OTTER TAIL CORP (Form: 8-K, Received: 07/01/2009 16:32:28)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): June 26, 2009

OTTER TAIL CORPORATION

(Exact name of registrant as specified in its charter)


Minnesota	0-00368	41-0462685
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

215 South Cascade Street, P.O. Box 496, Fergus Falls, MN 56538-0496
(Address of principal executive offices, including zip code)

(866) 410-8780
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS


	Item 1.01. Entry into a Material Definitive Agreement.
	Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
	Item 8.01. Other Events
	Item 9.01. Financial Statements and Exhibits.
	SIGNATURE
EXHIBIT INDEX
EX-2.1
EX-4.1
EX-4.2
EX-4.3

Item 1.01. Entry into a Material Definitive Agreement.

Adoption of Plan of Merger and Consummation of Holding Company Reorganization

On July 1, 2009, Otter Tail Corporation, a Minnesota corporation (“Old Otter Tail”), completed its holding company reorganization (the “Holding Company Reorganization”) in accordance with Section 302A.626 of the Minnesota Business Corporation Act (the “MBCA”) whereby it became a wholly owned subsidiary of a new public holding company, Otter Tail Corporation, a Minnesota corporation (“New Otter Tail”).

The new holding company structure was effected as of 12:00 a.m. Central Time on July 1, 2009 pursuant to a Plan of Merger dated as of June 30, 2009 (the “Plan of Merger”), by and among Old Otter Tail, New Otter Tail (formerly Otter Tail Holding Company, a Minnesota corporation and direct subsidiary of Old Otter Tail) and Otter Tail Merger Sub Inc., a Minnesota corporation and indirect subsidiary of Old Otter Tail and direct subsidiary of New Otter Tail (“Merger Sub”). The Plan of Merger provided for the merger (the “Merger”) of Old Otter Tail with Merger Sub, with Old Otter Tail as the surviving corporation. Pursuant to Section 302A.626 (subd. 2) of the MBCA shareholder approval was not required for the Merger. As a result of the Merger, Old Otter Tail is now a wholly owned subsidiary of New Otter Tail with the name Otter Tail Power Company. Immediately following the completion of the Merger, New Otter Tail changed its name from Otter Tail Holding Company to Otter Tail Corporation. The description of the Plan of Merger is qualified in its entirety by reference to the full text of the Plan of Merger, a copy of which is filed as Exhibit 2.1 hereto and incorporated herein by reference.

In the Merger, each issued and outstanding common share of Old Otter Tail was converted into one common share of New Otter Tail, par value $5 per share, and each issued and outstanding cumulative preferred share of Old Otter Tail was converted into one cumulative preferred share of New Otter Tail having the same designations, rights, powers and preferences. In connection with the Merger, each person that held rights to purchase, or other rights to or interests in, common shares of Old Otter Tail under any stock option, stock purchase or compensation plan or arrangement of Old Otter Tail immediately prior to the Merger holds a corresponding number of rights to purchase, and other rights to or interests in, common shares of New Otter Tail, par value $5 per share, immediately following the Merger.

The conversion of the common shares in the Merger occurred without an exchange of certificates. Accordingly, certificates formerly representing outstanding common shares of Old Otter Tail are deemed to represent the same number of common shares of New Otter Tail.

Pursuant to Section 302A.626 (subd. 7) of the MBCA, the provisions of the Restated Articles of Incorporation and Restated Bylaws of New Otter Tail are consistent with those of Old Otter Tail prior to the Merger. The authorized common shares and cumulative preferred shares of New Otter Tail, the designations, rights, powers and preferences of such shares and the qualifications, limitations and restrictions thereof are also consistent with those of Old Otter Tail’s common shares and cumulative preferred shares immediately prior to the Merger. The directors and executive officers of New Otter Tail are the same individuals who were directors and executive officers, respectively, of Old Otter Tail immediately prior to the Merger.

Immediately prior to the Merger, Old Otter Tail transferred to New Otter Tail by means of assignment the capital stock of its direct subsidiaries and all of its other assets not specific to the operation of the electric utility business. As a result, New Otter Tail is a holding company with two primary subsidiaries, Otter Tail Power Company (the electric utility) and Varistar Corporation (a holding company for the non-electric utility businesses).

Amendments to Note Purchase Agreements

In connection with the Holding Company Reorganization, Old Otter Tail entered into the following amendments to its note purchase agreements in order to obtain the consent of the noteholders to the Holding Company Reorganization.

Fourth Amendment to 2001 Note Purchase Agreement

On June 30, 2009 Old Otter Tail and the holders (the “2001 Noteholders”) of the 2001 Notes (as defined below) entered into a Fourth Amendment dated as of June 30, 2009 to Note Purchase Agreement dated as of December 1, 2001 (the “Fourth Amendment”), amending that certain Note Purchase Agreement dated as of December 1, 2001 among Old Otter Tail and each of the purchasers named on Schedule A attached thereto, as amended by a First Amendment to Note Purchase Agreement dated as of December 1, 2002 among Old Otter Tail and the noteholders party thereto, by a Second Amendment to Note Purchase Agreement dated as of October 1, 2004 among Old Otter Tail and the noteholders party thereto and by a Third Amendment to Note Purchase Agreement dated as of December 1, 2007 among Old Otter Tail and the noteholders party thereto (as so amended, the “2001 Note Purchase Agreement”). The 2001 Note Purchase Agreement relates to the issuance and sale by Old Otter Tail, in a private placement transaction, of its $90,000,000 6.63% Senior Notes due December 1, 2011 (the “2001 Notes”). The 2001 Note Purchase Agreement, including the first, second and third amendments thereto, are filed as Exhibit 4-D-7 to Old Otter Tail’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001, Exhibit 4-D-4 to Old Otter Tail’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, Exhibit 4.2 to Old Otter Tail’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004 and Exhibit 4.2 to Old Otter Tail’s Current Report on Form 8-K filed on December 20, 2007, respectively.

The Fourth Amendment sets forth the terms and conditions of the 2001 Noteholders’ consent to the Holding Company Reorganization including, among other things, conditions relating to the structure and mechanics of the Holding Company Reorganization, receipt by Old Otter Tail of necessary governmental and third party approvals and consents, and delivery by officers of and legal counsel to Old Otter Tail of certain certifications and legal opinions, respectively, relating to the Holding Company Reorganization. The Fourth Amendment also amends certain provisions of the 2001 Note Purchase Agreement, both in connection with the Holding Company Reorganization and for the purpose of achieving greater consistency among Old Otter Tail’s note purchase agreements. These amendments include changes to negative covenants in the 2001 Note Purchase Agreement regarding limitations on liens and contingent liabilities, and to events of default. As provided in the Fourth Amendment, the 2001 Note Purchase Agreement and the 2001 Notes remained obligations of Old Otter Tail, under the name Otter Tail Power Company, following the effectiveness of the Holding Company Reorganization. In addition, the guaranties issued by certain subsidiaries of Old Otter Tail of Old Otter Tail’s obligations under the 2001 Note Purchase Agreement and the 2001 Notes were released upon the effectiveness of the Holding Company Reorganization.

The summary in this Item 1.01 of the material terms of the Fourth Amendment is qualified in its entirety by reference to the full text of the Fourth Amendment, a copy of which is filed as Exhibit 4.1 hereto and is incorporated herein by reference.

Third Amendment to 2007 Note Purchase Agreement

On June 26, 2009, Old Otter Tail entered into a Third Amendment dated as of June 26, 2009 to Note Purchase Agreement dated as of August 20, 2007 (the “Third Amendment”) with the holders (the “2007 Noteholders”) of Old Otter Tail’s 2007 Notes (as defined below), amending that certain Note Purchase Agreement dated as of August 20, 2007 among Old Otter Tail and each of the purchasers party thereto, as amended by a First Amendment to Note Purchase Agreement dated as of December 14, 2007 among Old Otter Tail and the noteholders party thereto and by a Second Amendment to Note Purchase Agreement dated as of September 11, 2008 among Old Otter Tail and the noteholders party thereto (as so amended, the “2007 Note Purchase Agreement”). The 2007 Note Purchase Agreement relates to the issuance and sale by Old Otter Tail of $155 million aggregate principal amount of Old Otter Tail’s Senior Unsecured Notes in four series, in the designations and aggregate principal amounts set forth in the 2007 Note Purchase Agreement (the “2007 Notes”). The 2007 Note Purchase Agreement, including the first and second amendments thereto, are filed as Exhibit 4.1 to Old Otter Tail’s Current Report on Form 8-K filed on August 23, 2007, Exhibit 4.3 to Old Otter Tail’s Current Report on Form 8-K filed on December 20, 2007 and Exhibit 4.1 to Old Otter Tail’s Current Report on Form 8-K filed on September 15, 2008, respectively.

The Third Amendment sets forth the terms and conditions of the 2007 Noteholders’ consent to the Holding Company Reorganization including, among other things, conditions relating to the structure and mechanics of the Holding Company Reorganization, receipt by Old Otter Tail of necessary governmental and third party approvals and consents, and delivery by officers of and legal counsel to Old Otter Tail of certain certifications and legal opinions, respectively, relating to the Holding Company Reorganization. The Third Amendment also amends certain provisions of the 2007 Note Purchase Agreement, both in connection with the Holding Company Reorganization and for the purpose of achieving greater consistency among Old Otter Tail’s note purchase agreements. These amendments include changes to negative covenants in the 2007 Note Purchase Agreement regarding limitations on liens and subsidiary guarantees. As provided in the Third Amendment, the 2007 Note Purchase Agreement and the 2007 Notes remained obligations of Old Otter Tail, under the name Otter Tail Power Company, following the effectiveness of the Holding Company Reorganization.

The summary in this Item 1.01 of the material terms of the Third Amendment is qualified in its entirety by reference to the full text of the Third Amendment, a copy of which is filed as Exhibit 4.2 hereto and is incorporated herein by reference.

Amendment No. 2 to Cascade Note Purchase Agreement

On June 30, 2009, Old Otter Tail entered into an Amendment No. 2 dated as of June 30, 2009 to Note Purchase Agreement dated as of February 23, 2007 (“Amendment No. 2”) with Cascade Investment, L.L.C. (“Cascade”), amending that certain Note Purchase Agreement dated as of February 23, 2007 between Old Otter Tail and Cascade, as amended by a letter agreement dated December 14, 2007 between Old Otter Tail and Cascade (as so amended, the “Cascade Note Purchase Agreement”). The Cascade Note Purchase Agreement relates to the issuance and sale by Old Otter Tail to Cascade, in a private placement transaction, of Old Otter Tail’s $50,000,000 5.778% Senior Note due November 30, 2017 (the “Cascade Notes”). The Cascade Note Purchase Agreement is filed as Exhibit 4.1 to Old Otter Tail’s Current Report on Form 8-K filed on February 28, 2007.

Amendment No. 2 sets forth the terms and conditions of Cascade’s consent to the assignment by Old Otter Tail of its rights and obligations in, to and under the Cascade Note Purchase Agreement and the Cascade Note to New Otter Tail effective immediately prior to the effectiveness of the Holding Company Reorganization, as well as Cascade’s consent to the Holding Company Reorganization. These include conditions relating to the structure and mechanics of the Holding Company Reorganization, receipt by Old Otter Tail of necessary governmental and third party approvals and consents, delivery by officers of

and legal counsel to Old Otter Tail of certain certifications and legal opinions, respectively, relating to the Holding Company Reorganization, and delivery by New Otter Tail of a new standstill agreement with Cascade on terms no less favorable than those contained in the standstill agreement entered into by Old Otter Tail and Cascade on May 1, 2009 (the “Old Standstill”). Amendment No. 2 also amends certain provisions of the Cascade Note Purchase Agreement, both in connection with the Holding Company Reorganization and for the purpose of achieving greater consistency among Old Otter Tail’s note purchase agreements. These amendments include changes to negative covenants in the Cascade Note Purchase Agreement regarding limitations on liens, contingent liabilities and to events of default. In addition, Amendment No. 2 provides for an additional financial covenant applicable to New Otter Tail as of the effectiveness of the Holding Company Reorganization. Specifically, New Otter Tail may not permit the aggregate principal amount of all debt of Otter Tail Power Company and its subsidiaries to exceed 60% of Otter Tail Consolidated Total Capitalization (as defined in the Cascade Note Purchase Agreement, as amended by Amendment No. 2), determined as of the end of each fiscal quarter of New Otter Tail. The obligations of New Otter Tail under the Cascade Note Purchase Agreement and the Cascade Notes continue to be guaranteed by certain subsidiaries of New Otter Tail. As provided in Amendment No. 2, the Cascade Note Purchase Agreement and the Cascade Notes became obligations of New Otter Tail immediately prior to the effectiveness of the Holding Company Reorganization.

The summary in this Item 1.01 of the material terms of Amendment No. 2 is qualified in its entirety by reference to the full text of Amendment No. 2, a copy of which is filed as Exhibit 4.3 hereto and is incorporated herein by reference.

Cascade owned approximately 9.6% of Old Otter Tail’s outstanding common shares as of June 30, 2009 and, until July 1, 2009, was a party to the Old Standstill. The Old Standstill terminated effective upon the execution and delivery of the new Standstill Agreement dated as of July 1, 2009 between Cascade and New Otter Tail. A copy of the Old Standstill Agreement is filed as Exhibit 10.1 to Old Otter Tail’s Current Report on Form 8-K filed on May 5, 2009.

Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

The disclosure in Item 1.01 under “Adoption of Plan of Merger and Consummation of Holding Company Reorganization” is incorporated into this Item 3.01 by reference.

In connection with the Merger, the common shares of New Otter Tail are deemed to commence trading on the Nasdaq Global Select Market under the symbol “OTTR” on July 1, 2009. As a result of the Merger, Old Otter Tail’s common shares, which previously traded on the Nasdaq Global Select Market under the symbol “OTTR,” are deemed to be no longer publicly traded.

Item 8.01. Other Events.

On June 24, 2009, Moody’s Investors Services confirmed its rating of A3 for Old Otter Tail’s senior unsecured debt obligations, which became obligations of Otter Tail Power Company, the utility subsidiary, upon the effectiveness of the Holding Company Reorganization. Moody’s also assigned a rating of Baa3 to the Cascade Notes, which became obligations of New Otter Tail, upon the effectiveness of the Holding Company Reorganization. These actions concluded Moody’s review of the ratings of Old

Otter Tail’s senior unsecured debt for possible downgrade, which began on January 14, 2009 after the Minnesota Public Utilities Commission approved, with conditions, the restructuring of Old Otter Tail to establish a separate subsidiary corporation to conduct its utility operations. The rating outlook for both New Otter Tail and Otter Tail Power Company upon effectiveness of the Holding Company Reorganization is stable.

On June 26, 2009, Standard and Poor’s Ratings Services (“S&P”) issued a report confirming its rating of BBB- for Old Otter Tail’s senior unsecured debt obligations, which became obligations of Otter Tail Power Company, the utility subsidiary, upon the effectiveness of the Holding Company Reorganization. S&P also assigned a rating of BB+ to the Cascade Notes, which became obligations of New Otter Tail, upon the effectiveness of the Holding Company Reorganization. The rating outlook for both New Otter Tail and Otter Tail Power Company upon effectiveness of the Holding Company Reorganization is stable.

On June 26, 2009, Fitch Ratings (“Fitch”) announced that it will establish credit ratings for New Otter Tail, and Otter Tail Power Company, the utility subsidiary, upon the effectiveness of the Holding Company Reorganization. Fitch expects to assign a rating of BBB- to New Otter Tail’s senior unsecured debt obligations and a rating of BBB+ to Otter Tail Power Company’s senior unsecured debt obligations. The rating outlook for both New Otter Tail and Otter Tail Power Company upon effectiveness of the Holding Company Reorganization is expected to be stable.

Therefore, upon the effectiveness of the Holding Company Reorganization, the securities ratings of New Otter Tail and Otter Tail Power Company, the utility subsidiary, are as follows:

Otter Tail Corporation


	Moody’s Investors Service	Fitch Ratings	Standard & Poor’s

Corporate/Long-term Issuer Default Rating	Baa3	BBB-	BBB-
Senior Unsecured Debt	Baa3	BBB-	BB+
Outlook	Stable	Stable	Stable

Otter Tail Power Company


	Moody’s Investors Service	Fitch Ratings	Standard & Poor’s

Corporate/Long-term Issuer Default Rating	A3	BBB	BBB-
Senior Unsecured Debt	A3	BBB+	BBB-
Outlook	Stable	Stable	Stable

Our disclosure of these securities ratings is not a recommendation to buy, sell or hold our securities. These ratings are subject to revision or withdrawal at any time and each rating should be evaluated independently of any other rating.

Item 9.01. Financial Statements and Exhibits.

(d)

Exhibits.


Exhibit
Number		Description
2.1		Plan of Merger, dated as of June 30, 2009, by and among Otter Tail Corporation, Otter Tail Holding Company and Otter Tail Merger Sub Inc.

4.1		Fourth Amendment dated as of June 30, 2009 to Note Purchase Agreement dated as of December 1, 2001, among Otter Tail Corporation and the noteholders party thereto.

4.2		Third Amendment dated as of June 26, 2009 to Note Purchase Agreement dated as of August 20, 2007, among Otter Tail Corporation and each of the holders of notes party thereto.

4.3		Amendment No. 2 dated as of June 30, 2009 to Note Purchase Agreement dated as of February 23, 2007, between Otter Tail Corporation and Cascade Investment, L.L.C.

SIGNATURE

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.



	By:	/s/ Kevin G. Moug
		Kevin G. Moug
		Chief Financial Officer

Date: July 1, 2009

EXHIBIT INDEX


Exhibit
Number		Description
2.1		Plan of Merger, dated as of June 30, 2009, by and among Otter Tail Corporation, Otter Tail Holding Company and Otter Tail Merger Sub Inc.

4.1		Fourth Amendment dated as of June 30, 2009 to Note Purchase Agreement dated as of December 1, 2001, among Otter Tail Corporation and the noteholders party thereto.

4.2		Third Amendment dated as of June 26, 2009 to Note Purchase Agreement dated as of August 20, 2007, among Otter Tail Corporation and each of the holders of notes party thereto.

4.3		Amendment No. 2 dated as of June 30, 2009, 2009 to Note Purchase Agreement dated as of February 23, 2007, between Otter Tail Corporation and Cascade Investment, L.L.C.

Exhibit 2.1

PLAN OF MERGER

This PLAN OF MERGER, dated as of June 30, 2009 (the “Plan”), is entered into by and among Otter Tail Corporation, a Minnesota corporation (“Otter Tail” and after the Effective Time, the “Surviving Corporation”), Otter Tail Holding Company, a Minnesota corporation and the direct subsidiary of Otter Tail (“OT Holding”), and Otter Tail Merger Sub Inc., a Minnesota corporation and indirect subsidiary of Otter Tail and direct subsidiary of OT Holding (“Merger Sub”).

WHEREAS, the authorized capital stock of Otter Tail consists of:

(a) 50,000,000 Common Shares of the par value of $5 per share (“Otter Tail Common Shares”), of which 35,493,054 shares were issued and outstanding as of June 1, 2009;

(b) 1,500,000 Cumulative Preferred Shares without par value (“Otter Tail Cumulative Preferred Shares”), of which (i) 60,000 have been designated as Otter Tail’s $3.60 Cumulative Preferred Shares (“Otter Tail $3.60 Cumulative Preferred Shares), 60,000 of which were issued and outstanding as of June 1, 2009, (ii) 25,000 have been designated as Otter Tail’s $4.40 Cumulative Preferred Shares (“Otter Tail $4.40 Cumulative Preferred Shares”), 25,000 of which were issued and outstanding as of June 1, 2009, (iii) 30,000 have been designated as Otter Tail’s $4.65 Cumulative Preferred Shares (“Otter Tail $4.65 Cumulative Preferred Shares), 30,000 of which were issued and outstanding as of June 1, 2009, and (iv) 40,000 have been designated as Otter Tail’s $6.75 Cumulative Preferred Shares (the “$6.75 Otter Tail Cumulative Preferred Shares”), 40,000 of which were issued and outstanding as of June 1, 2009; and

(c) 1,000,000 Cumulative Preference Shares without par value (the “Otter Tail Cumulative Preference Shares”), none of which are currently outstanding.

WHEREAS, OT Holding is and, at all times since its organization, has been a direct, wholly owned subsidiary of Otter Tail with authorized capital stock consisting of:

(a) 50,000,000 Common Shares of the par value of $5 per share (“OT Holding Common Shares”), of which 100 shares are currently issued and outstanding;

(b) 1,500,000 Cumulative Preferred Shares without par value (“OT Holding Cumulative Preferred Shares”), of which (i) 60,000 have been designated as OT Holding’s $3.60 Cumulative Preferred Shares (“OT Holding $3.60 Cumulative Preferred Shares), (ii) 25,000 have been designated as OT Holding’s $4.40 Cumulative Preferred Shares (“OT Holding $4.40 Cumulative Preferred Shares”), (iii) 30,000 have been designated as OT Holding’s $4.65 Cumulative Preferred Shares (“OT Holding $4.65 Cumulative Preferred Shares), and (iv) 40,000 have been designated as OT Holding’s $6.75 Cumulative Preferred Shares (the “OT Holding $6.75 Cumulative Preferred Shares”); none of which were issued and outstanding as of June 1, 2009; and

(c) 1,000,000 Cumulative Preference Shares without par value (the “OT Holding Cumulative Preference Shares”), none of which are currently issued and outstanding.

WHEREAS, the designations, rights and preferences, and the qualifications, limitations and restrictions thereof, of the OT Holding Common Shares, the OT Holding Cumulative Preference Shares and each series of OT Holding Cumulative Preferred Shares, are the same as those of the Otter Tail Common Shares, the Otter Tail Cumulative Preference Shares, and the corresponding series of Otter Tail Cumulative Preffered Shares, respectively.

