Exhibit 10-J

 

OTTER TAIL CORPORATION
executive Severance Plan

 

Effective February 6, 2015

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*

Schedule A amended on January 1, 2018

 

 

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OTTER TAIL CORPORATION
EXECUTIVE SEVERANCE PLAN

TABLE OF CONTENTS

 

SECTION 1 - INTRODUCTION 1 SECTION 2 - DEFINITIONS  1 SECTION 3 - ELIGIBILITY
FOR SEVERANCE 2 SECTION 4 - AMOUNT OF SEVERANCE PAY AND OTHER BENEFITS 3 SECTION
5 - WHEN SEVERANCE PAY WILL BE PAID  3 SECTION 6 - MISCELLANEOUS PROVISIONS 3
SECTION 7 - ADMINISTRATION  5

 

 

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OTTER TAIL CORPORATION
EXECUTIVE SEVERANCE PLAN

 

 

SECTION 1 - INTRODUCTION

 

This Otter Tail Corporation Executive Severance Plan (the “Plan”) is effective
for the benefit of designated Employees of Otter Tail Corporation (the
“Corporation”) and its affiliates. The Plan is an unfunded employee welfare
benefit plan that provides severance benefits to a select group of management or
highly compensated employees under the Employee Retirement Income Security Act
(ERISA).

 

The Plan replaces and supersedes all severance agreements, obligations, plans,
policies and/or practices of the Employer covering any Employee prior to the
date the Employee becomes a Participant as described in Section 3 below, except
that the Plan shall not replace or supersede any change in control severance
agreement between the Employer and the Employee that provides for severance,
termination or other benefits in connection with a change in control or any
equity award agreement between the Employer and the Employee.

 

SECTION 2 - DEFINITIONS

 

Cause. “Cause” shall mean the termination of the Employee’s employment by the
Employer based upon (i) the willful and continued failure by the Employee
substantially to perform the Employee’s duties and obligations (other than any
such failure resulting from the Employee’s incapacity due to physical or mental
illness or any such actual or anticipated failure resulting from the Employee’s
resignation for Good Reason) or (ii) the willful engaging by the Employee in
misconduct which is materially injurious to the Corporation or any of its
affiliates, monetarily or otherwise. No action or failure to act on the
Employee’s part shall be considered “willful” unless done, or omitted to be
done, by the Employee in bad faith and without reasonable belief that such
action or omission was in the best interests of the Corporation and its
affiliates.

 

Committee. “Committee” shall mean the Compensation Committee of the Board of
Directors of the Corporation and any successor thereto. The Committee shall be
the “plan administrator” for purposes of section 3(16) of ERISA.

 

Disability. “Disability” shall mean any physical or mental condition that
qualifies the Employee for a disability benefit under the Employer’s long-term
disability plan.

 

Employee. An “Employee” shall mean any management or highly compensated employee
the Employer (or group or class of such employees) designated by the Committee
as an Employee for purposes of this Plan and listed on Schedule A attached
hereto, as revised from time to time.

 

Employer. The “Employer” shall mean, collectively, the Corporation and any
affiliate that employs an Employee.

 

Employment Termination. “Employment Termination” shall have meaning ascribed to
that term in Section 3 of the Plan.

 

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Good Reason. “Good Reason” shall mean the occurrence of any of the following
actions taken by the Employer (without the Employee’s consent) that results in a
material negative change to the Employee, except for the occurrence of such
action in connection with the termination or reassignment of the Employee for
Cause, Disability or death: (i) a breach or alteration of any material term of
any employment agreement or change in control agreement to which the Employee is
a party without the Employee’s consent; (ii) any reduction in the Employee’s
base pay that (either individually or when aggregated with any prior reductions)
equals or exceeds 20%; (iii) a modification of the Employer’s incentive
compensation program covering the Employee which (either individually or when
aggregated with any prior modifications) results in a reduction of 20% or more
in combined incentive opportunity at target; or (iv) a material reduction in the
aggregate benefits available to the Employee under the retirement programs that
apply to the Employee at the time of becoming a participant in this Plan, but
excluding 401(k) and ESOP. Any reduction or modification under (ii) and (iii)
above shall be disregarded if it is made on the same or substantially similar
basis for substantially all senior executives of the Corporation or any
affiliate that employs the Employee. For avoidance of doubt, a change in
incentive plan metrics does not constitute a modification of incentive
opportunity.

