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<SEC-DOCUMENT>0000898080-10-000010.txt : 20100311
<SEC-HEADER>0000898080-10-000010.hdr.sgml : 20100311
<ACCEPTANCE-DATETIME>20100311140030
ACCESSION NUMBER:		0000898080-10-000010
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20100305
ITEM INFORMATION:		Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20100311
DATE AS OF CHANGE:		20100311

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			MDU RESOURCES GROUP INC
		CENTRAL INDEX KEY:			0000067716
		STANDARD INDUSTRIAL CLASSIFICATION:	MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400]
		IRS NUMBER:				410423660
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-03480
		FILM NUMBER:		10673430

	BUSINESS ADDRESS:	
		STREET 1:		1200 WEST CENTURY AVENUE
		CITY:			BISMARCK
		STATE:			ND
		ZIP:			58506-5650
		BUSINESS PHONE:		701-530-1059

	MAIL ADDRESS:	
		STREET 1:		1200 WEST CENTURY AVENUE
		CITY:			BISMARCK
		STATE:			ND
		ZIP:			58506-5650

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	MONTANA DAKOTA UTILITIES CO
		DATE OF NAME CHANGE:	19850429
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT REPORT</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date of Report (Date of earliest event reported):<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;&#160;March 5, 2010</font></font></div>