WHEREAS, the Articles of Incorporation and the Bylaws of OT Holding immediately after the Effective Time (as hereinafter defined) will contain provisions identical to the Articles of Incorporation and Bylaws of Otter Tail immediately before the Effective Time (other than, as allowed by Section 302A.626 (subd. 7) of the Minnesota Business Corporation Act, as amended (the “MBCA”)).

WHEREAS, Merger Sub is a wholly owned subsidiary of OT Holding with authorized capital stock consisting of 1,000 shares of common stock, par value $5 per share (“Merger Sub Common Shares”), of which 100 shares are currently issued and outstanding.

WHEREAS, the Board of Directors of each of Otter Tail, OT Holding and Merger Sub has determined that it is desirable and in the best interests of Otter Tail, OT Holding and Merger Sub, respectively, that Otter Tail and Merger Sub should merge, Otter Tail shall be the surviving corporation, and OT Holding shall be a “holding company” of Otter Tail, as such term is defined in Section 302A.626 (subd. 1)(b) of the MBCA.

Terms

NOW, THEREFORE, the parties hereby prescribe the terms and conditions of the merger and the mode of carrying the same into effect as follows:

1. Merger of Otter Tail with Merger Sub. At the Effective Time, Otter Tail shall merge with Merger Sub (the “Merger”) in accordance with Section 302A.626 (subd. 3) of the MBCA, and the separate existence of Merger Sub shall cease and Otter Tail shall be a direct, wholly owned subsidiary of OT Holding. Otter Tail shall be the surviving corporation and assume all of the rights, privileges, assets and liabilities of Merger Sub. Merger Sub and Otter Tail are the only constituent corporations to the Merger.

2. Name of Surviving Corporation . The name of the surviving corporation shall be “Otter Tail Power Company”.

3. Effect of the Merger . The effect of the Merger shall be as provided in Section 302A.626 of the MBCA. As a result of the Merger, by operation of law and without further act or deed, at the Effective Time, all property, rights, interests and other assets of Merger Sub shall be transferred to and vested in the Surviving Corporation, and the Surviving Corporation shall assume all of the liabilities and obligations of Merger Sub.

4. Effect on Capital Stock. At the Effective Time:

(a) Each then issued and outstanding OT Holding Common Share held by Otter Tail will, by virtue of the Merger and without any action on the part of the holder thereof, be cancelled without conversion or issuance of any shares of stock of the Surviving Corporation with respect thereto.

(b) Each then issued and outstanding Otter Tail Common Share will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into one OT Holding Common Share, which shall have the same designations, rights, powers and preferences and the same qualifications, limitations and restrictions as one Otter Tail Common Share immediately prior to the Effective Time.

(c) Each then issued and outstanding Otter Tail $3.60 Cumulative Preferred Share will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into one OT Holding $3.60 Cumulative Preferred Share, which shall have the same designations, rights, powers and preferences and the same qualifications, limitations and restrictions as an Otter Tail $3.60 Cumulative Preferred Share immediately prior to the Effective Time.

(d) Each then issued and outstanding Otter Tail $4.40 Cumulative Preferred Share will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into one OT Holding $4.40 Cumulative Preferred Share, which shall have the same designations, rights, powers and preferences and the same qualifications, limitations and restrictions as a Otter Tail $4.40 Cumulative Preferred Share immediately prior to the Effective Time.

(e) Each then issued and outstanding Otter Tail $4.65 Cumulative Preferred Share will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into one OT Holding $4.65 Cumulative Preferred Share, which shall have the same designations, rights, powers and preferences and the same qualifications, limitations and restrictions as a Otter Tail $4.65 Cumulative Preferred Share immediately prior to the Effective Time.

(f) Each then issued and outstanding Otter Tail $6.75 Cumulative Preferred Share will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into one OT Holding $6.75 Cumulative Preferred Share, which shall have the same designations, rights, powers and preferences and the same qualifications, limitations and restrictions as a Otter Tail $6.75 Cumulative Preferred Share immediately prior to the Effective Time.

(g) Each then issued and outstanding Merger Sub Common Share will, by virtue of the Merger and without any action on the part of the holder thereof, be converted into a common share of the Surviving Corporation.

5. Certificates . At the Effective Time, each outstanding certificate that, immediately prior to the Effective Time, evidenced Otter Tail Common Shares or Otter Tail Cumulative Preferred Shares shall be deemed and treated for all corporate purposes to evidence the ownership of the number of OT Holding Common Shares or Otter Tail Cumulative Preferred

Shares, as the case may be, into which such Otter Tail Common Shares or Otter Tail Cumulative Preferred Shares were converted pursuant to Sections 4(b), 4(c), 4(d), 4(e) and 4(f), respectively, of this Plan.

6. Articles of Incorporation, Bylaws, Officers and Directors. Subject to Section 7 below, the Articles of Incorporation and Bylaws of Otter Tail, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation and Bylaws of the Surviving Corporation. The officers and directors of Otter Tail immediately prior to the Effective Time shall be the officers and directors of OT Holding as of the Effective Time. The officers and directors of Merger Sub immediately prior to the Effective Time shall be the officers and directors of the Surviving Corporation as of the Effective Time.

7. Amendment to Articles of Incorporation.

(a) Automatically, as a result of filing the Articles of Merger and this Plan in accordance with the MBCA, the Articles of Incorporation of the Surviving Corporation shall be amended as of the Effective Time as follows:

(i)

Article I of the Articles of Incorporation is amended in its entirety to read as follows:

ARTICLE I.

The name of the corporation shall be Otter Tail Power Company.

(ii)

A new Article XI of the Articles of Incorporation is added to read in its entirety as follows:

ARTICLE XI.

Any action or transaction by or involving the corporation, other than the election or removal of directors of the corporation, that requires for its adoption under the Minnesota Business Corporation Act or these Articles of Incorporation, the approval of the shareholders of the corporation shall, pursuant to Section 302A.626 (subd. 3(8)(i)) of the Minnesota Business Corporation Act, require, in addition to the approval of the shareholders of the corporation, the approval of the shareholders of Otter Tail Corporation, a Minnesota corporation (or any successor by merger), so long as such corporation or its successor is the ultimate parent, directly or indirectly, of the corporation, by the same vote that is required by the Minnesota Business Corporation Act and/or by these Articles of Incorporation. For the purposes of this Article XI, the term “parent” shall mean a corporation that owns, directly or indirectly, any outstanding capital stock of the corporation entitled to vote in the election of directors of the corporation.

(b) In connection with the Merger, the Articles of Incorporation of Otter Tail Holding Company shall be amended to provide that the name of Otter Tail Holding Company shall be “Otter Tail Corporation”.

8. Assumption of Certain Agreements and Plans Relating to Securities of Otter Tail. OT Holding and Otter Tail hereby agree that, immediately prior to the Effective Time, OT Holding will assume the following plans and agreements relating to securities of Otter Tail and all of the rights, duties and obligations under such plans and agreements from and after the Effective Time:

(a) 1999 Employee Stock Purchase Plan, As Amended (2006);

(b) 1999 Stock Incentive Plan, As Amended (2006), and all award agreements outstanding thereunder;

(d) Otter Tail Corporation Automatic Dividend Reinvestment and Share Purchase Plan;

(e) Indenture, dated as of November 1, 1997, between Otter Tail Corporation and U.S. Bank National Association (formerly known as First Trust National Association), as trustee; and

(f) Note Purchase Agreement dated as of February 23, 2007 between Otter Tail Corporation and Cascade Investment, L.L.C. (“Cascade”), as amended, and related Note issued to Cascade.

9. Plan of Reorganization. This Plan shall constitute a plan of reorganization of Otter Tail and Merger Sub.

10. Tax Treatment. The Merger shall constitute a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

11. Filing and Effective Time. If this Plan has not been terminated pursuant to Section 12 hereof, after this Plan has been duly approved in the manner required by law, appropriate Articles of Merger and this Plan shall be filed by Otter Tail and Merger Sub pursuant to and in accordance with the MBCA. The Merger shall be effective (the “Effective Time”) at 12:00 a.m. Central Time on July 1, 2009.

12. Termination . This Plan may be terminated and the Merger abandoned by the Board of Directors of Otter Tail at any time prior to the Effective Time.

13. Adoption and Approval . The Plan was adopted and approved by the Board of Directors of Otter Tail and OT Holding on June 30, 2009 and by the Board of Directors of Merger Sub on June 25, 2009. Pursuant to Section 302A.626 (subd. 2) of the MBCA, the Plan was not approved by the shareholders of Otter Tail or Merger Sub.

Exhibit 4.1

EXECUTION COPY

Otter Tail Corporation

Fourth Amendment
Dated as of June 30, 2009

Note Purchase Agreement
Dated As Of December 1, 2001

Re: $90,000,000 6.63% Senior Notes
Due December 1, 2011

Fourth Amendment To Note Purchase Agreement

This Fourth Amendment dated as of June 30, 2009 (the or this “ Fourth Amendment ”) to the Note Purchase Agreement dated as of December 1, 2001 is between and among Otter Tail Corporation , a Minnesota corporation (the “ Company ”), and each of the institutions which is a signatory to this Fourth Amendment (collectively, the “ Noteholders ”).

Recitals:

A. The Company and each of the Purchasers signatory thereto have heretofore entered into the Note Purchase Agreement dated as of December 1, 2001, as amended by a First Amendment thereto dated as of December 1, 2002, by a Second Amendment thereto dated as of October 1, 2004 and by a Third Amendment thereto dated as of December 1, 2007 (as heretofore so amended, the “ Note Purchase Agreement ”). The Company has heretofore issued the $90,000,000 6.63% Senior Notes due December 1, 2011 (the “ Notes ”) dated December 27, 2001 pursuant to the Note Purchase Agreement.

B. The Company has announced that it intends to restructure the Company into a holding company with Otter Tail Power Company as a separate, first-tier subsidiary (the “ Reorganization ”). The Company (“ Old Otter Tail ”) will form a direct, wholly owned subsidiary that will be a Minnesota corporation (“ New Otter Tail ”). New Otter Tail will form a direct, wholly owned subsidiary that will be a Minnesota corporation (“ Merger Sub ”). Old Otter Tail will transfer to New Otter Tail by way of assignment or contribution to capital all of the shares of capital stock of its direct, wholly owned subsidiaries. Pursuant to articles of merger and a plan of merger among Old Otter Tail, New Otter Tail and Merger Sub, Old Otter Tail will merge with Merger Sub (the “ Merger ”). The surviving corporation in the Merger will be Old Otter Tail and will have the name Otter Tail Power Company, and the current shareholders of Old Otter Tail will become shareholders of New Otter Tail. Immediately upon effectiveness of the Merger, New Otter Tail will change its name to Otter Tail Corporation. Immediately prior to the Merger, Old Otter Tail will transfer to New Otter Tail by way of assignment, and New Otter Tail will assume, all of the property, contracts, leases, rights, privileges, franchises, patents, trademarks, licenses, registrations and other assets and liabilities that pertain to the operation of the new holding company and that are not specific to the operation of the power company. Following the Merger, Otter Tail Power Company will be the holder of all of the rights and obligations of Old Otter Tail under the Note Purchase Agreement.

C. The Company has requested, in connection with the Reorganization, that the Note Purchase Agreement be amended as set forth herein.

D. The Company and the Noteholders now desire to amend the Note Purchase Agreement in the respects, but only in the respects, hereinafter set forth.

E. Capitalized terms used herein shall have the respective meanings ascribed thereto in the Note Purchase Agreement (as amended hereby) unless herein defined or the context shall otherwise require.

NOW, THEREFORE, upon the full and complete satisfaction of the conditions precedent to the effectiveness of this Fourth Amendment set forth in §2.1 hereof, and in consideration of

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good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Company and the Noteholders do hereby agree as follows:

SECTION 1. Amendments.

Section 1.1. Section 8.7 of the Note Purchase Agreement is hereby amended by amending the definitions of “ Called Principal ,” “ Remaining Scheduled Payments ” and “ Settlement Date ” in their entirety to read as follows:

“ Called Principal ” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or Section 22.8(d), is to be purchased pursuant to Section 8.3 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

“ Remaining Scheduled Payments ” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Sections 8.2, 8.3, 12.1 or 22.8(d).

“ Settlement Date ” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or Section 22.8(d) or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires and with respect to the purchase of Notes pursuant to Section 8.3, the date on which the Notes are required thereunder to be purchased by the Company.

Section 1.2. Effective as of the consummation of the Corporate Reorganization, Sections 9.8, 9.9, 9.10, 9.11 and 9.12 of the Note Purchase Agreement shall be deleted in their entirety.

Section 1.3. Section 10.3 of the Note Purchase Agreement is hereby amended in its entirety to read as follows:

“Section 10.3 Limitation on Liens . The Company will not, and will not permit any Subsidiary to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) any Lien on or with respect to any property or asset (including, without limitation, any document or instrument in respect of goods or accounts receivable) of the Company or any such Subsidiary, whether now owned or held or hereafter acquired, or any income or profits therefrom, or assign or otherwise convey any right to receive income or profits, except:

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(a) Liens for taxes and assessments or governmental charges or levies and Liens securing claims or demands of mechanics and materialmen; provided that payment thereof is not at the time required by Section 9.4;

(b) Liens of or resulting from any judgment or award in an aggregate amount not to exceed $10,000,000, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which the Company or a Subsidiary shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall have been secured;

(c) Liens incidental to the conduct of business or the ownership of properties and assets (including, without limitation, Liens in connection with worker’s compensation, unemployment insurance and other like laws, carrier’s, warehousemen’s liens and statutory landlords’ liens) and Liens to secure the performance of bids, tenders or trade contracts, or to secure statutory obligations, surety or appeal bonds or other Liens of like general nature, in any such case incurred in the ordinary course of business and not in connection with the borrowing of money; provided in each case, the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate actions or proceedings;

(d) minor survey exceptions or minor encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties, which are reasonably necessary for the conduct of the activities of the Company and its Subsidiaries or which customarily exist on properties of corporations engaged in similar activities and similarly situated and which do not in any event materially impair their use in the operation of the business of the Company and its Subsidiaries;

(e) Liens securing Debt of a Subsidiary to the Company or to a Wholly-Owned Subsidiary;

(f) Liens existing as of December 1, 2001 and described on Schedule 5.15 hereto and Liens securing any refinancing of Indebtedness secured by such Liens, provided that such refinancing shall be subject to similar terms and secured by the same assets and the principal amount of Indebtedness secured thereby is not increased;

(g) Liens in connection with the acquisition of property after the date hereof by way of purchase money mortgage, conditional sale or other title retention agreement, Capital Lease or other deferred payment contract, provided that such Liens attach only to the property being acquired and that the Debt secured thereby does not exceed the Fair Market Value of such property at the time of acquisition thereof and the Lien shall be created contemporaneously with, or within 180 days after, the acquisition of such property;

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(h) Liens that existed on assets of other Persons at the time of acquisition of such other Persons or of such assets by the Company or a Subsidiary and which continue to attach only to such assets and Liens securing any refinancing of Indebtedness secured by such Liens, provided that such refinancing shall be subject to similar terms and secured by the same assets and the principal amount of Indebtedness secured thereby is not increased;

(i) Liens (to the extent falling under the definition of “Lien”) consisting of ownership interests (and protective filings respecting such ownership interests) of lessors of assets (other than Utility Assets) to the Company or any Subsidiary under any operating lease, and of licensors of intellectual property or other rights to the Company or any Subsidiary; it being understood and agreed that for purposes of this clause (i), rail cars shall not be considered Utility Assets;

(j) Liens (to the extent falling under the definition of “Lien”) consisting of rights of lessees or sublessees of certain owned real estate of the Company or any Subsidiary leased in the ordinary course of the Company’s or such Subsidiary’s business, which leases do not materially interfere with the ordinary course of business of the Company or such Subsidiary;

(k) Liens arising under or related to any statutory or common law provisions, or customary account agreements, relating to banker’s liens or rights of setoff (but in no event including any grant of a security interest) as to deposit or securities accounts or other funds or instruments maintained or held with a depositary or other financial institution or securities intermediary;

(l) Liens created, assumed or incurred after the date of the Closing given to secure Debt of the Company or any Subsidiary in addition to the Liens permitted by the preceding clauses (a) through (k) hereof; provided that all Debt secured by Liens permitted under this Section 10.3(l) does not exceed $2,000,000 in the aggregate at any time outstanding and in no event shall any Lien permitted by this Section 10.3(l) secure any obligation under the Bank Credit Agreement or any related document;

provided that (1) all Debt secured by such Liens shall have been incurred within the applicable limitations provided in Section 10.1(b) and (2) at the time of creation, assumption or incurrence of the Debt secured by such Lien and after giving effect thereto and to the application of the proceeds thereof, no Default or Event of Default would exist.”

Section 1.4. Effective as of the consummation of the Corporate Reorganization, Section 10.7 of the Note Purchase Agreement is hereby amended in its entirety to read as follows:

“ Section 10.7 Benefit of More Restrictive Covenants or More Favorable Terms. If any Lender under the Bank Credit Agreement, or if any 2007 Noteholder under the 2007 Note Purchase Agreement, is or becomes entitled to

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the benefit of any (i) covenant, (ii) agreement, (iii) event of default, or (iv) other event which would permit the Lender or the 2007 Noteholder, as the case may be, to have the Company Debt obligations it holds purchased by the Company (a “ put event ”), which is more restrictive on the Company or its Subsidiaries than the covenants, agreements, events of default or put events contained herein or which is more favorable to such Lender or such 2007 Noteholder, as the case may be, than the covenants, agreements, events of default or put events contained herein, then such more restrictive or more favorable covenant, agreement, event of default or put event shall be deemed to be incorporated into this Agreement by reference during any period such Lender or 2007 Noteholder is so entitled thereto without regard to any waivers by some or all of the Lenders or some or all of the 2007 Noteholders, as the case may be, with respect thereto and shall remain so incorporated for a period of 30 days after the Lender or the 2007 Noteholder, as the case may be, is no longer entitled to the benefit thereof and the Noteholders shall be entitled to the benefits thereof with respect to this Agreement in addition to the existing covenants, agreements, events of default and put events contained herein so long as any of the Notes remain outstanding.

Prior to any closing of the effectuation of any amendment or modification to the Bank Credit Agreement or the 2007 Note Purchase Agreement, the Company shall deliver a letter to the Noteholders containing a list of those covenants, agreements, events of default and put events which are deemed to be incorporated into this Agreement pursuant to the foregoing provisions of this Section 10.7 and concurrently with or prior to the execution of any amendment to the Bank Credit Agreement or the 2007 Note Purchase Agreement, the Company shall deliver to the Noteholders a letter setting forth all covenants, agreements, events of default and put events and/or changes thereto which are deemed to be incorporated into this Agreement pursuant to the foregoing provisions of this Section 10.7 and any such letters delivered to the Noteholders shall be satisfactory in form and substance to the Noteholders. At any time after the receipt of any such letter the Required Holders shall have the right by delivery of written notice to the Company to amend this Agreement by adding to this Agreement any covenants, agreements, events of default or put events referred to in any such letter which the Required Holders elect to add pursuant to the foregoing provisions of this Section 10.7.”

Section 1.5. Clauses (i), (j) and (k) of Section 10.10 of the Note Purchase Agreement are hereby amended in their entirety to read as follows:

“(i) prior to consummation of the Corporate Reorganization, (i) Investments outstanding on April 30, 2002 in Subsidiaries by the Company and other Subsidiaries, and (ii) Investments by the Company or Subsidiaries in Persons that will be Subsidiaries upon completion of such Investments;

(j) upon and subsequent to consummation of the Corporate Reorganization, equity Investments by the Company or any Subsidiary in a Person that conducts only a Regulated Business or a business that is solely the

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generation, transmission, distribution or sale of electricity in the United States, which Person will be a Subsidiary upon completion of such Investment; provided, that upon the making of such Investment such Person will execute a guaranty agreement in respect of the Notes in form, scope and substance satisfactory to the Required Holders and, if then or at any time thereafter such Person creates, incurs, assumes or otherwise becomes liable with respect to any Debt (including, without limitation, Debt in the form of a Guaranty) other than Debt represented by such guaranty agreement in respect of the Notes, such Person shall cause the holder or obligee with respect to such other Debt to enter into an intercreditor agreement in form, scope and substance satisfactory to the Required Holders; and

(k) (i) Investments by any Material Subsidiary constituting loans to the Company and (ii) provided that no Default or Event of Default shall have occurred and be continuing, Investments made by the Company or any Material Subsidiary constituting loans to (A) any Material Subsidiary or (B) any Subsidiary that is not a Material Subsidiary, provided that such loans under the foregoing clauses (A) and (B) to any one Subsidiary shall not exceed $15,000,000 in aggregate principal amount outstanding at any time, and provided, further, that after the Corporate Reorganization, the only loans under the foregoing clauses (A) and (B) that will be permitted to be acquired for value, made, had, held or permitted to remain outstanding shall be those made to Subsidiaries that conduct only a Regulated Business.”

Section 1.6. Section 10.11 of the Note Purchase Agreement is hereby amended in its entirety to read as follows:

“Section 10.11 Contingent Liabilities . The Company will not and will not permit any Material Subsidiary to either: (a) endorse, guarantee, contingently agree to purchase or to provide funds for the payment of, or otherwise become contingently liable upon, any obligation of any other Person, except by the endorsement of negotiable instruments for deposit or collection (or similar transactions) in the ordinary course of business, or (b) agree to maintain the net worth or working capital of, or provide funds to satisfy any other financial test applicable to, any other Person, except (in the case of (a) or (b) above) for:

(i) guaranties by the Company of loans to leveraged Employee Stock Ownership Plans;

(ii) prior to consummation of the Corporate Reorganization, guaranties by Varistar Corporation of obligations of DMI Industries, Inc. in respect of down payments by customers of DMI Industries, Inc. in aggregate amounts of up to $30,000,000, with the amount of such guaranties to be deemed to be either (x) the dollar limitation set forth in any such guaranty, if applicable, or (y) the amount of such down payment so guaranteed;

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(iii) guaranties by the Company or any Material Subsidiary of obligations of any Material Subsidiary as lessee under any lease that is not a Capital Lease;

(iv) other guaranties limited as to principal of recovery to not more than $10,000,000 in the aggregate, provided that no such guaranty shall relate to any obligation under the Bank Credit Agreement or any related document;

(v) prior to consummation of the Corporate Reorganization, guaranties by Material Subsidiaries of the obligations of Varistar Corporation under the Amended and Restated Credit Agreement, dated as of December 23, 2008, among Varistar Corporation, the lenders party thereto and U.S. Bank National Association, as agent (the “ Varistar Credit Agreement ”); and

(vi) prior to consummation of the Corporate Reorganization, guaranties by Material Subsidiaries of obligations of the Company under the Cascade Note so long as each and every Subsidiary that guarantees the obligations of the Company under the Cascade Note is a Subsidiary Guarantor or an Additional Subsidiary Guarantor or becomes an Additional Subsidiary Guarantor in accordance with the terms of Section 9.8 hereof.”

