OTTER TAIL CORPORATION

2014 STOCK INCENTIVE PLAN

2014 PERFORMANCE AWARD AGREEMENT

This Performance Award Agreement is between Otter Tail Corporation, a Minnesota corporation (the “Corporation”), and you, as an employee of the Corporation, effective as of the date of grant (the “Grant Date”) set forth in the attached Performance Award Certificate.

 

WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 2014 Stock Incentive Plan (the “Plan”), wishes to grant to you the opportunity and right to receive a number of the Corporation’s Common Shares, par value $5.00 per share (the “Common Shares”), subject to the terms and conditions contained in this Agreement and in the attached Performance Award Certificate, which is made a part of this Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Corporation and you hereby agree as follows:

 

1.            Performance Award . The Corporation hereby grants to you, effective as of the Grant Date, a Performance Award representing the right to receive a specified number of Common Shares, as set forth in the attached Performance Award Certificate and subject to the terms and conditions set forth in this Agreement, the Performance Award Certificate and the Plan. The Performance Award, to the extent it becomes payable, shall be paid in Common Shares of the Corporation (the “Shares”).

 

2.            Performance Period and Performance Goals . The performance period for purposes of determining whether the Performance Award will be paid shall be January 1, 2014 through December 31, 2016 (the “Performance Period”). The performance goals for purposes of determining whether, and the extent to which, the Performance Award will be paid are set forth in Exhibit 1 to this Agreement, which Exhibit is made a part of this Agreement.

 

3.            Payment . Subject to the provisions of Sections 4 and 5 of this Agreement, the Performance Award shall be paid within 59 days after the January 15 following the end of the Performance Period after the Compensation Committee of the Corporation’s Board of Directors (the “Committee”) determines, in its discretion, whether and to what extent the performance goals have been achieved in accordance with the terms set forth in Exhibit 1 to this Agreement.

 

4.            Forfeiture; Early Vesting . Notwithstanding the provisions of Section 3 of this Agreement, in the event your employment is terminated during the Performance Period, the Performance Award and your right to receive any Shares shall be immediately and irrevocably forfeited, unless such termination is by reason of:

 

  (a)           disability (as determined under any long-term disability program then maintained by the Corporation or any of its Affiliates that is applicable to you),

 

 

  (b)           retirement (normal or early retirement under any retirement plan of the Corporation or any of its Affiliates that is applicable to you), provided you are at least 62 years old at the time of such retirement.

 

  (c)           death,

 

  (d)           your resignation for “Good Reason” (as defined in your Executive Employment Agreement, dated on or before the Grant Date, between the Corporation and you), or

 

  (e)            your termination “Without Cause” (as defined in your Executive Employment Agreement, dated on or before the Grant Date, between the Corporation and you).

 

In the event your employment is terminated during the Performance Period for one of the reasons enumerated in clauses (a) through (c) above, then you or your estate shall be entitled to receive a payment of the Performance Award based on, and assuming that, the performance goal would be achieved at the Target level, as set forth in Exhibit 1 to this Agreement. Such payment shall be made as soon as administratively feasible following your separation from service. In the event your employment is terminated during the Performance Period for one of the reasons enumerated in clause (d) or (e) above or retirement before age 62, then you shall be entitled to receive a pro rata payment of the Performance Award based on the performance of the Company against the performance goal as of the date of such termination, as set forth in Exhibit 1 to this Agreement. If a payment is made pursuant to this Section 4, no payment shall be made pursuant to Section 3 of this Agreement.

 

5.            Change in Control . Notwithstanding the provisions of Section 3 of this Agreement, in the event of a “Change in Control” (as defined in the Change in Control Severance Agreement, dated on or before the Grant Date, between the Corporation and you) during the Performance Period that occurs prior to your termination of employment, you shall be entitled to receive a payment of the Performance Award based on, and assuming that, the performance goal would have been achieved at the Target level, as set forth in Exhibit 1 to this Agreement. Such payment shall be made promptly following the date of the Change in Control. If a payment is made pursuant to this Section 5, no payment shall be made pursuant to Section 3 of this Agreement. Notwithstanding the forgoing, no amount shall be paid under this Section 5 unless the event constitutes a “change in the ownership of the Corporation,” “change in effective control of the Corporation,” and/or a “change in the ownership of a substantial portion of the Corporation’s assets” as defined under Treasury Regulation § 1.409A-3(i)(5) or such other regulation or guidance issued under Section 409A of the Code.