 

Good Reason shall not exist unless the Employee evidences a voluntary
resignation for Good Reason by written notice to the Employer given within 30
days after the date of the occurrence of any event that the Employee knows or
should reasonably have known constitutes Good Reason for voluntary resignation,
and the Employer shall have 30 days from the date the Employer receives the
notice to remedy the condition. Such notice need only identify the Employee and
set forth in reasonable detail the facts and circumstances claimed to constitute
Good Reason. If the Employer fails to timely remedy the condition, the Employee
must resign within 10 days following the failure to cure, otherwise the Employee
will be deemed to have consented to the action.

 

Participant. “Participant” shall have the meaning ascribed to that term in
Section 3 of the Plan.

 

Severance Multiplier. The “Severance Multiplier” means the severance multiplier
specified in Schedule A applicable to an Employee.

 

SECTION 3 - ELIGIBILITY FOR SEVERANCE

 

An Employee will become a “Participant” eligible for severance and other
benefits under the Plan if: (a) the Employee has had a termination that
qualifies as an “Employment Termination”; (b) the Employee is not a party to a
change in control severance agreement with the Employer that provides for
severance, termination or other benefits for the same Employment Termination;
(c) the Employee has returned all property of the Corporation and its
affiliates; (d) the Employee has signed and returned to the Employer a
separation agreement in a form acceptable to the Employer, in its sole
discretion, on or before the deadline communicated to the Employee; and (e) any
revocation period described in such separation agreement has expired.

 

An Employee will no longer be a Participant once all severance benefits have
been provided to such Employee under the Plan.

 

Employment Termination

 

An Employment Termination for purposes of severance benefit eligibility shall be
the Employee’s (i) involuntary employment termination by the Employer without
Cause (other than for death or Disability), or (ii) voluntary resignation for
Good Reason. An Employee’s employment termination for any other reason is not a
qualifying Employment Termination under the Plan.

 

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The determination of whether a termination is a qualifying Employment
Termination under the Plan will be made by the Committee, in its sole
discretion, and such determination will be conclusive.

 

Separation Agreement the Employee Must Sign

 

The agreement the Employee must sign will contain a comprehensive release of
claims relating to the Employee’s employment and termination, along with the
following: (i) an agreement not to disparage the Corporation and its affiliates;
(ii) an agreement not to compete with the Corporation and/or its affiliates for
a period of months following the Employment Termination corresponding to the
Employee’s Severance Multiplier (e.g, if the Severance Multiplier is 1.5, the
non-compete period is 18 months, and if the Severance Multiplier is 2, the
non-compete period is 24 months, etc.); an agreement not to solicit employees or
vendors of the Corporation and/or its affiliates for a period of months
following the Employment Termination corresponding to the Employee’s Severance
Multiplier; and an assignment of intellectual property the Employee created or
conceived within the scope of the Employee’s duties with the Corporation and/or
its affiliates. If the Employee breaches the separation agreement in any
material respect, the Employee may be required to repay to the Employer the
severance benefits provided to the Employee.

 

SECTION 4 - AMOUNT OF SEVERANCE PAY AND OTHER BENEFITS

 

Upon an Employment Termination, a Participant will be entitled to a severance
benefit equal to the Employee’s Severance Multiplier in Schedule A times the sum
of: (i) the Employee’s annual base salary in effect when the Employment
Termination occurs (but disregarding any decrease thereof that constituted “Good
Reason”); and (ii) the target bonus under the Employee’s applicable annual bonus
plan for the fiscal year in which the Employment Termination occurs (but
disregarding any decrease thereof that constituted “Good Reason” and, for
avoidance of doubt, excluding any long-term incentive compensation for which the
Employee is eligible).

