exv4w1






Exhibit 4.1




 





TERM LOAN AGREEMENT




Dated as of May 22, 2009




among




OTTER TAIL CORPORATION,

d/b/a OTTER TAIL POWER COMPANY,




various financial institutions,




KEYBANK NATIONAL ASSOCIATION,

as Syndication Agent,




UNION BANK, N.A.,

as Documentation Agent,




and




JPMORGAN CHASE BANK, N.A..

as Administrative Agent




JPMORGAN SECURITIES INC.,

KEYBANK NATIONAL ASSOCIATION

and

UNION BANK, N.A.,

Joint Lead Arrangers




 










 









 











	 	 	 	 	 
	 
	ARTICLE 1. DEFINITIONS AND INTERPRETATION
	 	 	1	 
	 
	Section 1.1 Defined Terms
	 	 	1	 
	 
	Section 1.2 Accounting Terms and Calculations
	 	 	11	 
	 
	Section 1.3 Computation of Time Periods
	 	 	11	 
	 
	Section 1.4 Other Interpretive Provisions
	 	 	11	 
	 
	ARTICLE 2. TERMS OF LENDING
	 	 	12	 
	 
	Section 2.1 The Commitments
	 	 	12	 
	 
	Section 2.2 Advance Options
	 	 	12	 
	 
	Section 2.3 Borrowing Procedures
	 	 	12	 
	 
	Section 2.4 Continuation or Conversion of Loans
	 	 	13	 
	 
	Section 2.5 Notes; Recordkeeping
	 	 	13	 
	 
	Section 2.6 Funding Losses
	 	 	13	 
	 
	Section 2.7 Purpose of the Loans
	 	 	14	 
	 
	ARTICLE 3. INTEREST AND FEES
	 	 	14	 
	 
	Section 3.1 Interest
	 	 	14	 
	 
	Section 3.2 Computation
	 	 	14	 
	 
	Section 3.3 Payment Dates
	 	 	14	 
	 
	Section 3.4 Agent’s and Lead Arrangers’ Fees
	 	 	14	 
	 
	ARTICLE 4. PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION OF THE CREDIT AND SETOFF
	 	 	14	 
	 
	Section 4.1 Repayment
	 	 	14	 
	 
	Section 4.2 Optional Prepayments
	 	 	15	 
	 
	Section 4.3 Payments
	 	 	15	 
	 
	Section 4.4 Proration of Payments
	 	 	15	 
	 
	Section 4.5 Senior Indebtedness Prepayment Event
	 	 	15	 
	 
	ARTICLE 5. ADDITIONAL PROVISIONS RELATING TO LOANS
	 	 	16	 
	 
	Section 5.1 Increased Costs
	 	 	16	 
	 
	Section 5.2 Deposits Unavailable or Interest Rate Unascertainable or
Inadequate; Impracticability
	 	 	17	 
	 
	Section 5.3 Changes in Law Rendering LIBOR Advances Unlawful
	 	 	17	 
	 
	Section 5.4 Discretion of the Banks as to Manner of Funding
	 	 	17	 
	 
	ARTICLE 6. CONDITIONS PRECEDENT
	 	 	18	 






i









 






	 	 	 	 	 
	Section 6.1 The Agent shall have received all of the following in form and
substance satisfactory to the Agent:
	 	 	18	 
	 