Section 1.7. Section 11 of the Note Purchase Agreement is hereby amended in its entirety to read as follows:

“An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:

(a) the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or

(b) the Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or

(c) the Company defaults (i) in the performance of or compliance with any term contained in Section 10 or Section 7.1(d) or (ii) in the payment when due of the amount required to be paid by the Company for the purchase of any Note pursuant to Section 8.3; or

(d) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be

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identified as a “notice of default” and to refer specifically to this paragraph (d) of Section 11); or

(e) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or

(f) (i) the Company or any Material Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Indebtedness that is outstanding in an aggregate principal amount of at least $10,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or any Material Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least $10,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared (or one or more Persons are entitled to declare such Indebtedness to be), due and payable before its stated maturity or before its regularly scheduled dates of payment; or

(g) the Company or any Material Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or

(h) a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company or any of its Material Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company or any of its Material Subsidiaries, or any such petition shall be filed against the Company or any of its Material Subsidiaries and such petition shall not be dismissed within 60 days; or

(i) a final judgment or judgments for the payment of money aggregating in excess of $10,000,000 are rendered against one or more of the Company and its Material Subsidiaries and which judgments are not, within 30 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 30 days after the expiration of such stay; or

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(j) prior to consummation of the Corporate Reorganization, default shall occur in the observance or performance of any provision of the Guaranty Agreement or the Guaranty Agreement shall cease to be in full force and effect for any reason except by operation of Section 9.12, including, without limitation, a final and nonappealable determination by any governmental body or court that the Guaranty Agreement is invalid, void or unenforceable, or any Subsidiary Guarantor or any Additional Subsidiary Guarantor shall contest or deny in writing the validity or enforceability of any provision of, or obligation under, the Guaranty Agreement; or

(k) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate amount of “unfunded benefit liabilities” (within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall exceed $500,000, (iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any Subsidiary thereunder; and in the case of clauses (i), (iii), (iv), (v) or (vi) above only, any such event or events, either individually or together with any other such event or events, would reasonably be expected to have a Material Adverse Effect; or

(l) any Person, or group of Persons acting in concert, that owned less than 5% of the shares of any voting class of stock of the Company shall have acquired more than 25% of the shares of such voting stock, other than the ownership by Otter Tail Corporation of the stock of the Company in connection with and as a result of the Corporate Reorganization.

As used in Section 11(k), the terms “employee benefit plan” and “employee welfare benefit plan” shall have the respective meanings assigned to such terms in section 3 of ERISA.”

Section 1.8. A new Section 22.8 is hereby added to the Note Purchase Agreement, which Section shall read in its entirety as follows:

“ SECTION 22.8. CORPORATE REORGANIZATION.

(a) Without any representation or warranty that the following transaction will be consummated, the Company has informed the Noteholders that it is planning the following transaction (the “ Corporate Reorganization ”), which Corporate Reorganization will consist of the following steps:

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(i) formation of a new Subsidiary, Otter Tail Holding Company (“ New OTC ”), which will be a Minnesota corporation;

(ii) formation by New OTC of a new Subsidiary, Otter Tail Merger Sub Inc. (“ Merger Sub ”), which will be a Minnesota corporation;

(iii) transfer by the Company to New OTC by way of assignment or contribution to capital of all Non- Power Company Assets;

(iv) assumption by New OTC of all liabilities and obligations of the Company except (A) those under this Agreement and the Notes issued hereunder, (B) those under the agreements listed on Schedule 22.8 under the caption “Senior Indebtedness Agreements and Notes to be Retained as Obligations of the Regulated Subsidiary Following the Corporate Reorganization” and the Indebtedness described on such Schedule 22.8 under such caption, and (C) all liabilities and obligations that pertain to the Company’s electric generation, transmission, distribution and sale business and do not pertain to the operation of the Company as a holding company (such liabilities and obligations other than those described in (A), (B) and (C) hereof are called the “ OTC-Assumed Liabilities ”);

(v) release of the Company from the OTC-Assumed Liabilities listed on Schedule 22.8 under the caption “Release of OTC-Assumed Liabilities” by each holder thereof;

(vi) merger of the Company with Merger Sub (the “ Merger ”) pursuant to a Plan of Merger (the “ Plan of Merger ”) by and among the Company, New OTC and Merger Sub, whereby (A) the surviving corporation in the Merger will be the Company, will have the name Otter Tail Power Company and will be a direct, wholly-owned subsidiary of New OTC and (B) the current shareholders of the Company will become shareholders of New OTC;

(vii) change of the name of New OTC to Otter Tail Corporation; and

(viii) the Company (which will then be named Otter Tail Power Company and sometimes referred to herein as the “ Regulated Subsidiary ”) will remain obligated under this Agreement and the Notes issued hereunder.

(b) If the Company elects to effect the Corporate Reorganization as provided in Section 22.8(a) above, such Corporate Reorganization shall not require the consent of the holders of the Notes. Upon the effectiveness of such Corporate Reorganization and by virtue of the Merger, Otter Tail Power Company

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shall be the obligor with respect to the obligations of the Company under this Agreement and the Notes. The Noteholders acknowledge that upon effectiveness of the Corporate Reorganization, Otter Tail Corporation (New OTC) shall have no liabilities, responsibilities or obligations with respect to this Agreement and the Notes, and the Subsidiary Guarantors shall be released from their obligations under the Guaranty Agreement. In addition, as of such time the address of the Company appearing on the first page of this Agreement shall be amended to read as follows: “215 South Cascade Street, Fergus Falls, MN 56537.”

(c) Upon the effectiveness of the Corporate Reorganization, the Regulated Subsidiary will, prior to or contemporaneously with the surrender by each Noteholder of any Note or Notes held by it that were originally issued by Otter Tail Corporation, deliver to such Noteholder a replacement Note or Notes (in each case, a “ Replacement Note ”) that equals the aggregate outstanding principal amount of such Noteholder’s Note or Notes and that reflects Otter Tail Power Company as the issuer thereof. Each such Replacement Note or Replacement Notes shall be substantially in the form of Exhibit 1.

(d) In connection with the Corporate Reorganization, on or before the effective date thereof (the “ Effective Date ”), each of the following terms (the “ Reorganization Terms ”) shall be satisfied by not later than September 30, 2009:

(i) the Regulated Subsidiary shall have delivered to each holder of a Note an Officer’s Certificate confirming that the Corporate Reorganization has been consummated in accordance with the terms and conditions of Section 22.8(a), confirming the name change of the Company to Otter Tail Power Company, that the Company, under such new name, remains obligated under this Agreement and the Notes issued hereunder, and that this Agreement and the Notes issued hereunder remain in full force and effect, enforceable against the Company in accordance with their respective terms;

(ii) no Default or Event of Default under this Agreement shall have occurred and be continuing immediately before or immediately after the Effective Date and each holder of a Note shall have received an Officer’s Certificate of the Regulated Subsidiary to such effect;

(iii) each holder of a Note shall have received (A) an opinion or opinions of counsel from Dorsey & Whitney LLP, counsel to the Company, as to the matters set forth in clauses (A)(1)(b)(iii), (A)(2), (A)(3), (B) and (C) below (it being understood and agreed that such opinion or opinions shall address the laws of the State of Minnesota, the laws of the State of New York and federal law but shall not address utility regulatory matters), and (B) an opinion of the General Counsel of the Company as to the matters set forth in clauses (A)(1)(a), (A)(1)(b)(i), (ii), (iv) and (v), and (A)(2) below (it being understood and agreed that such

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opinion shall address the laws of the State of North Dakota as well as the laws of such state, the laws of the State of Minnesota, the laws of the State of South Dakota and federal law relating to utility regulatory matters), to the effect that as of the Effective Date: (A)(1) the execution and delivery by the Regulated Subsidiary of the Replacement Notes to be issued in exchange for the existing Notes, and the performance by the Regulated Subsidiary of its obligations under the Plan of Merger, the Notes (including any Replacement Notes) and this Agreement (a) have been duly authorized by all requisite corporate action on the part of the Regulated Subsidiary, (b) will not, (i) violate any provision of the Regulated Subsidiary’s articles of incorporation, bylaws or similar governing documents, (ii) violate any utility regulatory law or regulation applicable to the Regulated Subsidiary, (iii) violate any other law or regulation applicable to the Regulated Subsidiary, (iv) violate any order of any court or any order of any other Governmental Authority binding upon it, except that such counsel need not express any opinion regarding any federal securities laws or the securities or “Blue Sky” laws of any state, or (v) result in a breach or constitute (alone or with due notice or lapse of time or both) a default under any material indenture, agreement or other instrument known to such counsel to which the Regulated Subsidiary is a party or by which it is bound; (2) no prior approval or consent on the part of any Governmental Authority is required to be obtained or made by the Regulated Subsidiary in connection with the execution and delivery by it of the Replacement Notes to be issued in exchange for the existing Notes, and the performance by the Regulated Subsidiary of its obligations under the Plan of Merger, the Notes (including any Replacement Notes) and this Agreement, except such as have been obtained or made; provided that such counsel need not express any opinion regarding any federal securities laws or the securities or “Blue Sky” laws of any state; and (3) the Plan of Merger, this Agreement and the Notes issued hereunder are (and any Replacement Notes issued pursuant to Section 22.8(c) of this Agreement will, upon such issuance, be) legal, valid and binding obligations of the Regulated Subsidiary enforceable against the Regulated Subsidiary in accordance with their respective terms, except as an enforcement of such terms may be limited by bankruptcy, insolvency, fraudulent conveyances and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles; (B) upon the filing of articles of merger with the Secretary of State of the State of Minnesota, and on the date and time specified therein, the Merger will be effective in accordance with the terms and provisions of such articles of merger and the laws of the State of Minnesota; and (C) the holders of the Notes (including any Replacement Notes issued in exchange for such Notes) will not recognize gain or loss for United States federal income tax purposes as a result of the Corporate Reorganization (and if the holders would recognize gain, in lieu of such opinion, such holders will receive an indemnity agreement, in form, scope and substance to such holders, from the Regulated Subsidiary

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with respect to such gains); it being understood that such opinions of counsel may be subject to such assumptions, exceptions and qualifications as are customary;

(iv) the Regulated Subsidiary will have obtained senior unsecured debt ratings from the Designated Ratings Agencies that are at least BBB- in the case of S&P and Baa1 in the case of Moody’s;

(v) the Regulated Subsidiary shall have provided to the holders of the Notes (A) a revised version of Schedule 5.4 and a schedule listing all partnerships and joint ventures in which the Regulated Subsidiary or any Subsidiary thereof is a partner (limited or general) or joint venturer; (B) copies of (1) the agreement and articles of merger entered and filed in connection with the Merger, (2) any amendment to the articles of incorporation and bylaws of the Regulated Subsidiary filed or made in connection with the Corporate Reorganization, including an amendment reflecting the change in the Company’s name to Otter Tail Power Company, (3) certified copies of the articles of incorporation and bylaws of New OTC, and (4) a certificate of good standing for the Company and New OTC in the jurisdictions of their incorporation, certified by the appropriate governmental officials; and (C) a forecast (consisting of balance sheets, income statements and statements of cash flows) for the Company following the Corporate Reorganization and covering the period through December 31, 2010, prepared in good faith by the Company;

(vi) there shall be no actions, suits or proceedings pending or, to the knowledge of the Regulated Subsidiary, threatened against or affecting the Regulated Subsidiary or any Subsidiary thereof or any property of the Regulated Subsidiary or any Subsidiary thereof in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect;

(vii) neither the Regulated Subsidiary nor any Subsidiary thereof shall be in default under any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or in violation of any applicable law, ordinance, rule or regulation (including without limitation Environmental Laws) of any Governmental Authority, which default or violation, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect;

(viii) the Regulated Subsidiary and its Subsidiaries shall own or possess all licenses, permits, franchises, authorizations, patents, copyrights, service marks, trademarks and trade names, or rights thereto, that are Material, without known conflict with the rights of others, except for those conflicts that, individually or in the aggregate, would not have a Material Adverse Effect;

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(ix) the Regulated Subsidiary shall have delivered to the Noteholders an Officer’s Certificate, dated as of the Effective Date, to the effects set forth in clauses (vi), (vii) and (viii) above and to the effect that Schedule 5.4 and the schedule of partnerships and joint ventures described in clause (v) above set forth, as of the date of such Officer’s Certificate, the information that would be required by Section 5.4 of the Agreement if the representations and warranties in such Section were being made as of such date; and

(x) the Company or the Regulated Subsidiary shall have paid all of the fees, charges and disbursements of the Noteholders’ special counsel arising out of the transactions contemplated by this Section 22.8.

In the event the Company completes a Corporate Reorganization but fails to satisfy any of the Reorganization Terms that are not waived by the Required Holders in writing, the Company will give written notice of such fact (the “ Failed Reorganization Notice ”) to the Noteholders not more than five days after any such failure. The Failed Reorganization Notice shall (i) refer to this Section 22.8 and the right of the Noteholders to require the Company to prepay their Notes on the terms and conditions provided for herein as a result of the Company’s failure to satisfy any of the Reorganization Terms, and (ii) contain an offer by the Company to prepay all of the outstanding Notes in full together with unpaid accrued interest to the date of prepayment and the Make-Whole Amount determined for the prepayment date with respect to such principal amount. Each Noteholder shall have the right to accept such offer and require prepayment in full of the Notes held by such Noteholder by written notice (the “ Failed Reorganization Prepayment Notice ”) to the Company given within 60 days following receipt of the Failed Reorganization Notice. On the prepayment date designated in such Noteholder’s Failed Reorganization Prepayment Notice (which shall not be less than 15 days nor more than 30 days after the date such Failed Reorganization Prepayment Notice is delivered to the Company), the Company shall prepay all Notes held by such Noteholder at 100% of the principal amount of such Notes, together with unpaid accrued interest thereon to the date of prepayment and the Make-Whole Amount determined for the prepayment date with respect to such principal amount. Failure to respond by a Noteholder of the Notes shall constitute an acceptance of such offer by such Noteholder.”

Section 1.9. Schedule B is hereby amended as follows:

(a) The definition of “Bank Credit Agreement” set forth in Schedule B to the Note Purchase Agreement is hereby amended in its entirety to read as follows:

“ Bank Credit Agreement ” means (a) the Credit Agreement dated as of July 30, 2008 among the Company, the Banks defined therein, Bank of America, N.A., as Syndication Agent, and U.S. Bank National Association, as a Bank and as Agent, and/or (b) the Term Loan Agreement dated as of May 22, 2009 among the Company, the Banks defined therein,

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KeyBank National Association, as Syndication Agent, and JPMorgan Chase Bank, N.A., as Administrative Agent, in each case as amended from time to time, any replacement, additional or successor agreement or agreements thereto pursuant to which the Company (which, following the Corporate Reorganization, shall be named Otter Tail Power Company) is the borrower, or any other bank credit facility or bank credit facilities in effect from time to time with banks or other lending institutions pursuant to which the Company (which, following the Corporate Reorganization, shall be named Otter Tail Power Company) is the borrower.

(b) The definition of “Company” set forth in Schedule B to the Note Purchase Agreement is hereby amended in its entirety to read as follows:

“ Company ” means Otter Tail Corporation, a Minnesota corporation or any successor that becomes such in the manner prescribed in Section 10.4. For the avoidance of doubt, from and after the Corporate Reorganization, the “Company” shall refer to Otter Tail Power Company.

(c) The definition of “ GAAP ” set forth in Schedule B to the Note Purchase Agreement is hereby amended in its entirety to read as follows:

“ GAAP ” means generally accepted accounting principles as in effect from time to time in the United States of America. For purposes of determining compliance with the financial covenants contained in this Agreement (including any financial covenants deemed to be incorporated in this Agreement pursuant to Section 10.7), any election by the Company to measure an item of Debt using fair value (as permitted by Statement of Financial Accounting Standards No. 159 or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.

(d) The definition of “ Priority Debt ” set forth in Schedule B to the Note Purchase Agreement is hereby amended in its entirety to read as follows:

“ Priority Debt ” means, at any time without duplication, the sum of (a) all Debt of the Company and of any Subsidiaries secured by Liens other than by Liens permitted by Sections 10.3(a) through (f) or by Section 10.3(k) and (b) all Debt of Subsidiaries and Preferred Stock of Subsidiaries held by Persons other than the Company or a Wholly-Owned Subsidiary; provided, that there shall be excluded from the definition of Priority Debt (i) any Debt of a Subsidiary to the Company or a Wholly-Owned Subsidiary, and (ii) (A) prior to the consummation of the Corporate Reorganization, the Guaranties of the Subsidiary Guarantors or any Additional Subsidiary Guarantor under the Guaranty Agreement and under the Varistar Credit Agreement, and (B) upon and subsequent to the consummation of the Corporate Reorganization, the Guaranties by Subsidiaries of the Notes (including any Replacement Notes) and the

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Guaranties by Subsidiaries of other Debt of the Company only if the holders of such other Debt shall have entered into an intercreditor agreement contemplated by Section 10.10(j) and then only so long as such intercreditor agreement shall remain in effect.

(e) The following definitions are hereby added so that such terms are organized in alphabetical order along with the remaining definitions in Schedule B:

“ Corporate Reorganization ” is defined in Section 22.8.

“ Effective Date ” is defined in Section 22.8.

“ Failed Reorganization Notice ” is defined in Section 22.8.

“ Failed Reorganization Prepayment Notice ” is defined in Section 22.8.

“ Fourth Amendment” means that certain Fourth Amendment to this Agreement dated as of June 30, 2009.

“ Merger ” is defined in Section 22.8.

“ Merger Sub ” is defined in Section 22.8.

“ New OTC ” is defined in Section 22.8.

“ Non-Power Company Assets ” means all tangible and intangible assets of the Company except for the Power Company Assets.

“ OTC-Assumed Liabilities ” is defined in Section 22.8.

“ Plan of Merger ” is defined in Section 22.8.

“ Power Company Assets ” means all tangible and intangible assets of the Company consisting of property, contracts, leases, right, privileges, franchises, patents, trademarks, licenses, registrations and other assets that pertain to the Company’s electric generation, transmission, distribution and sale business.

“ Regulated Business ” means a line of business consisting of generation, transmission, distribution and sale of electricity, regulated by the Minnesota Public Utilities Commission or an equivalent state or federal regulatory agency in another jurisdiction within the United States.

“ Regulated Subsidiary ” is defined in Section 22.8.

“ Reorganization Terms ” is defined in Section 22.8.

“ Replacement Notes ” is defined in Section 22.8.

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“ 2007 Noteholders ” means the holders of the notes issued under the 2007 Note Purchase Agreement.

“ 2007 Note Purchase Agreement ” means that certain Note Purchase Agreement, dated as of August 20, 2007, between the Company and the note purchasers party thereto, as amended from time to time.

“ Varistar Credit Agreement ” is defined in Section 10.11.

Section 1.10. Schedule 22.8 , in the form attached hereto, is hereby added to the Note Purchase Agreement.

Section 1.11. Effective as of the consummation of the Corporate Reorganization, Exhibit 1 to the Note Purchase Agreement shall be deleted in its entirety and replaced by Exhibit 1 in the form attached hereto.

SECTION 2. Representations and Warranties of the Company.

Section 2.1. To induce the Noteholders to execute and deliver this Fourth Amendment, the Company represents and warrants to the Noteholders (which representations and warranties shall survive the execution and delivery of this Fourth Amendment) that:

(a) this Fourth Amendment (i) has been duly authorized by all requisite corporate action on the part of the Company, executed and delivered by the Company and (ii) constitutes the legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally;

(b) the Note Purchase Agreement, as amended by this Fourth Amendment, constitutes the legal, valid and binding agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally;

(c) (i) the execution and delivery by the Company of this Fourth Amendment, and the performance by the Company of its obligations hereunder, will not (A) violate any provision of its articles of incorporation or bylaws, (B) violate any utility regulatory law or regulation applicable to the Company, (C) violate any other law or regulation applicable to the Company, (D) violate any order of any court or any order of any other Governmental Authority binding upon it, or (E) result in a breach or constitute (alone or with due notice or lapse of time or both) a default under any material indenture, agreement or other instrument to which the Company is a party or by which its properties or assets are bound, and (ii) no prior approval or consent on the part of any Governmental Authority is required to be obtained or made by the Company in connection with the execution and delivery by it of this Fourth Amendment and the performance by the Company of its obligations under this Fourth Amendment, except such as have been obtained;

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(d) as of the date hereof and after giving effect to this Fourth Amendment, no Default or Event of Default has occurred which is continuing; and

(e) all the representations and warranties contained in Section 5 of the Note Purchase Agreement, other than the representations and warranties set forth in Section 5.3, Section 5.4, Section 5.5 and the first sentence of Section 5.15 insofar as they contain information that is no longer current, are true and correct in all material respects with the same force and effect as if made by the Company on and as of the date hereof.

SECTION 3. Conditions to Effectiveness of This Fourth Amendment.