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<div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ITEM 5.02&#160;&#160;&#160;&#160;&#160;&#160;&#160;Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -9pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">2010 Annual Incentive Awards</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On March 5, 2010 the Compensation Committee (the &#8220;Committee&#8221;) of the Board of Directors (the &#8220;Board&#8221;) of MDU Resources Group, Inc. (the &#8220;Company&#8221;) established 2010 annual incentive award opportunities for its executive officers including its chief financial officer and those officers who are the named executive officers in the Company&#8217;s proxy statement for the 2010 Annual Meeting of Stockholders (the &#8220;NEOs&#8221;).&#160;&#160;The Board approved the award opportunities at its meeting on March 5, 2010.&#160;&#160;The 2010 annual incentive award opportunities for the chief financial officer and the NEOs are set forth in the 2010 Annual Award Opportunity Chart, which is filed as Exhibit 10.1 and incorporated herein by reference.&#160;&#160;The form of Annual Incentive Award Agreement is filed as
 Exhibit 10.2.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The 2010 awards for Messrs. Hildestad, Harp, Schneider and Bietz were made pursuant to the Long-Term Performance-Based Incentive Plan.&#160;&#160;Mr. Raile received no award because of his retirement on February 16, 2010.&#160;&#160;Mr. Schwartz&#8217;s award was made pursuant to the MDU Resources Group, Inc. Executive Incentive Compensation Plan.&#160;&#160;Mr. Schwartz succeeded Mr. Raile as chief financial officer on February 17, 2010.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Except as the Committee may otherwise determine, in order to be eligible to receive an annual incentive award payment under the Long-Term Performance-Based Incentive Plan, participants must remain employed by the Company through December 31, 2010.&#160;&#160;The Committee has full discretion to determine the extent to which goals have been achieved, the payment level and whether any final payment will be made.&#160;&#160;Unless the Committee determines otherwise, performance measure targets will be adjusted to take into account unusual or nonrecurring events affecting the Company, a subsidiary or a division or business unit, or the financial statements thereof, or changes in applicable laws, regulations or accounting principles to the extent such unusual or nonrecurring events or changes in applicable laws, regulations or accounting princ
iples otherwise would result in dilution or enlargement of the annual incentive award intended to be provided.&#160;&#160;Such adjustments are to be made in a manner that will not cause the award to fail to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With respect to annual incentive awards granted pursuant to an Executive Incentive Compensation Plan, participants who retire at age 65 during the year remain eligible to receive an award.&#160;&#160;Subject to the Committee&#8217;s discretion, participants who terminate employment for other reasons are not eligible for an award.&#160;&#160;The Committee has full discretion to determine the extent to which goals have been achieved, the payment level and whether any final payment will be made.&#160;&#160;Once performance goals are approved by the Committee for Executive Incentive Compensation Plan awards, the Committee generally does not modify the goals.&#160;&#160;However, if major unforeseen changes in economic and environmental conditions or other significant factors beyond the control of management substantially affected management&#8
217;s ability to achieve the specified performance goals, the Committee, in consultation with the chief executive officer,</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Payments are based upon achievement of annual performance measures with a threshold, target and maximum level.&#160;&#160;The target incentive award was established based upon the officer&#8217;s position and base salary.&#160;&#160;Payment will range from zero to 200% of the target based upon achievement of performance goals.&#160;&#160;The performance goals for 2010 are (i) budgeted earnings per share (&#8220;EPS&#8221;) achieved (weighted 50%) and (ii) budgeted return on invested capital (&#8220;ROIC&#8221;) achieved (weighted 50%).&#160;&#160;The goals are measured at the business unit level, as allocated, for Mr. Harp (MDU Construction Services Group, Inc.), Mr. Schneider (Knife River Corporation) and Mr. Bietz (WBI Holdings, Inc.).&#160;&#160;In addition to these performance goals, Mr. Bietz also has five individual performance goal
s relating to WBI Holdings, Inc.&#8217;s safety results, and each goal that is not met will reduce his annual incentive award payment by 1%.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Achievement of budgeted EPS and ROIC would result in payment of 100% of the target amount.&#160;&#160;Achievement of less than 85% of budgeted EPS and ROIC would result in no payment, while achievement of 115% of budgeted EPS and an ROIC equal to or greater than the business unit&#8217;s weighted average cost of capital (&#8220;WACC&#8221;) would result in payment of 200% of the target amount.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Annual incentive award payments for executives at the MDU Resources Group level, including Messrs. Hildestad and Schwartz, will be determined based on the annual incentive award payments made to the president and chief executive officers of the four business units &#8211; Knife River Corporation, MDU Construction Services Group, Inc., WBI Holdings, Inc. and Combined Utility Group &#8211; and will be calculated as follows.&#160;&#160;Each business unit president and chief executive officer&#8217;s annual incentive award payment, expressed as a percentage of his annual target award, will be multiplied by that business unit&#8217;s percentage share of average invested capital for 2010.&#160;&#160;These four products will be added together, and the sum will be multiplied by the MDU Resources Group, Inc. executive&#8217;s 2010 target incentive
