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 had a Separation from Service 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.


    
       

      
        3

        
          

        

      

       

    


    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, 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
specify the percentage of Compensation to be deferred and, if a Beneficiary
designation has not been made or the Participant wishes to change an existing
Beneficiary designation, the Beneficiary designations of the
Director.

    


    Except as provided in the last sentence
of this paragraph, a Notice of Election shall be valid only if it is delivered
prior to the first day of the calendar year in which the services giving rise to
the Compensation being deferred are to be performed.  A Participant's
Notice of Election shall become irrevocable as of the last date the Notice of
Election could be delivered or such earlier date as may be established by the
Board of Directors.  A Participant may revoke or change a Notice of
Election at any time prior to the date the election becomes irrevocable, subject
to such restrictions as the Board of Directors may establish from time to
time.  Any such revocation or change shall be made in a form and
manner determined by the Board of
Directors.  In the first calendar year in which a Participant becomes
eligible to participate in the Plan, the Participant may execute and deliver a
Notice of Election within thirty (30) days of the date the Participant first
becomes eligible to participate in the Plan, with respect to Compensation that
would be paid for services to be performed after the
election.


    
       

      
        4

        
          

        

      

       

    

     

    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 or
      dividend equivalent under Article VII is credited to the Deferred
      Compensation Account, it shall be converted to Investment Units, by
      dividing the amount credited by the Market Price of the Company's stock on
      the first trading day immediately preceding the date the amount is
      credited.  Fractional share Investment Units will be maintained
      in the Account.

            


    

    


    


    VII.
DIVIDEND
EQUIVALENTS

    


    If a dividend is paid on the common
stock of the Company, an equivalent amount shall be credited to the
Participant's Deferred Compensation Account for each Investment Unit in the
Participant's Deferred Compensation Account on the dividend record
date.  Crediting of any such dividend equivalents shall occur on the
dividend payment date.  Such amounts shall be converted to additional
Investment Units, pursuant to Article VI.B.

    



    
      
         


      

      
        5

        
          

        

      

       

    


    VIII.
DISTRIBUTION

    


    
      	
               
      

            	
              A.

            	
              Conversion of
      Investment Units to Dollars.  When a Participant
      has a Separation from Service, dies, or experiences a Disability,
      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.  Participants shall remain eligible to receive
      dividend equivalents pursuant to Article VII with respect to any
      Investment Units that have not been converted into dollars as of the
      dividend record date.

            


    

    


    
      	
               
      

            	
              B.

            	
              Payment.  During
      the first week (the “Payment Commencement Week”) of the first full month
      that begins at least six months after the date of the Participant's
      Separation from Service, death or Disability (the “Payment Commencement
      Month”), 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 equal monthly payments over a
      one-year period, with the first such monthly payment made during the
      Payment Commencement Week and the following monthly payments made during
      the first week of each of the next 11 months.  During the first
      week of the 12th
      month following the Payment Commencement Month, 25 percent of the
      remaining value of the Investment Units credited to the Participant's
      Deferred Compensation Account shall be converted to dollars and paid to
      the Participant in equal monthly payments over a one-year period, with the
      first such monthly payment made during that week and the following monthly
      payments made during the first week of each of the next 11
      months.  During the first week of the 24th
      month following the Payment Commencement Month, 33 1/3 percent of the
      remaining value of the Investment Units credited to the Participant's
      Deferred Compensation Account shall be converted to dollars and paid to
      the Participant in equal monthly payments over a one-year period, with the
      first such monthly payment made during that week and the following monthly
      payments made during the first week of each of the next 11
      months.  During the first week of the 36th
      month following the Payment Commencement Month, 50 percent of the
      remaining value of the Investment Units credited to the Participant's
      Deferred Compensation Account shall be converted to dollars and paid to
      the Participant in equal monthly payments over a one-year period, with the
      first
      such monthly payment made during that week and the following monthly
      payments made during the first week of each of the next 11
      months.  During the first week of the 48th
      month following the Payment Commencement Month, the remaining balance of
      the Participant's Deferred Compensation Account shall be converted to
      dollars and paid to the Participant in equal monthly payments over a
      one-year period, with the first such monthly payment made during that week
      and the following monthly payments made during the first week of each of
      the next 11 months.  For avoidance of doubt, if a dividend is
      paid on the common stock of the Company, an equivalent amount shall be
      credited to Participants' Deferred Compensation Accounts pursuant to
      Article VII with respect to any Investment Units that have not been
      converted into dollars as of the dividend record date.  No
      interest will be paid on amounts in the Deferred Compensation
      Accounts.

            


    


    
      
         


      

      
        6

        
          

        

      

       

    

     

    
      	
               
      

            	
              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”).

            


    

    


    


    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.

    



    
      
         


      

      
        7

        
          

        

      

       

    


    X. 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.

    


    XI. 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 XI.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.  To the extent consistent with the rules
      relating to plan terminations and liquidations in Treasury Regulation
      Section 1.409A-3(j)(4)(ix) or otherwise consistent with Section 409A of
      the Code, the Board of Directors may provide that, without the prior
      written consent of Participants, the Investment
      Units recorded in the Participants' Deferred Compensation Accounts shall
      be converted into dollars pursuant to Article VIII.A and all of the
      Participants’ Deferred Compensation Accounts shall be distributed in a
      lump sum upon (or as soon as is permitted following) termination of the
      Plan.  Unless so distributed, in the event of a Plan
      termination, the Company shall continue to maintain the Deferred
      Compensation Accounts until distributed pursuant to the terms of the Plan
      and Participants shall remain 100% vested in all amounts credited to their
      Deferred Compensation
Accounts.

            


    


    
      
         


      

      
        8

        
          

        

      

       

    

    XII.
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.

            	
              No Right to Nomination
      or Reelection.  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.

            


    


    
      
         


      

      
        9

        
          

        

      

       

    


    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.

            


    

    


    
      	
               
      

            	
              J.

            	
              Section
      409A.  It is intended that this Plan will comply with
      Section 409A of Code and any regulations and guidelines issued thereunder,
      to the extent the Plan is subject thereto, and the Plan shall be
      interpreted accordingly.

            


    

     

     

    
      
        
        

      

      
        10