 

6.            Restriction on Transfer . The Performance Award, and the right to receive Shares, may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, other than by will or the laws of descent and distribution, and no attempt to transfer the Performance Award, and the right to receive the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Performance Award or the Shares. No transfer by will or the applicable laws of descent and distribution of the Performance Award shall be effective to bind the Corporation unless the Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.

 

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7.            Issuance of Shares . After the Performance Award becomes payable pursuant to Section 3, 4 or 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 8 hereof, the Corporation shall promptly cause to be issued a certificate or certificates, registered in your name or in the name of your legal representatives, beneficiaries or heirs, as the case may be, representing the Shares (less any shares withheld to pay withholding taxes) and shall cause such certificate or certificates to be delivered to you or your legal representatives, beneficiaries or heirs, as the case may be.

 

8.            Income Tax Matters .

 

  (a)           You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of the grant of the Performance Award, the receipt of Shares upon any payment of the Performance Award, the subsequent disposition of the Shares and any other matters related to this Agreement. In order to comply with all applicable federal or state income tax laws or regulations, the Corporation may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.

 

  (b)           In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, you may elect to satisfy your federal and state income tax withholding obligations arising from the receipt of the Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the order of the Corporation, (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Corporation Common Shares having a Fair Market Value equal to the amount of such taxes. The Corporation will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share. Your election must be made on or before the date that the amount of tax to be withheld is determined.

 

9.            Miscellaneous .

 

  (a)           Notwithstanding the foregoing, to the extent that any payment due hereunder is (i) deferred compensation subject to section 409A of the Internal Revenue Code, and (ii) is payable to a specified employee (as that term is defined in section 409A), and (iii) is payable on account of the specified employee’s separation from service (as that term is defined in section 409A), payment of any part of such amount that would have been made during the six (6) months following the separation from service shall not then be paid but shall rather be paid on the first day of the seventh (7 th ) month following the separation from service.

 

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(i)

For this purpose, specified employees shall be identified by the Corporation on a basis consistent with regulations issued under section 409A, and consistently applied to all plans, programs, contracts, etc. maintained by the Corporation that are subject to section 409A.

 

(ii)

For this purpose “termination of employment” shall be defined as “separation from service” as that term is defined under section 409A.

 

(iii)

To the extent that 409A is applicable to this Agreement, this Agreement shall be construed and administered to comply with the rules of section 409A. Neither the Corporation nor any of its officers, directors, agents or affiliates shall be obligated, directly or indirectly, to any participant or any other person for any taxes, penalties, interest or like amounts that may be imposed on the participant or other person on account of any amounts under this Plan or on account of any failure to comply with any Code section.

  (b)           Nothing contained in this Agreement or the Plan shall confer on you any right to continue in the employ of the Corporation or any Affiliate or affect in any way the right of the Corporation or any Affiliate to terminate your employment at any time.

 

  (c)           You shall not have any rights of a holder of Common Shares unless and until Shares are actually issued to you after the end of the Performance Period as provided in this Agreement.

 

  (d)           The Corporation shall not be required to deliver any Shares until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied.

 

  (e)           This Agreement is subject to the terms of the Plan. Terms used in this Agreement which are not defined herein shall have the respective meanings given to such terms in the Plan. A copy of the Plan is available to you upon request.

 

  (f)            This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without giving effect to the conflicts of laws principles thereof.

 

  (g)           Headings in this Agreement are for convenience of reference only and shall not be deemed in any way to be material or relevant to the construction or interpretation of this Agreement or any provision hereof.

 

  (h)           THIS PERFORMANCE AWARD AGREEMENT IS ATTACHED TO AND MADE A PART OF A PERFORMANCE AWARD CERTIFICATE AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH PERFORMANCE AWARD CERTIFICATE IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND YOU.

 

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By the Corporation’s and your signature below, it is agreed that this Performance Award is governed by the terms and conditions of the Performance Award Agreement, a copy of which is attached and made a part of this document, and the Plan.

 

 

			OTTER TAIL CORPORATION
	By:
		Edward J. McIntyre
		Its: Chief Executive Officer

 

[Name of Participant]

 

 

n	Amounts payable for performance will be treated linearly from threshold to target and from target to maximum.

n	Total Shareholders Return ( TSR) = stock price appreciation plus value of dividends.

n	Peer group = Edison Electric Institute Index

n	Award capped at Target if there is negative TSR.

