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WebFilings | MDU-6.30.2012Q2 Ex 10b

INSTRUMENT OF AMENDMENT TO THE
MDU RESOURCES GROUP, INC. 
401(k) RETIREMENT PLAN

The MDU Resources Group, Inc. 401(k) Retirement Plan (as amended and restated March 1, 2011) (the “K-Plan”), is hereby further amended, effective January 1, 2012, unless otherwise indicated, as follows:

		
	1.
	By replacing Section 3.1 Savings Contributions, (a) Maximum in its entirety, with the following:

		
	(a)
	Maximum.  A Participant may contribute, by payroll deduction, any whole percentage of the Participant’s Compensation for each pay period to the Participant’s Savings Contribution Account, subject to the following maximum percentages: (i) 50% of the Participant’s Compensation if the Participant is not a Highly Compensated Employee, and (ii) 22% of the Participant’s Compensation if the Participant is a Highly Compensated Employee.

Explanation: This amendment clarifies Maximum Savings Contribution language and removes language that is not pertinent as the same maximum savings percentages apply consistently to all Participating Affiliates.

		
	2.
	By replacing Section 3.1 Savings Contributions, (c) and (d) in their entirety, with the following:

		
	(c)
	Upon becoming a Participant, and at any time thereafter, each Participant may elect the percentage of Compensation to be contributed as a Savings Contribution to the Plan. Any such election will take effect as soon as administratively feasible. Each election by a Participant under this Section shall be made pursuant to the method established by the Committee for this purpose.  

		
	(d)
	Effective September 1, 2007, if a Participant fails to make an election within thirty (30) days of becoming a Participant, the Participant shall be deemed to have elected to have three percent (3%) of Compensation withheld and contributed to the Plan, effective as soon as administratively feasible following the thirty (30) day period.  Prior to the date an automatic deferral election is effective, the Participant shall receive a notice that explains the automatic deferral feature, the Eligible Employee’s right to elect not to have Compensation automatically reduced, and the procedure for making an alternate election. An automatic deferral election shall be treated, for all purposes of the Plan, as a voluntary deferral election.

In addition, each Eligible Employee who did not have a Savings Contribution election of at least three percent (3%) of

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Compensation on file as of May 25, 2007, shall be deemed to have elected to have three percent (3%) of Compensation withheld and contributed to the Plan as Savings Contributions effective as of the first payroll period beginning after the Effective Date, unless prior to August 21, 2007, such Eligible Employee has made an alternate election.

		
	(e)
	Notwithstanding a Participant’s election under Subsection 3.1(c) or deemed election under Subsection 3.1(d) above, each Participant who is contributing less than fifteen percent (15%) of Compensation to the Plan on January 16, 2012, and January 1 of each year thereafter, shall be deemed to have elected to increase the Participant’s deferral percentage by one percent (1%) on and after March 1, 2012, and January 1 of each year thereafter; provided, however, that this Subsection 3.1(e) shall not apply to any Participant who has elected to opt out of Savings Contributions or elected to opt out of the automatic deferral escalation feature.

		
	(f) 
	Savings Contributions must be contributed to the Trust Fund as soon as practicable, but in no event later than the fifteenth (15th) business day of the month following the month in which such deferrals were made. Savings Contributions made pursuant to Subsection 3.1(d) or (e) above shall be invested pursuant to Subsection 5.2(a) below.

Explanation: This amendment clarifies the methods available for making a savings contribution election, clarifies the default enrollment percentage, and allows for automatic increases in savings contributions.
  
		
	3.
	By replacing Section 5.2 Investment, (a) in its entirety, with the following:

		
	(a)
	Each Participant’s Accounts and earnings credited to such Accounts on and after the Effective Date will be invested in one or more of the Investment Funds. Each Participant will designate the proportion (expressed as a percentage in multiples of one percent (1%)) of such Participant’s Accounts to be invested in each Investment Fund.  Such designation, once made, can be changed at any time and will take effect as soon as administratively feasible. Participants may also, at any time and independent of changing their election of investment of future savings contributions, transfer the amount equivalent to the Participant’s interest or any partial interest (expressed as a percentage in multiples of one percent (1%) or in dollars) from one Investment Fund to another. Any designation made under this Section 5.2(a) shall be made pursuant to the method established by the Committee for this purpose.

Notwithstanding any other provision herein to the contrary, during any period in which a Participant has not made an initial election as

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to the investment of his or her Accounts, the Participant shall be deemed to have elected to have his or her Accounts invested in the age appropriate target date fund, as determined by the Committee.  The investment described in the preceding sentence is referred to as the default fund and is intended to constitute a “Qualified Default Investment Alternative” (QDIA) within the meaning of ERISA Section 404(c) and regulations issued thereunder.

