SEPARATION AGREEMENT AND RELEASE
The following is a Separation Agreement and Release
("Agreement") between Xxxxxxx X. Xxxx, Executive Vice President,
Chief Administrative and Corporate Development Officer and
Director of MDU Resources Group, Inc. and as Director of all of
its subsidiaries and any other currently held positions within
Companies ("Xxxxxxx X. Xxxx") and MDU Resources Group, Inc.,
including all of its subsidiaries, divisions, affiliates, limited
liabilities corporations, partners, partnerships, foreign and
domestic, officers, directors, employees and agents, the
successors and assigns of MDU Resources Group, Inc.
("Companies").
WHEREAS, Xxxxxxx X. Xxxx and Companies have agreed that,
effective October 31, 2002, Xxxxxxx X. Xxxx will voluntarily
resign from his position as Executive Vice President, Chief
Administrative and Corporate Development Officer and as Officer
and Director of Companies, the form of which resignation is
attached hereto as Exhibit A and is incorporated herein by
reference; and
WHEREAS, effective November 1, 2002, Xxxxxxx X. Xxxx will be
employed by Companies in the position of Special Projects Advisor
to the Chief Executive Officer. His employment in that position
will end effective May 31, 2004;
WHEREAS, compensation for such position will be Twenty Two
Thousand Nine Hundred Sixteen Dollars and Sixty Seven Cents
($22,916.67) per month and other benefits as more fully described
in attachment Exhibit B. Such sum will be paid in a payroll
check and subject to appropriate withholdings;
WHEREAS, Xxxxxxx X. Xxxx and Companies desire to set forth
the terms and conditions of their agreement regarding Xxxxxxx X.
Xxxx'x separation and release;
NOW, THEREFORE, in consideration of the mutual covenants,
promises, and agreements contained in this Agreement, Xxxxxxx X.
Xxxx and Companies agree as follows:
1. Compensation.
(a) Salary. Salary as Special Projects Advisor to the
Chief Executive Officer will be Twenty Two Thousand Nine Hundred
Sixteen Dollars and Sixty Seven Cents ($22,916.67) per month from
November 1, 2002 through May 31, 2004.
(b) Lump Sum Payment. Companies will pay to Xxxxxxx
X. Xxxx as consideration for settlement and release of all
claims, including, but not limited to, all future participation
or distribution in various stock and bonus plans, the sum of One
Million Sixty Three Thousand and Three Hundred Thirty Three
Dollars ($1,063,333) less legally required deductions, including
deductions for federal income tax, FICA, and state income tax.
Said payment will be made on January 10, 2003, or upon the
expiration of the rescission period set forth in paragraph 4 of
this Agreement, whichever date is later. Xxxxxxx X. Xxxx
acknowledges and agrees that this sum is good and adequate
consideration for this Agreement and is a sum to which he would
not otherwise be entitled.
(c) Other Benefits. Other benefits are more fully set
forth in Exhibit B to this Agreement, which describes Xxxxxxx X.
Xxxx'x and the Companies' agreement on those additional issues
and is incorporated herein by reference.
(d) Executive Incentive Compensation Plan. Xxxxxxx X.
Xxxx will not participate or be eligible for participation in the
Executive Incentive Compensation Plan after October 31, 2002.
(e) 1992 Key Employee Stock Option Plan. The lump sum
payment described in paragraph 1(b) fully compensates Xxxxxxx X.
Xxxx for all participation in the 1992 Key Employee Stock Option
Plan through May 31, 2004.
(f) 1997 Executive Long Term Incentive Plan. The lump
sum payment described in paragraph 1(b) above fully compensates
him for any and all participation in this plan from the date of
this Agreement through May 31, 2004. Xxxxxxx X. Xxxx shall
retain any options currently vested under this plan. Any options
which are not currently vested are forfeited.
(g) 1999 Accelerated Restricted Stock Program. The
lump sum payment described in paragraph 1(b) above fully
compensates him for any and all participation in this plan
through May 31, 2004.