 

Offsets. The Employer has the right to reduce the Employee’s severance pay by
any amounts owed by the Employee to the Employer. In addition, if an Employee
becomes entitled to or receives any severance, termination or notice payments
under any Federal, State or other law (for example, any WARN law, but excluding
state unemployment compensation benefits) or otherwise, the Employee’s severance
pay under the Plan will be reduced by the amount of such other payments paid or
payable.

 

SECTION 5 - WHEN SEVERANCE PAY WILL BE PAID

 

Severance pay under the Plan will be paid to the Employee in a lump sum as soon
as practicable (generally, within two pay periods) after the Employee signs the
required separation agreement and any revocation period under such separation
agreement has expired, subject to the limitations under Section 6.H. below.

 

SECTION 6 - MISCELLANEOUS PROVISIONS

 

A.

Amendment and Termination. The Corporation reserves the right, in its sole
discretion, to amend or terminate the Plan, in whole or in part, at any time and
for any reason; provided that no amendment or termination may materially and
adversely alter or impair an Employee’s rights or benefits under this Plan
without the written consent of the Employee.

 

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B.

Severability. If any of the Plan’s provisions are found to be unlawful, such
finding will not affect the Plan’s other provisions unless such finding makes
impossible or impracticable the Plan’s functioning, in which case appropriate
provisions will be adopted so that the Plan may continue to function.

 

C.

Incompetency. If the Committee finds that a Participant is unable to care for
his/her affairs, and a claim for Plan benefits has not been made by a duly
appointed legal representative, such benefits may be paid in any manner the
Committee determines, and such payment will be a complete discharge of liability
for Plan benefits to which such Participant was entitled.

 

D.

Not an Employment Contract. Nothing contained in this Plan is intended to create
any liability of the Employer to retain any Employee in its service. All
Employees remain subject to termination as if the Plan had not been established.

 

E.

Financing. Severance benefits payable under the Plan will be paid out of the
general assets of the Employer. No Participant’s right to receive payments under
the Plan will be secured by any assets of the Corporation or its affiliates.

 

F.

Nontransferability. A Participant has no right to assign or otherwise dispose of
any interest under the Plan, nor may any right be assigned or transferred by
operation of law.

 

G.

Legally-Required Withholdings. Benefits under the Plan will be subject to all
legally-required withholdings, including tax withholdings.

 

H.

409A Limitation. The Plan is intended to qualify as an involuntary separation
arrangement that is exempt from section 409A of the Internal Revenue Code
(“Section 409A”). Specifically, any benefits paid within the Applicable 2-1/2
Month Period (as defined below) are intended to constitute separate payments
(for purposes of Treasury Regulation § 1.409A-2(b)(2)) that are exempt from
Section 409A pursuant to the “short-term deferral” rule set forth in Treasury
Regulation § 1.409A-1(b)(4). To the extent that any benefits do not qualify for
the foregoing exemptions, such benefits are intended to be exempt from
section 409A under the “involuntary separation pay plan” exception set forth in
Treasury Regulation § 1.409A-1(b)(9)(iii), up to the maximum extent permitted by
said provision (generally, two times the lesser of the Employee’s annualized
compensation or the compensation limit then in effect under section 401(a)(17)
of the Code). Benefits in excess of the maximum shall be delayed as necessary to
avoid application of Section 409A (unless otherwise exempt). The term
“Employment Termination” shall be interpreted to mean a “separation from
service” as that term is defined under Section 409A to the extent necessary to
qualify the arrangement as an involuntary separation arrangement. “Applicable
2-1/2 Month Period” means the period beginning upon the Employee’s Employment
Termination and ending 2-1/2 months after the later of (i) the end of the
calendar year in which the Employee’s Employment Termination occurred, or (ii)
the end of the Employer’s fiscal year in which the Employee’s Employment
Termination occurred.