	Section 6.2 Representation and Warranties
	 	 	18	 
	 
	Section 6.3 No Default
	 	 	18	 
	 
	Section 6.4 Payment of Fees and Expenses
	 	 	18	 
	 
	ARTICLE 7. REPRESENTATIONS AND WARRANTIES
	 	 	19	 
	 
	Section 7.1 Organization, Standing, Etc
	 	 	19	 
	 
	Section 7.2 Authorization and Validity
	 	 	19	 
	 
	Section 7.3 No Conflict; No Default
	 	 	19	 
	 
	Section 7.4 Government Consent
	 	 	19	 
	 
	Section 7.5 Financial Statements and Condition
	 	 	20	 
	 
	Section 7.6 Litigation and Contingent Liabilities
	 	 	20	 
	 
	Section 7.7 Compliance
	 	 	20	 
	 
	Section 7.8 Environmental, Health and Safety Laws
	 	 	20	 
	 
	Section 7.9 ERISA
	 	 	20	 
	 
	Section 7.10 Regulation U
	 	 	21	 
	 
	Section 7.11 Ownership of Property; Liens
	 	 	21	 
	 
	Section 7.12 Taxes
	 	 	21	 
	 
	Section 7.13 Trademarks, Patents
	 	 	21	 
	 
	Section 7.14 Investment Company Act
	 	 	21	 
	 
	Section 7.15 Subsidiaries
	 	 	21	 
	 
	Section 7.16 Partnerships and Joint Ventures
	 	 	22	 
	 
	Section 7.17 Senior Debt
	 	 	22	 
	 
	ARTICLE 8. AFFIRMATIVE COVENANTS
	 	 	22	 
	 
	Section 8.1 Financial Statements and Reports
	 	 	22	 
	 
	Section 8.2 Corporate Existence
	 	 	23	 
	 
	Section 8.3 Insurance
	 	 	23	 
	 
	Section 8.4 Payment of Taxes and Claims
	 	 	24	 
	 
	Section 8.5 Inspection
	 	 	24	 
	 
	Section 8.6 Maintenance of Properties
	 	 	24	 
	 
	Section 8.7 Books and Records
	 	 	24	 
	 
	Section 8.8 Compliance
	 	 	24	 
	 
	Section 8.9 ERISA
	 	 	24	 






ii









 






	 	 	 	 	 
	Section 8.10 Environmental Matters
	 	 	24	 
	 
	Section 8.11 Failure to Approve Capital Structure
	 	 	24	 
	 
	Section 8.12 Senior Debt
	 	 	25	 
	 
	Section 8.13 Ratings Triggers
	 	 	25	 
	 
	ARTICLE 9. NEGATIVE COVENANTS
	 	 	25	 
	 
	Section 9.1 Merger
	 	 	25	 
	 
	Section 9.2 Sale of Assets
	 	 	25	 
	 
	Section 9.3 Plans
	 	 	26	 
	 
	Section 9.4 Ownership of Stock
	 	 	26	 
	 
	Section 9.5 Other Agreements
	 	 	26	 
	 
	Section 9.6 Restricted Payments
	 	 	26	 
	 
	Section 9.7 Investments
	 	 	27	 
	 
	Section 9.8 Liens
	 	 	28	 
	 
	Section 9.9 Contingent Liabilities
	 	 	29	 
	 
	Section 9.10 Unconditional Purchase Obligations
	 	 	30	 
	 
	Section 9.11 Transactions with Related Parties
	 	 	30	 
	 
	Section 9.12 Use of Proceeds
	 	 	30	 
	 
	Section 9.13 Interest-bearing Debt to Total Capitalization
	 	 	31	 
	 
	Section 9.14 Interest and Dividend Coverage Ratio
	 	 	31	 
	 
	Section 9.15 Restriction of Varistar Corporation Support
	 	 	31	 
	 
	ARTICLE 10. EVENTS OF DEFAULT AND REMEDIES
	 	 	31	 
	 
	Section 10.1 Events of Default
	 	 	31	 
	 
	Section 10.2 Remedies
	 	 	33	 
	 
	Section 10.3 Security Agreement in Accounts and Setoff
	 	 	33	 
	 
	ARTICLE 11. THE AGENT
	 	 	33	 
	 
	Section 11.1 Appointment and Grant of Authority
	 	 	33	 
	 
	Section 11.2 Non-Reliance on Agent
	 	 	34	 
	 
	Section 11.3 Responsibility of the Agent and Other Matters
	 	 	34	 
	 
	Section 11.4 Action on Instructions
	 	 	34	 
	 
	Section 11.5 Indemnification
	 	 	35	 
	 
	Section 11.6 JPMorgan Chase Bank, N.A
	 	 	35	 
	 
	Section 11.7 Notice to Holder of Note
	 	 	35	 
	 
	Section 11.8 Successor Agent
	 	 	35	 






iii









 