Explanation: This amendment clarifies that Accounts of Participants without Investment Fund elections will be invested in the QDIA default investment fund as established by the Employee Benefits Committee.

		
	4.
	By replacing the table in Section D‐1‐2 Eligibility to Share in the Profit Sharing Feature of Supplement D-1,  Provisions Relating to the Profit Sharing Feature for Certain Participating Affiliates, in its entirety, with the following:

	
		
	Participating Affiliate
	Current Effective Date
(Original Effective Date)2

	Anchorage Sand & Gravel Company, Inc. (excluding President)
	January 1, 1999

	Baldwin Contracting Company, Inc.
	January 1, 1999

	Bell Electrical Contractors, Inc.
	January 1, 2002

	Bitter Creek Pipelines, LLC1/3
	January 1, 2010
(January 1, 2001)

	Cascade Natural Gas Corporation
	January 1, 2011
July 2, 2007

	Concrete, Inc.
	January 1, 2001

	Connolly-Pacific Co.
	January 1, 2007

	DSS Company
	January 1, 2004
(July 8, 1999)

	E.S.I., Inc.
	January 1, 2008
(January 1, 2003)

	Fairbanks Materials, Inc.
	May 1, 2008

	Granite City Ready Mix, Inc.
	June 1, 2002

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	Participating Affiliate
	

Current Effective Date
(Original Effective Date)2

	Great Plains Natural Gas Co.
	January 1, 2008

	Hawaiian Cement (non-union employees hired after December 31, 2005)
	January 1, 2009

	Intermountain Gas Company
	January 1, 2011

	Jebro Incorporated
	November 1, 2005

	Kent’s Oil Service4
	January 1, 2007

	Knife River Corporation – Northwest (the Central Oregon Division, f/k/a HTS)
	January 1, 2010
(January 1, 1999)

	Knife River Corporation – Northwest (the Southern Idaho Division)
	January 1, 2010
(January 1, 2006)

	Knife River Corporation – Northwest (the Southern Oregon Division)
	January 1, 2012

	Knife River Corporation – Northwest (the Spokane Division)
	January 1, 2010
(January 1, 2006)

	Knife River Corporation – Northwest (the Western Oregon Division)
	January 1, 2012

	Knife River Corporation - South
(f/k/a Young Contractors, Inc.)
	January 1, 2008
(January 1, 2007)

	LTM, Incorporated
	

January 1, 2003

	Montana-Dakota Utilities Co. (including union employees)
	January 1, 2008

	Oregon Electric Construction, Inc.3
	March 7, 2011

	Prairielands Energy Marketing, Inc.
	January 1, 2012

	Wagner Industrial Electric, Inc.
	

January 1, 2008

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	Participating Affiliate .
	Current Effective Date
(Original Effective Date)2

	Wagner Smith Equipment Co.
	January 1, 2008
(July 1, 2000)

	WBI Holdings, Inc.1/3
	January 1, 2009

	WHC, Ltd.
	

September 1, 2001

	Williston Basin Interstate Pipeline
Company1/3
	January 1, 2009

1Eligible employees participating in a management incentive compensation plan or an executive incentive compensation plan are not eligible for a Profit Sharing Contribution. Employees of the Total Corrosion Solutions division of Bitter Creek Pipelines, LLC are excluded from this feature.
2In the event a Participating Affiliate adopts a Profit Sharing Feature on a date other than January 1, effective as of the date of participation in the Plan, the amount of any such contribution allocated to a Supplement D-1 Participant shall be based upon Compensation, received while in the employ of the Participating Affiliate after the date of acquisition by the Company or any Affiliate.
3Requirement to be an Active Employee on the last day of the Plan Year does not apply.
4The following participants of Kent’s Oil Service are granted vesting service for prior years of service with Spirit Road Oils: Isaias Jaimes, Hideo Lewis, Christopher Niffenegger, Jose Padilla, George Velador, and Anthony Willis.

Explanation: This amendment adds Knife River Corporation – Northwest (Southern Oregon Division and Knife River Corporation – Northwest (Western Oregon Division) as Participating Affiliates, effective January 1, 2012, as a result of standardization of benefits for Knife River Corporation – Northwest (and subsequently amends Addendum D. and D.3). The amendment also adds Footnote 4 to clarify vesting for six participants of Kent’s Oil Service due to the acquisition of assets from Spirit Road Oils.