 

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Exhibit 10.2

 

OTTER TAIL CORPORATION

2014 STOCK INCENTIVE PLAN

2014 RESTRICTED STOCK AWARD AGREEMENT

FOR EXECUTIVE OFFICERS

This Restricted Stock Award Agreement for Executive Officers is between Otter Tail Corporation, a Minnesota corporation (the “Corporation”), and the person named in the attached Restricted Stock Award Certificate who is an Executive Officer of the Corporation effective as of the date of grant (the “Grant Date”) set forth in the attached Restricted Stock Award Certificate.

WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 2014 Stock Incentive Plan (the “Plan”), wishes to award to the Executive Officer a number of the Corporation’s Common Shares, par value $5.00 per share (the “Common Shares”), subject to certain restrictions and on the terms and conditions contained in this Agreement and in the attached Restricted Stock Award Certificate, which is made a part hereof.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Corporation and the Executive Officer hereby agree as follows:

1.            Award of Restricted Stock . The Corporation hereby grants to the Executive Officer, effective as of the Grant Date, an award of restricted stock for that number of Common Shares set forth in the attached Restricted Stock Award Certificate (the “Shares”), on the terms and conditions set forth in this Agreement, the Restricted Stock Award Certificate and the Plan.

2.            Rights of the Executive Officer with Respect to the Shares . With respect to the Shares, the Executive Officer shall be entitled at all times on and after the date of issuance of the Shares to exercise the rights of a shareholder of Common Shares of the Corporation, including the right to vote the Shares and the right to receive dividends thereon as provided in Section 8 hereof, unless and until the Shares are forfeited pursuant to Section 5(b) hereof. The rights of the Executive Officer with respect to the Shares shall remain forfeitable at all times prior to the date or dates on which such rights become vested, and the restrictions with respect to the Shares lapse, in accordance with Section 3, 4 or 5(a) hereof.

3.            Vesting . Subject to the terms and conditions of this Agreement, the Shares shall vest, and the restrictions with respect to the Shares shall lapse, in installments on the dates and in the amounts set forth in the attached Restricted Stock Award Certificate if the Executive Officer remains continuously employed by the Corporation until the respective vesting dates.

 

 

  (a)            The acquisition by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Corporation or any of its Affiliates, or any employee benefit plan of the Corporation and/or one or more of its Affiliates, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% or more of either the then outstanding Common Shares or the combined voting power of the Corporation’s then outstanding voting securities in a transaction or series of transactions not approved in advance by a vote of at least three-quarters of the Continuing Directors (as hereinafter defined); or

  (b)             Individuals who, as of the Grant Date, constitute the Board of Directors of the Corporation (generally the “Directors” and as of the Grant Date the “Continuing Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a Director subsequent to the Grant Date whose nomination for election was approved in advance by a vote of at least three-quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the Directors of the Corporation, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

 

  (c)            The approval by the shareholders of the Corporation of a reorganization, merger, consolidation, liquidation or dissolution of the Corporation or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Corporation other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the Continuing Directors;

  (d)            The first purchase under any tender offer or exchange offer (other than an offer by the Corporation or any of its Affiliates) pursuant to which Common Shares are purchased; or

  (e)            At least a majority of the Continuing Directors determines in their sole discretion that there has been a change in control of the Corporation.

5.            Additional Vesting Rules; Forfeiture .

  (a)            If the Executive Officer ceases to be employed by the Corporation by reason of disability (as determined under any long-term disability program then maintained by the Corporation that is applicable to the Executive Officer), retirement (normal or early retirement under any retirement plan of the Corporation that is applicable to the Executive Officer) or death prior to the vesting of the Shares pursuant to Section 3 or 4 hereof, the Executive Officer or the Executive Officer’s legal representatives, beneficiaries or heirs, as the case may be, shall become immediately vested, as of the date of such disability, retirement or death, in all of the unvested Shares, and the restrictions with respect to all of such Shares shall lapse. No transfer by will or the applicable laws of descent and distribution of any Shares which vest by reason of the Executive Officer’s death shall be effective to bind the Corporation unless the Compensation Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Compensation Committee may deem necessary to establish the validity of the transfer.