.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Committee may use negative discretion and adjust any annual incentive award payment downward, using any subjective or objective measures as it shall determine, including but not limited to the 20% limitation described in the following sentence.&#160;&#160;The 20% limitation means that no more than 20% of after-tax earnings that are in excess of planned earnings at the business unit level for operating company executives, which include Messrs. Harp, Schneider and Bietz, and at the MDU Resources Group level for corporate executives, which include Messrs. Hildestad and Schwartz, will be paid in annual incentives to executives.&#160;&#160;The application of this limitation or any other reduction, and the methodology used in determining any such reduction, is in the sole discretion of the Committee.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -9pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">2010 Long-Term Incentive Awards</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On March 5, 2010 the Committee recommended long-term incentive awards in the form of performance shares pursuant to the Long-Term Performance-Based Incentive Plan for the executive officers including the chief financial officer and the NEOs.&#160;&#160;The Board approved these awards at its meeting on March 5, 2010.&#160;&#160;Mr. Raile received no award because of his retirement on February 16, 2010.&#160;&#160;The 2010 long-term incentive award opportunities for the chief financial officer and the NEOs are set forth in the 2010 Performance Share Award Opportunity Chart, which is filed as Exhibit 10.3 and incorporated herein by reference.&#160;&#160;The form of Performance Share Award Agreement is filed as Exhibit 10.4.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From 0% to 200% of the target award will be paid out, depending on the Company&#8217;s 2010-2012 total stockholder return (&#8220;TSR&#8221;) compared to the TSRs of companies in the Company&#8217;s performance graph peer group over the 2010-2012 performance period. The payout percentage is determined as follows:</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The Company&#8217;s</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Payout Percentage of</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">90th or higher</font></div>
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<td align="left" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td>
<td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td>
<td valign="bottom" width="24%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">200%</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">70th</font></div>
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<td align="left" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td>
<td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td>
<td valign="bottom" width="24%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">150%</font></div>
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<td align="left" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td>
<td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td>
<td valign="bottom" width="24%">
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<td align="left" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td>
<td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td>
<td valign="bottom" width="24%">
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<td align="left" valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160; </font></td>
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<td valign="bottom" width="24%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;0%</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If the Company achieves a percentile rank between the 40th and 50th percentiles, the payout percentage will be equal to 10%, plus 9% for each percentile rank whole percentage above the 40th percentile.&#160;&#160;If the Company achieves a percentile rank between the 50th and 90th percentiles, the payout percentage will be equal to 100%, plus 2-1/2% for each percentile rank whole percentage above the 50th percentile.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -9pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Company also will pay dividend equivalents in cash on the number of shares actually earned for the performance period.&#160;&#160;The dividend equivalents will be paid at the same time as the performance share awards are paid.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If the Company&#8217;s TSR for the 2010-2012 performance period is negative, the number of shares and dividend equivalents otherwise earned, if any, for the performance period will be reduced.&#160;&#160;The amount of the reduction, as determined by the Committee in its sole discretion, will range from a 50% reduction to a 100% reduction (down to zero) of the number of shares and dividend equivalents otherwise earned.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.</font></div>