		
	5.
	By replacing Section D‐2‐2 Eligibility to Share in the Retirement Contribution of Supplement D-2,  Provisions Relating to the Retirement Contribution Feature for Certain Participating Affiliates, in its entirety, with the following:

	
			
	Participating Affiliate
	Current Effective Date (Original Effective Date)
	Special Contribution Amount – Percentage of Compensation

	Bitter Creek Pipelines, LLC1

	January 1, 2006 (January 1, 2001)
	5%

	Cascade Natural Gas Corporation (non-bargaining)
	January 1, 2011
(July 2, 2007)
	5%

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	Participating Affiliate
	Current Effective Date (Original Effective Date)
	Special Contribution Amount – Percentage of Compensation

	Cascade Natural Gas Corporation (Field Operations Bargaining Unit employees hired on or after 1/1/2007)
	July 2, 2007
	4%

	Fidelity Exploration & Production
Company2
	January 1, 2006
(July 2, 2001)
	5%

	Great Plains Natural Gas Co.
	January 1, 2003
 
	5%

	Hamlin Electric Company
	January 1, 2005
 
	5%

	Intermountain Gas Company
	January 1, 2011
(October 12, 2008)
	5%

	Oregon Electric Construction, Inc.
	March 7, 2011
 
	6%

	Rocky Mountain Contractors, Inc. (Union)3
	January 1, 2008
	3%

	Rocky Mountain Contractors, Inc.
	January 1, 2005
 
	5%

1The following participants of Bitter Creek Pipelines, LLC are excluded: Grady Breipohl, Jon Forbes, Richard Guderjahn, Steven Haag, Raymond Harms, Wade Hasler, Douglas Henry, Pamela Lynn, Todd Mandeville, Marlin Mogan, and Dale Sudbrack due to participation in the appropriate pension plan replacement contribution.
2The following participants of Fidelity Exploration & Production Company are excluded: Harlan R. Jirges, Marvin E. Rygh, Judy A. Schmitt, and Dennis M. Zander due to participation in the appropriate pension plan replacement contribution.
3Requirement to be compensated for 1,000 hours of service does not apply to Rocky Mountain Contractors, Inc. (Union).
In order to share in the allocation of any Retirement Contribution made by a Supplement D-2 Company pursuant to Paragraph 3 below for a given Plan Year, Participants employed by a Supplement D-2 Company must be compensated for 1,000 Hours of Service (prorated for the Plan Year in which the Retirement Contribution Feature becomes effective) in that Plan Year and must not be covered by a collectively bargained unit to which the Retirement Contribution has not been extended. However, if the Participant’s failure to be compensated for 1,000 Hours of Service in that Plan Year is due to the Participant’s Disability, Death, or Retirement on or after attaining age 60 during such Plan year, such Participant shall nevertheless be entitled to share in the allocation of the Retirement Contribution for such Plan Year. Any Participant who is not a Highly Compensated Employee who has met the above eligibility requirements as of June 30 each Plan Year shall receive a pro-rata allocation mid-year based on compensation paid through June 30. The final annual allocation shall be reduced by any such mid-year allocation. Participants who meet

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the requirements of this paragraph are referred to herein as “Supplement D-2 Participants.”

Explanation: This amendment updates the footnote of the table and provides for a mid-year Retirement Contribution allocation as approved by the Management Policy Committee and amends Addendum D.12.

		
	6.
	By replacing the table in Section D‐3‐2 Eligibility to Share in the Profit Sharing Feature of Supplement D-3,  Provisions Relating to the Profit Sharing Feature for Certain Participating Affiliates, in its entirety, with the following:

	
		
	Participating Affiliate
	Current Effective Date (Original Effective
Date)

	Ames Sand & Gravel, Inc.
	July 16, 2007

	Knife River – ND  Division, a Division of Knife River Corporation – North Central
	January 1, 2007

	Knife River- Western North Dakota Division, a Division of Knife River Corporation – North Central
	March 17, 2011

	Knife River Corporation – North Central
	January 1, 2007

	Knife River Midwest, LLC (Western Iowa Division)
	April 1, 2007        (April 1, 2004)

	Knife River Midwest, LLC (Central Iowa Division, f/k/a Becker Gravel, Inc.)
	January 1, 2012

	Northstar Materials, Inc.
	January 1, 2003

Explanation: This amendment clarifies the segregation of the Knife River Midwest, LLC Profit Sharing Feature for the Western Iowa and Central Iowa divisions, effective January 1, 2012, and amends Addendum D.1.

		
	7.
	By replacing Supplement D-5, Provisions Relating to the Knife River Corporation – Northwest (Western Oregon Division, f/k/a MBI) Retirement Contribution Feature in its entirety with the word RESERVED, effective January 1, 2012.

Explanation: This supplement is removed as a result of standardizing retirement benefits for Knife River Corporation – Northwest allowing the Western Oregon Division to be included as a Participating Affiliate in Supplement D-1.