 

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  (b)             If the Executive Officer’s employment relationship with the Corporation ceases for reasons other than disability, retirement or death prior to the vesting of the Shares pursuant to Section 3 or 4 hereof, the Executive Officer’s rights to all of the unvested Shares shall be immediately and irrevocably forfeited, including the right to vote such Shares and the right to receive cash dividends.

6.            Restriction on Transfer . Until the Shares vest pursuant to Section 3, 4 or 5(a) hereof, none of the Shares may be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, and no attempt to transfer the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Shares.

7.            Issuance and Custody of Certificates .

  (a)            The Corporation shall cause to be issued uncertificated book-entry shares, registered in the Executive Officer’s name, representing the Shares. These Shares shall be held as restricted Shares until the vesting dates, be subject to an appropriate stop-transfer order and shall bear the following restrictive legend:

“The Common Shares represented by book-entry are subject to forfeiture and are subject to the restrictions against transfer as contained in the Otter Tail Corporation 2014 Stock Incentive Plan and a Restricted Stock Award Agreement between Otter Tail Corporation and the registered owner of such shares. Release from such restrictions, terms and conditions shall be made only in accordance with the provisions of the Plan and the Agreement, copies of which are on file in the office of the Secretary of Otter Tail Corporation.”

  (b)            Upon execution of this Agreement, the Executive Officer shall execute and deliver to the Corporation a stock power or stock powers relating to the Shares.

  (c)            After any Shares vest pursuant to Section 3, 4 or 5(a) hereof, and following payment of the applicable withholding taxes pursuant to Section 9 hereof, the Corporation shall promptly cause to be issued a certificate or certificates, registered in the Executive Officer’s name or in the name of the Executive Officer’s legal representatives, beneficiaries or heirs, as the case may be, representing such vested Shares (less any shares withheld to pay withholding taxes), free of the legend provided in Section 7(a) hereof and any stop-transfer order with respect to such Shares, and shall cause such certificate or certificates to be delivered to the Executive Officer or the Executive Officer’s legal representatives, beneficiaries or heirs, as the case may be.

8.            Distributions and Adjustments .

  (a)            If any Shares vest in the Executive Officer subsequent to any change in the number or character of the Common Shares of the Corporation (through recapitalization, stock split, stock dividend, reorganization, merger, consolidation or otherwise), the Executive Officer shall then receive upon such vesting the number and type of securities or other consideration which the Executive Officer would have received if such Shares had vested prior to the event changing the number or character of the outstanding Common Shares.

 

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  (b)            Any additional Common Shares of the Corporation, any other securities of the Corporation and any other property (except for cash dividends or other cash distributions) distributed with respect to the Shares prior to the date or dates the Shares vest shall be subject to the same restrictions, terms and conditions as the Shares to which they relate and shall be promptly deposited with the Secretary of the Corporation or a custodian designated by the Secretary.

  (c)            Any cash dividends or other cash distributions payable with respect to the Shares shall be distributed to the Executive Officer at the same time cash dividends or other cash distributions are distributed to shareholders of the Corporation generally.

9.            Income Tax Matters .

  (a)             The Executive Officer acknowledges that the Executive Officer will consult with the Executive Officer’s personal tax advisor regarding the income tax consequences of the grant of the Shares, payment of dividends on the Shares and the vesting of the Shares or any other matters related to this Agreement. In order to comply with all applicable federal or state income tax laws or regulations, the Corporation may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of the Executive Officer, are withheld or collected from the Executive Officer.

  (b)            In accordance with the terms of the Plan, and such rules as may be adopted by the Compensation Committee under the Plan, you may elect to satisfy your federal and state income tax withholding obligations arising from the receipt of the Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the order of the Corporation, (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of the employer’s minimum statutory withholding requirements, or (iii) delivering to the Corporation Common Shares having a Fair Market Value equal to the amount of such taxes. The Corporation will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share. Your election must be made on or before the date that the amount of tax to be withheld is determined.

10.          Miscellaneous .

  (a)             Nothing contained in this Agreement or the Plan shall confer on the Executive Officer any right to continue in the employ of the Corporation or affect in any way the right of the Corporation to terminate the employment of the Executive Officer at any time.

  (b)             The Corporation shall not be required to deliver any Shares until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied.

 

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  (c)            This Agreement is subject to the terms of the Plan. Terms used in this Agreement which are not defined herein shall have the respective meanings given to such terms in the Plan. A copy of the Plan is available to the Executive Officer upon request.

  (d)            This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without giving effect to the conflicts of laws principles thereof.