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<div align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MDU Resources Group, Inc.</font></div>
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<div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:&#160;&#160;&#160;&#160; <font style="DISPLAY: inline; TEXT-DECORATION: underline">/s/ Paul K. Sandness</font>_________</font></div>
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<div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160; </font>Paul K. Sandness</font></div>
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<div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; General Counsel and Secretary</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">MDU Resources Group, Inc. 2010 Annual Award Opportunity Chart</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.2</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Form of Annual Incentive Award Agreement under the Long-Term Performance-Based Incentive Plan, as amended March 5, 2010</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.3</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">MDU Resources Group, Inc. 2010 Performance Share Award Opportunity Chart</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.4</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Form of Performance Share Award Agreement under the Long-Term Performance-Based Incentive Plan, as amended March 5, 2010</font></div>
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<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
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<DESCRIPTION>EXHIBIT 10.1
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Raile received no award due to his retirement on February 16, 2010.</font></div>
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1%.</font></div>
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<DOCUMENT>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: courier new">ANNUAL INCENTIVE AWARD AGREEMENT</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New"><font style="FONT-SIZE: 11pt; FONT-FAMILY: Courier New">{}</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New"><font id="TAB1" style="FONT-SIZE: 11pt; MARGIN-LEFT: 36pt; FONT-FAMILY: Courier New"></font><font style="FONT-SIZE: 11pt; FONT-FAMILY: Courier New">In accordance with the terms of the MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan (the &#8220;Plan&#8221;), pursuant to action of the Compensation Committee of the Board of Directors of MDU Resources Group, Inc. (the &#8220;Committee&#8221;), MDU Resources Group, Inc. (the &#8220;Company&#8221;) has&#160;&#160;granted to you (the &#8220;Participant&#8221;) an opportunity to receive an annual incentive award for calendar year 2010 (the &#8220;Award&#8221;), subject to the terms and conditions set forth in this Award Agreement (including Annexes A and B hereto and all documents incorporated herein by reference), as set forth below:</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: courier new">Target Award:</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: courier new">Performance Measures:</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: courier new">Described in Annex B</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: courier new">MDU RESOURCES GROUP, INC.</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: courier new">Thomas Everist</font></div>
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<td colspan="2" valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: courier new">_______________________________&#160; </font></td>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">TO</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">ANNUAL INCENTIVE AWARD AGREEMENT</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">It is understood and agreed that the Award evidenced by the Award Agreement to which this is annexed is subject to the following additional terms and conditions.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">1.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New; TEXT-DECORATION: underline">Nature of Award</font>.&#160;&#160;The Award represents the opportunity to receive an annual incentive award if the Performance Measures are achieved during the Performance Period.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">2.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New; TEXT-DECORATION: underline">Determination of Annual Incentive Award Earned</font>.&#160;&#160;The amount of the annual incentive award earned, if any, pursuant to this Award Agreement shall range from zero to 200% of the Target Award based upon achievement of the Performance Measures, with such percentage determined by the Committee in accordance with Annex B hereto.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">3.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New; TEXT-DECORATION: underline">Payment</font>.&#160;&#160;Payment of any annual incentive award earned pursuant to this Agreement shall be made in cash in a lump sum.&#160;&#160;Unless the Participant has elected to defer receipt of the annual incentive award in accordance with an applicable deferral arrangement, payment will be made as soon as practicable (but not later than the next March 10th) following the Committee's certification of the achievement of the Performance Measures and determination of the Participant's annual incentive payment pursuant to Section 2 hereof.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">4.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New; TEXT-DECORATION: underline">Termination of Employment</font>.&#160;&#160;Notwithstanding anything contained herein to the contrary, except as the Committee may otherwise determine, in order to be eligible to receive an annual incentive award under this Award Agreement, the Participant must remain in the employ of the Company through the Performance Period.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">5.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New; TEXT-DECORATION: underline">Unusual or Nonrecurring Events</font>.&#160;&#160;Unless otherwise determined by the Committee, the Performance Measure targets shall be adjusted to take into account unusual or nonrecurring events affecting the Company, a Subsidiary or a division or business unit, or the financial statements thereof, or changes in applicable laws, regulations or accounting principles to the extent such unusual or nonrecurring events or changes in applicable laws, regulations or accounting principles otherwise</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">would result in dilution or enlargement of the annual incentive award intended to be provided hereunder; provided, however, that such adjustment shall be made in a manner that will not cause the Award to fail to qualify as performance-based compensation for purposes of Section 162(m)(4)(C) of the Code.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">6.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New; TEXT-DECORATION: underline">Tax Withholding</font>.&#160;&#160;The Committee shall have the power and the right to deduct or withhold from any annual incentive award earned pursuant to this Award Agreement an amount sufficient to satisfy any Federal, state and local taxes (including the Participant's FICA obligations) required by law to be withheld.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">7.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New; TEXT-DECORATION: underline">Ratification of Actions</font>.&#160;&#160;By accepting the Award or other benefit under the Plan, the Participant and each person claiming under or through him shall be conclusively deemed to have indicated his acceptance and ratification of, and consent to, any action taken under the Plan or the Award by the Company, its Board of Directors, or the Committee.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">8.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New; TEXT-DECORATION: underline">Definitions</font>. Capitalized terms not otherwise defined herein or in the Award Agreement shall have the meanings given them in the Plan.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">9.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New; TEXT-DECORATION: underline">Governing Law and Severability</font>. To the extent not preempted by Federal law, the Award Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law provisions.&#160;&#160;In the event any provision of the Award Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Award Agreement, and the Award Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">10.&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New; TEXT-DECORATION: underline">No Rights to Continued Employment</font>.&#160;&#160;This Award Agreement is not a contract of employment.&#160;&#160;Nothing in the Plan or in this Award Agreement shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate the Participant's employment at any time, for any reason or no reason, or confer upon the Participant the right to continue in the employ of the Company or a Subsidiary.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">ANNUAL INCENTIVE AWARD AGREEMENT</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">The Committee may use negative discretion and adjust any annual incentive award payment downward, using any subjective or objective measures as it shall determine, including but not limited to the 20% limitation described in the following sentence.&#160;&#160;The 20% limitation means that no more than 20% of after-tax earnings that are in excess of planned earnings at the business unit level for operating company executives and at the MDU Resources Group level for corporate executives will be paid in annual incentives to executives.&#160;&#160;The application of this limitation or any other reduction, and the methodology used in determining any such reduction, is in the sole discretion of the Committee.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New"><font style="FONT-SIZE: 11pt; FONT-FAMILY: Courier New"><font style="FONT-SIZE: 11pt; FONT-FAMILY: Courier New"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New; TEXT-DECORATION: underline">Determination of Annual Incentive Award Earned and Performance Measures</font>.</font></font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">The amount of the annual incentive award earned, if any, for the Performance Period shall be determined in accordance with the following formula:</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">Annual Incentive Award Earned = Payout Percentage X Target Award</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">The Payout Percentage is determined based on the annual incentive award payments made to the president and chief executive officers of the four business units &#8211; Knife River Corporation, MDU Construction Services Group, Inc., WBI Holdings, Inc. and Combined Utility Group (collectively, the "Business Units") &#8211; and will be calculated as follows.&#160;&#160;Each business unit president and chief financial officer's annual incentive award payment, expressed as a percentage of his annual target award, will be multiplied by that business unit's percentage share of average invested capital for 2010.&#160;&#160;These four products will be added together, and the sum will be multiplied by the Participant's Target Award.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Courier New"><font style="FONT-SIZE: 11pt; FONT-FAMILY: Courier New"><font style="FONT-SIZE: 11pt; FONT-FAMILY: Courier New">The Performance Measures for the Business Units are as follows: <font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: Courier New">[Attach [2010] Approved Performance Measures for Knife River Corporation, MDU Construction Services Group, Inc., WBI Holdings, Inc. and Combined Utility Group]</font></font></font></font></div>