		
	8.
	By replacing the second to last paragraph of Section D‐6‐2 Eligibility to Share in the Retirement Contribution of Supplement D-6,  Provisions Relating to the MDU Resources Group, Inc. Retirement Contribution Feature, in its entirety, with the following:

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In order to share in the allocation of any Retirement Contribution made by a Supplement D-6 Company pursuant to Paragraph 3 below for a given Plan Year, Eligible Employees described above must be compensated for 1,000 Hours of Service in that Plan Year; provided, however, that if the Participant’s failure to be compensated for 1,000 Hours of Service in that Plan Year is due to the Participant’s Disability, Death, or Retirement on or after attaining age 60 during such Plan year, such Participant shall nevertheless be entitled to share in the allocation of the Retirement Contribution for such Plan Year. Any Participant who is not a Highly Compensated Employee who has met the above eligibility requirements as of June 30 each Plan Year shall receive a pro-rata allocation mid-year based on compensation paid through June 30. The final annual allocation shall be reduced by any such mid-year allocation. Participants who meet the requirements of this paragraph are referred to herein as “Supplement D-6 Participants.”

Explanation: This amendment provides for a mid-year Retirement Contribution allocation as approved by the Management Policy Committee and amends Addendum D.19.

		
	9.
	By replacing the second paragraph of Section D‐6A‐2 Eligibility to Share in the Retirement Contribution of Supplement D-6A,  Provisions Relating to the Retirement Contribution Feature, in its entirety, with the following:

In order to share in the allocation of the Retirement Contribution made by a Supplement D-6A Company pursuant to Paragraph 3 below for a given Plan Year, Eligible Employees described above must be compensated for 1,000 Hours of Service in that Plan Year; provided, however, that if the Participant’s failure to be compensated for 1,000 Hours of Service in that Plan Year is due to the Participant’s Disability, Death, or Retirement on or after attaining age 60 during such Plan year, such Participant shall nevertheless be entitled to share in the allocation of the Retirement Contribution for such Plan Year.  Any Participant who is not a Highly Compensated Employee who has met the above eligibility requirements as of June 30 each Plan Year shall receive a pro-rata allocation mid-year based on compensation paid through June 30. The final annual allocation shall be reduced by any such mid-year allocation.  Participants who meet the requirements of this paragraph are referred to herein as “Supplement D‐6A Participants.”

Explanation: This amendment provides for a mid-year Retirement Contribution allocation as approved by the Management Policy Committee and amends Addendum D.19. 

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	10.
	By adding the following new entry to Schedule B:

Knife River Midwest, LLC, Central Iowa Division (f/k/a Becker Gravel, Inc., shall make supplemental contributions on behalf of its Davis‐Bacon Employees in such amounts as may be necessary to satisfy the required Prevailing Wage Law fringe cost to the extent that the sum of the employer Matching and Profit Sharing Contributions, if any, for a period are insufficient to satisfy the required Prevailing Wage Law fringe cost pursuant to Supplement G.
Effective as of January 1, 2012.
 ***************************************
Explanation: This amendment provides the manner in which the above Participating Affiliate is implementing the provisions of the Davis-Bacon (Supplement G) feature.

IN WITNESS WHEREOF, MDU Resources Group, Inc., as Sponsoring Employer of the Plan, has caused this amendment to be duly executed by a member of the MDU Resources Group, Inc. Employee Benefits Committee (“EBC”) on this 24th day of May, 2012.

	
				
	 
	MDU RESOURCES GROUP, INC.

	 
	EMPLOYEE BENEFITS COMMITTEE

	 
	 
	 

	 
	 
	 

	 
	By:
	/s/ Doran N. Schwartz

	 
	 
	Doran N. Schwartz, Chairman

9Converted by EDGARwiz

  EXHIBIT 10.1

 

 THIRD AMENDED AND RESTATED
 TAX ALLOCATION AGREEMENT
 

 

 This Third Amended and Restated Tax Allocation Agreement, dated as of April 10, 2012, is made by and among Northeast Utilities (the "Parent Company") and The Connecticut Light and Power Company, Western Massachusetts Electric Company, HWP Company (f/n/a Holyoke Water Power Company), Northeast Utilities Service Company, Northeast Nuclear Energy Company,  The Rocky River Realty Company,  Public Service Company of New Hampshire, Properties, Inc., North Atlantic Energy Corporation, North Atlantic Energy Service Corporation, Select Energy Contracting, Inc.,  NU Enterprises, Inc., Northeast Generation Services Company, ES Boulos Company, NGS Mechanical, Inc., Mode 1 Communications, Inc., Select Energy, Inc., Yankee Energy System, Inc., Yankee Gas Services Company, Yankee Energy Financial Services Company, Yankee Energy Services Company, Renewable Properties, Inc., CL&P Funding LLC, The Connecticut Steam Company, Electric Power Incorporated, The Nutmeg Power Company, PSNH Funding LLC 2, PSNH Funding LLC, WMECO Funding LLC, NU Transmission Ventures, Inc., Northern Pass Transmission LLC, NSTAR LLC (f/n/a NU Holding Energy 2 LLC), NSTAR Electric Company, Harbor Electric Energy Company, BEC Funding II LLC, CEC Funding LLC, NSTAR Gas Company, NSTAR Electric and Gas Corporation, Advanced Energy Systems Inc.,   Hopkinton LNG Corp., NSTAR Communications, Inc. and any other entities that become a member of the Parent Company's affiliated group and execute a duplicate copy of this Agreement or consent to be included in the Parent Company's consolidated federal income tax return (hereinafter collectively "subsidiaries" and singly "subsidiary"). These subsidiaries join in the annual filing of a consolidated federal income tax return with the Parent Company. 
 

