Item 1.01 Entry into a Material Definitive Agreement.
On January 24, 2023, MDU Resources Group, Inc. ("MDU Resources" or the
"Company") entered into a Cooperation Agreement (the "Cooperation Agreement")
with Keith A. Meister and Corvex Management LP (Mr. Meister and Corvex
Management LP, together with their respective affiliates, the "Corvex Group").
Pursuant to the Cooperation Agreement, the Company agreed, among other things,
to appoint Corvex Partner James H. Gemmel to the MDU Resources board of
directors (the "Board"), subject to the approval of the Federal Energy
Regulatory Commission under the Federal Power Act (the "FERC Approval"). The
Cooperation Agreement also provides that, prior to the receipt of the FERC
Approval, Mr. Gemmel will be appointed as a non-voting observer (a "Board
Observer") of the Board, effective immediately following the execution of the
Cooperation Agreement on January 24, 2023.
Under the terms of the Cooperation Agreement, if the FERC Approval is obtained
on or before the date (the "2023 Proxy Deadline") that is fifteen (15) business
days prior to the date on which MDU Resources expects to mail its proxy
statement relating to the Company's 2023 annual meeting of stockholders (the
"2023 Annual Meeting"), then (i) immediately following the date of the FERC
Approval, the size of the Board will be increased by one (1) director and Mr.
Gemmel will be appointed to the Board for a term expiring at the 2023 Annual
Meeting and (ii) MDU Resources will nominate Mr. Gemmel for re-election at the
2023 Annual Meeting for a term expiring at the Company's 2024 annual meeting of
stockholders (the "2024 Annual Meeting"). If the FERC Approval is obtained after
the 2023 Proxy Deadline, then, immediately after the later of the date the FERC
Approval is received and the completion of the 2023 Annual Meeting, the size of
the Board will be increased by one (1) director and Mr. Gemmel will be appointed
to the Board for a term expiring at the 2024 Annual Meeting. Upon Mr. Gemmel's
appointment to the Board, Mr. Gemmel will cease to be a Board Observer.
Pursuant to the Cooperation Agreement, the Corvex Group has agreed to abide by
certain customary standstill restrictions, voting commitments, and other
provisions. In addition, the Cooperation Agreement provides for customary
director replacement procedures in the event Mr. Gemmel ceases to serve as a
director or Board Observer under certain circumstances as specified in the
Cooperation Agreement. Furthermore, in connection with Mr. Gemmel's appointment,
Corvex Management LP and Mr. Meister also entered into a customary
confidentiality agreement with respect to the Company's information (the
"Confidentiality Agreement").
The Cooperation Agreement also provides that Mr. Gemmel (or his replacement
pursuant to the Cooperation Agreement) will resign from the Board effective upon
the earliest of the following (each a "Resignation Event"): (i) the second
business day following such time as the Corvex Group ceases to hold a "net long
position" (as defined in the Cooperation Agreement) of at least 8,100,000 shares
of the Company's common stock, par value $1.00 per share; (ii) the later of each
of (A) the closing of the Company's previously announced distribution of the
equity of Knife River Corporation to the Company's stockholders and/or the
closing of the sale, distribution or other disposal (in one or a series of
transactions) of any such shares not so distributed, in each case, such that the
Company and any subsidiary thereof, no longer holds, directly or indirectly, any
equity interest or any other securities in Knife River Corporation, and
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(B) the closing of the sale, distribution or other complete disposition of
one-hundred percent (100%) of MDU Construction Services Group, Inc. or its
business (in one or a series of transactions), such that the Company and any
subsidiary thereof, no longer holds any interest in the business of MDU
Construction Services Group, Inc.; (iii) the date of the 2024 Annual Meeting,
unless the Board has determined to nominate Mr. Gemmel (or his replacement
pursuant to the Cooperation Agreement) for election at the 2024 Annual Meeting;
and (iv) the material breach by the Corvex Group or Mr. Gemmel (or his
replacement pursuant to the Cooperation Agreement) of the Confidentiality
Agreement or certain provisions of the Cooperation Agreement.
The Cooperation Agreement will terminate on the earlier of (i) the date that Mr.
Gemmel (or his replacement pursuant to the Cooperation Agreement) no longer
serves as a Board Observer or a director and (ii) the occurrence of a
Resignation Event.
The foregoing summary of the Cooperation Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Cooperation Agreement, a copy of which is attached as Exhibit 10.1 to this
Current Report on Form 8-K and is incorporated herein by reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The information set forth in Item 1.01 is incorporated herein by reference.
Pursuant to the Cooperation Agreement, Mr. Gemmel (i) was appointed as a
non-voting observer of the Board, effective immediately following the execution
of the Cooperation Agreement on January 24, 2023, and (ii) will later be
appointed as a director of the Board, subject to the receipt of the FERC
Approval, in accordance with the Cooperation Agreement. As compensation for his
service on the Board, Mr. Gemmel will receive the Company's standard
compensation for non-employee directors.
Upon Mr. Gemmel's appointment to the Board as a director, the Company will enter
into an indemnification agreement with Mr. Gemmel which will provide, among
other things, that the Company will indemnify Mr. Gemmel to the fullest extent
permitted by applicable Delaware law and in excess of that expressly permitted
by statute, but not to the extent prohibited by law. The terms of the
indemnification agreement are described in the Company's Current Report on Form
8-K, dated August 12, 2010, which was filed with the Securities and Exchange
Commission on August 17, 2010 ( File No. 1-3480 ), which description is
incorporated herein by reference.
Item 8.01 Other Events.
On January 24, 2023, MDU Resources issued a press release announcing the
Company's entry into the Cooperation Agreement and the matters described in Item
1.01 and Item 5.02. A copy of the press release is attached as Exhibit 99.1 to
this Current Report on Form 8-K and is incorporated herein by reference.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are being furnished as part of this
report.
Exhibit Number Description
10.1 Cooperation Agreement, dated as of January 24 , 2023, by and
among Keith A. Meister, Corvex Management LP and MDU Resources Group,
Inc.
99.1 Press release of MDU Resources Group, Inc., dated January
24 , 2023.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
* * *
Cautionary Note on Forward Looking Statements
This Current Report on Form 8-K includes certain forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. The forward-looking statements contained in this Current Report on Form
8-K, including statements about the receipt of required regulatory approvals for
Mr. Gemmel's appointment as a member of the MDU Resources board of directors are
expressed in good faith and are believed by the Company to have a reasonable
basis. Nonetheless, actual results may differ materially from the projected
results expressed in the forward-looking statements. For a discussion of
important factors that could cause actual results to differ materially from
those expressed in the forward-looking statements, refer to Item 1A-Risk Factors
in MDU Resources' most recent Form 10-Q and 10-K.
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