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<div align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Target</font></div>
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<div align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Maximum</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Name</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Title</font></div>
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<div align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Shares</font></div>

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<div align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Dividend</font></div>

<div align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Equivalents</font></div>

<div align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">($)</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Shares</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Dividend</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">($)</font></div>
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<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Shares</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">(#)</font></div>
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<td valign="top" width="10%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Dividend</font></div>

<div align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Equivalents</font></div>

<div align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">($)</font></div>
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<td align="left" valign="top" width="12%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Terry D. Hildestad</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">President and Chief Executive Officer</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">MDU Resources Group, Inc.</font></div>
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<td valign="top" width="9%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">4,771</font></div>
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<td valign="top" width="10%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">9,017</font></div>
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<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">47,709</font></div>
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<td valign="top" width="10%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">90,170</font></div>
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<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">95,418</font></div>
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<td valign="top" width="10%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">180,340</font></div>
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</tr><tr>
<td align="left" valign="top" width="12%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 12pt">Vernon A. Raile<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: text-top">1</font></font></font></div>
</td>
<td align="left" valign="top" width="19%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Executive Vice President, Treasurer and Chief Financial Officer</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">MDU Resources Group, Inc.</font></div>
</td>
<td valign="top" width="9%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#8211;</font></div>
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<td valign="top" width="10%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#8211;</font></div>
</td>
<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#8211;</font></div>
</td>
<td valign="top" width="10%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#8211;</font></div>
</td>
<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#8211;</font></div>
</td>
<td valign="top" width="10%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#8211;</font></div>
</td>
</tr><tr>
<td align="left" valign="top" width="12%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Doran N. Schwartz</font></div>
</td>
<td align="left" valign="top" width="19%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Vice President and Chief Financial Officer</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">MDU Resources Group, Inc.</font></div>
</td>
<td valign="top" width="9%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">827</font></div>
</td>
<td valign="top" width="10%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">1,563</font></div>
</td>
<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">8,269</font></div>
</td>
<td valign="top" width="10%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">15,628</font></div>
</td>
<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">16,538</font></div>
</td>
<td valign="top" width="10%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">31,257</font></div>
</td>
</tr><tr>
<td align="left" valign="top" width="12%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">John G. Harp</font></div>
</td>
<td align="left" valign="top" width="19%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">President and Chief Executive Officer</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">MDU Construction Services Group, Inc.</font></div>
</td>
<td valign="top" width="9%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">1,718</font></div>
</td>
<td valign="top" width="10%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">3,247</font></div>
</td>
<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">17,175</font></div>
</td>
<td valign="top" width="10%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">32,461</font></div>
</td>
<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">34,350</font></div>
</td>
<td valign="top" width="10%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">64,922</font></div>
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<td align="left" valign="top" width="12%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">William E. Schneider</font></div>
</td>
<td align="left" valign="top" width="19%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">President and Chief Executive Officer</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Knife River Corporation</font></div>
</td>
<td valign="top" width="9%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">1,708</font></div>
</td>
<td valign="top" width="10%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">3,228</font></div>
</td>
<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">17,076</font></div>
</td>
<td valign="top" width="10%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">32,274</font></div>
</td>
<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">34,152</font></div>
</td>
<td valign="top" width="10%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">64,547</font></div>
</td>
</tr><tr>
<td align="left" valign="top" width="12%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Steven L. Bietz</font></div>
</td>
<td align="left" valign="top" width="19%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">President and Chief Executive Officer</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">WBI Holdings, Inc.</font></div>
</td>
<td valign="top" width="9%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">1,336</font></div>
</td>
<td valign="top" width="10%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">2,525</font></div>
</td>
<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">13,358</font></div>
</td>
<td valign="top" width="10%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">25,247</font></div>
</td>
<td valign="top" width="7%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">26,716</font></div>
</td>
<td valign="top" width="10%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 2px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">50,493</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">(1)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Mr. Raile received no award due to his retirement on February 16, 2010.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 12pt">{&#160;&#160;&#160;&#160;}</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">In accordance with the terms of the MDU Resources Group, Inc. Long-Term Performance-Based Incentive Plan (the "Plan"), pursuant to action of the Compensation Committee of the Board of Directors of MDU Resources Group, Inc. (the "Committee"), MDU Resources Group, Inc. (the "Company") hereby grants to you (the "Participant") Performance Shares (the "Award"), subject to the terms and conditions set forth in this Award Agreement (including Annexes A and B hereto and all documents incorporated herein by reference), as set forth below:</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Target Award:</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">{&#160;&#160;&#160;&#160;}Performance Shares (the "Target Award")</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Performance Period:</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">{&#160;&#160;&#160;&#160;} through</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">{&#160;&#160;&#160;&#160;} (the "Performance Period")</font></div>