      For purposes of this Agreement, the following terms shall have the meanings specified below:
 

 

      “Associate” means any member company of the Parent Company’s affiliated group that is included in the Parent Company’s consolidated federal income tax return, including the Parent Company. 
 

       “Associates” means all of the member companies of the Parent Company’s affiliated group that are included in the Parent Company’s consolidated federal income tax return, including the Parent Company.
 

      “Code” means the Internal Revenue Code of 1986, as amended from time to time (and any corresponding provisions of succeeding law).
 

      "Consolidated tax" means the aggregate tax liability for a tax year, being the tax shown on the consolidated return and any adjustments thereto thereafter determined. The consolidated tax will be the refund if the consolidated return shows a negative tax.
 

      "Corporate tax credit" is a negative separate return tax of an Associate for a tax year, equal to the amount by which the consolidated tax is reduced by including a net corporate 
 

 
 1
 

 

 

 

 taxable loss or other net tax benefit of such associate company in the consolidated tax return.
 

      "Corporate Taxable Income" is the income or loss of an Associate for a tax year, computed as though such company had filed a separate return on the same basis as used in the consolidated return, except that dividend income from Associates shall be disregarded, and other intercompany transactions eliminated in the consolidated return shall be given appropriate effect. It shall be further adjusted to allow for applicable rights accrued to the Associate, on the basis of other tax years, but carryovers or carrybacks shall not be taken into account if the Associate has been paid a corporate tax credit therefor. Corporate Taxable Income shall be adjusted in an appropriate and reasonable manner to reflect deductions of an Associate that are unable to be used  due to reductions, limitations, phase-outs and expirations imposed by the Code or the Regulations by the consolidated tax group.  If an Associate is a member of the Parent Company  consolidated tax group for only part of a tax year, that period will be deemed to be its tax year for all purposes. Basis shall be determined under Treas. Reg. Section 1.1502-31 or 1.1502-32 and earnings and profits shall be determined under Treas. Reg. Section 1.1502-33. Items attributable to a consolidated return year but not allowable on a separate company basis shall be excluded in determining Corporate Taxable Income to the extent such items were previously taken into account to reduce consolidated taxable income.
 

       “Regulations” mean the Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as such regulations are amended from time to time.
 

      "Separate return tax" is the tax on the Corporate Taxable Income of an Associate computed as though such company were not a member of a consolidated group.
 

 In consideration of the mutual benefits and obligations provided for herein, the parties to this Agreement hereby agree that the consolidated tax of the Associates shall be allocated as follows:
 

 1.   PARENT COMPANY.  Except as expressly set forth herein, the Parent Company shall be treated in the same manner as the other Associates for purposes of this Agreement. 
 

 2.   ALLOCATION OF CONSOLIDATED FEDERAL TAX. The consolidated tax, exclusive of capital gains taxes (see paragraph (3)), and the alternative minimum tax (see paragraph (7)), and before the application or recapture of any credits (see paragraph (4)) and the results of any special benefits (see paragraph (5)), shall be allocated among the Associates based on their Corporate Taxable Income, computed without regard to net capital gains or losses. Subject to the limitation provided in paragraph (10), such consolidated tax allocated to an Associate, which may be either positive or negative, shall be equal to the Corporate Taxable Income of the Associate (after elimination of capital gains and losses) multiplied times the highest effective corporate federal income tax rate set forth in Section 11 of the Code. However, no Associate shall receive a negative allocation greater (in absolute value) than the amount by which its loss has reduced the consolidated tax liability. Conversely, an Associate  shall receive a negative allocation for any loss or deduction it cannot use currently to the extent such loss or deduction reduces 
 

 
 2
 
 
 
 
 
 
 
 
  
 
 the consolidated tax liability. If the consolidated tax liability is greater than the aggregate tax on the corporate taxable income of the Associates ("separate return tax"), then no subsidiary shall receive an allocation greater than its separate return tax, and the Parent Company shall be liable for the excess of the consolidated tax over the sum of the separate return taxes of the subsidiaries, subject to recovery in later years from subsequent consolidated tax benefits.
 

