Nomination for ESOP Company of the Year Award History of DSG and ESOP. Dakota Supply Group rd Ave N. Fargo, ND

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1 Nomination for ESOP Company of the Year Award 2014 Dakota Supply Group rd Ave N. Fargo, ND History of DSG and ESOP Company established: 1898 Year ESOP established: 1996 (1991 as a KSOP) Percent of ESOP ownership 100% Sub S Corporation Number of employees Since our establishment in 1898, we at Dakota Supply Group (DSG) have worked hard at making a name for ourselves as a full- line distributor of electrical, mechanical, communications, utility, automation, waterworks, filtration and metering technology products and systems. DSG offers more than 250 lines and more than 25,000 products. With our logistics system and broad inventory, we can provide customers with same- day service by processing, picking and shipping an order within minutes. We re ready to serve our growing economy by working with our current vendors and searching out new products and services that will help our customers grow. DSG s corporate headquarters are located in Fargo, North Dakota, with additional North Dakota locations in Grand Forks, Bismarck, Minot and Williston. In South Dakota, DSG has locations in Aberdeen, Sioux Falls, Mitchell, Pierre and Rapid City. DSG s Minnesota locations are in Alexandria, Bemidji, Burnsville and St. Paul. With the addition of W.A Roosevelt to the DSG family, we have added 5 locations in Wisconsin (Rice Lake, La Crosse, Plover, Madison, and New Berlin). In 2012, DSG added two new companies to our family. MDM Supply with four locations in Bozeman, Helena, Kalispell and Missoula Montana. Fargo Water Equipment in Fargo, North Dakota was also added to the DSG family. The DSG ESOP actually started as a KSOP. After being bought and sold eight times over a ten year period, management at the time arranged the purchase of the company through a KSOP arrangement using in large part the 401(k) trust fund of 34 employees. In 1996 the KSOP became our current ESOP and in 1997 DSG was one of the first to take advantage of the S corp. status with our ESOP which at that time owned 67% of the company. In May of 2006 we also reached our goal of becoming 100% employee owned! Since 1999 we have had ten different acquisitions that have brought us to our current company level that is roughly 595 employees and around $369 million in sales.

2 Involvement with the ESOP Association & MN/Dakotas ESOP Association Chapter DSG strives to represent our company well in the association both at the chapter and the national level. Neal Smith, our VP of Human Resources was the first Chapter President from outside of the Twin Cities. Employee owners from all across DSG regularly attend the MN/Dakotas Chapter meetings. EOC Members have been on various committees for the MN/Dakotas chapter. DSG has ESOP committee members from across 3 states that regularly travel to the MN/Dakotas Chapter quarterly meetings. DSG s Committee members and Management team have been presenters or panelists for Chapter and National meetings. The Las Vegas technical conference has been attended multiple times by Todd Kumm, our CEO or Neal Smith, our Vice President of HR. DSG was a catalyst for changing the chapter name to the MN/Dakotas chapter and has continued to help recruit Dakotas companies in becoming active in our chapter. Every ESOP Committee member will attend the National ESOP conference as well as an Employee Owner retreat within their 3 year term. We have sent most of our Branch and Corporate Leadership to either the National Conference or an Employee Owner Retreat so they can see firsthand how Employee Ownership works. This last year we had the opportunity to host Richard Duffy from the National ESOP Association as well as had Representative Rick Berg come in for a Company visit. Participate in Congressional visits while at the National ESOP conference. Craig Major from Dakota Supply Aberdeen Joined the Government Relations Committee in 2012 & is the Chairman of the Committee for Sen., John Thune of South Dakota visited and talked our ESOP Committee along with our Aberdeen S.D. Branch Employee Owners

3 Employee- Owner Communication At DSG, we pride ourselves in our ability to communicate with our fellow owners. Employee Owners will make better decisions the more they know about our company. This is the premise of the ESOP ideal, the more information you share with your employees, the more buy- in and cooperation you will receive. Below are a few of the ways that we at DSG communicate with our Employee owners: Quarterly Branch Financial meetings Employee Ownership Committee representatives or liaisons at every location. Bi- monthly newsletters that include Company and ESOP News Connections Magazine Published twice a year for employees & customers. National ESOP Month celebrations Letter writing campaigns to our government officials New owner certificates and packets presented to each employee as they enter the ESOP plan ESOP news in congress Industry information DOU s which stands for Dinner on Us. Employees have the opportunity to receive an $80.00 Dinner on Us if they read and complete a quiz every month on issues selected as important to DSG. We have received 2 AACE awards in the last 6 years, and hope to have an opportunity to win another one this year. We generally do an activity for our Stock certificate presentation, this year we created a DSG HAS TALENT Showcase of our upper management in a comedic video picture.

4 Examples of Employee participation at DSG DSG is involved with many things in the ESOP community, but we are also involved in the communities where we do business. All of this involvement allows employee owners to participate. Some of these are: United Way activities Owners put together activities where all the proceeds go to benefit the United Way in their communities. We have owners involved with annual Walks to Defeat ALS. ALS is also known as Lou Gehrig s disease For the last few years our Christmas bonus has also been supplemented by a form to fill out to donate $100 (last year was actually $250) to a charity of our choice. In 2013, this totaled more than $275, Nation ESOP month was celebrated by giving back to the communities by donating 1,225 Meals, 65 Coats, 350+ Pounds on non- perishable foods. Branch managers are empowered to donate to organizations and charities they feel are worthwhile and deserving. DSG Alexandria donated $1,888 & participated in a Polar Plunge for the Special Olympics Organization. We also have ways for individual owners to receive recognition. Some of these ways are: WE Ward - - Employees and customers alike can nominate an Employee Owner they feel has gone above and beyond what was expected of them. From those who are nominated, we select a quarterly winner who receives a cash prizes. At the end of the year we an overall "We Ward Winner" and that person receives a cash prize as well.

5 Wealth Creation at DSG Wealth creation for our Employee owners is one of the main points of emphasis here at DSG. Below are a couple of the ways DSG helps our participants with wealth creation: Contributions to the ESOP DSG believes our ESOP plan is an excellent source of retirement income for our Owners. Historically we as a company generally contribute more than 10% of total payroll to our ESOP on a yearly basis. Over the past 5 years, that contribution has been right around 12%. Since the inception of our ESOP, our annualized rate of return is more than 20%. 401K Matching We take the phrase Don t put all your eggs into one basket seriously here at DSG. That is why we as a company will match 50% of the first 6% of an owner s salary that they invest in their 401K account. These funds cannot be invested in company stock to ensure some diversification for our owners. We at DSG consider our ESOP more than a retirement plan it is truly a way of life for us and this is in fact OUR Company! With our 100% NON- leveraged ESOP status we see the sky as the limit for where we can go!! Please consider Dakota Supply Group for the honor of ESOP Company of the Year Thank You.