  (e)            Headings in this Agreement are for convenience of reference only and shall not be deemed in any way to be material or relevant to the construction or interpretation of this Agreement or any provision hereof.

  (f)             THIS RESTRICTED STOCK AWARD AGREEMENT FOR EXECUTIVE OFFICERS IS ATTACHED TO AND MADE A PART OF A RESTRICTED STOCK AWARD CERTIFICATE FOR EXECUTIVE OFFICERS AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH RESTRICTED STOCK AWARD CERTIFICATE FOR EXECUTIVE OFFICERS IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND THE EXECUTIVE OFFICER.

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OTTER TAIL CORPORATION

 

2014 STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD CERTIFICATE FOR EXECUTIVE OFFICERS

This certifies the award of restricted stock as specified below which has been granted under the Otter Tail Corporation 2014 Stock Incentive Plan (the “Plan”), the terms and conditions of which are incorporated by reference herein and made a part hereof. In addition, the award shown in this Certificate is nontransferable and is subject to the terms and conditions set forth in the attached 2014 Restricted Stock Award Agreement for Executive Officers of which this Certificate is a part.

[Name and address of recipient]

[Social Security Number of recipient]

You have been granted the following Award:

By the Corporation’s and your signature below, it is agreed that this award of restricted stock is governed by the terms and conditions of the 2014 Restricted Stock Award Agreement for Executive Officers, a copy of which is attached and made a part of this document, and the Corporation’s 2014 Stock Incentive Plan.

 

 

Exhibit 10.3

 

OTTER TAIL CORPORATION

2014 STOCK INCENTIVE PLAN

2014 RESTRICTED STOCK AWARD AGREEMENT

FOR DIRECTORS

This Restricted Stock Award Agreement is between Otter Tail Corporation, a Minnesota corporation (the “Corporation”), and the person named in the attached Restricted Stock Award Certificate for Directors who is a Non-employee Director (“Director”) of the Corporation effective as of the date of grant (the “Grant Date”) set forth in the attached Restricted Stock Award Certificate for Directors.

WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 2014 Stock Incentive Plan (the “Plan”), wishes to award to the Director a number of the Corporation’s Common Shares, par value $5.00 per share (the “Common Shares”), subject to certain restrictions and on the terms and conditions contained in this Agreement and in the attached Restricted Stock Award Certificate for Directors, which is made a part hereof.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Corporation and the Director hereby agree as follows:

1.           Award of Restricted Stock .  The Corporation hereby grants to the Director, effective as of the Grant Date, an award of restricted stock for that number of Common Shares set forth in the attached Restricted Stock Award Certificate for Directors (the “Shares”), on the terms and conditions set forth in this Agreement, the Restricted Stock Award Certificate for Directors and the Plan.

2.           Rights of the Director with Respect to the Shares .  With respect to the Shares, the Director shall be entitled at all times on and after the date of issuance of the Shares to exercise the rights of a shareholder of Common Shares of the Corporation, including the right to vote the Shares and the right to receive dividends thereon as provided in Section 8 hereof, unless and until the Shares are forfeited pursuant to Section 5(b) hereof.  The rights of the Director with respect to the Shares shall remain forfeitable at all times prior to the date or dates on which such rights become vested, and the restrictions with respect to the Shares lapse, in accordance with Section 3, 4 or 5(a) hereof.

3.           Vesting .  Subject to the terms and conditions of this Agreement, the Shares shall vest, and the restrictions with respect to the Shares shall lapse, in installments on the dates and in the amounts set forth in the attached Restricted Stock Award Certificate for Directors if the Director remains continuously a Director of the Corporation until the respective vesting dates.

 

4.           Change of Control .  Notwithstanding the vesting provision contained in Section 3 above, but subject to the other terms and conditions set forth herein, upon the occurrence of a Change of Control (as defined below) prior to any termination of the Director’s service on the Board, the Director shall become immediately and unconditionally vested in all of the Shares, and the restrictions with respect to all of the Shares shall lapse. As used herein, “Change of Control” shall mean any of the following events:

(a)           The acquisition by any person, entity or “group,” within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Corporation or any of its Affiliates, or any employee benefit plan of the Corporation and/or one or more of its Affiliates, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% or more of either the then outstanding Common Shares or the combined voting power of the Corporation’s then outstanding voting securities in a transaction or series of transactions not approved in advance by a vote of at least three-quarters of the Continuing Directors (as hereinafter defined); or