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<td align="left" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160;</font></td>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Date of Grant:</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">{&#160;&#160;&#160;&#160;}</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Dividend Equivalents:</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Yes</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">THESE PERFORMANCE SHARES ARE SUBJECT TO FORFEITURE AS PROVIDED HEREIN.&#160;&#160;THIS AWARD AND AMOUNTS RECEIVED IN CONNECTION WITH THIS AWARD ARE ALSO SUBJECT TO FORFEITURE, RECAPTURE OR OTHER ACTION IN THE EVENT OF AN ACCOUNTING RESTATEMENT, AS PROVIDED IN THE PLAN.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">The Participant, in consideration of this grant of Performance Shares, by affixing his signature hereto, specifically waives any rights he may have under the definition of Change in Control contained in Section 2.5 of the Plan, as it was in effect prior to November 12, 2009, and hereby consents to the use of the definition of Change in Control as amended November 12, 2009 in connection with any grants made pursuant to the Plan and still outstanding on the date hereof.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">Further terms and conditions of the Award are set forth in Annexes A and B hereto, which are integral parts of this Award Agreement.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">All terms, provisions and conditions applicable to the Award set forth in the Plan and not set forth in this Award Agreement are hereby incorporated herein by reference.&#160;&#160;To the extent any provision hereof is inconsistent with a provision of the Plan; the provisions of the Plan will govern.&#160;&#160;The Participant hereby acknowledges receipt of a copy of this Award Agreement, including Annexes A and B hereto, and a copy of the Plan and agrees to be bound by all the terms and provisions hereof and thereof.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">MDU RESOURCES GROUP, INC.</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">By:</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Terry D. Hildestad</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">President and</font></div>
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<td align="left" valign="top" width="38%">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Chief Executive Officer</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">________________________</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">ANNEX A</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">TO</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">MDU RESOURCES GROUP, INC.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">PERFORMANCE SHARE AWARD AGREEMENT</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">It is understood and agreed that the Award of Performance Shares evidenced by the Award Agreement to which this is annexed is subject to the following additional terms and conditions.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">Nature of Award</font>.&#160;&#160;The Target Award represents the opportunity to receive shares of Company common stock, $1.00 par value ("Shares") and Dividend Equivalents on such Shares.&#160;&#160;The number of Shares that may be earned under this Award shall be determined pursuant to Section 2 hereof.&#160;&#160;The amount of Dividend Equivalents that may be earned under this Award shall be determined pursuant to Section 4 hereof.&#160;&#160;Except for Dividend Equivalents, which are paid in cash, Awards will be paid in Shares.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">Determination of Number of Shares Earned</font>.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 72pt"></font><font style="FONT-SIZE: 12pt">The number of Shares earned, if any, for the Performance Period shall be determined in accordance with the following formula:</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 72pt"></font><font style="FONT-SIZE: 12pt"># <font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt">of Shares = Payout Percentage X Target Award</font></font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">The "Payout Percentage" is based on the Company's total shareholder return ("TSR") relative to that of the Peer Group listed on Annex B (the "Percentile Rank") for the Performance Period, determined in accordance with the following table:</font></div>

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<table cellpadding="0" cellspacing="0" width="60%" style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
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<td valign="center" width="40%" style="BORDER-TOP: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Percentile Rank</font></div>
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<td valign="center" width="39%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-TOP: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Payout Percentage</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">(% of Target Award)</font></div>
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<td valign="center" width="40%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">90th or higher</font></div>
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<td valign="center" width="39%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">200%</font></div>
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<td valign="center" width="40%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">70th</font></div>
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<td valign="center" width="39%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">150%</font></div>
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<td valign="center" width="40%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">50th</font></div>
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<td valign="center" width="39%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">100%</font></div>
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<td valign="top" width="40%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">40th</font></div>
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<td valign="top" width="39%" style="BORDER-RIGHT: black 0.5pt solid; BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">10%</font></div>
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<td valign="top" width="40%" style="BORDER-LEFT: black 0.5pt solid; BORDER-BOTTOM: black 1px solid">
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">less than 40th</font></div>
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">0%</font></div>
</td>
</tr></table>
</div>