	 	 	 	 	 
	Section 11.9 Syndication Agent
	 	 	35	 
	 
	Section 11.10 Documentation Agent
	 	 		 
	 
	ARTICLE 12. PERMITTED REORGANIZATION
	 	 	36	 
	 
	Section 12.1 Proposed Transaction
	 	 	36	 
	 
	Section 12.2 Conditions to Permitted Reorganization
	 	 	36	 
	 
	Section 12.3 Acknowledgement of No Liability of New OTC
	 	 	38	 
	 
	ARTICLE 13. MISCELLANEOUS
	 	 	39	 
	 
	Section 13.1 No Waiver and Amendment
	 	 	39	 
	 
	Section 13.2 Amendments, Etc
	 	 	39	 
	 
	Section 13.3 Assignments and Participations
	 	 	39	 
	 
	Section 13.4 Costs, Expenses and Taxes; Indemnification
	 	 	41	 
	 
	Section 13.5 Notices
	 	 	42	 
	 
	Section 13.6 Successors
	 	 	42	 
	 
	Section 13.7 Severability
	 	 	43	 
	 
	Section 13.8 Subsidiary References
	 	 	43	 
	 
	Section 13.9 Captions
	 	 	43	 
	 
	Section 13.10 Entire Agreement
	 	 	43	 
	 
	Section 13.11 Counterparts
	 	 	43	 
	 
	Section 13.12 Governing Law
	 	 	43	 
	 
	Section 13.13 Consent to Jurisdiction
	 	 	43	 
	 
	Section 13.14 Waiver of Jury Trial
	 	 	43	 
	 
	Section 13.15 Customer Identification — USA PATRIOT Act Notice
	 	 	44	 
	 
	Section 13.16 OFAC and Asset Control Regulations
	 	 	44	 







iv









 








TERM LOAN AGREEMENT




     THIS TERM LOAN AGREEMENT dated as of May 22, 2009 is among OTTER TAIL CORPORATION, d/b/a OTTER
TAIL POWER COMPANY, a Minnesota corporation (the “Borrower”), the financial institutions
listed on the signature pages hereof or that hereafter become parties hereto by means of assignment
and assumption as described below (each individually a “Bank” and collectively the
“Banks”), KEYBANK NATIONAL ASSOCIATION, as Syndication Agent, UNION BANK, N.A., as
Documentation Agent, and JPMORGAN CHASE BANK, N.A., as Administrative Agent.



     WHEREAS, the Banks have agreed to make term loans to the Borrower in an aggregate principal
amount up to $75,000,000.



     NOW, THEREFORE, the parties hereto agree as follows:



ARTICLE 1.

DEFINITIONS AND INTERPRETATION




     Section 1.1 Defined Terms. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the following respective meanings (and such meanings
shall be equally applicable to both the singular and plural forms of the terms defined, as the
context may require):



     “Advance” means the portion of the outstanding Loans by the Banks as to which one of
the available interest rate options and, if pertinent, an Interest Period, is applicable. An
Advance may be a “LIBOR Advance” or a “Base Rate Advance” (each, a “type” of Advance).



     “Adverse Event” means the occurrence of any event that could have a material adverse
effect on the business, operations, property, assets or condition (financial or otherwise) of the
Borrower and the Subsidiaries as a consolidated enterprise or on the ability of the Borrower to
perform its obligations under the Loan Documents.



     “Agent” means JPMorgan Chase Bank, N.A., as administrative agent for the Banks
hereunder, and each successor thereto in such capacity.



     “Agent’s Fee Letter” means the letter agreement dated as of April 8, 2009 between the
Borrower and the Agent respecting certain fees payable to the Agent for its own account.



     “Agreement” means this Term Loan Agreement.