 3.   ALLOCATION OF CAPITAL GAINS TAXES. The portion of the consolidated tax attributable to net capital gains and losses shall be allocated directly to the Associate giving rise to such items. The effects of netting capital gains and losses in the current year shall follow the principles of paragraph (2). The effects of capital loss carrybacks or carryforwards shall follow the principles of paragraph (6). 
 

 4.   ALLOCATION OF GENERAL BUSINESS CREDITS. General business credits arising in a particular year shall be allocated among the Associates giving rise to such credits by multiplying the amount of consolidated general business credits for such year utilized by a fraction, the numerator of which is the amount of general business credit of the Associate for such year and the denominator of which is the total amount of general business credit of all Associates for such year.  If the consolidated group is in a credit carryforward situation, the utilized credit shall be allocated based on the vintages that comprise the utilized credit. For purposes of the consolidated return, the credits utilized are determined on a first-in first-out basis with all credits generated by all subsidiaries in the earliest year utilized first before credits generated in a subsequent year can be utilized. For purposes of allocating the credits pursuant to this agreement, and in accordance with the separate return limitation of paragraph (10), the credits utilized shall be determined on a first-in first-out basis with the credits generated by Associates allocated positive taxes in paragraphs (2) and (3) utilized first, for all available vintages, before credits generated by Associates allocated negative taxes in paragraphs (2) and (3) are utilized. If the vintages of credits utilized pursuant to this agreement differ from those utilized according to the consolidated return for an  Associate, then the vintages of credits utilized pursuant to this agreement shall be exchanged among the affected Associates. General business credits that are lost due to reductions, limitations and expirations imposed by the Code or the regulations thereunder shall be allocated in an appropriate and reasonable manner.
 

 5.   ALLOCATION OF SPECIAL BENEFITS.  Any special benefits, such as the effects of Section 1341 of the Code, shall be allocated directly to the subsidiaries giving rise to them. 
 

 6.   ALLOCATION OF A NET OPERATING LOSS. Should the Parent Company's affiliated group generate a net operating loss for a tax year, each Associate shall first receive an allocation of consolidated tax, which may be either positive or negative, as provided in paragraph (2); provided, however, a negative allocation of the consolidated tax shall be made to an Associate  only to the extent that corporate taxable income of such Associate reduces consolidated tax for such tax year. The current consolidated net operating loss shall then be apportioned to  each Associate  with a taxable loss and carried back or forward to year(s) when the consolidated net operating loss can be utilized. The consolidated reduction in tax resulting from the carryback or carryforward of the net operating loss shall be apportioned to each loss Associate in accordance with 
 

 
 3
 

 

 

 

  
 
 

 paragraphs (2) through (5).  For purposes of the consolidated return, the utilization of net operating losses carried back or carried over is determined on a first-in first-out basis with all net operating losses generated by all Associates in the earliest year utilized first before net operating losses generated in a subsequent year can be utilized.  For purposes of allocating the net operating losses pursuant to this Agreement, and in accordance with the separate return limitation of Paragraph (10), the net operating losses utilized shall be determined on a first-in first-out basis with the net operating losses generated by  Associates allocated positive taxes in Paragraphs (2) and (3) utilized first, for all available vintages, before net operating losses generated by Associates allocated negative taxes in Paragraphs (2) and (3) are utilized. If the vintages of net operating losses utilized pursuant to this Agreement differ from those utilized according to the consolidated return for an Associate , then the vintages of net operating losses utilized pursuant to this Agreement shall be exchanged among the affected Associates. Net operating loss carryovers that are lost due to reductions, limitations and expirations imposed by the Code or the Regulations shall be allocated in an appropriate and reasonable manner. 
  
 7.   ALLOCATION OF ALTERNATIVE MINIMUM TAX OR CREDIT.  Any portion of the consolidated tax that is attributable to alternative minimum tax ("Consolidated AMT") shall be allocated in a positive amount to each subsidiary with "tentative minimum tax," as defined in Section 55(b)(1) of the Code (determined following the principles used to compute each Associate’s separate return tax), which for purposes of this Agreement can be positive or negative ("Separate Return Tentative Minimum Tax"), in excess of the "regular tax," as defined in Section 55(c) of the Code (determined following the principles used to compute each Associate’s separate return tax), allocated to such Associate in accordance with this Agreement (except paragraph (10)), which for purposes of this Agreement can be positive or negative ("Separate Return Regular Tax"). Consolidated AMT shall be allocated to each such Associate by multiplying Consolidated AMT by a fraction the numerator of which is the amount by which the Associate’s Separate Return Tentative Minimum Tax exceeds such Associate’s Separate Return Regular Tax and the denominator of which is the sum of the amounts by which the Separate Return Tentative Minimum Tax of the Associates to which an allocation of Consolidated AMT is made exceeds the Separate Return Regular Tax allocated to such Associates.  If the regular tax portion of the consolidated tax is reduced by reason of a "minimum tax credit," as defined in Section 53 of the Code, the benefit of such minimum tax credit shall be allocated to the Associates that (by having an alternative minimum tax liability allocated to them in a prior year) generated such minimum tax credit, with the earliest liabilities being allocated such minimum credit first.  The allocation of any "alternative tax net operating loss deduction," as defined by Section 56(d) of the Code, shall follow the principles of paragraph (6).
 

