exv10w1






Exhibit 10.1




STANDSTILL AGREEMENT




     AGREEMENT, dated May 1, 2009, by and between Otter Tail Corporation, a Minnesota corporation
(the “Company”), and Cascade Investment, L.L.C. (“Cascade”).



     WHEREAS, Cascade is the beneficial owner of 3,406,499, or approximately 9.6%, of the
outstanding common shares, $5 par value per share, of the Company (the “Common Shares”);



     WHEREAS, the parties hereto wish to provide for a constructive, orderly and mutually
beneficial relationship between themselves;



     WHEREAS, Cascade proposes to acquire additional Common Shares in one or more transactions from
time to time, in open market purchases, block transactions, privately negotiated transactions or
otherwise, pursuant to which Cascade may become an “Interested Shareholder” as defined in the
Minnesota Business Corporation Act (the “MBCA”, and such future transactions that collectively
result in Cascade becoming an Interested Shareholder, the Share Purchases”);



     WHEREAS, Cascade would be subject to certain restrictions under Section 673 of the MBCA if it
should proceed with the Share Purchases in the absence of approval thereof by a committee of
“Disinterested Directors” (as defined in Section 673 of the MBCA) formed by the Company’s Board of
Directors and Cascade has requested that the Company’s Board of Directors consider approving the
Share Purchases in accordance with Section 673 of the MBCA and, in connection with obtaining such
approval, Cascade has agreed to enter this Agreement; and



     WHEREAS, a committee of Disinterested Directors (such committee, the “Special Committee”) has
approved the Share Purchases in accordance with Section 673 of the MBCA, subject to the execution
and delivery of this Agreement;



     NOW, THEREFORE, the parties hereto agree as follows:



     1. Certain Definitions.



     (a) “Acquisition Transaction” shall mean the acquisition or purchase of all or substantially
all of the assets or securities of, or any merger, consolidation or other form of business
combination with, the Company.



     (b) “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules
and regulations of the Securities and Exchange Commission (the “Commission”) thereunder (the
“Exchange Act Rules”) as in effect on the date hereof (the term “registrant” in Rule 12b-2 meaning
in this case the Company or Cascade, as the case may be); except that, for the purposes of this
Agreement, the Company and its subsidiaries shall not be deemed to be Associates or Affiliates of
Cascade and Cascade shall not be deemed to be an Associate or Affiliate of the Company and its
subsidiaries.



 









 





     (c) “beneficial ownership” shall be determined pursuant to Rule 13d-3 of the Exchange Act
Rules (or any successor rule or statutory provision) or, if Rule 13d-3 shall be rescinded and there
shall be no successor rule or statutory provision thereto, pursuant to Rule 13d-3 as in effect on
the date hereof.



     (d) “Holding Company Reorganization” shall mean, collectively, a series of contemporaneous
transactions in form and substance reasonably satisfactory to Cascade involving (i) the formation
by the Company of a new subsidiary, Otter Tail Holding Company (“New Otter Tail”), which will be a
Minnesota corporation; (ii) the formation by New Otter Tail of a new subsidiary, Otter Tail Merger
Sub (“Merger Sub”), which will be a Minnesota corporation; (iii) the exchange of the common stock
of New Otter Tail for the outstanding Common Shares, which Common Shares will thereafter be held by
New Otter Tail; and (iv) the merger of the Company with Merger Sub, pursuant to which the surviving
corporation in the merger will be the Company and will be renamed Otter Tail Power Company, as a
result of which transaction Otter Tail Power Company (formerly the Company) will thereafter be a
wholly owned subsidiary of New Otter Tail.



     (e) “Independent Investment Banker” shall mean a nationally recognized investment banking firm
selected by the affirmative vote of the Board of Directors of the Company (or an appropriate
committee thereof).



     (f) “Permitted Acquisition Transaction” shall mean any Acquisition Transaction by any Person
available to all holders of Voting Securities (A) that is a tender offer (with a mandatory clean-up
or back-end merger at the same price) or (B) that requires a stockholder vote and, in the case of
each of clauses (A) and (B) above, satisfies the following conditions:




          (1) it is recommended by the Board of Directors of the Company; and




          (2) the Board of Directors of the Company shall have received a written opinion of an
Independent Investment Banker that the consideration which the holders of Voting Securities
shall be entitled to receive in such Acquisition Transaction is fair to such stockholders
from a financial point of view.