(h) Stock Options. Termination of employment for
purposes of vested stock options will be May 31, 2004.
2. Release and Covenant Not to Xxx. In exchange for the
severance pay described in paragraph 1(b) and the terms of this
Agreement, Xxxxxxx X. Xxxx, on behalf of himself, his heirs,
executors, and administrators does fully release and discharge
the following entities and persons from all claims: the
Companies, their parents, affiliates, subsidiaries, related
companies, officers, shareholders, directors, employees, agents,
and insurers (hereinafter collectively referred to as
"Releasees").
Xxxxxxx X. Xxxx understands and acknowledges that he is
releasing the Releasees from and against any and all claims,
demands, actions, liabilities, damages, or rights of any kind
through the date of this Release, whether known or unknown,
arising out of or resulting from Xxxxxxx X. Xxxx'x hiring by
Companies, employment with Companies, separation of employment
and resignation from officer and director status with Companies,
and Xxxxxxx X. Xxxx'x position as an officer with Companies.
Xxxxxxx X. Xxxx further agrees that he will not institute any
judicial proceedings against Releasees as a result of any claims
of any kind or character which Xxxxxxx X. Xxxx might have arising
out of or resulting from Xxxxxxx X. Xxxx'x hiring by Companies,
employment with Companies, separation of employment and
resignation from employment with Companies, and Xxxxxxx X. Xxxx'x
position as an officer with Companies. This includes any claims
based upon:
- Federal, state or local employment discrimination laws,
regulations or requirements, including Title VII of the Civil
Rights Act, the Age Discrimination in Employment Act, the Older
Workers Benefit Protection Act, the Americans with Disabilities
Act, the North Dakota Discrimination Act.
- Any other statute, ordinance, or regulation;
- Any contract, quasi-contract or promissory estoppel;
- Any tort, including wrongful discharge, misrepresentation,
fraud, infliction of emotional distress, or defamation; or
- Any other theory, whether developed or undeveloped.
3. Acceptance Period. The terms of this Agreement will be
open for acceptance by Xxxxxxx X. Xxxx for a period of 21 days,
during which time he may consider whether or not to accept this
Agreement and consult his counsel to advise him regarding the
same. Xxxxxxx X. Xxxx agrees that changes to this Agreement,
whether material or immaterial, will not restart this acceptance
period.
4. Right to Revoke. Xxxxxxx X. Xxxx acknowledges that he
has the right to revoke this Agreement only insofar as it extends
to potential claims under the Age Discrimination and Employment
Act, by informing the Companies of his intent to revoke this
Agreement within seven (7) calendar days following his signing of
it. Such revocation, if made, shall be in writing, and either
received by the Companies by the seventh day after signing or
postmarked by the seventh day with a simultaneous telephone
notification to Xxxxxx X. Xxxxx, XX, General Counsel at telephone
number 000-000-0000. Xxxxxxx X. Xxxx agrees that if he exercises
this right of revocation, the Companies may, at their option,
either nullify this Agreement in its entirety or kept it in
effect as to all claims not revoked in accordance with the
revocation provisions of this Agreement. In the event the
Companies opt to nullify the entire Agreement, neither Xxxxxxx X.
Xxxx nor the Companies will have any rights or obligations
whatsoever under this Agreement.
5. Nondisclosure of Proprietary and Trade Secret Business
Information. Xxxxxxx X. Xxxx agrees to retain in strict
confidence and not to use in any way and to not disclose to any
persons any non-public, confidential, proprietary, or trade
secret information of Companies and Companies' affiliates, as
described in the North Dakota Uniform Trade Secret Act. Xxxxxxx
X. Xxxx further acknowledges that he has returned to the
Companies all documents and information (including but not
limited to disk and information stored on the hard or soft drive
of any computer maintained by Xxxxxxx X. Xxxx) encompassing non-
public, confidential, proprietary, or trade secret information of
the Companies.