<br>
</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">If the Company achieves a Percentile Ranking between the 40th and 50th percentiles, the Payout Percentage shall be equal to 10%, plus 9% for each Percentile Rank whole percentage above the 40th percentile.&#160;&#160;If the Company achieves a Percentile Ranking between the 50th and 90th percentiles, the Payout Percentage shall be equal to 100%, plus 2-1/2% for each Percentile Rank whole percentage above the 50th percentile.</font></div>

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<br>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">If the Company&#8217;s TSR for the Performance Period is negative, the number of shares otherwise earned, if any, for the Performance Period will be reduced.&#160;&#160;The amount of the reduction, as determined by the Committee in its sole discretion, will range from a 50% reduction to a 100% reduction (down to zero) of the number of shares otherwise earned.</font></div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">The Percentile Rank of a given company's TSR is defined as the percentage of the Peer Group companies' returns falling at or below the given company's TSR.&#160;&#160;The formula for calculating the Percentile Rank follows:</font></div>

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<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
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<div><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160; </font></div>
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<div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Percentile Rank = (n - r + 1)/n x 100</font></div>
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<div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Where:</font></div>
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<div>
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<td style="WIDTH: 36pt">
<div><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160; </font></div>
</td>
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<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">n =</font></div>
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<div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">total number of companies in the Peer Group, including the Company</font></div>
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<div>
<table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">
<tr valign="top">
<td style="WIDTH: 36pt">
<div><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">&#160; </font></div>
</td>
<td style="WIDTH: 36pt">
<div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">r =</font></div>
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<td>
<div align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">the numeric rank of the Company's TSR relative to the Peer Group, where the highest return in the group is ranked number 1</font></div>
</td>
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</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">To illustrate, if the Company's TSR is the third highest in the Peer Group comprised of 26 companies, its Percentile Rank would be 92.&#160;&#160;The calculation is: (26 - 3 + 1)/26 x 100 = 92.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">The Percentile Rank shall be rounded to the nearest whole percentage.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">If the common stock of a company in the Peer Group ceases to be traded during the Performance Period, the company will be deleted from the Peer Group.&#160;&#160;Percentile Rank will be calculated without regard to the return of the deleted company.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Total shareholder return is the percentage change in the value of an investment in the common stock of a company from the initial investment made on the last trading day in the calendar year preceding the beginning of the performance period through the last trading day in the final year of the performance period.&#160;&#160;It is assumed that dividends are reinvested in additional shares of common stock at the frequency paid.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">All Performance Shares that are not earned for the Performance Period shall be forfeited.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">3.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">Issuance of Shares</font>.&#160;&#160;Subject to any restrictions on distributions of Shares under the Plan, and subject to Section 6 of this Annex A, the Shares earned under the Award, if any, shall be issued to the Participant as soon as practicable (but no later than the next March 10) following the close of the Performance Period.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">4.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">Dividend Equivalents</font>.&#160;&#160;Dividend Equivalents shall be earned with respect to any Shares issued to the Participant pursuant to this Award.&#160;&#160;The amount of Dividend Equivalents earned shall be equal to the total dividends declared on a Share between the Date of Grant of this Award and the last day of the Performance Period, multiplied by the number of Shares issued to the Participant pursuant to the Award Agreement.&#160;&#160;Any Dividend Equivalents earned shall be paid in cash to the Participant when the Shares to which they relate are issued or as soon as practicable thereafter
, but no later than the next March 10 following the close of the Performance</font></font></div>