     (g) “Person” shall mean any individual, firm, corporation or other entity and shall include
any group comprised of any Person and any other Person with whom such Person or an Affiliate or
Associate of such Person has any agreement, arrangement or understanding, directly or indirectly,
for the purpose of acquiring, holding, voting or disposing of any shares of Voting Securities.



     (h) “Standstill Period” shall mean a period of time beginning on the date of the acquisition
of Voting Securities by Cascade such that Cascade’s aggregate beneficial ownership, directly or
indirectly, of Voting Securities is 10% or greater and ending on the date of termination of this
Agreement.



     (i) “Voting Securities” shall mean the issued and outstanding Common Shares and any other
issued and outstanding securities of the Company entitled generally to vote for the election



2









 







of directors of the Company without regard to any specific subsequent event or occurrence.
Any percentage of Voting Securities hereunder shall mean as a percentage of voting power.



     2. Restrictions on Purchases.



     (a) Without the approval of the Board of Directors of the Company, during the Standstill
Period Cascade shall not and shall not permit any of its subsidiaries (which shall include all
entities that Cascade controls, whether in corporate or non-corporate form) to, directly or
indirectly:




          (1) acquire, propose or agree to acquire, by purchase or otherwise, Voting Securities
if such acquisition would result in Cascade having beneficial ownership of 20% or more of
the outstanding Voting Securities (such percentage of Voting Securities, the “Percentage
Limitation”) except (i) by way of stock dividends or other distributions by the Company made
available to holders of Voting Securities generally or (ii) pursuant to a Permitted
Acquisition Transaction;




          (2) form or join any “group” within the meaning of Section 13(d)(3) of the Exchange Act
with respect to Voting Securities other than a group, if any, consisting solely of Cascade,
any of its subsidiaries and William H. Gates III;




          (3) deposit any Voting Securities in a voting trust or subject any Voting Securities to
any voting agreement or similar arrangement with respect to the voting of such Voting
Securities; or




          (4) directly or indirectly become a “participant” in any “solicitation” of “proxies”
(as such terms are defined in Regulation 14A under the Exchange Act) to vote, or to seek to
influence any person or entity with respect to the voting of, any Voting Securities, except
in accordance with matters recommended by the Board of Directors of the Company.



     (b) Anything to the contrary contained in Section 2(a) notwithstanding:




          (1) for the avoidance of doubt, nothing in Section 2(a) shall apply to any portfolio
company of Cascade with respect to which Cascade or any of its subsidiaries is not the party
exercising control over the decision to purchase Voting Securities, provided that
such portfolio company is not acting at the request or direction of or in coordination with
Cascade or any of its subsidiaries;




          (2) Cascade will not be deemed in violation of Section 2(a) if the beneficial ownership
of Cascade exceeds the Percentage Limitation solely as a result of an acquisition of Voting
Securities by the Company or its subsidiaries (including as a result of a redemption or
repurchase by the Company of any Voting Securities) that, by reducing the number of Voting
Securities outstanding, increases the proportionate number of Voting Securities beneficially
owned by Cascade (and its subsidiaries), provided that Cascade does not acquire
additional Voting Securities in violation of Section 2(a) after it has been notified by the
Company of such acquisition of Voting Securities by the Company (or its subsidiaries); and



3









 






          (3) nothing contained in Section 2(a) shall prevent Cascade (or any of its
subsidiaries) from voting any Voting Securities then beneficially owned by Cascade (or any
of its subsidiaries) in any manner.



     (c) For purposes of determining compliance with this Section 2, Cascade shall be entitled to
rely without independent investigation upon the most recent publicly available Form 10-K, Form 10-Q
or Form 8-K (or any successor form) of the Company filed with the Commission reporting the number
of Voting Securities then issued and outstanding.