6. Return of Property Xxxxxxx X. Xxxx acknowledges that
prior to October 31, 2002, he will have returned company property
in his possession that was used in his positions Executive Vice
President, Chief Administrative and Corporate Development Officer
and Director of MDU Resources Group, Inc. and as Director of all
of its subsidiaries and any other currently held positions within
Companies. It is further agreed that Xxxxxxx X. Xxxx will vacate
his current office on the Companies' premises and have all
personalty removed from same by the close of business on
October 31, 2002.
Xxxxxxx X. Xxxx will be provided a computer and
internet access from his office in his home to support his work
in the position of Special Projects Advisor to the Chief
Executive Officer and will perform his duties in that position
from his home office.
7. The parties will mutually agree on the wording of (1)
an announcement to the employees of Companies; (2) letter to the
directors of MDU Resource Group, Inc.; and (3) press release to
the media regarding Xxxxxxx X. Xxxx'x leaving Companies as
Executive Vice President, Chief Administrative and Corporate
Development Officer and Director of MDU Resources Group, Inc.
including his position as Director of all of its subsidiaries.
8. Confidentiality. Xxxxxxx X. Xxxx agrees to keep the
terms of this Agreement and the facts of this Agreement
confidential and agrees not to disclose any information
concerning this Agreement to any person other than his present or
future attorneys, accountants, tax advisors, investment advisors,
family, or in response to a court order, subpoena, or valid
inquiry by a government agency. Companies agree to keep the
terms of this Agreement and the facts of this Agreement
confidential and agree not to disclose any information concerning
this Agreement to any person other than their present or future
attorneys, accountants, tax advisors, or in response to a law,
rule or regulation, court order, subpoena, or valid inquiry by a
government agency.
9. Nondisparagement. The parties agree not to make any
disparaging or negative statements about each other which
includes Companies' parent, subsidiaries, successors and assigns,
affiliate and predecessor companies, and their successors and
assigns, and present and former officers, employees, directors
and agents and any of them whether in their individual or
official capacity.
10. No Admission of Wrongdoing. Xxxxxxx X. Xxxx and
Companies agree that this Agreement is not an admission by
Xxxxxxx X. Xxxx or Companies of any acts that might be considered
a violation of federal, state, or local law, and that this
Agreement shall not be interpreted as such.
11. Change of Control Employment Agreement. Xxxxxxx X.
Xxxx and MDU Resources Group Inc. are parties to a Change of
Control Employment Agreement dated November 1, 1998. Xxxxxxx X.
Xxxx acknowledges that no "Change of Control" has occurred, as
that term is defined in that agreement and that agreement has no
force or effect.
12. Agreement Regarding No Right to Future Employment.
Xxxxxxx X. Xxxx'x employment in the position as Special Projects
Advisor to the Chief Executive Office will end on May 31, 2004.
Xxxxxxx X. Xxxx agrees that he will not at any time in the future
bring a claim against Companies for any failure to offer him
future employment or failure to accept from him an application
for future employment with Companies.
13. Entire Agreement Amendment. Xxxxxxx X. Xxxx
understands and represents that there is no Agreement or
understanding between him and Companies pertaining to his
retirement from employment and resignation from officer status
with Companies except what is set forth in this Agreement.
Xxxxxxx X. Xxxx and Companies agree that this Agreement can be
modified only in writing and that such writing must be signed by
Xxxxxxx X. Xxxx and an appropriate representative of Companies.
14. Severability. Should any court of competent
jurisdiction or arbitrator determine that any term or provision
of this Agreement is unenforceable, such term or provision shall
be deemed to be deleted as though it had never been a part of
this Agreement, and the validity, legality, and enforceability of
the remaining terms and provisions shall not be in any way
affected or imperiled thereby.
15. Assignment. This Agreement is personal to Xxxxxxx X.
Xxxx. Xxxxxxx X. Xxxx may not assign any of his rights or
delegate any of his duties or obligations under this Agreement.