Section 3.1. This Fourth Amendment shall not become effective until, and shall become effective when, each and every one of the following conditions shall have been satisfied:

(a) executed counterparts of this Fourth Amendment, duly executed by the Company and the holders of the Notes outstanding as of the date hereof, shall have been delivered to the Noteholders;

(b) the representations and warranties of the Company set forth in § 2 hereof are true and correct on and with respect to the date hereof;

(c) the Noteholders shall have received the favorable opinions of (i) Dorsey & Whitney LLP, counsel to the Company, as to the matters set forth in §§ 2. 1(a)(ii) , 2. 1(b) , 2. 1(c)(i) (C) and 2. 1(c)(ii) hereof (it being understood and agreed that such opinion shall address the laws of the State of Minnesota, the laws of the State of New York and federal law but shall not address utility regulatory matters), and (ii) the General Counsel of the Company as to the matters set forth in §§ 2. 1(a)(i) , 2. 1(c)(i) (A), (B), (D) and (E) , and 2. 1(c)(ii) hereof (it being understood and agreed that such opinion shall address the laws of the State of North Dakota as well as the laws of such state, the laws of the State of Minnesota, the laws of the State of South Dakota and federal law relating to utility regulatory matters), which opinions shall be in form and substance satisfactory to the Noteholders;

(d) executed counterparts of amendments to the 2007 Note Purchase Agreement, the Bank Credit Agreement, the Varistar Credit Agreement and the Cascade Note Purchase Agreement (which last-mentioned amendment shall be accompanied by an Assignment, Assumption and Release Agreement), in each case with respect to, among other things, the Corporate Reorganization (other than in the case of the Bank Credit Agreement and the Varistar Credit Agreement, since the Corporate Reorganization was addressed in those agreements themselves rather than in amendments thereto) and duly executed by the respective parties thereto, shall have been delivered to the Noteholders; and

(e) the Company shall have paid (i) to each Noteholder an agreed upon amendment fee, and (ii) all expenses of the Noteholders related to this Fourth Amendment and all matters contemplated hereby, including, without limitation, all fees and expenses of the Noteholders’ special counsel described in Section 4.1 of this Fourth Amendment.

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	Otter Tail Corporation
	By :	/s/ Kevin G. Moug
		Name: Kevin G. Moug
		Title: Chief Financial Officer

Signature Page
( to Fourth Amendment to Note Purchase Agreement )


Principal Amount of Notes Held:	Accepted and Agreed to:

$36,000,000	THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
	By:	/s/ Brian N. Thomas
		Vice President

$7,500,000	PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY
	By:	Prudential Investment Management, Inc., as investment manager

	By:	/s/ Brian N. Thomas
		Vice President

$5,000,000	HARTFORD LIFE INSURANCE COMPANY
	By:	Prudential Private Placement Investors, L.P., as Investment Advisor

	By:	Prudential Private Placement Investors, Inc., General Partner

	By:	/s/ Brian N. Thomas
		Vice President

$1,500,000	MEDICA HEALTH PLANS
	By:	Prudential Private Placement Investors, L.P., as Investment Advisor

	By:	Prudential Private Placement Investors, Inc., General Partner
	By:	/s/ Brian N. Thomas
		Vice President

Signature Page
(to Fourth Amendment to Note Purchase Agreement)


Principal Amount of Notes Held:	Accepted and Agreed to:
$13,000,000	GENWORTH LIFE INSURANCE COMPANY (formerly known as General Electric Capital Assurance Company)
	By:	/s/ John R. Endres
		Name:	John R. Endres
		Title:	Investment Officer

$7,000,000	GENWORTH LIFE ASSURANCE COMPANY OF NEW YORK (formerly known as GE Capital Life Assurance Company of New York)
	By:	/s/ John R. Endres
		Name:	John R. Endres
		Title:	Investment Officer

$5,000,000	GENWORTH LIFE AND ANNUITY INSURANCE COMPANY (successor by merger to First Colony Life insurance Company)
	By:	/s/ John R. Endres
		Name:	John R. Endres
		Title:	Investment Officer

Signature Page
(to Fourth Amendment to Note Purchase Agreement)


Principal Amount of Notes Held:	Accepted and Agreed to:

$10,000,000	AIG EDISON LIFE INSURANCE COMPANY
	By:	AIG Global Investment Corp, investment sub-adviser

	By:	/s/ Victoria Y Chin
		Name:	Victoria Y Chin
		Title:	Vice President

Signature Page
(to Fourth Amendment to Note Purchase Agreement)


Principal Amount of Notes Held:	Accepted and Agreed to:

$5,000,000	COUNTRY LIFE INSURANCE COMPANY
	By:	/s/ John Jacobs
		Name:	John Jacobs
		Title:	Director Fixed Income

Signature Page
(to Fourth Amendment to Note Purchase agreement)

Senior Indebtedness Agreements and Notes
to be Retained as Obligations of the Regulated Subsidiary
following the Corporate Reorganization

1. $170,000,000 maximum principal amount of obligations of Otter Tail Corporation, dba Otter Tail Power Company pursuant to the Credit Agreement, dated as of July 30, 2008, among Otter Tail Corporation, dba Otter Tail Power Company, the Banks party thereto from time to time, Bank of America, N.A., as Syndication Agent, and U.S. Bank National Association, as Agent for the Banks.

2. $20,625,000, Mercer County, North Dakota Pollution Control Refunding Revenue Bonds (Otter Tail Corporation Project) Series 2001.

3. $10,400,000, Grant County, South Dakota Pollution Control Refunding Revenue Bonds (Otter Tail Power Corporation Project) Series 1993.

4. $5,165,000, Grant County, South Dakota Pollution Control Refunding Revenue Bonds (otter Tail Power Corporation Project) Series 2001.

5. $33,000,000 5.95% Senior Unsecured Notes, Series A, due 2017, $30,000,000 6.15% Senior Unsecured Notes, Series B, due 2022, $42,000,000 6.37% Senior Unsecured Notes, Series C, due 2027, and $50,000,000 6.47% Senior Unsecured Notes, Series D, due 2037, issued under the Note Purchase Agreement, dated as of August 20, 2007, as thereafter amended, between Otter Tail Corporation and the noteholders party thereto.

6. $75,000,000 maximum principal amount of obligations of Otter Tail Corporation, d/b/a Otter Tail Power Company pursuant to the Term Loan Agreement, dated as of May 22, 2009, among Otter Tail Corporation, d/b/a Otter Tail Power Company, JPMorgan Chase Bank, N.A., as Administrative Agent, KeyBank National Association, as Syndication Agent, Union Bank, N.A., as Documentation Agent, and the Banks named therein.

Release of
OTC-Assumed Liabilities

1. $50,000,000 Senior Unsecured Note due November 30, 2017, issued under the Note Purchase Agreement, dated as of February 23, 2007, as thereafter amended, between Otter Tail Corporation and Cascade Investment L.L.C.

Schedule 22.8
(to Fourth Amendment to Note Purchase Agreement)

[FORM OF NOTE]

Otter Tail Power Company

6.63% Senior Note December 1, 2011


No. R-___		June 1, 2009

$____________		PPN 68964* AA9

For Value Received , the undersigned, Otter Tail Power Company (formerly known as Otter Tail Corporation and herein called the “ Company ”), a corporation organized and existing under the laws of the State of Minnesota, hereby promises to pay to ____________, or registered assigns, the principal sum of ___________________________ ($____________) on December 1, 2011, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.63% per annum from the date hereof, payable semiannually, on the first day of each June and December in each year, commencing with the June or December next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreement referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the great of (i) 8.63% or (ii) 2% over the rate of interest publicly announced by U.S. Bank National Association from time to time in Minneapolis, Minnesota as its “base” or “prime” rate.

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the principal office of JPMorgan Chase Bank, N.A., in New York, New York or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.

This Note is one of a series of Senior Notes (herein called the “ Notes ”) issued pursuant to a Note Purchase Agreement, dated as of December 1, 2001 (as from time to time amended, the “ Note Purchase Agreement ”), among the Company and the respective Purchasers named therein and it entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreements and (ii) to have made the representation set forth in Section 6.2 of the Note Purchase Agreement.

The Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

This Note is subject to optional and mandatory prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

Exhibit 1
(to Fourth Amendment to Note Purchase Agreement)

If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.


	Otter Tail Power Company
	By:
		Name:
		Title:

Exhibit 1
(to Fourth Amendment to Note Purchase Agreement)

Exhibit 4.2

EXECUTION COPY

OTTER TAIL CORPORATION

THIRD AMENDMENT

Dated as of June 26, 2009

NOTE PURCHASE AGREEMENT

Dated as of August 20, 2007

$33,000,000 5.95% Senior Unsecured Notes, Series A, due 2017
$30,000,000 6.15% Senior Unsecured Notes, Series B, due 2022
$42,000,000 6.37% Senior Unsecured Notes, Series C, due 2027
$50,000,000 6.47% Senior Unsecured Notes, Series D, due 2037

THIRD AMENDMENT TO NOTE PURCHASE AGREEMENT

This Third Amendment dated as of June 26, 2009 (the or this “ Third Amendment ”) to the Note Purchase Agreement dated as of August 20, 2007 is between OTTER TAIL CORPORATION, a Minnesota corporation (the “ Company ”), and each of the institutions which is a signatory to this Third Amendment (collectively, the “ Noteholders ”).

RECITALS:

A. The Company and each of the Noteholders have heretofore entered into that certain Note Purchase Agreement dated as of August 20, 2007 between the Company and each of the Noteholders listed on Schedule A thereto, as amended by a First Amendment dated as of December 14, 2007 between the Company and the institutions signatory thereto and by a Second Amendment dated as of September 11, 2008 between the Company and the institutions signatory thereto (as so amended, the “ Note Purchase Agreement ”). The Company has heretofore issued (a) $33,000,000 aggregate principal amount of 5.95% Senior Unsecured Notes, Series A, due 2017 (the “ Series A Notes ”); (b) $30,000,000 aggregate principal amount of 6.15% Senior Unsecured Notes, Series B, due 2022 (the “ Series B Notes ”); (c) $42,000,000 aggregate principal amount of 6.37% Senior Unsecured Notes, Series C, due 2027 (the “ Series C Notes ”); and (d) $50,000,000 aggregate principal amount of 6.47% Senior Unsecured Notes, Series D, due 2037 (the “ Series D Notes ” and together with the Series A Notes, the Series B Notes and the Series C Notes, collectively, the “ Notes ”) pursuant to the Note Purchase Agreement.

B. Section 24 of the Note Purchase Agreement provides for certain terms and conditions upon which the Company may reorganize its corporate structure into a holding company with Otter Tail Power Company as a separate, first-tier subsidiary (the “ Corporate Reorganization ”).

C. The Company has determined that it will complete the Corporate Reorganization in a different manner than as set forth in Section 24 of the Note Purchase Agreement, as follows: the Company (“ Old Otter Tail ”) will form a direct, wholly owned subsidiary that will be a Minnesota corporation (“ New Otter Tail ”). New Otter Tail will form a direct, wholly owned subsidiary that will be a Minnesota corporation (“ Merger Sub ”). Old Otter Tail will transfer to New Otter Tail by way of assignment or contribution to capital all of the shares of capital stock of its direct, wholly owned subsidiaries. Pursuant to articles of merger and a plan of merger among Old Otter Tail, New Otter Tail and Merger Sub, Old Otter Tail will merge with Merger Sub (the “ Merger ”). The surviving corporation in the Merger will be Old Otter Tail and will have the name Otter Tail Power Company, and the current shareholders of Old Otter Tail will become shareholders of New Otter Tail. Immediately upon effectiveness of the Merger, New Otter Tail will change its name to Otter Tail Corporation. Immediately prior to the Merger, Old Otter Tail will transfer to New Otter Tail by way of assignment, and New Otter Tail will assume, all of the property, contracts, leases, rights, privileges, franchises, patents, trademarks, licenses, registrations and other assets and liabilities that pertain to the operation of the new holding company and that are not specific to the operation of the power company. Following the

Merger, Otter Tail Power Company will be the holder of all of the rights and obligations of Old Otter Tail under the Note Purchase Agreement.

D. The Company has proposed that the Note Purchase Agreement be amended to, among other things, reflect the current structure proposed for completion of the Corporate Reorganization.

E. The Company and the Noteholders now desire to amend the Note Purchase Agreement in the respects, but only in the respects, hereinafter set forth.

F. Capitalized terms used herein shall have the respective meanings ascribed thereto in the Note Purchase Agreement unless herein defined or the context shall otherwise require.

G. All requirements of law have been fully complied with and all other acts and things necessary to make this Third Amendment a valid, legal and binding instrument according to its terms for the purposes herein expressed have been done or performed.

NOW, THEREFORE , upon the full and complete satisfaction of the conditions precedent to the effectiveness of this Third Amendment set forth in Section 3.1 hereof, and in consideration of good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Company and the Noteholders do hereby agree as follows:

SECTION 1. AMENDMENTS.

1.1. Effective as of the completion of the Merger, Section 12.7 of the Note Purchase Agreement shall be and is hereby amended in its entirety to read as follows:

“ Section 12.7 Liens . The Company will not, and will not permit any Subsidiary to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) any Lien on or with respect to any property or asset (including, without limitation, any document or instrument in respect of goods or accounts receivable) of the Company or any such Subsidiary, whether now owned or held or hereafter acquired, or any income or profits therefrom, or assign or otherwise convey any right to receive income or profits, except:

(a) Liens for taxes and assessments or governmental charges or levies and Liens securing claims or demands of mechanics and materialmen; provided that payment thereof is not at the time required by Section 11.4;

(c) Liens incidental to the conduct of business or the ownership of properties and assets (including, without limitation, Liens in connection with worker’s

compensation, unemployment insurance and other like laws, carrier’s, warehousemen’s liens and statutory landlords’ liens) and Liens to secure the performance of bids, tenders or trade contracts, or to secure statutory obligations, surety or appeal bonds or other Liens of like general nature, in any such case incurred in the ordinary course of business and not in connection with the borrowing of money; provided in each case, the obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate actions or proceedings;

(e) Liens securing Debt of a Subsidiary to the Company or to another Subsidiary;

(f) Liens existing as of the date hereof and described on Schedule 7.15 hereto and Liens securing any refinancing of Indebtedness secured by such Liens, provided that such refinancing shall be subject to similar terms and secured by the same assets and the principal amount of Indebtedness secured thereby is not increased;

(g) Liens in connection with the acquisition of property after the date hereof by way of purchase money mortgage, conditional sale or other title retention agreement, Capital Lease or other deferred payment contract, provided that such Liens attach only to the property being acquired and that the Debt secured thereby does not exceed the Fair Market Value of such property at the time of acquisition thereof and the Lien shall be created contemporaneously with, or within one hundred eighty (180) days after, the acquisition of such property;

(h) Liens that existed on assets of other Persons at the time of acquisition of such other Persons or of such assets by the Company or a Subsidiary and which continue to attach only to such assets and Liens securing any refinancing of Indebtedness secured by such Liens, provided that such refinancing shall be subject to similar terms and secured by the same assets and the principal amount of Indebtedness secured thereby is not increased;

(i) Liens arising under or related to any statutory or common law provisions, or customary account agreements, or other customary rights relating to banker’s liens, rights of setoff or similar rights and remedies as to deposit or securities accounts or other funds or instruments maintained or held with a depositary or other financial institution or securities intermediary;

(j) Liens of lessors of real property on which facilities owned or leased by the Company or any Subsidiary are located;

(k) Liens (to the extent falling under the definition of “Lien”) consisting of ownership interests (and protective filings respecting such ownership interests) of lessors of assets (other than Utility Assets) to the Company or any Subsidiary under any operating lease, and of licensors of intellectual property or other rights to the Company or any Subsidiary, it being understood and agreed that for purposes of this clause (k), rail cars shall not be considered “Utility Assets”;

(l) Liens (to the extent falling under the definition of “Lien”) consisting of rights of lessees or sublessees of assets of the Company or any Subsidiary leased in the ordinary course of the Company’s or such Subsidiary’s business, which leases do not materially interfere with the ordinary course of business of the Company or such Subsidiary; and

(m) Liens created, assumed or incurred after the date of the Closing given to secure Debt of the Company or any Subsidiary in addition to the Liens permitted by the preceding clauses (a) through (l) hereof;

provided that (1) all Debt secured by such Liens shall have been incurred within the applicable limitations provided in Section 12.1(b) and (2) at the time of creation, assumption or incurrence of the Debt secured by such Lien and after giving effect thereto and to the application of the proceeds thereof, no Default or Event of Default would exist.”

1.2. Section 12.9 of the Note Purchase Agreement shall be and is hereby amended in its entirety to read as follows:

“ Section 12.9. Subsidiary Guarantees . The Company will not permit any Subsidiary to either (a) endorse, guarantee, contingently agree to purchase or to provide funds for the payment of, or otherwise become contingently liable upon, any obligation of any other Person, except by the endorsement of negotiable instruments for deposit or collection (or similar transactions) in the ordinary course of business, or (b) agree to maintain the net worth or working capital of, or provide funds to satisfy any other financial test applicable to, any other Person, except (in the case of (a) or (b) above) for (i) guaranties by one or more Subsidiaries of the Company or Varistar of obligations of the Company or Varistar in respect of Indebtedness identified in Schedule 7.15 hereto, (ii) guaranties by one or more Subsidiaries of the Company or Varistar of obligations of the Company in respect of Indebtedness of the Company pursuant to that certain Note Purchase Agreement, dated as of February 23, 2007, between the Company and Cascade Investment L.L.C., (iii) guaranties by any Subsidiaries of Varistar in respect of indebtedness incurred by Varistar under a credit facility with U.S. Bank National Association entered into after the date hereof, if any (a “ Varistar Credit Facility ”), and in connection therewith Varistar agrees to a covenant restricting itself or its Subsidiaries from guaranteeing indebtedness of any other Person (subject to the exceptions provided for therein) (a “ Subsidiary Guarantee Covenant ”), (iv) guaranties by the Company or any Subsidiary of obligations of any Subsidiary as lessee under any lease that is not a

Capital Lease, (v) guaranties by Varistar Corporation of obligations of DMI Industries, Inc. in respect of down payments by customers of DMI Industries, Inc. in aggregate amounts of up to $30,000,000, with the amount of such guaranties to be deemed to be either (x) the dollar limitation set forth in any such guaranty, if applicable, or (y) the amount of such down payment so guarantied, and (vi) other guaranties limited as to principal of recovery to not more than $10,000,000 in the aggregate. Notwithstanding the foregoing, in the event Varistar enters into a Varistar Credit Facility, then (i) in the event such Varistar Credit Facility is terminated or expires by its terms, or if the Corporate Reorganization is consummated pursuant to the terms of Section 24 hereof, the provisions of this Section 12.9 shall be deemed deleted and shall no longer be in effect and (ii) in the event that the Subsidiary Guarantee Covenant does not apply to any particular Subsidiary or Subsidiaries, the provisions of this Section 12.9 shall be deemed deleted and shall no longer be in effect with respect to such particular Subsidiary or Subsidiaries.”

1.3. Clause (j) of Section 13 of the Note Purchase Agreement shall be and is hereby amended in its entirety to read as follows:

“(j) [INTENTIONALLY OMITTED];”

1.4. Section 24 of the Note Purchase Agreement shall be and is hereby amended in its entirety to read as follows:

“ SECTION 24. CORPORATE REORGANIZATION.

(a) Without any representation or warranty that the following transaction will be consummated, the Company has informed the holders of the Notes that it is planning the following transaction (the “ Corporate Reorganization ”) which Corporate Reorganization will consist of the following steps:

(i) formation of a new subsidiary, Otter Tail Holding Company (“ New OTC ”), which will be a Minnesota corporation;

(ii) formation by New OTC of a new subsidiary, Otter Tail Merger Sub Inc. (“ Merger Sub ”), which will be a Minnesota corporation;

(iii) transfer by the Company to New OTC by way of assignment or contribution to capital of all Non- Power Company Assets;

(iv) assumption by New OTC of all liabilities and obligations of the Company except (A) those under this Agreement and the Notes issued hereunder, (B) those under the agreements listed on Schedule 24 under the caption “Senior Indebtedness Agreements and Notes to be Retained as Obligations of the Regulated Subsidiary following the Corporate Reorganization” and the Notes described on such Schedule 24 under such caption, and (C) all liabilities and obligations that pertain to the Company’s electric generation and transmission business and do not pertain to the operation of the Company as a holding

company (such liabilities and obligations other than those described in (A), (B) and (C) hereof are called the “ OTC-Assumed Liabilities ”);

(v) release of the Company from the OTC-Assumed Liabilities listed on Schedule 24 under the caption “Release of OTC-Assumed Liabilities” by each holder thereof;

(vi) merger of the Company with Merger Sub (the “ Merger ”) pursuant to a Plan of Merger (the “Plan of Merger”) by and among the Company, New OTC and Merger Sub, where (A) the surviving corporation in the Merger will (I) be the Company, (II) have the name Otter Tail Power Company and (III) be a direct, wholly-owned subsidiary of New OTC and (B) the current shareholders of the Company will become shareholders of New OTC;

(vii) change of the name of New OTC to Otter Tail Corporation; and

(viii) the Company (now named Otter Tail Power Company and sometimes referred to herein as the “ Regulated Subsidiary ”) will remain obligated under this Agreement and the Notes issued hereunder.

(b) If the Company elects to effect the Corporate Reorganization as provided in Section 24(a) above, such Corporate Reorganization shall not require the consent of the holders of the Notes. Upon the effectiveness of such Corporate Reorganization and by virtue of the Merger, Otter Tail Power Company shall be the obligor with respect to the obligations of the Company under this Agreement and the Notes. The holders of the Notes acknowledge that upon the effectiveness of the Corporate Reorganization, Otter Tail Corporation (New OTC) shall have no liabilities, responsibilities or obligations with respect to this Agreement and the Notes. In addition, as of such time (i) the reference on the cover page of this Agreement to the Company shall be amended to read as follows: “Otter Tail Power Company,” (ii) the reference to “Otter Tail Corporation” in the first paragraph of this Agreement shall be replaced with the words “Otter Tail Power Company” and (iii) the address of the Company appearing on the first page of this Agreement shall be amended to read as follows: “Otter Tail Power Company, 215 South Cascade Street, Fergus Falls, MN 56537.”