     3. Representations.



     (a) The Company represents and warrants to Cascade that:




          (1) The Company has the requisite corporate power to enter into, deliver and perform
its obligations under this Agreement. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been duly
authorized by all requisite corporate action on its part. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a valid and binding obligation
of the Company enforceable against the Company in accordance with its terms;




          (2) The execution and delivery of this Agreement and the Share Purchases by Cascade in
accordance with this Agreement will not 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, (A) the Articles of Incorporation of the Company, as amended, or Bylaws of
the Company, as amended, of, (B) Section 673 of the MBCA or Minnesota Statute Section
216B.48 or (C) 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. Except for required filings, notifications,
consents, authorizations, approvals, waivers or exemptions to or from a governmental or
regulatory body or authority (“Agency Authorizations”), if any, under (i) state or federal
securities laws, (ii) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) the
Federal Energy Regulatory Commission and (iv) the Minnesota Public Utilities Commission, the
North Dakota Public Service Commission and the South Dakota Public Utilities Commission, if
any, which Agency Authorizations referred to in this clause (iv) to the extent required by
the execution and delivery of this Agreement have been made, obtained or requested on or
prior to the date hereof, no Agency Authorization is required to be made, obtained or
requested by the Company in connection with the execution and delivery by the Company of
this Agreement or the Share Purchases; and




          (3) The Board of Directors of the Company and the Special Committee have taken all
actions necessary to approve the Share Purchases in accordance with Section 673 of the MBCA
so as to exempt Cascade from the imposition of the restrictions contained in Section 673 of
the MBCA applicable to a “business combination” (as



4









 






defined in Section 011 of the MBCA) between the Company and Cascade and, to the
knowledge of the Company, no other “fair price”, “moratorium”, “control share acquisition”
or other similar anti-takeover law is applicable to the Share Purchases by Cascade.



     (b) Cascade represents and warrants to the Company that:




          (1) Cascade has the power to enter into, deliver and perform its obligations under this
Agreement. This Agreement has been duly and validly executed and delivered by Cascade and
constitutes a valid and binding obligation of Cascade enforceable against Cascade in
accordance with its terms; and




          (2) The execution and delivery of this Agreement and the Share Purchases by Cascade in
accordance with this Agreement will not 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 organizational documents of, or any contract, permit, law or order
applicable to, Cascade, except for any violation, breach, modification, conflict, default,
acceleration, encumbrance or effect which would not have a material adverse effect on
Cascade. Except for Agency Authorizations, if any, under (i) state or federal securities
laws, (ii) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (iii) the Federal
Energy Regulatory Commission and (iv) the Minnesota Public Utilities Commission, the North
Dakota Public Service Commission and the South Dakota Public Utilities Commission, if any,
no Agency Authorizations is required to be made, obtained or requested by Cascade in
connection with the execution and delivery by Cascade of this Agreement or the Share
Purchases.



     4. Covenants.



     (a) Upon the consummation of the Holding Company Reorganization, Cascade agrees to enter into
a separate standstill agreement (the “New Standstill Agreement”) with New Otter Tail on terms no
less favorable to Cascade than the terms contained in this Agreement.



     (b) Upon the execution and delivery of the New Standstill Agreement, this Agreement shall
automatically terminate and cease to be of any further force or effect.



     5. Specific Enforcement; Consent to Jurisdiction.The Company, on the one hand, and
Cascade, on the other hand, acknowledge and agree that each would be irreparably harmed and would
have no adequate remedy at law if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. Accordingly, it is agreed that,
in addition to any other remedies which may be available, the parties shall be entitled to obtain
temporary and permanent injunctive relief with respect to any breach or threatened breach of, or
otherwise obtain specific performance of, the covenants and other agreements contained in this
Agreement. Each party hereto consents to personal jurisdiction in Minnesota in any action relating
to this Agreement and to the appointment of the Secretary of State of Minnesota as agent for
receipt of service of process.



5









 





     6. Miscellaneous.



     (a) Expenses. Each party shall bear the expenses of its attorneys, investment
advisors or other costs it has incurred.



     (b) Entire Agreement; Amendments. This Agreement embodies the entire agreement
between the parties hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect thereof. This Agreement may be
changed only by an agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought and in the case of the Company only upon the
approval of a majority of the Board of Directors (or an appropriate committee thereof).