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<br>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">Period.&#160;&#160;If the Award is forfeited or if no Shares are issued, no Dividend Equivalents shall be paid.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">5.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">Termination of Employment</font>.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 72pt"></font><font style="FONT-SIZE: 12pt">(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;If the Participant's employment with the Company is terminated (1) for "Cause" (as defined below) at any time or (2) for any reason other than "Cause" before the Participant, as of the effective date of termination, has reached age 55 and completed 10 "Years of Service" (as defined below), all Performance Shares (and related Dividend Equivalents) shall be forfeited.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 72pt"></font><font style="FONT-SIZE: 12pt">(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;If the Participant's employment with the Company is terminated for any reason other than "Cause" after the Participant, as of the effective date of termination, has reached age 55 and completed 10 "Years of Service" (1) during the first year of the Performance Period, all Performance Shares (and related Dividend Equivalents) shall be forfeited; (2) during the second year of the Performance Period, determination of the Company's Percentile Rank for the Performance Period will be made by the Committee at the end of the Performance Period, and Shares (and related Dividend Equivalents) earned, if any, will be paid based on the Payout Percentage, prorated for the number of full mon
ths elapsed from and including the month in which the Performance Period began to and including the month in which the termination of employment occurs; and (3) during the third year of the Performance Period, determination of the Company's Percentile Rank for the Performance Period will be made by the Committee at the end of the Performance Period, and Shares (and related Dividend Equivalents) earned, if any, will be paid based on the Payout Percentage without prorating.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 72pt"></font><font style="FONT-SIZE: 12pt">(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;For purposes of the Award Agreement, the term "Cause" shall mean the Participant's fraud or dishonesty that has resulted or is likely to result in material economic damage to the Company or a Subsidiary, or the Participant's willful nonfeasance if such nonfeasance is not cured within ten days of written notice from the Company or a Subsidiary, as determined in good faith by a vote of at least two-thirds of the non-employee directors of the Company at a meeting of the Board at which the Participant is provided an opportunity to be heard.&#160;&#160;For purposes of the Award Agreement, the term "Years of Service" shall mean the years a Participant is employed by the Company and/
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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">6.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">Tax Withholding</font>.&#160;&#160;Pursuant to Article 16 of the Plan, the Committee shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any Federal, state and local taxes (including the Participant's FICA obligations) required by law to be withheld with respect to the Award.&#160;&#160;The Committee may condition the delivery of Shares upon the Participant's satisfaction of such withholding obligations.&#160;&#160;The Participant may elect to satisfy all or part of such withholding requirement by tendering previous
ly-owned Shares or by having the Company withhold Shares having a Fair Market Value equal to the minimum statutory withholding that could be imposed on the transaction (based on minimum statutory withholding rates for Federal, state, and local tax purposes, as applicable, including payroll taxes, that are applicable to such supplemental taxable income).&#160;&#160;Such election shall be irrevocable, made in writing, signed by the Participant, and shall</font></font></div>

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<br>
<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">7.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">Ratification of Actions</font>.&#160;&#160;By accepting the Award or other benefit under the Plan, the Participant and each person claiming under or through him or her shall be conclusively deemed to have indicated the Participant's acceptance and ratification of, and consent to, any action taken under the Plan or the Award by the Company, its Board of Directors, or the Committee.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">8.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">Notices</font>.&#160;&#160;Any notice hereunder to the Company shall be addressed to its office, 1200 West Century Avenue, P.O. Box 5650, Bismarck, North Dakota 58506; Attention: Corporate Secretary, and any notice hereunder to the Participant shall be addressed to him or her at the address specified on the Award Agreement, subject to the right of either party to designate at any time hereafter in writing some other address.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">9.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">Definitions</font>.&#160;&#160;Capitalized terms not otherwise defined herein or in the Award Agreement shall have the meanings given them in the Plan.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">10.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">Governing Law and Severability</font>.&#160;&#160;To the extent not preempted by Federal law, the Award Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law provisions.&#160;&#160;In the event any provision of the Award Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Award Agreement, and the Award Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font id="TAB1" style="FONT-SIZE: 12pt; MARGIN-LEFT: 36pt"></font><font style="FONT-SIZE: 12pt">11.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">No Rights to Continued Employment</font>.&#160;&#160;The Award Agreement is not a contract of employment.&#160;&#160;Nothing in the Plan or in the Award Agreement shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate the Participant's employment at any time, for any reason or no reason, or confer upon the Participant the right to continue in the employ of the Company or a Subsidiary.</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 12pt; TEXT-DECORATION: underline">ANNEX B</font></font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">TO</font></div>

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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">MDU RESOURCES GROUP, INC.</font></div>

<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: times new roman">LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN</font></div>

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