(c) Upon the effectiveness of such Corporate Reorganization, the Regulated Subsidiary will, promptly upon the surrender by each holder of a Series A, Series B, Series C or Series D Note originally issued by Otter Tail Corporation, deliver to such holder a replacement Note or Notes (in each case, a “Replacement Note”) that equals the outstanding principal amount of such holder’s surrendered Series A, Series B, Series C or Series D Note or Notes, that reflects Otter Tail Power Company as the issuer thereof, and that includes, for each Series, a Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) with respect to such Series reflecting Otter Tail Power Company as the issuer, in exchange for such holder’s Note or Notes originally issued by Otter Tail Corporation, and each such Replacement Note or Replacement Notes shall in all other ways be substantially the same in form and

substance as the Series A, Series B, Series C and Series D Notes originally issued by Otter Tail Corporation.

(i) The Regulated Subsidiary shall have delivered to each holder of a Note an Officer’s Certificate confirming that the Corporate Reorganization has been consummated in accordance with the terms and conditions of Section 24(a), confirming the name change of the Company to Otter Tail Power Company, confirming that the Company, under such new name, remains obligated under this Agreement and the Notes issued hereunder, and that this Agreement and the Notes issued hereunder remain in full force and effect, enforceable against the Company in accordance with their respective terms, and confirming that no Default or Event of Default under this Agreement shall have occurred and be continuing as of the Effective Date.

(ii) Each holder of a Note shall have received an opinion or opinions of counsel from Dorsey & Whitney LLP or the General Counsel of the Company to the effect that as of the Effective Date: (A) the execution and delivery by the Regulated Subsidiary of the Replacement Notes to be issued in exchange for such holders’ existing Notes, and the performance by the Regulated Subsidiary of its obligations under the Plan of Merger, the Notes (including any Replacement Notes) and this Agreement have been duly authorized by all necessary corporate or similar action on the part of the Regulated Subsidiary and the Plan of Merger, this Agreement and the Notes issued hereunder are (and any Replacement Notes issued pursuant to Section 24(c) of this Agreement will, upon such issuance, be) legal, valid and binding obligations of the Regulated Subsidiary enforceable against the Regulated Subsidiary in accordance with their terms, except as an enforcement of such terms may be limited by bankruptcy, insolvency, fraudulent conveyances and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles, (B) that the execution and delivery by the Regulated Subsidiary of the Replacement Notes and the performance by the Regulated Subsidiary of its obligations under the Plan of Merger, this Agreement and the Notes (including any Replacement Notes) will not contravene any provision of the Regulated Subsidiary’s articles of incorporation, bylaws or similar governing documents, any law or regulation applicable to the Regulated Subsidiary or any agreement, mortgage or instrument known to such counsel to which the Regulated Subsidiary is a party, except for any such contravention which would not, individually or in the aggregate, result in a Material Adverse Effect, (C) the holders of the Notes (including any Replacement Notes received in exchange for such Notes) will not recognize gain or loss for United States federal income tax purposes as a result of the Corporate Reorganization (and if the holders would recognize gain, in lieu of such opinion, such holders will receive an indemnity agreement from the Regulated Subsidiary with respect to such gains), it being understood that such opinion or opinions of counsel may be subject to such

assumptions, exceptions and qualifications as are customary, and (D) upon the filing of articles of merger with the Secretary of State of the State of Minnesota, and on the date and time specified therein, the Merger will be effective in accordance with the terms and provisions of such articles of merger and the laws of the State of Minnesota.

(iii) The Regulated Subsidiary will have obtained senior unsecured debt ratings from the Designated Ratings Agencies that are equal to or greater than the ratings which were assigned to the Company immediately prior to the Effective Date of the Corporate Reorganization;

(iv) The Regulated Subsidiary shall have provided to the holders of the Notes (A) a schedule listing all partnerships and joint ventures in which the Regulated Subsidiary is a partner (limited or general) or joint venturer, (B) copies of (1) the agreement and articles of merger entered and filed in connection with the Merger, (2) any amendment to the articles of incorporation and bylaws of the Regulated Subsidiary filed or made in connection with the Corporate Reorganization, including an amendment reflecting the change in the Company’s name to Otter Tail Power Company, (3) certified copies of the articles of incorporation and bylaws of New OTC, and (4) a certificate of Good Standing for the Company and New OTC in the jurisdictions of their incorporation, certified by the appropriate governmental officials; and (C) a balance sheet of the Company giving effect to the Corporate Reorganization, prepared in accordance with GAAP, and projections and budgets for the Company following the Corporate Reorganization, prepared in good faith by the Company;

(v) there shall be no actions, suits or proceedings pending or, to the knowledge of the Regulated Subsidiary, threatened against or affecting the Regulated Subsidiary or any property of the Regulated Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect;

(vi) the Regulated Subsidiary shall not be in default under any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or in violation of any applicable law, ordinance, rule or regulation (including without limitation Environmental Laws) of any Governmental Authority, which default or violation, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect;

(vii) the Regulated Subsidiary shall own or possess all licenses, permits, franchises, authorizations, patents, copyrights, service marks, trademarks and trade names, or rights thereto, that are Material, without known conflict with the rights of others, except for those conflicts that, individually or in the aggregate, would not have a Material Adverse Effect;

(viii) the Regulated Subsidiary shall have delivered to the Noteholders an Officer’s Certificate, dated as of the Effective Date, to the effects set forth in clauses (v), (vi) and (vii) above and to the effect that the schedule of partnerships and joint ventures described in clause (iv) above set forth, as of the date of such Officer’s Certificate, the information that would be required by Section 7.4 of the Agreement if the representations and warranties in such Section were being made as of such date; and

(ix) The Company or the Regulated Subsidiary shall pay all of the fees, charges and disbursements of the special counsel referred to in Section 4.4 and arising out of the transactions contemplated by this Section 24.

In the event the Company completes a Corporate Reorganization but fails to satisfy any of the Reorganization Terms that are not waived in accordance with Section 19.1 of this Agreement, the Company will give written notice of such fact (the “ Failed Reorganization Notice ”) to the Holders of the Notes not more than five (5) days after any such failure. The Failed Reorganization Notice shall (i) refer to this Section 24 and the right of the Holders of the Notes to require the Company to prepay their Notes on the terms and conditions provided for herein as a result of the Company’s failure to satisfy any of the Reorganization Terms, and (ii) contain an offer by the Company to prepay all of the outstanding Notes in full together with unpaid accrued interest to the date of prepayment and the Make-Whole Amount determined for the prepayment date with respect to such principal amount. Each holder of the Notes shall have the right to accept such offer and require prepayment of the Notes held by such holder in full by written notice (the “ Failed Reorganization Prepayment Notice ”) to the Company given within sixty (60) days following receipt of the Failed Reorganization Notice. On the prepayment date designated in such holder’s Failed Reorganization Prepayment Notice (which shall not be less than fifteen (15) days nor more than thirty (30) days after the date such Failed Reorganization Prepayment Notice is delivered to the Company), the Company shall prepay all Notes held by such holder at 100% of the principal amount of such Notes, together with unpaid accrued interest thereon to the date of prepayment and the Make-Whole Amount determined for the prepayment date with respect to such principal amount. Failure to respond by a holder of the Notes shall constitute a rejection of such offer by such holder.

1.5. Exhibit 24(g) to the Note Purchase Agreement and each reference thereto are hereby deleted in their entirety.

1.6. Schedule B is hereby amended as follows:

(a) The definitions of the terms “Assignment Date,” “Assignment Terms,” “Company Guaranty,” “Failed Assignment Notice,” “Failed Assignment Prepayment Notice,” “Note Assumption and Exchange Agreement,” “Priority Debt” and “Regulated Subsidiary Notes” are hereby deleted.

(b) The definitions of the terms “Company,” “GAAP” and “Priority Debt” are hereby amended to read as follows:

“ Company ” means Otter Tail Corporation, a Minnesota corporation or any successor that becomes such in the manner prescribed in Section 12.4. For the avoidance of doubt, from and after the Corporate Reorganization, the “Company” shall refer to Otter Tail Power Company.

“ GAAP ” means generally accepted accounting principles as in effect from time to time in the United States of America. For purposes of determining compliance with the financial covenants contained in this Agreement, any election by the Company to measure an item of Indebtedness using fair value (as permitted by Statement of Financial Accounting Standards No. 159 or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.

“ Priority Debt ” means, at any time without duplication, the sum of (a) all Debt of the Company and of any Subsidiaries secured by Liens other than by Liens permitted by Sections 12.7(a) through (g) and (i) and (b) all Debt of Subsidiaries and Preferred Stock of Subsidiaries held by entities other than the Company or a Wholly-Owned Subsidiary.

(c) The following definitions are hereby added so that such terms are organized in alphabetical order along with the remaining definitions in Schedule B:

“ Effective Date ” is defined in Section 24.

“ Failed Reorganization Notice ” is defined in Section 24.

“ Failed Reorganization Prepayment Notice ” is defined in Section 24.

“ Merger ” is defined in Section 24.

“ Merger Sub ” is defined in Section 24.

“ New OTC ” is defined in Section 24.

“ Non-Power Company Assets ” means all tangible and intangible assets of the Company except for the Power Company Assets.

“ OTC-Assumed Liabilities ” is defined in Section 24.

“ Power Company Assets ” means all tangible and intangible assets of the Company consisting of property, contracts, leases, right, privileges, franchises, patents, trademarks, licenses, registrations and other assets that pertain to the Company’s electric generation and transmission business.

“ Reorganization Terms ” is defined in Section 24.

“ Replacement Notes ” is defined in Section 24.

1.7. Schedule 24, in the form attached hereto, is hereby added to the Note Purchase Agreement.

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

2.1. To induce the Noteholders to execute and deliver this Third Amendment (which representations shall survive the execution and delivery of this Third Amendment), the Company represents and warrants to the Noteholders that:

(a) this Third Amendment has been duly authorized, executed and delivered by it and this Third Amendment constitutes the legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally;

(b) the Note Purchase Agreement, as amended by this Third Amendment, constitutes the legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally;

(c) the execution and delivery by the Company of this Third Amendment, and the performance by the Company of its obligations hereunder (i) have been duly authorized by all requisite corporate action and, if required, shareholder action, (ii) do not require the consent or approval of any governmental or regulatory body or agency, and (iii) will not (A) violate (1) any provision of law, statute, rule or regulation or its articles of incorporation or bylaws, (2) any order of any court or any rule, regulation or order of any other agency or government binding upon it, or (3) any provision of any indenture, mortgage, deed of trust, loan, purchase or credit agreement or other Material agreement or instrument to which it is a party or by which its properties or assets are or may be bound, or (B) result in a breach or constitute (alone or with due notice or lapse of time or both) a default under any indenture, agreement or other instrument referred to in clause (iii)(A)(3) of this Section 2.1(c);

(d) as of the date hereof and after giving effect to this Third Amendment, no Default or Event of Default has occurred which is continuing; and

(e) except as set forth on Schedule A hereto, all the representations and warranties contained in Section 7 of the Note Purchase Agreement (other than the information on the Schedules thereto which information is no longer current and other than the representations and warranties set forth in Section 7.3, Section 7.4, and the first sentence of Section 7.15) are true and correct in all material respects with the same force and effect as if made by the Company on and as of the date hereof.

SECTION 3. CONDITIONS TO EFFECTIVENESS OF THIS THIRD AMENDMENT.

3.1. This Third Amendment shall not become effective until, and shall become

effective when, each and every one of the following conditions shall have been satisfied:

(a) executed counterparts of this Third Amendment, duly executed by the Company and the Noteholders, have been delivered to the Noteholders;

(b) the representations and warranties of the Company set forth in Section 2 hereof are true and correct on and with respect to the date hereof; and

Upon receipt of all of the foregoing, this Third Amendment shall become effective.

SECTION 4. PAYMENT OF NOTEHOLDERS’ COUNSEL FEES AND EXPENSES.

4.1. The Company agrees to pay upon demand, the reasonable fees and expenses of Winston & Strawn LLP, counsel to the Noteholders, in connection with the negotiation, preparation, approval, execution and delivery of this Third Amendment.

SECTION 5. Noteholder Representations and Warranties.

5.1. Each Noteholder separately represents that it holds the principal amount of Notes set forth opposite its signature block below.

SECTION 6. MISCELLANEOUS.

6.1. This Third Amendment shall be construed in connection with and as part of the Note Purchase Agreement, and except as modified and expressly amended by this Third Amendment, all terms, conditions and covenants contained in the Note Purchase Agreement and the Notes are hereby ratified and shall be and remain in full force and effect.

6.2. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Third Amendment may refer to the Note Purchase Agreement without making specific reference to this Third Amendment but nevertheless all such references shall include this Third Amendment unless the context otherwise requires.

6.3. The descriptive headings of the various Sections or parts of this Third Amendment are for convenience only and shall not affect the meaning or construction of any of the provisions hereof.

6.4. This Third Amendment shall be governed by and construed in accordance with the laws of the State of New York.

[Remainder of page Intentionally Left Blank]

The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this Third Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement.


	OTTER TAIL CORPORATION
	By:	/s/ George A. Koeck
		George A. Koeck
		General Counsel & Corporate Secretary


Accepted and Agreed to:	Principal Amount of Notes:

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA	$	40,000,000



By	/s/ Ho Young Lee
	Name:	Ho Young Lee
	Title:	Director


PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY	$	25,000,000

By: Provident Investment Management, LLC
Its: Agent



By	/s/ Ben Vance
	Name:	Ben Vance
	Title:	Managing Director


THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA		$	14,000,000



By	/s/ Thomas M. Donohue
	Name:	Thomas M. Donohue
	Title:	Managing Director


THRIVENT FINANCIAL FOR LUTHERANS		$	10,000,000



By	/s/ Alan D. Onstad
	Name:	Alan D. Onstad
	Title:	Senior Director


PHOENIX LIFE INSURANCE COMPANY		$	10,000,000



By	/s/ Paul M. Chute
	Name:	Paul M. Chute
	Title:	Sr. Managing Director


Accepted and Agreed to:	Principal Amount of Notes:

FORT DEARBORN LIFE INSURANCE COMPANY	$	2,500,000
THE CATHOLIC AID ASSOCIATION	$	500,000
GREAT WESTERN INSURANCE COMPANY	$	500,000
AMERICAN REPUBLIC INSURANCE COMPANY	$	1,000,000
CINCINNATI INSURANCE COMPANY	$	4,000,000
COLORADO BANKERS LIFE INSURANCE COMPANY	$	500,000

By: Advantus Capital Management, Inc.



By	/s/ Rose A. Lambros
	Name:	Rose A. Lambros
	Title:	Vice President


NAVY MUTUAL AID ASSOCIATION		$	7,000,000



By	/a/ Allen M. McCray
	Name:	Allen M. McCray
	Title:	Vice President, Investments


NATIONAL GUARDIAN LIFE INSURANCE COMPANY		$	3,000,000



By	/s/ R.A. Mucci
	Name:	R.A. Mucci
	Title:	Senior Vice President & Treasurer


AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS		$	18,500,000



By	/s/ Mary Ellen Kein
	Name:	Mary Ellen Kein
	Title:	V. P. Fixed Income


AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS (JAPAN BRANCH)		$	18,500,000



By	/s/ Greg Gantt
	Name:	Greg Gantt
	Title:	V. P. Fixed Income

Schedule 24

Senior Indebtedness Agreements and Notes
to be Retained as Obligations of the Regulated Subsidiary
following the Corporate Reorganization

1. Obligations of Otter Tail Corporation, dba Otter Tail Power Company pursuant to the Credit Agreement, dated as of July 30, 2008, among Otter Tail Corporation, dba Otter Tail Power Company, the Banks party thereto from time to time, Bank of America, N.A., as Syndication Agent, and U.S. Bank National Association, as Agent for the Banks.

2. $20,625,000, Mercer County, North Dakota Pollution Control Refunding Revenue Bonds (Otter Tail Corporation Project) Series 2001.

3. $10,400,000, Grant County, South Dakota Pollution Control Refunding Revenue Bonds (otter Tail Power Corporation Project) Series 1993.

4. $5,165,000, Grant County, South Dakota Pollution Control Refunding Revenue Bonds (otter Tail Power Corporation Project) Series 2001.

5. $90,000,000, 6.63% Senior Notes due December 1, 2011, issued under the Note Purchase Agreement, dated as of December 1, 2001, as thereafter amended, between Otter Tail Corporation and the Noteholders party thereto.

6. Obligations of Otter Tail Corporation, d/b/a Otter Tail Power Company pursuant to the Term Loan Agreement, dated as of May 22, 2009, among Otter Tail Corporation, d/b/a Otter Tail Power Company, JPMorgan Chase Bank, N.A., as Administrative Agent, KeyBank National Association, as Syndication Agent, Union Bank, N.A., as Documentation Agent, and the Banks named therein.

Release of OTC-Assumed Liabilities

Schedule A

Exceptions to Representations and Warranties

Schedule 7.19 of the Note Purchase Agreement should include the following statement: the Company has investments in eleven limited partnerships that invest in tax-credit-qualifying affordable-housing projects that provided tax credits of $55,000 in 2008, $285,000 in 2007 and $839,000 in 2006. As of December 31, 2009, the Company owned a majority interest in eight of the eleven limited partnerships with a total investment of $1,426,000.

Exhibit 4.3

Execution Copy

Otter Tail Corporation

Amendment No. 2
Dated as of June 30, 2009

Note Purchase Agreement
Dated as of February 23, 2007

Re: $50,000,000 Senior Note
due November 30, 2017

Amendment No. 2 to Note Purchase Agreement

This Amendment dated as of June 30, 2009 (the or this “ Amendment ”) to the Note Purchase Agreement dated as of February 23, 2007 is between Otter Tail Corporation, a Minnesota corporation (the “ Company ”), and Cascade Investment, L.L.C. (“ Cascade ”).

Recitals:

A. The Company and Cascade have heretofore entered into the Note Purchase Agreement dated as of February 23, 2007, as amended by a letter agreement dated December 14, 2007 (as so amended, the “ Note Purchase Agreement ”). The Company has heretofore issued the $50,000,000 5.778% Senior Note due November 30, 2017 (the “ Note ”) dated December 14, 2007 pursuant to the Note Purchase Agreement.

B. The Company has announced that it intends to restructure the Company into a holding company with Otter Tail Power Company as a separate, first-tier subsidiary as described in Article I hereto (the “ Permitted Reorganization ”).

C. The Company has requested (i) that Cascade consent to the assignment (the “ Assignment ”), effective immediately prior to the effectiveness of the Permitted Reorganization (the “ Effective Time ”), by the Company of its rights and obligations under the Note Purchase Agreement and the Note to Otter Tail Holding Company (“ Otter Holding ”) pursuant to the Assignment, Assumption and Release Agreement, dated as of the date immediately preceding the effectiveness of the Permitted Reorganization and effective as of the Effective Time, by and among the Company, Otter Holding and Cascade, substantially in the form of Exhibit A hereto (the “ Assignment Agreement ”) and (ii) that the Note Purchase Agreement and the Note be amended as set forth herein.

D. The Company and Cascade now desire to amend the Note Purchase Agreement and the Note in the respects, but only in the respects, hereinafter set forth.

E. Capitalized terms used herein shall have the respective meanings ascribed thereto in the Note Purchase Agreement (as amended hereby) unless herein defined or the context shall otherwise require.

Now, Therefore , in consideration of good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Company and Cascade do hereby agree as follows, which agreement shall become effective as of the Effective Time upon the full and complete satisfaction of each of the conditions precedent set forth in Sections 1.1, 5.1 and 5.2 hereof:

ARTICLE I
PERMITTED REORGANIZATION

Section 1.1. Proposed Holding Company Reorganization . Without any representation or warranty that the following transaction will be consummated, the Company has informed Cascade that it is planning the following transaction (the “ Permitted Reorganization ”):

	(a)		formation by the Company of a new subsidiary, Otter Holding, which will be a Minnesota corporation;

	(b)		formation by Otter Holding of a new subsidiary, Otter Tail Merger Sub Inc. (“ Merger Sub ”), which will be a Minnesota corporation;

	(c)		transfer by the Company to Otter Holding by way of assignment or contribution to capital of all tangible and intangible assets of the Company except for the tangible and intangible assets of the Company that pertain to the Company’s electric generation and transmission business, and shall expressly include (a) stock of Varistar Corporation, and (b) all notes payable by Varistar Corporation or any of its Subsidiaries to the Company (such assets to be transferred, the “ Non-Power Company Assets ”);

	(d)		assumption by Otter Holding of all liabilities and obligations of the Company except the following (i) those under the senior indebtedness agreements listed on Schedule A and any note described on such Schedule A, and (ii) all liabilities and obligations that pertain to the Company’s electric generation and transmission business and do not pertain to the operation of the Company as a holding company;

	(e)		assumption by Otter Holding of the Amended and Restated Credit Agreement, dated as of December 23, 2008, among Varistar Corporation, the Banks referenced therein, Bank of America, N.A., Keybank National Association and Wells Fargo Bank National Association, as Co-Documentation Agents, and U.S. Bank National Association, as Agent for the Banks and as Lead Arranger;

	(f)		release of Varistar Corporation and its Subsidiaries from any guaranties of senior indebtedness agreements listed on Schedule A and any note described on such Schedule A;

	(g)		merger of the Company with Merger Sub, where (i) the surviving corporation will be the Company and will have the name Otter Tail Power Company and will be a direct, wholly owned subsidiary of Otter Holding and (ii) the current shareholders of the Company will become shareholders of Otter Holding;

	(h)		change of the name of Otter Holding to Otter Tail Corporation;

	(i)		assumption by Otter Holding of all of the Company’s obligations under the Note Purchase Agreement and Note and release by Cascade of the Company’s obligations pursuant to the Assignment Agreement (which releases shall not release or affect the obligations and liabilities of the Subsidiary Guarantors under the Guaranty Agreement);

	(j)		the Permitted Reorganization shall take effect immediately following the Effective Time; and,

(k)

as of the Effective Time and upon the effectiveness of the Permitted Reorganization, Cascade shall be deemed to have waived any Event of Default that is a Change of Control Event that may otherwise have occurred solely as a result of the Company having entered into the Assignment Agreement and the Permitted Reorganization and Cascade agrees and acknowledges that neither the Assignment nor the Permitted Reorganization shall constitute a violation of Section 4.9 of the Note Purchase Agreement.