 









 





     “Applicable Margin” means the applicable percentage set forth below, determined based
on the applicable Level:



	 	 	 	 	 	 	 	 	 
	 	 	   Applicable Margin	 
	 	 	LIBOR	 	 	Base Rate	 
	Level:	 	Advances	 	 	Advances	 
	Level I:
	 	 	2.50         	%	 	 	1.50         	%
	Level II:
	 	 	3.00         	%	 	 	2.00         	%
	Level III:
	 	 	3.50         	%	 	 	2.50         	%
	Level IV
	 	 	4.00         	%	 	 	3.00         	%





The Applicable Margin shall be based on Level III as of the date of this Agreement. The Applicable
Margin shall be adjusted ten Business Days after any change in ratings that would require such
adjustment. For purposes of the foregoing, the Levels shall be defined and determined as follows
(subject to the last sentence of this definition):





     Level I shall apply if the Borrower’s Long Term Debt Rating is A- or better
(S&P) or A3 or better (Moody’s).




     Level II shall apply if (a) Level I status does not apply and (b) the
Borrower’s Long Term Debt Rating is BBB+ or better (S&P) or Baa1 or better (Moody’s).




     Level III shall apply if (a) neither Level I nor Level II status applies and
(b) the Borrower’s Long Term Debt Rating is BBB or better (S&P) or Baa2 or better (Moody’s).




     Level IV shall apply if (a) none of Level I, Level II or Level III status
applies and (b) the Borrower’s Long Term Debt Rating is BBB- or lower (S&P) or Baa3
(Moody’s) or lower.


If the Borrower does not have Long Term Debt Ratings from S&P and Moody’s then Level IV shall
apply. In the event of a split rating (i.e., Long Term Debt Ratings by S&P and Moody’s that would
not be in the same Level), the Level shall be based on the higher Long Term Debt Rating unless the
ratings are more than one Level apart, in which case the Level shall be based on the Long Term Debt
Rating one Level higher than the lower of the two Long Term Debt Ratings.




     “Assumed Liabilities” is defined in Section 12.1.



     “Base Rate” means, for any day, a fluctuating rate per annum as determined by the
Agent to equal the greatest of (a) the Prime Rate in effect on such day, or (b) the Federal Funds
Effective Rate in effect on such day plus 0.50% per annum, or (c) the LIBOR Rate (Reserve Adjusted)
Daily Floating in effect on such day plus 1.00% per annum. If for any reason the Agent shall have
determined (which determination shall be conclusive in the absence of manifest error) that it is
unable to ascertain the Federal Funds Effective Rate or the LIBOR Rate (Reserve Adjusted) Daily
Floating for any reason (including the inability or failure of the Agent to obtain sufficient bids
or publications in accordance with the terms hereof), the Base Rate shall be



2









 







determined based on the other rate or rates set forth above until the circumstances giving
rise to such inability no longer exist.



     “Base Rate Advance” means an Advance designated as such in a notice of borrowing under
Section 2.3 or a notice of continuation or conversion under Section 2.4.



     “Business Day” means any day (other than a Saturday, Sunday or legal holiday in the
State of Illinois) on which national banks are permitted to be open in Chicago, Illinois and New
York, New York and, with respect to LIBOR Advances, a day on which dealings in Dollars may be
carried on by the Agent in the London interbank market.



     “Capitalized Lease” means any lease which is or should be capitalized on the books of
the lessee in accordance with GAAP.



     “Closing Date” has the meaning specified in Section 6.1.



     “Code” means the Internal Revenue Code of 1986.



     “Commitment” means, with respect to any Bank, the obligation of such Bank to make a
Loan on the Closing Date. The amount of the Commitment of each Bank (subject to any Assignment and
Assumption Agreement entered into prior to the making of the Loans) is set forth on Schedule
1.1(a).



     “Compliance Certificate” means a certificate in the form of Exhibit B, duly
completed and signed by an authorized officer of the Borrower.



     “Default” means any event which, with the giving of notice to the Borrower, the lapse
of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event
of Default.