The payment to be provided to Xxxxxxx X. Xxxx shall be made to
his spouse, Xxxx X. Xxxx, in the event of his death prior to his
receipt thereof.
16. Enforceable Contract. The laws of the state of North
Dakota shall govern this Agreement. If any part of this
Agreement is construed to be a violation of any law, such part
shall be modified to achieve the objective of the parties to the
fullest extent permitted and the balance of this Agreement shall
remain in full force and effect.
17. Affirmation. Xxxxxxx X. Xxxx affirms that he has read
this Agreement and has been advised to consult with an attorney
prior to signing this Agreement. Xxxxxxx X. Xxxx acknowledges
that the provisions of the agreement are understandable to him
and that he has entered into this Agreement freely and
voluntarily.
Dated: October 18, 2002 /s/ XXXXXXX X. XXXX
Xxxxxxx X. Xxxx
FOR THE COMPANIES
Dated: October 18, 2002 /s/ XXXXXX X. XXXXX
Xxxxxx X. Xxxxx, President, Chief
Executive Officer and Chairman of
the Board
Exhibit A
Resignation of Xxxxxxx X. Xxxx as Officer and Director of
MDU Resources Group, Inc. and Companies, and acceptance of
position as Special Projects Advisor to the
Chief Executive Officer of MDU Resources Group, Inc.
I, Xxxxxxx X. Xxxx, hereby resign from (1) my positions with
MDU Resources Group, Inc. as Executive Vice President, Chief
Administrative and Corporate Development Officer and Director;
and (2) from the Board of Directors of MDU Resources Group, Inc.
and from all the boards of its subsidiaries, affiliates, limited
liability corporations, partnerships and related entities, of
which I am a director effective October 31, 2002; (3) I hereby
accept the position of Special Projects Advisor to the Chief
Executive Officer effective November 1, 2002.
/s/ XXXXXXX X. XXXX October 18, 2002
Xxxxxxx X. Xxxx Dated
EXHIBIT B
SUMMARY OF OTHER BENEFITS
Xxxxxxx X. Xxxx
October 31, 2002
The following is a brief summary of benefit related items for
Xxxxxxx X. Xxxx. Please refer to the "Benefit Status at
Employment Termination" sections of each Summary Plan Description
in Your Resources book for further details on most of these
benefits. To the extent that the following is inconsistent with
the terms of the benefit plans, the plans govern.
MEDICAL AND DENTAL INSURANCE
Retiree medical coverage would become available to you,
effective May 31, 2004, as long as it is a benefit offered
through the company. Our records indicate that you are
currently enrolled in the Comp 400 plan with employee plus
one coverage. The current monthly premium cost for medical
coverage for an active employee with employee plus one
coverage is $35.00. This premium is subject to change
during annual renewal of benefits, which takes place during
November of each year.
Once you reach retirement age, you are eligible to continue
medical coverage at the rate in effect at that time.
Dental coverage would normally terminate effective May 31,
2004. However, you do have an option to elect COBRA
continuation beyond May 31, 2004. The COBRA continuation
coverage is the same coverage as is in effect prior to your
termination. Our records indicate that you are currently
enrolled in the dental plan with family coverage. The
current monthly premium cost for dental coverage for an
active employee is with family coverage is $26.00. This
premium is subject to change during annual renewal of
benefits, which takes place during November of each year.
The monthly premium cost for dental COBRA continuation will
be the COBRA premium in effect on May 31, 2004. Currently,
the period of time that coverage can be continued through
COBRA is 18 months from the date of termination.
A Notice of Election Form will be provided to you after
your termination date of May 31, 2004. This form describes
your option for election of continuation of this benefit.
If you do not elect dental continuation coverage, dental
coverage on your behalf will terminate effective May 31,
2004.
TAX-FREE OPTIONS PLAN
Participation in the premium conversion portion of TOP will
discontinue upon your termination on May 31, 2004.