ARTICLE II
CONSENT TO ASSIGNMENT

Subject to the terms and conditions of this Amendment and the Assignment Agreement, Cascade shall consent to the transfer and assignment by the Company to Otter Holding as of the Effective Time of all of the rights and obligations of the Company under the Note Purchase Agreement and the Note and, from and after the Effective Time, Cascade shall look solely to Otter Holding for the performance of the obligations of the Company under the Note Purchase Agreement and the Note. From and after the Effective Time, and subject to the terms and conditions of this Amendment and the Assignment Agreement, Otter Tail Power Company shall be fully released and discharged from all liabilities, responsibilities and obligations with respect to the Note Purchase Agreement and the Note. From and after the Effective Time, (i) all references to “the Company” in the Note Purchase Agreement and the Note shall mean Otter Holding and (ii) all references to “the Note” in the Note Purchase Agreement shall mean the Note, executed by Otter Holding, as amended to reflect the provisions hereof and in the form of Exhibit B hereto.

ARTICLE III
AMENDMENTS

Section 3.1. (a) Effective as of the Effective Time, the following definitions of “Change of Control Event,” “Credit Agreement” and “Priority Debt” set forth in Annex A to the Note Purchase Agreement shall be amended in their entirety to read as follows:

“Change of Control Event” means any of the following:

(a) any Person or group of Persons (other than (i) the Company, (ii) any Subsidiary, (iii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, (iv) the Purchaser or (v) any Affiliate of the Purchaser) ¹ beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act) more than 25% of any class of voting stock of the Company; or

(b) ( i ) the Company enters into any binding or non-binding agreement with any third party (other than the Purchaser or any Affiliate of the Purchaser) with respect to, or any third party (other than the Purchaser or any Affiliate of the


¹		According to normal convention, underscore represents language added to the original and strikethrough indicates a deletion of text from the original. However, it is intended that the marking is for convenience only and has no legal effect.

Purchaser) makes a public announcement or filing with the SEC that indicates an intention to enter into, ~~(i)~~ a merger, consolidation, share exchange, recapitalization or other business combination involving the Company and as a result of such merger, consolidation, share exchange, recapitalization or other business combination, a Person other than the Purchaser or any Affiliate of the Purchaser, directly or indirectly, ~~shall~~ would acquire a 25% or greater equity interest in , or 25% or more of the voting securities or capital stock of, or 25% or more of the Consolidated Assets of the Company or ~~the~~ any successor corporation or (ii) the acquisition by a Person other than the Purchaser or any Affiliate of the Purchaser in any other manner (including by disposition or transfer), directly or indirectly, of a 25% or greater equity interest in, 25% or more of the voting securities or capital stock of, or 25% or more of the Consolidated Assets of, the Company.

“Credit Agreement” shall mean the Amended and Restated Credit Agreement, dated as of December 23, 2008 ~~April 26, 2006~~ , among the Company (formerly known as Otter Tail Holding Company) , the Banks referenced therein, Bank of America, N.A., Keybank National Association and ~~JPMorgan Chase Bank, N.A., as Syndication Agent~~ , Wells Fargo Bank National Association, as Co- Documentation Agents, and U.S. Bank National Association, as Agent for the Banks and as Lead Arranger , as amended from time to time, and any replacement or successor agreement or agreements thereto-, including, without limitation, the Varistar Credit Agreement and any other bank credit facility or bank credit facilities in which the Company or Varistar Corporation is party in effect from time to time with banks or other lending institutions .

“Priority Debt” means at any time without duplication, the sum of (a) all Debt of ~~the Company~~ Varistar Corporation and of any of its Subsidiaries secured by Liens other than by Liens permitted by Sections 10.3(a) through (g), (j) and (k) and (b) all Debt of Varistar Corporation and its Subsidiaries and Preferred Stock of Varistar Corporation and its Subsidiaries held by entities other than the Company, Varistar Corporation or a ~~Wholly-Owned Subsidiary~~ wholly owned subsidiary of Varistar Corporation ; provided, that there shall be excluded from the definition of Priority Debt (i) any Debt of ~~a Subsidiary~~ Varistar Corporation or a wholly owned subsidiary of Varistar Corporation to the Company ~~or a Wholly-Owned Subsidiary~~ and (ii) the Guaranties of the Subsidiary Guarantors or any Additional Subsidiary Guarantor under (x) the Guaranty Agreement, and (y) the Credit Agreement ~~and (z) the 2001 Note Purchase Agreement~~ .

Section 3.2. Effective as of the Effective Time, the following definitions shall be added to Annex A so that such definitions are ordered alphabetically with the remaining definitions in such Annex A:

“ Assignment Agreement ” means the Assignment, Assumption and Release Agreement, dated as of June 30, 2009, by and among the Company, the Purchaser and Otter Tail Holding Company, a Minnesota corporation.

“ Otter Power Consolidated Debt ” means as of any date of determination, the total of all Debt of Otter Tail Power Company and its Subsidiaries outstanding on such date, after eliminating all offsetting debits and credits between Otter Tail Power Company and

its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of Otter Tail Power Company and its Subsidiaries in accordance with GAAP.

“ Otter Power Consolidated Net Worth ” means, at any time,

(a) the total assets of Otter Tail Power Company and its Subsidiaries which would be shown as assets on a consolidated balance sheet of Otter Tail Power Company and its Subsidiaries as of such time prepared in accordance with GAAP, after eliminating all amounts properly attributable to minority interests, if any, in the stock and surplus of such Subsidiaries, minus

(b) the total liabilities of Otter Tail Power Company and its Subsidiaries which would be shown as liabilities on a consolidated balance sheet of Otter Tail Power Company and its Subsidiaries as of such time prepared in accordance with GAAP.

“ Otter Power Consolidated Total Capitalization ” means, at any time, the sum of Otter Power Consolidated Net Worth and Otter Power Consolidated Debt.

“ Permitted Securitization Transactions ” means sales of accounts receivable of DMI Industries, Inc. and ShoreMaster, Inc. in nominal principal amounts not to exceed, in the aggregate, $50,000,000; provided, that such transactions may include only recourse to the Company or a Subsidiary (a) under customary representations and warranties not constituting credit support for the assets sold, and (b) constituting credit support in an amount not exceeding 10% of the nominal principal amount of the transaction. The nominal principal amount of any Permitted Securitization Transaction, and the discount or other yield attributable thereto for purposes of determination of Interest Charges, shall each be determined on a reasonable basis by the Company as if each such transaction were a financing transaction and not a sale.

“ Varistar Consolidated Debt ” means as of any date of determination, the total of all Debt of Varistar Corporation and its Subsidiaries outstanding on such date, after eliminating all offsetting debits and credits between Varistar Corporation and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of Varistar Corporation and its Subsidiaries in accordance with GAAP.

“ Varistar Consolidated Net Worth ” means, at any time,

(c) the total assets of Varistar Corporation and its Subsidiaries which would be shown as assets on a consolidated balance sheet of Varistar Corporation and its Subsidiaries as of such time prepared in accordance with GAAP, after eliminating all amounts properly attributable to minority interests, if any, in the stock and surplus of such Subsidiaries, minus

(d) the total liabilities of Varistar Corporation and its Subsidiaries which would be shown as liabilities on a consolidated balance sheet of Varistar Corporation and its Subsidiaries as of such time prepared in accordance with GAAP.

“ Varistar Consolidated Total Capitalization ” means, at any time, the sum of Varistar Consolidated Net Worth and Varistar Consolidated Debt.

Section 3.3. Effective as of the Permitted Reorganization Date, Section 1.2 of the Note Purchase Agreement shall be amended in its entirety to read as follows:

“Section 1.2 Interest Rate; Adjustment to Interest Rate . ~~(a)~~ The Note shall bear interest at a rate of 5.778% per annum (the “Interest Rate”) until July 1, 2009. On and after July 1, 2009, the Interest Rate shall be 8.89% per annum. ; provided however, that if, after the date hereof but on or prior to the Closing, a rating assigned by either Moody’s or S&P to the long-term senior unsecured indebtedness of the Company is downgraded below “Baa3” or “BBB-,” respectively, then the Interest Rate will increase by 0.50% for each rating notch downgrade below “Baa3” by Moody’s, and 0.50% for each rating notch downgrade below “BBB-” by S&P. For illustration purposes only, if each of Moody’s and S&P downgrades its rating of the Company’s long-term senior unsecured indebtedness by one rating notch, the Interest Rate will be increased by 1.0%.

(b) If, after a downgrade as described in the first sentence of Section 1.2(a) but on or prior to the Closing, a rating assigned by either Moody’s or S&P to the long-term senior unsecured indebtedness of the Company is upgraded, then the Interest Rate will decrease by 0.50% for each rating notch upgrade by each of Moody’s and S&P. For illustration purposes only, if, Moody’s and S&P each downgrade their respective ratings assigned to the Company’s long-term senior unsecured indebtedness by one rating notch after the date hereof but on or prior to the Closing (resulting in a 1.0% increase in the Interest Rate pursuant to Section 1.2(a)), but then, on or prior to the Closing upgrade their respective ratings of such indebtedness by one rating notch each, the Interest Rate, as previously increased, will be decreased by 1.0%.

~~(c) Notwithstanding the provisions of Sections 1.2(a) and (b), in no event shall the Interest Rate be (i) less than 5.778% or (ii) adjusted following the Closing~~ .

Section 3.4. Effective as of the Effective Time, Section 10.1 of the Note Purchase Agreement shall be amended in its entirety to read as follows:

“Section 10.1 Limitation on Debt and Priority Debt .

(a) The Company will not permit Consolidated Debt to exceed 60% of Consolidated Total Capitalization determined as of the end of each fiscal quarter of the Company.

(b) The Company will not permit Priority Debt to exceed 20% of Varistar Consolidated Total Capitalization determined as of the end of each fiscal quarter of the Company.

(c) The Company will not permit the aggregate principal amount of all Debt of Otter Tail Power Company and its Subsidiaries to exceed 60% of Otter Power

Consolidated Total Capitalization determined as of the end of each fiscal quarter of the Company. ”

Section 3.5. Effective as of the Effective Time, Section 10.3 of the Note Purchase Agreement shall be amended in its entirety to read as follows:

(d) Minor survey exceptions or minor encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties, which are reasonably necessary for the conduct of the activities of the Company and its Subsidiaries or which customarily exist on properties of corporations engaged in similar activities and similarly situated and which do not in any event materially impair their use in the operation of the business of the Company and its Subsidiaries;

(e) Liens securing Debt of a Subsidiary to the Company or to another Subsidiary;

(f) Liens on property of the Company created by the Indenture to secure Bonds of the Company issued and outstanding thereunder and described on Schedule 5.15, including property acquired by the Company after the Closing Date to which such

~~Liens attach~~ Liens arising under or related to any statutory or common law provisions, or customary account agreements, or other customary rights relating to banker’s liens, rights of setoff or similar rights and remedies as to deposit or securities accounts or other funds or instruments maintained or held with a depositary or other financial institution or securities intermediary ;

(g) Liens ~~in addition to those permitted by clause (f) hereof~~ existing as of the date of this Agreement and described on Schedule 5.15 hereto and Liens securing any refinancing of Indebtedness secured by such Liens, provided that such refinancing shall be subject to similar terms and secured by the same assets and the principal amount of Indebtedness secured thereby is not increased;

(h) Liens in connection with the acquisition of property after the date hereof by way of purchase money mortgage, conditional sale or other title retention agreement, Capital Lease or other deferred payment contract, provided that such Liens attach only to the property being acquired and that the Debt secured thereby does not exceed the Fair Market Value of such property at the time of acquisition thereof and the Lien shall be created contemporaneously with, or within 180 days after, the acquisition of such property;

(i) Liens that existed on assets of other Persons at the time of acquisition of such other Persons or of such assets by the Company or a Subsidiary and which continue to attach only to such assets and Liens securing any refinancing of Indebtedness secured by such Liens, provided that such refinancing shall be subject to similar terms and secured by the same assets and the principal amount of Indebtedness secured thereby is not increased;

(j) Liens (to the extent falling under the definition of “Lien”) consisting of rights of lessors or sublessors of property leased to the Company or any Subsidiary or of lessees or sublessees of property of the Company or any Subsidiary leased by the Company or any Subsidiary to such lessees or sublessees, in each case in the ordinary course and consistent with past practice of the Company’s or such Subsidiary’s business, which leases do not materially interfere with the ordinary course of business of the Company or such Subsidiary;

(k) Liens in favor of customs and revenue authorities to secure payment of customs duties in connection with the importation of goods by the Company or any Subsidiary in the ordinary course of business and other similar Liens arising in the ordinary course of business of the Company or any Subsidiary; and

(l) Liens created, assumed or incurred after the date of the Closing given to secure Debt of the Company or any Subsidiary in addition to the Liens permitted by the preceding clauses (a) through ( i k) hereof; provided that all Debt secured by Liens permitted under this Section 10.3( j l) does not exceed $ 2 5 ,000,000 in the aggregate at any time outstanding;

provided that (1) all Debt secured by such Liens shall have been incurred within the applicable limitations provided in Section s 10.1(b)- (c) and (2) at the time of creation, assumption or incurrence of the Debt secured by such Lien and after giving effect thereto and to the application of the proceeds thereof, no Default or Event of Default would exist.”

Section 3.6. Effective as of the Effective Time, Section 10.7 of the Note Purchase Agreement shall be amended in its entirety to read as follows:

“Section 10.7 Benefit of More Restrictive Covenants or More Favorable Terms . If ~~any 2001 Noteholder or~~ any Lender under the Credit Agreement is or becomes entitled to the benefit of any covenant, agreement, event of default or other event which would permit ~~the 2001 Noteholder or~~ the Lender to have the Company Debt obligations it holds purchased by the Company (a “put event”) which is more restrictive on the Company or its Subsidiaries than the covenants, agreements, events of default or put events contained herein or which is more favorable to ~~such 2001 Noteholder or~~ such Lender than the covenants, agreements, events of default or put events contained herein, then such more restrictive or more favorable covenant, agreement, event of default or put event shall be deemed to be incorporated into this Agreement by reference during any period ~~such 2001 Noteholder or~~ such Lender is so entitled thereto without regard to any waivers by ~~the 2001 Noteholder or~~ the Lender with respect thereto and shall remain so incorporated for a period of 30 days after ~~the 2001 Noteholder or~~ the Lender is no longer entitled to the benefit thereof and each Noteholder shall be entitled to the benefits thereof with respect to this Agreement in addition to the existing covenants, agreements, events of default and put events contained herein so long as any Note remains outstanding. The Company shall notify each Noteholder of any such covenant, agreement, event of default or put event, and shall at the request of the Noteholders amend this Agreement to include such covenant, agreement, event of default or put event.”

Section 3.7. Effective as of the Effective Time, Section 10.11 of the Note Purchase Agreement shall be amended in its entirety to read as follows:

(i) guaranties by the Company of loans to leveraged employee stock ownership plans;

(ii) ~~a performance guaranty by the Company of performance by DMI Industries under a certain contract involving aggregate payments of approximately $20,000,000~~ guaranties by the Company of obligations of DMI Industries, Inc. in respect

of down payments by customers of DMI Industries, Inc. in an aggregate amount of up to $30,000,000, with the amount of such guaranties to be deemed to be either (x) the dollar limitation set forth in any such guaranty, if applicable, or (y) the amount of such down payment so guarantied (it being understood that the Company shall include in the quarterly statements delivered pursuant to Section 7.1(a) a statement setting forth the highest, lowest and average aggregate amount of down payments guarantied pursuant to this Section 10.11(ii) during the period covered by such statements);

(iii) guaranties by the Company or any Material Subsidiary of obligations of any Material Subsidiary as lessee under any lease that is not a Capital Lease,

(iv) other guaranties limited as to principal of recovery to not more than $10,000,000 in the aggregate;

(v) guaranties by Varistar Corporation of the obligations of the Company under the Credit Agreement, ~~and~~

(vi) the guaranty by Varistar Corporation of the obligations of the Company in respect of up to $40,000,000 of Insured Senior Notes due October 1, 2017, as described in a Prospectus dated September 11, 2002 and a prospectus supplement dated on or about September 19, 2002 guaranties by the Company of the obligations of DMI Industries, Inc. and ShoreMaster, Inc. under any agreement governing the terms of Permitted Securitization Transactions, provided, that such guaranties shall not, in the aggregate, guaranty receivables sale arrangements involving account receivable sales at any time remaining outstanding in excess of $50,000,000,and

(vii) guarantees by Material Subsidiaries of the obligations of the Company under the Credit Agreement, so long as each and every Subsidiary that guarantees the obligations of the Company under the Credit Agreement is a Subsidiary Guarantor or an Additional Subsidiary Guarantor or becomes an Additional Subsidiary Guarantor in accordance with the terms of Section 9.7 hereof. ”

Section 3.8. Effective as of the Effective Time, Article XI of the Note Purchase Agreement shall be amended in its entirety to read as follows:

“An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:

(b) the Company defaults in the payment of any interest on the Note for more than five Business Days after the same becomes due and payable; or

(c) the Company defaults (i) in the performance of or compliance with any term contained in Article X or Section 7.1(d) or (ii) in the payment when due of the

amount required to be paid by the Company for any purchase of any Notes pursuant to Section 8.3; or

(d) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Article XI) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any Noteholder (any such written notice to be identified as a “notice of default” and to refer specifically to this paragraph (d) of Article XI); or

(e) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement or by any Subsidiary in the Guaranty Agreement or in any writing furnished in connection with the transactions contemplated hereby (including, without limitation, any amendment to this Agreement and the Assignment Agreement) proves to have been false or incorrect in any material respect on the date as of which made; or

(f) (i) the Company , Otter Tail Power Company, any Subsidiary of Otter Tail Power Company or any Material Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Indebtedness that is outstanding in an aggregate principal amount of at least $5,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company , Otter Tail Power Company, any Subsidiary of Otter Tail Power Company or any Material Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of at least $5,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared (or one or more Persons are entitled to declare such Indebtedness to be), due and payable before its stated maturity or before its regularly scheduled dates of payment; or

(g) the Company , Otter Tail Power Company, any Subsidiary of Otter Tail Power Company or any Material Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or

(h) a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company , Otter Tail Power Company, any Subsidiary of Otter Tail Power Company or any of the Company’s ~~its~~ Material Subsidiaries, a

custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company , Otter Tail Power Company, any Subsidiary of Otter Tail Power Company or any of the Company’s ~~its~~ Material Subsidiaries, or any such petition shall be filed against the Company , Otter Tail Power Company, any Subsidiary of Otter Tail Power Company or any of the Company’s Material Subsidiaries and such petition shall not be dismissed within 60 days; or

(i) a final judgment or judgments for the payment of money aggregating in excess of $ 5 1 ,000,000 are rendered against one or more of the Company , Otter Tail Power Company, any Subsidiary of Otter Tail Power Company or and the Company’s Material Subsidiaries and which judgments are not, within 30 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 30 days after the expiration of such stay; or

(j) default shall occur in the observance or performance of any provision of the Guaranty Agreement or the Guaranty Agreement shall cease to be in full force and effect for any reason, including, without limitation, a final and nonappealable determination by any governmental body or court that the Guaranty Agreement is invalid, void or unenforceable, or any Subsidiary Guarantor or any Additional Subsidiary Guarantor shall contest or deny in writing the validity or enforceability of any provision of, or obligation under, the Guaranty Agreement; or

(k) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC, (iii) the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan, (iv) the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (v) the aggregate benefit liabilities under all of the Plans subject to Title IV of ERISA (other than Multiemployer Plans), determined as of the first day of such Plans’ most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes (but not for other purposes), shall exceed the assets of such Plans by more than $500,000, (vi) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (vii) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (viii) the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any Subsidiary thereunder; and in each case except clause (iii), any such event or events, either individually or together with any other such event or events, would reasonably be expected to have a Material Adverse Effect; or

(l) (i) the Company shall cease to own, directly or indirectly, all of the capital stock of each of Varistar Corporation and Otter Tail Power Company or (ii) a Change of Control Event shall have occurred.

As used in Section 11(k), the terms “employee benefit plan” and “employee welfare benefit plan” shall have the respective meanings assigned to such terms in section 3 of ERISA.”