     (c) Termination. This Agreement will remain in full force and effect until the
earliest to occur of the following (as a result of which this Agreement shall immediately terminate
and cease to be in full force and effect): (i) termination by the mutual written agreement of the
Company and Cascade; (ii) the expiration of a period of one year from the date of delivery by
Cascade to the Company of written notice of Cascade’s election to terminate this Agreement, which
notice may be delivered by Cascade to the Company at any time after May 1, 2012; (iii) upon written
notice by Cascade to the Company, any time after a third party (A) commences (for the purposes of
Rule 14d-2 under the Exchange Act Rules) a tender offer or exchange offer for at least 50% of the
outstanding Voting Securities; (B) publicly announces the commencement of a proxy contest with
respect to the election of any directors of the Company; or (C) enters into a definitive agreement
with the Company contemplating the acquisition (by way of merger, tender offer, consolidation,
business combination or otherwise) of at least 50% of the outstanding Voting Securities or all or
any material portion of the assets of the Company (other than as part of the Holding Company
Reorganization); (iv) upon written notice by Cascade to the Company, any time after Cascade had
acquired beneficial ownership of 10% or more of the outstanding Voting Securities but thereafter
has disposed of Voting Securities such that its beneficial ownership at such time is less than 10%
of the outstanding Voting Securities; or (v) pursuant to Section 4(b).



     (d) Headings. The section headings are for convenience only and shall not affect the
construction of any provision of this Agreement. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement, unless otherwise indicated.



     (e) Counterparts. This Agreement may be executed by the parties hereto in
counterparts, and each such executed counterpart shall be an original instrument and all of such
counterparts together shall be deemed to be one and the same instrument.



     (f) Notices. All notices, requests, service of process and other communications
hereunder shall be validly given, made or served, upon delivery, if in writing and delivered
personally, by telex (except for service of process) or sent by registered mail, postage prepaid,
to the parties at the following addresses (or at such other address as shall be specified by like
notice):



6









 




if to the Company:



Otter Tail Corporation

4334 18th Avenue S., Suite 200

Fargo, North Dakota 58103

Attention: General Counsel

Facsimile: (701) 232-4108



with a copy to:



Dorsey & Whitney

50 South Sixth Street

Minneapolis, Minnesota 55402

Attention: Gary L. Tygesson

Facsimile: (612) 340-7800



if to Cascade:



Cascade Investment, L.L.C.

2365 Carillon Point

Kirkland, Washington 98033

Attention: General Counsel

Facsimile: (425) 803-0459



with a copy to:



Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, NY 10006

Attention: Robert P. Davis

Facsimile: (212) 225-3999




     (g) Governing Law. This Agreement shall be governed by the laws of the State of
Minnesota without giving effect to the principles of conflicts of law thereof.



     (h) Successors. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.



     (i) Waiver. No failure or delay on the part of any party in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further exercise of any
other power, right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.



     (j) Separability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such



7









 







invalidity or unenforceability without rendering invalid or unenforceable the remaining terms
and provisions or affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction, and the parties agree to negotiate in good faith an
amendment to this Agreement to cure any such invalidity or unenforceability in a manner designed to
most closely effect the purpose of such term or provision.



     (k) Further Assurances. At the request of either party hereto, the other party hereto
shall execute and deliver to such party such documents and instruments as may be reasonably
necessary to implement or evidence the foregoing.



     (l) Business Days. Any action which is required to be taken hereunder shall be taken
on a business day and where the date required for any action hereunder does not fall on a business
day, such action shall be taken on the next calendar day which is a business day.



[Signature Page to Follow]




8









 








     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day
and year first above written.



	 	 	 	 	 	 	 
	 	 	OTTER TAIL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/John Erickson
 

	 	 
	 

	 	Name:
	 	John Erickson	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	CASCADE INVESTMENT, L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Michael Larson
 

	 	 
	 

	 	Name:
	 	Michael Larson	 	 
	 

	 	Title:
	 	Business Manager	 	 






Signature Page to

Standstill Agreement