 

I.

Governing Law. To the extent not preempted by federal law, this Plan 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.

 

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SECTION 7 - ADMINISTRATION

 

A.

Claim Procedure. An individual who believes he/she is eligible for benefits
under the Plan, or believes he/she is eligible for benefits that are different
from those being offered to the individual, may submit a written claim with the
Committee. Any such claim must be submitted within 180 days after the employment
termination upon which the claim is based, and any claim submitted after that
period will be denied as untimely. The claim will be reviewed by one or more
individuals appointed by the Committee to serve as the claim administrator under
the Plan.

 

The claimant will be informed of the claim administrator’s decision regarding
the claim within 90 days after it is filed. Under special circumstances, the
claim administrator may require an additional period of not more than 90 days to
review a claim. If this occurs, the claimant will be notified in writing as to
the length of the extension, the reason for the extension, and any other
information needed in order to process the claim. If a claimant is not notified
within the 90-day period (or 180-day period, if so extended), the claimant may
consider the claim to be denied.

 

If a claim is denied, in whole or in part, the claimant will be notified in
writing of the specific reason(s) for the denial, the Plan provision(s) on which
the decision was based, what additional material or information is relevant to
the case and what procedure the claimant should follow to get the claim reviewed
again. The claimant then has 60 days to appeal the decision to the Committee.
The appeal must be submitted in writing to the Committee. A claimant may request
to review pertinent documents and may submit a written statement of issues and
comments.

 

A decision as to a claimant’s appeal will be made within 60 days after the
appeal is received. Under special circumstances, the Committee may require an
additional period of not more than 60 days to review an appeal. If this occurs,
the claimant will be notified in writing as to the length of the extension, not
to exceed 120 days from the day on which the appeal was received.

 

If a claimant’s appeal is denied, in whole or in part, the claimant will be
notified in writing of the specific reason(s) for the denial and the Plan
provision(s) on which the decision was based. The Committee’s decision on an
appeal will be final and binding on all parties and persons affected. If a
claimant is not notified within the 60-day (or 120-day, if so extended) period,
the claimant may consider the appeal to be denied.

 

The claim procedure in the Plan, including appeals, must be fully exhausted and
a final determination made by the Committee before a claimant may file a lawsuit
based on a denial of Plan benefits. Any lawsuit for Plan benefits must be filed
within one year after the Committee’s final determination of the claim for
benefits.

 

B.

Plan Interpretations and Benefit Determinations. The Plan is administered and
operated by the Committee who has complete authority and sole discretion to
interpret the Plan’s terms (and any related documents), and to determine
eligibility for, and amounts of, benefits under the Plan. All such
interpretations and determinations (including factual determinations) by the
Committee will be final and binding upon affected parties.

 

The Committee may, subject to limitations under applicable law or securities
exchange rules, delegate such powers and duties as are deemed desirable to the
Chief Executive Officer or one or more other individuals, in which case every
reference made to the Committee will be deemed to mean or include such
individuals as to matters within their jurisdiction.

 

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If any individual to whom authority has been delegated hereunder shall also be
an Employee in the Plan, the individual shall have no authority with respect to
any matter specially affecting his or her individual interest in the Plan.

 

C.

Miscellaneous.

 

 

●

THE PLAN’S SPONSOR:

          Otter Tail Corporation     4334 18th Avenue SW     Suite 200    
Fargo, ND 58103

 

 

●

AGENT FOR SERVICE OF LEGAL PROCESS:

          General Counsel     Otter Tail Corporation     4334 18th Avenue SW    
Suite 200     Fargo, ND 58103

 

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SCHEDULE A

 

 

Name  Severance Multiplier Date Added             Timothy J. Rogelstad  1.5
2/06/2015       Paul Knutson 1.5 2/06/2015       Chuck MacFarlane 2.0 4/13/2015
      John Abbott  1.5 4/13/2015       Jennifer Smestad  1.5 1/1/2018

 

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