 8.   OTHER FEDERAL TAXES, BENEFITS AND CREDITS.  Taxes, tax benefits and credits against consolidated tax that are not specifically addressed herein and for which allocation under paragraph (2) is not appropriate shall be allocated following the principles set forth in paragraphs (3) through (7) in order to allocate the material effects of such tax, tax benefit or credit to the Associate to which it is applicable.  
 

 9.   PAYMENTS FOR ALLOCATIONS.  Any Associate with a net positive allocation shall pay the Parent Company the net amount allocated in the amounts and on the dates indicated by the Parent Company, while any Associate  with a net negative allocation 
 

 
 4
 

 

 

 

  
 
 shall receive payment from the Parent Company in the amount of its negative allocation on the same dates indicated by the Parent Company. The payment made to an Associate with a negative allocation should equal the amount by which the consolidated tax is reduced by including the Associate's net corporate tax loss in the consolidated tax return. The Parent Company shall pay to the Internal Revenue Service the consolidated group's net current federal income tax liability from the net of the receipts and payments. 
 

 10.  SEPARATE RETURN LIMITATION.  No subsidiary shall be allocated a federal income tax which is greater than the federal income tax computed as if such subsidiary had always filed a separate return.  If the federal income tax otherwise allocated to a subsidiary under this Agreement is greater than the federal income tax computed as if such subsidiary had always filed a separate return, the Parent Company shall be liable for such excess, subject to recovery in later years from subsequent consolidated tax benefits.
 

 11.  STATE TAX LIABILITIES. 
 (a)    Generally any current state income tax liability or benefit associated with a state income tax return involving more than one subsidiary shall be allocated to such subsidiaries doing business in such state following the principles set forth herein for current federal income taxes.  For purposes of allocating any current state income tax liability that is determined on the basis of unitary reporting and that is associated with a state income tax return ­­­­­involving more than one subsidiary ("Unitary Tax Liability”), any such current Unitary Tax Liability shall be allocated, first, to subsidiaries with a positive income tax liability with respect to such state determined following the principles used to compile the subsidiary’s separate return tax (“Separate Unitary Return Tax”) in an amount equal to each such subsidiary’s Separate Unitary Return Tax. The Unitary Tax Difference is the current Unitary Tax Liability less the aggregate Separate Unitary Return Tax of the subsidiaries with positive Separate Unitary Return Tax.  If the Unitary Tax Difference is positive, then that amount shall be allocated to the Parent Company.  If the Unitary Tax Difference is negative, then that amount shall be allocated in a negative amount to each subsidiary that provided tax credits used by the group to lower the Unitary Tax Liability greater than the amount of tax credits used in calculating the subsidiaries Separate Unitary Return Tax, then in a negative amount to each subsidiary having negative Separate Unitary Return Tax in an amount equal to the lesser of the Unitary Tax Difference or the sum of the Separate Unitary Return Tax of all subsidiaries with negative Separate Unitary Return Tax multiplied by a fraction (A) the numerator of which is the Separate Unitary Return Tax of the subsidiary and (B) the denominator of which is the sum of the Separate Unitary Return Tax of the subsidiaries having negative Separate Unitary Return Tax, and finally allocated in a negative amount to the Parent Company. 
    
                  
     (b) Payments of positive and negative allocations of state income tax liabilities and of net current state income tax liabilities of the Parent Company and the subsidiaries shall follow the principles set forth in paragraph (9).
 

 12.  FILING TAX RETURNS.  The Parent Company shall prepare and file the consolidated federal income tax return for the subsidiaries that are parties to this Agreement. The Parent Company shall act as the sole agent for each subsidiary with respect to the payment of any liability shown on the federal income tax return and for all 
 

 
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 other purposes required by Treas. Reg. 1.1502-77(a). The Parent Company or designated subsidiary may act as an agent for each subsidiary doing business in a state with respect to the payment of any liability shown on the state income tax returns of such state.
 

 13.  ADJUSTMENT OF TAX LIABILITY.  In the event that the consolidated federal or state income tax liability for any year is redetermined subsequent to the allocation of the consolidated tax liability reported for that tax year, the redetermined tax liability shall be allocated pursuant to this Agreement as if the adjustments and modifications related to the redetermination had been a part of the original return. In the case of a negotiated adjustment not involving an item-by-item modification of the consolidated return, the amount of the adjustment shall be distributed in an appropriate and reasonable manner. Any interest or penalties associated with the underpayment or overpayment of tax shall be allocated based on the allocation of the underlying underpayment or overpayment of tax.
 