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Section 4.1. To induce Cascade to execute and deliver this Amendment (which representations shall survive the execution and delivery of this Amendment), the Company represents and warrants to Cascade that:

(a) (i) each of this Amendment and the Assignment Agreement has been duly authorized by all requisite corporate action on the part of the Company, and (ii) this Amendment has been executed and delivered by the Company and constitutes the legal, valid and binding agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally;

(b) each of the Note Purchase Agreement, as amended by this Amendment, and the Note, constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally;

(c) the execution and delivery by the Company of this Amendment and the Assignment Agreement and the performance by the Company of its obligations under this Amendment and the Assignment Agreement will not (A) violate the Articles of Incorporation of the Company, as amended, or Bylaws of the Company, as amended, (B) violate Section 673 of the Minnesota Business Corporation Act (the “ MBCA ”) or Minnesota Statutes Section 216B.48, or (C) violate, result in the breach or modification of, conflict with, constitute a default or result in an acceleration of any obligation under, result in the imposition of any encumbrance pursuant to, or affect the validity or effectiveness of, any contract, permit, order or other law applicable to the Company, except (as to clause (C) only) for any violation, breach, modification, conflict, default, acceleration, encumbrance or effect which would not have a material adverse effect on the Company and its subsidiaries taken as a whole. No approval or consent, filings, notifications, waivers or exemptions on the part of any (A) Minnesota, North Dakota or South Dakota or (B) New York or federal, governmental authority is required to be obtained or made by the Company in connection with the execution and delivery by it of this Amendment and the Assignment Agreement and the performance by the Company of its obligations under this Amendment and the Assignment Agreement, except such as have been obtained or made;

(d) as of the date hereof and after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing;

(e) all the representations and warranties contained in Article V of the Note Purchase Agreement are true and correct in all material respects with the same force and effect as if made by the Company on and as of the date hereof, except as set forth on Schedule B hereto; and

(f) upon the effectiveness of the Permitted Reorganization, each of the transactions described in Section 1.1 shall have occurred.

ARTICLE V
CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT

Section 5.1. Conditions to Permitted Reorganization . The Effective Time shall not occur and this Amendment shall not take effect until and unless each and every one of the following conditions (in addition to those set forth in Sections 1.1 and 5.2) have been satisfied in full or waived by Cascade:

(a) Otter Holding and Merger Sub shall have been duly incorporated as Minnesota corporations.

(b) All Non-Power Company Assets shall have been assigned or contributed to the capital of Otter Holding.

(d) The Articles of Incorporation and By-Laws of Otter Holding shall be satisfactory to Cascade in form and substance.

(e) Otter Holding shall have received approval of the Permitted Reorganization from the Minnesota Public Utilities Commission and any other governmental agency or authority (state, federal or local) having applicable jurisdiction.

(f) Cascade shall have received (except as otherwise noted below) all of the following, in form and substance satisfactory to Cascade, each duly executed by all necessary parties (other than Cascade):

	(i)		the Assignment Agreement executed and delivered by the Company and Otter Holding;

	(ii)		upon the effectiveness of the Permitted Reorganization and upon the surrender by Cascade of the Note issued by Otter Tail Corporation on December 14, 2007, the Note, as amended to reflect the provisions of this Amendment and the Assignment Agreement, dated as of the date preceding the Permitted Reorganization and effective as of the Effective Time, executed and delivered by Otter Holding in the form of Exhibit B hereto;

	(iii)		a certificate or certificates of the Secretary or an Assistant Secretary of Otter Holding, attesting to and attaching (i) a copy of the corporate resolution of Otter Holding authorizing the execution, delivery and

performance of the Assignment and Assumption Agreement and of this Amendment, (ii) an incumbency certificate showing the names and titles, and bearing the signatures of, the officers of Otter Holding authorized to execute the Assignment and Assumption Agreement, (iii) a copy of the Articles of Incorporation of Otter Holding with all amendments thereto, including an amendment to change Otter Holding’s name to Otter Tail Corporation, and (iv) a copy of the By-Laws of Otter Holding with all amendments thereto;

	(iv)		a Certificate of Good Standing for Otter Holding in the jurisdiction of its incorporation, certified by the appropriate governmental officials;

	(v)		opinions of counsel to Otter Holding and the Material Subsidiaries, addressed to Cascade, in substantially the forms provided in Exhibit C attached hereto;

	(vi)		any necessary revised versions of Schedules 4.9, 5.3, 5.4, 5.5, 5.8, 5.11, 5.15 and 10.10 to the Note Purchase Agreement as provided in Section 5.1(g)(i) below;

	(vii)		a standstill agreement, dated and effective as of the date of the effectiveness of the Permitted Reorganization, by and between Otter Holding and Cascade, on terms no less favorable to Cascade than the terms contained in the standstill agreement, dated May 1, 2009, by and between the Company and Cascade;

	(viii)		a certificate or certificates of the Secretary or an Assistant Secretary of Otter Holding, attesting to and attaching a copy of the corporate resolutions (A) adopted by a committee of “disinterested directors” (as defined in Section 673 of the MBCA) formed by the board of directors of Otter Holding ratifying and adopting the resolutions of a special committee of “disinterested directors” of the Company adopted on May 1, 2009 for the purpose of exempting Cascade and its affiliates and associates from the restrictions and limitations on “interested shareholders” (as defined in Section 011 of the MBCA) set forth in the Section 673 of the MBCA, and (B) adopted by the board of directors of the Company for the purpose of approving any “Business Combination” (within the meaning of paragraph C.1 of Article VI, Division V of the Articles of Incorporation of the Company) that resulted or may be deemed to have resulted from the Permitted Reorganization and/or the assignment by the Company to Otter Holding of its rights and obligations under the Note Purchase Agreement and the Note;

	(ix)		written confirmation to Cascade from each Subsidiary Guarantor that, as of the Effective Time, the Guaranty Agreement remains a legal, valid and binding obligation of such Subsidiary Guarantor enforceable against such Subsidiary Guarantor in accordance with its terms with respect to such

Subsidiary Guarantor’s unconditional guarantee of the payment by Otter Holding of all amounts due with respect to the Note as provided in the Guaranty Agreement, as the Note has been amended to reflect the provisions of this Amendment and the Assignment Agreement, and the performance by the Otter Holding of its obligations under the Note Purchase Agreement and the Note as so amended; provided, that, if such written confirmation is not provided, each Subsidiary Guarantor shall execute and deliver to Cascade a new guaranty agreement substantially in the form of the Guaranty Agreement attached as Exhibit 2 to the Note Purchase Agreement.

(g) Upon and after consummation of the Permitted Reorganization:

	(i)		all representations and warranties of the Company hereunder (except for the first two sentences of Section 5.14), as applied to Otter Holding, shall be true and correct in all material respects except as provided in Schedule C and except that Schedules 4.9, 5.3, 5.4, 5.5, 5.8, 5.11, 5.15 and 10.10 to the Note Purchase Agreement in the form previously delivered to Cascade by Otter Holding on the date hereof shall be deemed to replace the corresponding Schedules to the Note Purchase Agreement as of the Permitted Reorganization; and

	(ii)		no Default or Event of Default shall have occurred after giving effect to the Permitted Reorganization.

(h) No default or event of default shall have occurred under any material contract or agreement constituting a portion of the Non-Power Company Assets, which default or event of default shall not have been waived to the reasonable satisfaction of Cascade.

(i) Cascade shall have received satisfactory evidence that upon consummation of the transactions described herein, the unsecured long term debt of Otter Holding shall be rated no lower than BB+ by S&P and Ba1 by Moody’s.

Section 5.2. Other Conditions Precedent . Provided that each and every one of the following conditions and the conditions in Sections 1.1 and 5.1 shall have been satisfied, this Amendment shall take effect at the Effective Time:

(a) executed counterparts of this Amendment, duly executed by the Company and Cascade, shall have been delivered to the Cascade;

(b) (i) the representations and warranties of the Company set forth in Section 4.1 hereof are true and correct on and with respect to the date hereof and at the Effective Time, (ii) the representations and warranties of the Company and Otter Holding in the Assignment Agreement are true and correct on and with respect to the date hereof, and (iii) the Company shall have complied with all of the obligations contained in this Amendment;

(d) Cascade shall have received the favorable opinions of counsel to the Company as to the matters set forth in Sections 4.1(a), 4.1(b) and 4.1(c) hereof and Section 5 of the Assignment Agreement, which opinions shall be in form and substance satisfactory to Cascade and shall cover the matters set forth in Exhibit C to this Amendment attached hereto;

(e) The Company shall have paid the reasonable fees, charges and disbursements of Cascade’s special counsel, Cleary Gottlieb Steen & Hamilton LLP, in connection with the negotiation, preparation, approval, execution and delivery of this Amendment and the Assignment Agreement to the extent reflected in a statement of such counsel rendered to Cascade and delivered to the Company; and

(f) the Company shall have paid to Cascade a mutually agreed upon fee, which shall be non-refundable.

Upon receipt of all of the foregoing, this Amendment shall become effective.

ARTICLE VI
PAYMENT OF NOTEHOLDER’S COUNSEL FEES AND EXPENSES

Section 6.1. The Company agrees to pay upon demand, the reasonable fees and expenses of Cleary Gottlieb Steen & Hamilton LLP, counsel to Cascade, in connection with the negotiation, preparation, approval, execution and delivery of this Amendment.

ARTICLE VII
NOTEHOLDER REPRESENTATIONS AND WARRANTIES

Section 7.1. Cascade represents that it holds all of the outstanding principal amount of the Note.

ARTICLE VIII
MISCELLANEOUS

Section 8.1. This Amendment shall be construed in connection with and as part of the Note Purchase Agreement, and except as modified and expressly amended by this Amendment, all terms, conditions and covenants contained in the Note Purchase Agreement and the Note are hereby ratified and shall be and remain in full force and effect.

Section 8.2. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Amendment may refer to the Note Purchase Agreement without making specific reference to this Amendment but nevertheless all such references shall include this Amendment unless the context otherwise requires.

Section 8.3. The descriptive headings of the various Sections or parts of this Amendment are for convenience only and shall not affect the meaning or construction of any of the provisions hereof.

Section 8.4. This Amendment shall be governed by and construed in accordance with New York law.

Section 8.5. The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement.

Section 8.6. This Amendment shall terminate and have no effect on the Note Purchase Agreement and the Note if the Effective Time has not occurred by July 2, 2009.

The foregoing is hereby agreed to as of the date hereof.


Otter Tail Corporation
By:	/s/ Kevin G. Moug
	Name:	Kevin G. Moug
	Title:	Chief Financial Officer

ACCEPTED AND AGREED TO:


CASCADE INVESTMENT, L.L.C.
By:	/s/ Michael Larson
	Name:	Michael Larson
	Title:	Business Manager

(Signature page to Amendment No. 2
to Note Purchase Agreement)

Schedule A
(to Amendment No. 2 to Note Purchase Agreement)

Senior Indebtedness Agreements and Notes
to remain obligations of Otter Tail Power Company following the
the Permitted Reorganization

1.		Notes issued under the Note Purchase Agreement, dated as of August 20, 2007, as thereafter amended, between the Otter Tail Corporation and the Noteholders named therein consisting of:

(i)		$33,000,000, 5.95% Senior Unsecured Notes, Series A, due 2017;

(ii)		$30,000,000, 6.15% Senior Unsecured Notes, Series B, due 2022;

(iii)		$42,000,000, 6.37% Senior Unsecured Notes, Series C, due 2027; and

(iv)		$50,000,000, 6.47% Senior Unsecured Notes, Series D, due 2037.

2.		$20,625,000, Mercer County, North Dakota Pollution Control Refunding Revenue Bonds (Otter Tail Corporation Project) Series 2001 .

3.		$10,400,000, Grant County, South Dakota Pollution Control Refunding Revenue Bonds (otter Tail Power Corporation Project) Series 1993.

4.		$5,165,000, Grant County, South Dakota Pollution Control Refunding Revenue Bonds (otter Tail Power Corporation Project) Series 2001.

5.		All of the 6.63% Senior Notes due December 1, 2011, issued under the Note Purchase Agreement, dated as of December 1, 2001, as thereafter amended, between Otter Tail Corporation and the noteholders party thereto, outstanding as of the date of effectiveness of the Permitted Reorganization.

6.		Credit Agreement, dated as of July 30, 2008, among Otter Tail Corporation, the Banks named therein, Bank of America, N.A., as Syndication Agent, and U.S. Bank National Association, as agent for the Banks, as amended, and all Notes of Otter Tail Corporation issued pursuant thereto.

7.		Term Loan Agreement, dated as of May 22, 2009, among Otter Tail Corporation, d/b/a Otter Tail Power Company, JPMorgan Chase Bank, N.A., as administrative agent, KeyBank National Association, as syndication agent, Union Bank, N.A., as documentation agent, and the banks named therein.

Schedule B
(to Amendment No. 2 to Note Purchase Agreement)

Exceptions to Representations and Warranties

Since the date of the Note Purchase Agreement, the Indebtedness listed on Schedule 5.15 has changed and should reflect the following Indebtedness:


		Principal Amount
		Outstanding
Location	Description	(as of 3/31/09)*
Company	6.63% Senior Notes due December 1, 2011	$	90,000,000
Company	5.778% Senior Unsecured Note due November 30, 2017	$	50,000,000
Company	5.95% Senior Unsecured Notes, Series A, due 2017	$	33,000,000
Company	6.15% Senior Unsecured Notes, Series B, due 2022	$	30,000,000
Company	6.37% Senior Unsecured Notes, Series C, due 2027	$	42,000,000
Company	6.47% Senior Unsecured Notes, Series D, due 2037	$	50,000,000
Company	4.65% Grant County, South Dakota Pollution Control Refunding Revenue Bonds (Otter Tail Power Corporation Project) Series 2001 due September 1, 2017	$	5,165,000
Company	4.85% Mercer County, North Dakota pollution control refunding revenue bonds, due September 1, 2022	$	20,580,000
Company	Pollution control refunding revenue bonds, variable, 4.13% at June 20, 2007, due December 1, 2012	$	10,400,000
Company	Obligations under Credit Agreement dated as of July 30, 2008, as amended	$	32,315,510
Company	Obligations under Term Loan Agreement dated as of May 22, 2009 (“Term Loan Agreement”)	$	75,000,000
Varistar Corporation	Obligations under Amended and Restated Credit Agreement dated as of December 23, 2008, as amended	$	116,747,339
Varistar Corporation	Other	$	7,600,730

The 6.63% Senior Notes and the 5.778% Senior Unsecured Notes are guarantied by Varistar Corporation and certain of its Subsidiaries. The obligations of Varistar Corporation under the A&R Credit Agreement are guarantied by certain of Varistar Corporation’s Subsidiaries. The Grant County and Mercer County pollution control refunding revenue bonds are covered under a financial guaranty insurance policy provided by Ambac Assurance Corporation.


*		Amount outstanding under the Term Loan Agreement was incurred on May 22, 2009.

Schedule C
(to Amendment No. 2 to Note Purchase Agreement)

Exceptions to Representations and Warranties
as applied to Otter Holding upon and after
consummation of the Permitted Reorganization

1.		The information provided in each Schedule delivered to Cascade as required by Section 5.1(g)(i) of the Amendment is true and correct only as of the date of delivery thereof, notwithstanding any statement to the contrary in Article V of the Note Purchase Agreement.

2.		For purposes of Section 5.7, no order of the Minnesota Public Utilities Commission approving the capital structure of Otter Holding is required.

3.		With respect to Section 5.19, Otter Holding was incorporated in June 2009 and will not be subject to SEC reporting requirements until the Effective Time.

4.		With respect to Section 5.20, Otter Holding was incorporated in June 2009.

EXHIBIT A
(to Amendment No. 2 to Note Purchase Agreement)

FORM OF ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT

[See attached]

ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT

THIS ASSIGNMENT, ASSUMPTION AND RELEASE AGREEMENT (this “ Agreement ”), is made and entered into as of June 30, 2009, by and among Otter Tail Corporation, a Minnesota corporation (“ Old Otter Tail ”), Otter Tail Holding Company, a Minnesota corporation (“ Otter Holding ”) and Cascade Investment, L.L.C., a Washington limited liability company (“ Cascade ”). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Note Purchase Agreement defined below, unless the context shall otherwise require.

RECITALS:

A. Old Otter Tail and Cascade have heretofore entered into the Note Purchase Agreement dated as of February 23, 2007, as amended by a letter agreement dated December 14, 2007 and an Amendment No. 2 thereto (“ Amendment No. 2 ”) dated as of June 30, 2009 (as so amended, the “ Note Purchase Agreement ”). Old Otter Tail has heretofore issued the $50,000,000 5.778% Senior Note due November 30, 2017 (the “ Note ”) dated December 14, 2007 pursuant to the Note Purchase Agreement.

B. Old Otter Tail has announced that it intends to restructure Old Otter Tail into a holding company with Otter Tail Power Company as a separate, first-tier subsidiary as described in Article I of Amendment No. 2 (the “ Permitted Reorganization ”).

C. The Company has proposed that its rights and obligations under the Note Purchase Agreement and the Note (as such term is defined in Amendment No. 2) be assigned, immediately prior to the effectiveness of the Permitted Reorganization, to Otter Tail Holding Corporation (“ Otter Holding ”) pursuant to this Agreement, and Cascade has consented to such assignment.

NOW, THEREFORE , in consideration of the premises, the mutual agreements herein set forth below and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows:

1. Assignment . Effective as of immediately prior to the effectiveness of the Permitted Reorganization (the “ Effective Time ”), Old Otter Tail hereby transfers, assigns and conveys to Otter Holding its entire right, title and interest in, to and under, and all of its obligations under, the Note Purchase Agreement and the Note (as such term is defined in Amendment No. 2).

2. Assumption . As of the Effective Time, Otter Holding hereby accepts the foregoing assignment and hereby assumes and agrees to perform all of the obligations of Old Otter Tail under the Note Purchase Agreement and the Note (as such term is defined in Amendment No. 2).

3. Release of Otter Tail Power Company . Upon the effectiveness of the assignment and assumption contained in Sections 1 and 2 above, respectively, Cascade (a) releases and discharges Old Otter Tail from all of its obligations under the Note Purchase Agreement and the

Note, provided , however , that the foregoing shall not constitute a release or affect the obligations and liabilities of the Subsidiary Guarantors under the Guaranty Agreement, and (b) agrees and confirms that Old Otter Tail will not thereafter be deemed the “Company” for purposes of the Note Purchase Agreement and the Note.

4. Substitution of Schedules . As provided in Section 5.1(g)(i) of Amendment No. 2, Schedules 4.9, 5.3, 5.4, 5.5, 5.8, 5.11, 5.15 and 10.10 to the Note Purchase Agreement are replaced and superseded by the Schedules previously delivered to Cascade on the date hereof bearing such numbers.

5. Representations and Warranties .

(a) Each of the Company and Otter Holding represents and warrants to Cascade that this Agreement has been duly authorized by all requisite corporate action on the part of the Company and Otter Holding and has been executed and delivered by the Company and Otter Holding and constitutes the legal, valid and binding agreement of the Company and Otter Holding enforceable against each of them in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.

(b) Otter Holding represents and warrants to Cascade that as of the Effective Time, each of the Note Purchase Agreement and the Note, as amended, will constitute the legal, valid and binding obligations, contracts and agreements of Otter Holding enforceable against it in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.

(c) Otter Holding represents and warrants to Cascade that the execution and delivery by Otter Holding of this Agreement, the Note, as amended, and the Standstill Agreement, dated as of the date hereof, between Cascade and Otter Holding (the “ Standstill Agreement ”) and the performance by Otter Holding of its obligations under this Agreement, the Note, as amended, and the Standstill Agreement will not (A) violate the Articles of Incorporation of Otter Holding, as amended, or Bylaws of Otter Holding, as amended, (B) violate Section 673 of the MBCA or Minnesota Statutes Section 216B.48, or (C) violate, result in the breach or modification of, conflict with, constitute a default or result in an acceleration of any obligation under, result in the imposition of any encumbrance pursuant to, or affect the validity or effectiveness of, any contract, permit, order or other law applicable to Otter Holding, except (as to clause (C) only) for any violation, breach, modification, conflict, default, acceleration, encumbrance or effect which would not have a material adverse effect on Otter Holding and its Subsidiaries taken as a whole. No approval or consent, filings, notifications, waivers or exemptions on the part of any (A) Minnesota, North Dakota or South Dakota or (B) New York or federal, governmental authority is required to be obtained or made by Otter Holding in connection with the execution and delivery by it of this Agreement, the Note, as amended, and the Standstill Agreement and the performance by Otter Holding of its obligations under this Agreement, the Note, as amended, and the Standstill Agreement, except such as have been obtained or made.

(d) Cascade represents to each of the Company and Otter Holding that the first two sentences of Section 6.6 of the Note Purchase Agreement as applied to the Note, as amended by Amendment No. 2 and this Agreement, are true and correct as of the date hereof.

6. Miscellaneous . This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one instrument. The captions and headings of the various sections of this Agreement are for convenience only and shall not be deemed a part of this Agreement and shall not be construed as defining or as limiting in any way the scope or intent of provisions hereof.

7. Effectiveness . This Agreement shall be deemed effective immediately prior to the effectiveness of the Permitted Reorganization, provided that each and every one of the conditions set forth in Sections 5.1 and 5.2 of Amendment No. 2 has been satisfied in full or waived by Cascade; provided, further , that, if the Permitted Reorganization does not occur by July 2, 2009, this Agreement shall terminate automatically and the assignment, assumption and release described above in Sections 1, 2 and 3, respectively, shall be void and of no effect.

8. Governing Law . This Agreement shall be governed by and construed in accordance with New York law.

[Signature pages follow.]

IN WITNESS WHEREOF, and intending to be legally bound thereby, the parties hereto have executed this Agreement as of the date written above.


	OTTER TAIL CORPORATION

	George A. Koeck
	General Counsel and Corporate Secretary

	OTTER TAIL HOLDING COMPANY

	George A. Koeck
	General Counsel and Corporate Secretary

	CASCADE INVESTMENT, L.L.C.

	Name:
	Title:

EXHIBIT B
(to Amendment No. 2 to Note Purchase Agreement)

[FORM OF NOTE]
OTTER TAIL HOLDING COMPANY

Senior Note due November 30, 2017


[No. R-1]			$50,000,000

FOR VALUE RECEIVED, the undersigned, OTTER TAIL HOLDING COMPANY (herein called the “Company”), a corporation organized and existing under the laws of the State of Minnesota, hereby promises to pay to Cascade Investment, L.L.C., or registered assigns, the principal sum of FIFTY MILLION DOLLARS on November 30, 2017, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof (i) at the rate of 5.778% per annum from December 14, 2007 until July 1, 2009 and (ii) from and after July 1, 2009 at a rate of 8.89%per annum, payable semiannually, on the last day of each May and November in each year, commencing with the May or November next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreement referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 8.89% or (ii) 2% over the rate of interest publicly announced by Citibank N.A. from time to time in New York, New York as its “base” or “prime” rate.