(b)            Individuals who, as of the Grant Date, constitute the Board of Directors of the Corporation (generally the “Directors” and as of the Grant Date the “Continuing Directors”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a Director subsequent to the Grant Date whose nomination for election was approved in advance by a vote of at least three-quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the Directors of the Corporation, as such terms are used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to be a Continuing Director; or

(c)           The approval by the shareholders of the Corporation of a reorganization, merger, consolidation, liquidation or dissolution of the Corporation or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Corporation other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by a vote of at least three-quarters of the Continuing Directors;

(d)           The first purchase under any tender offer or exchange offer (other than an offer by the Corporation or any of its Affiliates) pursuant to which Common Shares are purchased; or

(e)           At least a majority of the Continuing Directors determines in their sole discretion that there has been a change in control of the Corporation.

5.           Early Vesting; Forfeiture .

(a)            If the Director’s service on the Corporation’s Board ceases for reason of disability, retirement from the Board or death prior to the vesting of the Shares pursuant to Section 3 or 4 hereof, the Director or the Director’s legal representatives, beneficiaries or heirs, as the case may be, shall become immediately vested, as of the date of such disability, retirement or death, in all of the unvested Shares, and the restrictions with respect to all of such Shares shall lapse.  No transfer by will or the applicable laws of descent and distribution of any Shares which vest by reason of the Director’s death shall be effective to bind the Corporation unless the Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.

 

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(b)           If the Director’s service on the Corporation’s Board ceases for reasons other than disability, retirement or death prior to the vesting of the Shares pursuant to Section 3 or 4 hereof, the Director’s rights to all of the unvested Shares shall be immediately and irrevocably forfeited, including the right to vote such Shares and the right to receive cash dividends.

6.           Restriction on Transfer .  Until the Shares vest pursuant to Section 3, 4 or 5(a) hereof, none of the Shares may be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, and no attempt to transfer the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Shares.

7.           Issuance and Custody of Certificates .

(a)           The Corporation shall cause to be issued uncertificated book-entry shares, registered in the Director’s name, representing the Shares.  These Shares shall be held as restricted Shares until the vesting dates, be subject to an appropriate stop-transfer order and shall bear the following restrictive legend:

	“The Common Shares represented by book-entry are subject to forfeiture and are subject to the restrictions against transfer as contained in the Otter Tail Corporation 2014 Stock Incentive Plan and a Restricted Stock Award Agreement between Otter Tail Corporation and the registered owner of such shares.  Release from such restrictions, terms and conditions shall be made only in accordance with the provisions of the Plan and the Agreement, copies of which are on file in the office of the Secretary of Otter Tail Corporation.”

 

(b)           Upon execution of this Agreement, the Director shall execute and deliver to the Corporation a stock power or stock powers relating to the Shares.

(c)           After any Shares vest pursuant to Section 3, 4 or 5(a) hereof, and following payment of the applicable withholding taxes pursuant to Section 9 hereof, the Corporation shall promptly cause to be issued a certificate or certificates, registered in the Director’s name or in the name of the Director’s legal representatives, beneficiaries or heirs, as the case may be, representing such vested Shares (less any shares withheld to pay withholding taxes), free of the legend provided in Section 7(a) hereof and any stop-transfer order with respect to such Shares, and shall cause such certificate or certificates to be delivered to the Director or the Director’s legal representatives, beneficiaries or heirs, as the case may be.

 

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8.           Distributions and Adjustments .

(a)           If any Shares vest in the Director subsequent to any change in the number or character of the Common Shares of the Corporation (through recapitalization, stock split, stock dividend, reorganization, merger, consolidation or otherwise), the Director shall then receive upon such vesting the number and type of securities or other consideration which the Director would have received if such Shares had vested prior to the event changing the number or character of the outstanding Common Shares.

(b)           Any additional Common Shares of the Corporation, any other securities of the Corporation and any other property (except for cash dividends or other cash distributions) distributed with respect to the Shares prior to the date or dates the Shares vest shall be subject to the same restrictions, terms and conditions as the Shares to which they relate and shall be promptly deposited with the Secretary of the Corporation or a custodian designated by the Secretary.

(c)           Any cash dividends or other cash distributions payable with respect to the Shares shall be distributed to the Director at the same time cash dividends or other cash distributions are distributed to shareholders of the Corporation generally.