 14.  EFFECTIVE DATE. This Agreement amends and restates the prior Amended and Restated Tax Allocation Agreement relating to the allocation of federal and state income tax liability dated January 1, 1990, as amended by the First Amendment thereto dated October 26, 1998 and the Second Amendment thereto dated March 1, 2000,  and as further amended by the Second Amended and Restated Tax Allocation Agreement dated September 21, 2005. This Agreement shall be effective for allocation of the current federal and state income tax liabilities of the consolidated group for taxable years beginning on or after January 1, 2012 and all subsequent years until this Agreement is further amended in writing by each such company which is or becomes a party to this Agreement. For any party to this Agreement that became a member of the Parent Company's affiliated group after January 1, 2012, this Agreement shall be effective as of the date such subsidiary became a member of the affiliated group. If at any time any other company becomes a member of the Parent Company's affiliated group, the parties hereto agree that such new member may become a party to this Agreement by (i) executing a duplicate copy of this Agreement or (ii) consenting to be included in a consolidated federal income tax return that includes the Parent Company.  If at any time any company ceases to be a member of the Parent Company's affiliated group, such company shall no longer be a party to this Agreement, but such company shall continue to be bound by this Agreement as to the taxable year in which such company leaves the Parent Company's affiliated group and all prior taxable years in which such company was a member of the Parent Company's affiliated group.
 

 15.  REGULATORY FILINGS.  The Parent Company will make any necessary filings with any regulatory commissions that the Parent Company deems necessary or appropriate.
 

 16.  GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the laws of the State of Connecticut.
 

 17.  COUNTERPARTS. This Agreement may be executed in one or more counterparts all of which taken together shall constitute one and the same instrument.
 

 18.  MISCELLANEOUS. This Agreement contains the complete agreement among the parties and supersedes any prior understandings, agreements or representations by or 
 

 
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 among the parties, written or oral, which may have related to the subject matter hereof in any way.  No term or provision of this Agreement shall be construed to confer a benefit upon, or grant a privilege or right to, any person other than the parties hereto.
 

 

 

 

 

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 The above procedures for apportioning the consolidated annual net current federal and state income tax liability and expense of Northeast Utilities and its subsidiaries have been duly authorized and agreed to by each of the below listed members of the consolidated group as evidenced by the signature of a duly authorized officer of each company:
 

 NORTHEAST UTILITIES
 THE CONNECTICUT LIGHT AND POWER COMPANY
 WESTERN MASSACHUSETTS ELECTRIC COMPANY
 HWP COMPANY (f/n/a HOLYOKE WATER POWER COMPANY)
 NORTHEAST UTILITIES SERVICE COMPANY
 NORTHEAST NUCLEAR ENERGY COMPANY
 THE ROCKY RIVER REALTY COMPANY
 PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
 NORTH ATLANTIC ENERGY CORPORATION
 NORTH ATLANTIC ENERGY SERVICE CORPORATION
 PROPERTIES, INC.
 SELECT ENERGY CONTRACTING, INC.
 NU ENTERPRISES, INC.
 NORTHEAST GENERATION SERVICES COMPANY
 E. S. BOULOS COMPANY
 NGS MECHANICAL, INC.
 MODE 1 COMMUNICATIONS, INC.
 SELECT ENERGY, INC.
 YANKEE ENERGY SYSTEM, INC.
 YANKEE GAS SERVICES COMPANY
 YANKEE ENERGY FINANCIAL SERVICES COMPANY
 YANKEE ENERGY SERVICES COMPANY
 RENEWABLE PROPERTIES,INC.
 CL&P FUNDING LLC
 THE CONNECTICUT STEAM COMPANY
 ELECTRIC POWER INCORPORATED
 THE NUTMEG POWER COMPANY
 PSNH FUNDING LLC2
 PSNH FUNDING LLC
 WMECO FUNDING LLC
 NU TRANSMISSION VENTURES, INC.
 NORTHERN PASS TRANSMISSION LLC
 NSTAR LLC (f/n/a NU HOLDING ENERGY 2 LLC)
 NSTAR ELECTRIC COMPANY
 HARBOR ELECTRIC ENERGY COMPANY
 BEC FUNDING II LLC
 CEC FUNDING LLC
 NSTAR GAS COMPANY
 NSTAR ELECTRIC AND GAS CORPORATION
 ADVANCED ENERGY SYSTEMS, INC.
 HOPKINTON LNG CORP. 
 NSTAR COMMUNICATIONS, INC.
 

 

 
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 By:  /S/ JAY BUTH
 Name: Jay Buth
 Title:  Vice President, Controller and
             Chief Accounting Officer
             Northeast Utilities Service Company, 
 as Agent for the above Companies
 

 

 

 

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