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the principal office of the Company in Fargo, North Dakota or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.

This Note is a Senior Note (herein called the “Note”) issued pursuant to a Note Purchase Agreement, dated as of February 23, 2007 (as from time to time amended, the “Note Purchase Agreement”), between the Company and Cascade Investment, L.L.C., and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have made the representations set forth in Section 6.6 of the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

All amounts of principal, interest and Make-Whole Amount (as such term is defined in the Note Purchase Agreement) payable with respect to this Note are unconditionally guaranteed by the Subsidiary Guarantors (as such term is defined in the Note Purchase Agreement), under and pursuant to that certain Guaranty Agreement dated as of December 3, 2007 from such Subsidiary Guarantors, all in accordance with the provisions of the Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York excluding choice-of-law principals of the law of such State that would require the application of the laws of a jurisdiction other than such State.


	OTTER TAIL HOLDING COMPANY
	By:
		George A. Koeck
		General Counsel and Corporate Secretary

EXHIBIT C
(to Amendment No. 2 to Note Purchase Agreement)

DESCRIPTION OF OPINION OF COUNSEL

[See attached]

[Form of Opinion of General Counsel]

June 30, 2009

Cascade Investment, L.L.C.
2365 Carillon Point
Kirkland, Washington 98033

Ladies and Gentlemen:

I have acted as counsel to Otter Tail Corporation, a Minnesota corporation (the “Company”), in connection with that certain Amendment No. 2 dated as of June 30, 2009 to Note Purchase Agreement dated as of February 23, 2007 (the “Amendment”), between the Company and Cascade Investment, L.L.C. (“Cascade”), which amends that certain Note Purchase Agreement, dated as of February 23, 2007 (the “Original Note Purchase Agreement”), as amended by a letter agreement dated December 14, 2007 (the “Letter Agreement”) (the Original Agreement, as amended by the Letter Agreement, being referred to herein as the “Note Purchase Agreement”), between the Company and Cascade relating to the issuance and sale by the Company of its 5.778% Senior Note due November 30, 2017 in the aggregate principal amount of $50,000,000 (the “Original Note”), as amended by the Amendment (as amended, the “Replacement Note”). This opinion is being delivered to you pursuant to Section 5.1(f)(v) and Section 5.2(d) of the Amendment. Capitalized terms used herein, except as otherwise specifically defined herein, are used with the same meaning as defined in the Note Purchase Agreement as amended by the Amendment.

In connection with this opinion I have examined such documents and reviewed such questions of law as I have considered necessary and appropriate for the purposes of this opinion.

In rendering my opinions set forth below, I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures (other than the signatures of officers of the Company, Otter Holding, Merger Sub and the Subsidiary Guarantors) and the conformity to authentic originals of all documents submitted to me as copies. I also have assumed the legal capacity for all purposes relevant hereto of all natural persons and, with respect to all parties to agreements or instruments relevant hereto other than the Company, Otter Holding, Merger Sub and the Subsidiary Guarantors, that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations of such parties. I have also assumed that all conditions precedent to the effectiveness of the Amendment and the Assignment Agreement have been satisfied or waived contemporaneously with the delivery of this opinion letter. As to questions of fact material to my opinion, I have relied upon representations and certificates of officers and other employees of the Company, Otter Holding and Merger Sub (in each case known by me to have authority to make such representations and

certifications on behalf of the Company, Otter Holding or Merger Sub, as appropriate) and the Subsidiaries, and certificates of public officials.

Based on the foregoing, I am of the opinion that:

	1.		Each Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary, except where failure to be so licensed or to so qualify or to be in good standing would not result in a Material Adverse Effect; and all of the issued and outstanding shares of capital stock of each Subsidiary have been duly issued, are fully paid and non-assessable and are owned by the Company, by one or more Subsidiaries, or by the Company and one or more Subsidiaries.

	2.		No approval or consent of, filing with, notification to, or waiver or exemption from, any Minnesota or North Dakota governmental authority or any Minnesota, North Dakota, South Dakota or other federal governmental authority regulating public utilities or public utility holding companies, is required to be obtained or made by the Company in connection with its execution and delivery of the Amendment or the Assignment Agreement or the performance by the Company of its obligations pursuant to the Amendment and the Assignment Agreement, except for such approvals, consents, filings, notifications, waivers or exemptions as have been obtained or made.

	3.		No approval or consent of, filing with, notification to, or waiver or exemption from, any Minnesota or North Dakota governmental authority or any Minnesota, North Dakota, South Dakota or other federal governmental authority regulating public utilities or public utility holding companies, is required to be obtained or made by Otter Holding in connection with its execution and delivery of the Assignment Agreement, the Replacement Note and the Standstill Agreement or the performance by Otter Holding of its obligations pursuant to the Assignment Agreement, the Replacement Note and the Standstill Agreement, except for such approvals, consents, filings, notifications, waivers or exemptions as have been obtained or made and except that I express no opinion regarding any federal securities laws or the securities or “Blue Sky” laws of any state.

	4.		No approval or consent of, filing with, notification to, or waiver or exemption from, any Minnesota or North Dakota governmental authority or any Minnesota, North Dakota, South Dakota or other federal governmental authority regulating public utilities or public utility holding companies, is required to be obtained or made by any Subsidiary Guarantor in connection with the execution and delivery of the Acknowledgment of Guaranty dated as of June 30, 2009, executed by each of the Subsidiary Guarantors (the “Guaranty Acknowledgment”), except for such approvals, consents, filings, notifications, waivers or exemptions as have been

obtained or made and except that I express no opinion regarding any federal securities laws or the securities or “Blue Sky” laws of any state.

	5.		Each of the Subsidiary Guarantors has the corporate power and authority and is duly authorized to enter into the Guaranty Acknowledgment and to perform all of its obligations under the Guaranty Agreement, and the Guaranty Acknowledgment has been duly authorized by all requisite corporate action on the part of each Subsidiary Guarantor and duly executed and delivered by each of the Subsidiary Guarantors.

	6.		The execution and delivery by each of the Subsidiary Guarantors of the Guaranty Acknowledgment and the performance by each Subsidiary Guarantor of its obligations pursuant to the Guaranty Agreement will not (a) violate the articles of incorporation or bylaws of the Company, Otter Holding or any Subsidiary Guarantor, or (b) violate, result in the breach or modification of, conflict with, constitute a default or result in an acceleration of any obligation under, result in the imposition of any encumbrance pursuant to, or affect the validity or effectiveness of, any contract, permit, order or other law applicable to the Company, Otter Holding or any Subsidiary Guarantor except (as to clause (b) only) for any violation, breach, modification, conflict, default, acceleration, encumbrance or effect which would not have a Material Adverse Effect.

	7.		The execution and delivery by the Company of the Amendment and the Assignment Agreement and the performance by the Company of its obligations under the Amendment and the Assignment Agreement will not (a) violate the articles of incorporation or bylaws of the Company, (b) violate Section 673 of the Minnesota Business Corporation Act (the “MBCA”) or Minnesota Statutes Section 216B.48, or (c) violate, result in the breach or modification of, conflict with, constitute a default or result in an acceleration of any obligation under, result in the imposition of any encumbrance pursuant to, or affect the validity or effectiveness of, any contract, permit, order or other law applicable to the Company, except (as to clause (c) only) for any violation, breach, modification, conflict, default, acceleration, encumbrance or effect which would not have a Material Adverse Effect and except that I express no opinion regarding any federal securities laws or the securities or “Blue Sky” laws of any state.

	8.		The execution and delivery by Otter Holding of the Assignment Agreement, the Replacement Note and the Standstill Agreement and the performance by Otter Holding of its obligations under the Assignment Agreement, the Replacement Note and the Standstill Agreement will not (a) violate the articles of incorporation or bylaws of Otter Holding, (b) violate Section 673 of the MBCA or Minnesota Statutes Section 216B.48, or (c) violate, result in the breach or modification of, conflict with, constitute a default or result in an acceleration of any obligation under, result in the imposition of any encumbrance pursuant to, or affect the validity or effectiveness of, any contract, permit, order or other law applicable to Otter Holding, except (as to clause (c) only) for any violation, breach,

modification, conflict, default, acceleration, encumbrance or effect which would not have a Material Adverse Effect.

There is no litigation pending or, to the best of my knowledge, threatened which in my opinion could reasonably be expected to have a Material Adverse Effect or that would impair the ability of Otter Holding to, as of the Effective Time, issue and deliver the Replacement Note as contemplated in the Note Purchase Agreement, as amended by the Amendment, and comply with the provisions of the Note Purchase Agreement, as amended by the Amendment, the Replacement Note, the Standstill Agreement or of any Subsidiary Guarantor to comply with the provisions of the Guaranty Agreement.

The opinions expressed above are limited to the laws of the States of Minnesota and North Dakota and the federal laws of the United States and, with respect to my opinion in paragraphs 1, 4 and 5 only, the following corporate laws: the Arizona Business Corporation Act, the Delaware General Corporation Law, the Idaho Business Corporation Act, and the General and Business Corporation Law of Missouri. I express no opinion as to the laws of any other jurisdiction.

The foregoing opinions are being furnished to you solely for your benefit (and the benefit of your successors and assigns) and may not be relied upon by, nor may copies be delivered to, any other person without my prior written consent.


	Very truly yours,

	George A. Koeck
	General Counsel and Corporate Secretary

[Form of Opinion of Dorsey & Whitney LLP]

June 30, 2009

Cascade Investment, L.L.C.
2365 Carillon Point
Kirkland, Washington 98033

Ladies and Gentlemen:

We have acted as counsel to Otter Tail Corporation, a Minnesota corporation (the “Company”), in connection with that certain Amendment No. 2 dated as of June 30, 2009 to Note Purchase Agreement dated as of February 23, 2007 (the “Amendment”), between the Company and Cascade Investment, L.L.C. (“Cascade”), which amends that certain Note Purchase Agreement, dated as of February 23, 2007 (the “Original Note Purchase Agreement”), as amended by a letter agreement dated December 14, 2007 (the “Letter Agreement”) (the Original Note Purchase Agreement, as amended by the Letter Agreement, being referred to herein as the “Note Purchase Agreement”), between Otter Tail and Cascade relating to the issuance and sale by the Company of its 5.778% Senior Note due November 30, 2017 in the aggregate principal amount of $50,000,000 (the “Original Note”), as amended by the Amendment (the “Replacement Note”). This opinion is being delivered to you pursuant to Section 5.1(f)(v) and Section 5.2(d) of the Amendment. Capitalized terms used herein, except as otherwise specifically defined herein, are used with the same meaning as defined in the Note Purchase Agreement, as amended by the Amendment.

In connection with this opinion, we have examined such documents and reviewed such questions of law as we have considered necessary and appropriate for the purposes of this opinion.

In rendering our opinions set forth below, we have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted to us as copies. We have also assumed the legal capacity for all purposes relevant hereto of all natural persons and, with respect to all parties to agreements or instruments relevant hereto other than the Company, Otter Holding and Merger Sub, that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations of such parties. We have also assumed that all conditions precedent to the effectiveness of the Amendment and the Assignment Agreement have been satisfied or waived contemporaneously with the delivery of this opinion letter. As to questions of fact material to our opinion, we have relied upon certificates of officers of the Company, Otter Holding and Merger Sub and of public officials.

Our opinions expressed below as to certain factual matters are qualified as being limited “to our knowledge” or by other words to the same or similar effect. Such words, as used herein, mean that prior to or during the course of this firm’s representation of the Company in connection with the specific transactions contemplated by the Note Purchase Agreement, as

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amended by the Amendment, no contrary information came to the attention (but not including any constructive or imputed notice) of the attorneys currently with our firm who have given substantive attention to matters on behalf of the Company. In rendering such opinions, we have not conducted any independent investigation of the Company or any of its Subsidiaries, consulted with other attorneys in our firm with respect to the matters covered thereby, or reviewed any of our prior files involving the Company or any of its Subsidiaries. Finally, no inference as to our knowledge with respect to the factual matters upon which we have so qualified our opinions should be drawn from the fact of our representation of the Company.

Based on the foregoing, we are of the opinion that:

(i) The Company is a corporation, duly incorporated, validly existing and in good standing under the laws of the State of Minnesota and has the corporate power and the corporate authority to execute and perform its obligations under the Amendment and the Assignment Agreement. The Company has the corporate power and the corporate authority to conduct the activities in which it is now engaged, as described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and is duly licensed or qualified and is in good standing as a foreign corporation in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary, except where the failure to be so licensed or to so qualify or to be in good standing would not result in a Material Adverse Effect.

(ii) Otter Holding is a corporation, duly incorporated, validly existing and in good standing under the laws of the State of Minnesota and has the corporate power and the corporate authority to execute and perform its obligations under the Amendment, the Note Purchase Agreement, as amended by the Amendment and assigned to Otter Holding pursuant to the Assignment Agreement, the Replacement Note and the Assignment Agreement. The Company has the corporate power and the corporate authority to conduct the activities in which it is now engaged, and is duly licensed or qualified and is in good standing as a foreign corporation in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary, except where the failure to be so licensed or to so qualify or to be in good standing would not result in a Material Adverse Effect.

(iii) Each of the Amendment and the Assignment Agreement has been duly authorized by all requisite corporate action on the part of the Company, duly executed and delivered by the Company and constitutes the legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms.

(iv) The Assignment Agreement has been duly authorized by all requisite corporate action on the part of Otter Holding, duly executed and delivered by Otter Holding and constitutes the legal, valid and binding agreement of Otter Holding enforceable against Otter Holding in accordance with its terms.

(v) Each of the Note Purchase Agreement, as amended by the Amendment, and the Original Note constitutes the legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms. As of the Effective Time, each of the Note Purchase Agreement, as amended by the Amendment, and, upon the surrender by Cascade of

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the Original Note and issuance by the Company of the Replacement Note, the Replacement Note will constitute the legal, valid and binding agreement of Otter Holding enforceable against Otter Holding in accordance with its respective terms.

(vi) The Guaranty Agreement constitutes the legal, valid and binding agreement of each of the Subsidiary Guarantors named as a party thereto, enforceable against such Subsidiary Guarantor in accordance with its terms. We have assumed for purposes of this opinion that the Guaranty Agreement and the Acknowledgment of Guaranty dated as of June 30, 2009, executed by each of the Subsidiary Guarantors (the “Guarantee Acknowledgment”) have each been duly authorized, executed and delivered by such Subsidiary Guarantor, and note that you have (previously, with respect to the Guaranty Agreement, and on the date hereof, with respect to the Guaranty Acknowledgment) received opinions from George A. Koeck, General Counsel and Corporate Secretary of the Company, to that effect.

(vii) No approval or consent of, filing with, notification to, or waiver or exemption from, any Minnesota, New York or federal governmental authority (other than any Minnesota, New York or federal governmental authority regulating public utilities or public utility holding companies, as to which we express no opinion) is required to be obtained or made by the Company in connection with its execution and delivery of the Amendment and the Assignment Agreement or the performance by the Company of its obligations pursuant to the Amendment and the Assignment Agreement, except for such approvals, consents, filings, notifications, waivers or exemptions as have been obtained or made and except that we express no opinion regarding any federal securities laws (other than as provided in our opinion in clause (xi) below), or the securities or “Blue Sky” laws of any state.

(viii) No approval or consent of, filing with, notification to, or waiver or exemption from, any Minnesota, New York or federal governmental authority (other than any Minnesota, New York or federal governmental authority regulating public utilities or public utility holding companies, as to which we express no opinion) is required to be obtained or made by Otter Holding in connection with its execution and delivery of the Assignment Agreement, the Standstill Agreement or the Replacement Note or the performance by Otter Holding of its obligations pursuant to the Assignment Agreement, the Replacement Note and the Standstill Agreement, except for such approvals, consents, filings, notifications, waivers or exemptions as have been obtained or made and except that we express no opinion regarding any federal securities laws (other than as provided in our opinion in clause (xi) below), or the securities or “Blue Sky” laws of any state.

(ix) The execution and delivery by the Company of the Amendment and the Assignment Agreement and the performance by the Company of its obligations under the Amendment and the Assignment Agreement will not (a) violate the articles of incorporation or bylaws of the Company or (b) violate, result in the breach or modification of, conflict with, constitute a default or result in an acceleration of any obligation under, result in the imposition of any encumbrance pursuant to, or affect the validity or effectiveness of, any contract, permit, order or other law applicable to the Company, except (as to clause (b) only) for any violation, breach, modification, conflict, default, acceleration, encumbrance or effect which would not have a Material Adverse Effect and except that we express no opinion regarding (A) any law regulating public utilities or public utility holding companies or (B) any federal securities laws

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(other than as provided in our opinion in clause (xi) below), or the securities or “Blue Sky” laws of any state.

(x) The execution and delivery by Otter Holding of the Assignment Agreement, the Replacement Note and the Standstill Agreement and the performance by Otter Holding of its obligations under the Assignment Agreement, the Replacement Note and the Standstill Agreement will not (a) violate the articles of incorporation or bylaws of Otter Holding or (b) violate, result in the breach or modification of, conflict with, constitute a default or result in an acceleration of any obligation under, result in the imposition of any encumbrance pursuant to, or affect the validity or effectiveness of, any contract, permit, order or other law applicable to Otter Holding, except (as to clause (b) only) for any violation, breach, modification, conflict, default, acceleration, encumbrance or effect which would not have a Material Adverse Effect and except that we express no opinion regarding (A) any law regulating public utilities or public utility holding companies or (B) any federal securities laws (other than as provided in our opinion in clause (xi) below), or the securities or “Blue Sky” laws of any state.

(xi) Assuming the accuracy and performance of, and compliance with, the representations, warranties and agreements of the Company and you in the Note Purchase Agreement, as amended by the Amendment, and the Assignment Agreement, the issuance and delivery of the Replacement Note under the circumstances contemplated by the Note Purchase Agreement, as amended by the Amendment, do not, under existing law, require the registration of the Replacement Note under the Securities Act of 1933.

(xii) Neither the Company nor Otter Holding is an “investment company” as such term is defined in the Investment Company Act of 1940, as amended, and to our knowledge, based solely on our review of the statements of beneficial ownership of the Company’s stock filed as of the date hereof with the SEC and our review of the stock ledger of Otter Holding, and in reliance upon certificates of officers of the Company and Otter Holding, neither the Company nor Otter Holding is “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

The opinions set forth above are subject to the following qualifications and exceptions:

(a) Our opinions above in clauses (iii), (iv), (v) and (vi) are subject to the effect of any applicable bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent transfer, statutes of limitation or other similar laws and judicial decisions affecting or relating to the rights of creditors generally.

(b) Our opinions in clauses (iii), (iv), (v) and (vi) above are subject to the effect of general principles of equity, including without limitation, concepts of materiality, reasonableness, good faith and fair dealing, estoppel, election of remedies and other similar doctrines affecting the enforceability of agreements generally (regardless of whether considered in a proceeding in equity or at law). In addition, the availability of specific performance, injunctive relief, the appointment of a receiver or other equitable remedies is subject to the discretion of the tribunal before which any proceeding therefor may be brought.

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(c) We express no opinion as to the enforceability of provisions in the Note Purchase Agreement, the Original Note, the Replacement Note, the Amendment, Assignment Agreement or the Guaranty Agreement to the extent they contain obligations of the Company, Otter Holding or the Subsidiary Guarantors to pay any prepayment premium, default interest rate or other form of liquidated damages if the payment of such premium, interest rate or damages may be construed as unreasonable in relation to the actual damages or disproportionate to actual damages suffered by the Purchaser as a result of such prepayment or default.

(d) We express no opinion as to the enforceability of the 2001 Note Purchase Agreement and any Credit Agreement which may be deemed to be incorporated by reference into the Note Purchase Agreement pursuant to Section 10.7 of the Note Purchase Agreement or as to the effect such incorporation may have on the enforceability of the Note Purchase Agreement, the Original Note, the Replacement Note, the Guaranty Agreement or the Guaranty Acknowledgment.

(e) Our opinion in paragraph (vi) above as to the Guaranty Acknowledgment and the Guaranty Agreement is subject to the defenses available to a guarantor under applicable law.

(f) We express no opinion as to the validity, binding effect or enforceability of (i) any provision of the Note Purchase Agreement, the Original Note, the Replacement Note, the Amendment, the Assignment Agreement, the Guaranty Acknowledgment or the Guaranty Agreement related to choice of law, forum selection or submission to jurisdiction (including, without limitation, any express or implied waiver of any objection to venue in any court or of any objection that a court is an inconvenient forum) to the extent that the validity, binding effect or enforceability of any such provision is to be determined by any court other than a court of the State of New York, (ii) waivers by the Company, Otter Holding or a Subsidiary Guarantor of any statutory or constitutional rights or remedies, (iii) terms which excuse any person or entity from liability for such person’s or entity’s negligence or willful misconduct, (iv) cumulative remedies to the extent such cumulative remedies purport to compensate, or would have the effect of compensating, the party entitled to the benefits thereof in an amount in excess of the actual loss suffered by such party, (v) provisions providing that waivers or consents by a party may not be given effect unless in writing or that one or more waivers may not under certain circumstances constitute a wavier of other matters of the same kind, or (vi) terms purporting to establish evidentiary standards, or as to compliance or the effect of noncompliance by you with any state or federal laws or regulations applicable to you in connection with the transactions described in the Guaranty Acknowledgment and the Guaranty Agreement.

(g) In rendering our opinion in paragraphs (vii) and (viii) above, we do not express any opinion with respect to any approval or consent of, filing with, notification to, or waiver or exemption from, any Minnesota, New York or federal

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governmental authority required generally in connection with the business or operations of the Company or Otter Holding.

The opinions expressed above are limited to the laws of the States of Minnesota and New York and the federal laws of the United States and we express no opinion as to the laws of any other jurisdiction.

Very truly yours,

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