Participation in the health care spending portion of this
plan would normally cease on the date of your termination.
However, you do have an option to elect COBRA continuation
beyond May 31, 2004. The COBRA continuation coverage is
the same coverage as in effect prior to your termination.
Currently, the period of time that coverage can be
continued through COBRA is 18 months from the date of
termination.
LIFE INSURANCE
The $100,000 non-contributory life insurance you are
currently insured for will cease upon your termination,
May 31, 2004.
Our records indicate you are currently insured for $200,000
contributory life insurance. The amount of contributory
life insurance you are insured for on May 31, 2004, can be
continued as a retiree benefit. However, the coverage will
decrease to 25% of the amount in effect immediately prior
to retirement. The premium to continue this benefit will
be the premiums in effect May 31, 2004.
VOLUNTARY AD&D INSURANCE
You earlier waived participation in this plan.
VACATION
You will be paid for your accrued and used vacation balance
as of October 31, 2002. Additional vacation that is accrued
during the employment continuation period will be recorded
as used to reflect a balance of zero as of May 31, 2004.
UTILITY DISCOUNT
In accordance with company policy, the utility discount of
33 1/3 percent will remain in effect during the employment
continuation period, as long as it is offered as an active
employee benefit. This will be extended to you as a retiree
benefit, effective May 31, 2004, as long as you remain in a
service area and the benefit continues to be extended to
retirees.
401(k) PLAN
Upon termination of your employment on May 31, 2004, you
will be eligible to rollover the amount in your 401(k) Plan
account into a self-directed retirement account or to take
distribution of your 401(k) Plan account. If you elect
distribution of your account, the portion of your account
invested in MDU Resources common stock will be distributed
in the form of a stock certificate. All other investments
in the Plan will be distributed in the form of cash.
To request a distribution, you will need to use Benefits
Complete at (000) 000-0000, which will provide you the
appropriate forms you will need to complete indicating the
specifics of your request. For access to your account,
have your PIN and Social Security number available.
Distributions are made as soon as administratively feasible
upon request. If you do not request a distribution prior
to your 65th birthday, distribution will automatically be
made as soon as administratively possible following your
65th birthday.
PENSION PLAN
Under current provisions of the pension plan, there are two
options of settlement of pension benefits available upon
your termination of employment, effective May 31, 2004: 1)
an immediate monthly pension benefit, or 2) a deferred
monthly pension benefit to begin no earlier than age 55 and
no later than age 65. The following are the estimated
benefits under the above-referred options using a
termination date of May 31, 2004.
In calculating the estimated benefit, the 2002 interest
rate factors, IRS maximum recognizable compensation, and
integration factor were used. Since distribution will be
made after 2002, the sum could vary depending on the
interest rate factors, maximum recognizable compensation,
and integration factor in effect for the year of
distribution.
Pension elections forms must be completed and returned to
MDU Resources Group, Inc. benefits department in order to
commence your benefits. These must be received into the
benefit department no later than May 15, 2004, if you wish
to commence benefits June 1, 2004.
Age 55 0 Months
May 31, 2004
Actuarial Benefit
Forms of Payment Factor Amount
Straight Life 1.000 $5,994.47
Ten Year Certain & Life 0.973 $5,832.62
Qualified Joint & Survivor 0.950 $5,694.75
Joint & Two-Thirds 0.950 $5,694.75
If you commence monthly pension benefits prior to age 60,
assuming you are least age 55, the pension amount is
reduced by one-fourth of one percent per month, dating
backward from your 60th birthday.
SUPPLEMENTAL INCOME SECURITY PLAN (SISP)
You are 100% vested in the SISP at level 63 which would
provide $125,700 per year in retirement benefits payable
for 15 years as early as age 65 or $251,400 per year as a
death benefit payable for 15 years. Please refer to the
Summary Plan Description Booklet, previously provided to
you for details on SISP benefits.