9.           Income Tax Matters .  The Director acknowledges that the Director will consult with the Director’s personal tax advisor regarding the income tax consequences of the grant of the Shares, or any other matters related to this Agreement.  Income taxes will not be withheld in connection with the vesting of shares under this Agreement.

10.         Miscellaneous .

(a)           The Corporation shall reserve and keep available such number of Common Shares as will be sufficient to satisfy the requirements of this Agreement.

(b)           The Corporation shall not be required to deliver any Shares until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied.

(c)           If any of the shares covered by this Agreement are not registered under the Securities Act of 1933 at the time of their issuance hereunder, the Director represents and agrees that all such shares purchased under this grant will be acquired for investment and not for resale.

(d)           As used in this Agreement, the term “Common Shares” shall mean the Common Shares of the Corporation as authorized at the Grant Date and “Fair Market Value” shall have the meaning ascribed to them in the Plan.

 

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(e)           This grant of Shares is granted pursuant to the Plan and is subject to all the terms and conditions contained therein. A copy of the Plan is available to the Director upon request.

(f)            This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota.

(g)           Headings in this Agreement are for convenience of reference only and shall not be deemed in any way to be material or relevant to the construction or interpretation of this Agreement or any provision hereof.

(h)            THIS RESTRICTED STOCK AWARD AGREEMENT FOR DIRECTORS IS ATTACHED TO AND MADE A PART OF A RESTRICTED STOCK AWARD CERTIFICATE FOR DIRECTORS AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH RESTRICTED STOCK AWARD CERTIFICATE FOR DIRECTORS IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND THE DIRECTOR.

* * * * * * * *

 

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OTTER TAIL CORPORATION

2014 STOCK INCENTIVE PLAN

RESTRICTED STOCK AWARD CERTIFICATE FOR DIRECTORS

This certifies the award of restricted stock as specified below which has been granted under the Otter Tail Corporation 2014 Stock Incentive Plan (the “Plan”), the terms and conditions of which are incorporated by reference herein and made a part hereof.  In addition, the award shown in this Certificate is nontransferable and is subject to the terms and conditions set forth in the attached 2014 Restricted Stock Award Agreement for Directors of which this Certificate is a part.

[Name and address of recipient]

[Social Security Number of recipient]

You have been granted the following Award:

                                                            

By the Corporation’s and your signature below, it is agreed that this award of restricted stock is governed by the terms and conditions of the 2014 Restricted Stock Award Agreement for Directors, a copy of which is attached and made a part of this document, and the Corporation’s 2014 Stock Incentive Plan, a copy of which is enclosed.

	OTTER TAIL CORPORATION
	By:
		Edward J. McIntyre
		Its:  Chief Executive Officer
	[Name of Recipient]

 

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Directors may elect to receive their compensation (other than expense reimbursements) in the form of cash, stock or a combination. Directors may elect to defer the receipt of all or part of their cash compensation pursuant to the Deferred Compensation Plan for Directors. The deferral may be in the form of cash or stock units. Cash deferrals receive interest at a rate equal to 1% over the prime commercial rate of U.S. Bank National Association. Deferrals in the form of stock units are credited quarterly with dividend equivalents equal to the dividend rate on Otter Tail Corporation’s common shares and the deferred amount is paid out in common shares.

 

Exhibit 10.5

SECOND AMENDMENT

OF

OTTER TAIL CORPORATION

DEFERRED COMPENSATION PLAN FOR DIRECTORS

(2003 Restatement)

 

The “OTTER TAIL CORPORATION DEFERRED COMPENSATION PLAN FOR DIRECTORS” established as of November 1, 1983, by the Board of Directors of OTTER TAIL CORPORATION, a Minnesota corporation, as amended and restated in a document entitled “Otter Tail Corporation Deferred Compensation Plan for Directors (2003 Restatement) (hereinafter referred to as the “Plan Statement”), as amended, is hereby further amended in the following respects:

 

1. ADMINISTRATION. Effective as of the date the shareholders approve the 2014 Stock Incentive Plan, Section 6(e) of the Plan Statement and Section 6(e) of Appendix A is amended by replacing “Otter Tail Corporation 1999 Stock Incentive Plan” with “Otter Tail Corporation 2014 Stock Incentive Plan.”

 

2. SAVINGS CLAUSE. Save and except as hereinabove expressly amended, the Plan Statement shall continue in full force and effect.