     “EBIT” means, for any period of determination, the consolidated net income of the
Borrower and its Subsidiaries before provision for income taxes, plus, to the extent
subtracted in determining consolidated net income, Interest Expense, all as determined in
accordance with GAAP, excluding (to the extent included): (a) non-operating gains (including
extraordinary or nonrecurring gains, gains from discontinuance of operations and gains arising from
the sale of assets other than inventory), except for gains resulting from sale of fixed assets,
during the applicable period; (b) similar non-operating losses, except for losses from sale of
fixed assets, during such period, and (c) payments of any premiums and any other costs, fees and
expenses required to be paid by the terms thereof in connection with the repayment or redemption of
Interest-bearing Debt existing as of the date of this Agreement and of Preferred Stock existing as
of the date of this Agreement; provided that if the Borrower or any Subsidiary acquires a
Person (an “Acquired Person”) in an Acquisition in such period, then all of the Acquired
Person’s EBIT (calculated for such Person as set forth above) for the period of determination shall
be added to EBIT, and if the Borrower or any Subsidiary sells all or substantially all of the stock
or assets of any Subsidiary in any such period, then the EBIT of such Subsidiary (calculated for
such Person as set forth above) shall be deducted from EBIT.



     “ERISA” means the Employee Retirement Income Security Act of 1974.



3









 





     “ERISA Affiliate” means any trade or business (whether or not incorporated) that is a
member of a group of which the Borrower is a member and which is treated as a single employer under
Section 414 of the Code.



     “Event of Default” means any event described in Section 10.1.



     “Federal Funds Effective Rate” means, for any day, an interest rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for such day on such transactions received by the Agent from three
Federal funds brokers of recognized standing selected by it. In the case of a day which is not a
Business Day, the Federal Funds Effective Rate for such day shall be the Federal Funds Effective
Rate for the preceding Business Day. Each change in the Base Rate due to a change in the Federal
Funds Effective Rate shall take effect on the effective date of such change in the Federal Funds
Effective Rate.



     “Federal Reserve Board” means the Board of Governors of the Federal Reserve System or
an successor thereto.



     “GAAP” means generally accepted accounting principles as applied in the preparation of
the audited consolidated financial statements of the Borrower referred to in Section 7.5.



     “Guaranty” means to (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, or other
obligations of, any other Person.



     “Indebtedness” means, without duplication, all obligations, contingent or otherwise,
which in accordance with GAAP should be classified upon the obligor’s balance sheet as liabilities,
but in any event including the following (whether or not they should be classified as liabilities
upon such balance sheet): (a) obligations secured by any mortgage, pledge, security interest, lien,
charge or other encumbrance existing on property owned or acquired subject thereto, whether or not
the obligation secured thereby shall have been assumed and whether or not the obligation secured is
the obligation of the owner or another party; (b) any obligation on account of deposits or
advances; (c) any obligation for the deferred purchase price of any property or services, except
trade accounts payable arising in the ordinary course of business, (d) any obligation as lessee
under any Capitalized Lease; (e) all guaranties, endorsements and other contingent obligations in
respect to Indebtedness of others; (f) undertakings or agreements to reimburse or indemnify issuers
of letters of credit; and (g) net liabilities under any interest rate swap, collar or other
interest rate hedging agreement. For all purposes of this Agreement, the Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer.



4









 





     “Interest and Dividend Coverage Ratio” means the ratio, calculated for each period of
four consecutive fiscal quarters of the Borrower, of: (a) EBIT for such period; to (b) the
sum for such period of (i) Interest Expense, plus (ii) dividends or interest on Preferred
Stock.



     “Interest-bearing Debt” means, without duplication, all obligations of the Borrower or
a Subsidiary on a consolidated basis: (a) in respect of borrowed money; (b) secured by a mortgage,
pledge, security interest, lien or charge on the assets of the Borrower or a Subsidiary, whether
the obligation secured is the obligation of the owner or another Person (provided that
non-recourse obligations will only be taken into account up to the fair market value of the related
property); (c) for the deferred purchase price of any property or services evidenced by a note,
payment contract (other than an account payable arising in the ordinary course of business) or
other instrument, (d) as lessee under any Capitalized Lease; (e) in respect of guaranties and
contingent or other legal obligations in respect to Interest-bearing Debt of other Persons,
excluding ordinary course endorsements; (f) in respect of interest rate swap, interest rate collar
or other interest rate hedging agreements (but only the net liabilities under related agreements);
(g) in respect of undertakings or agreements to reimburse or indemnify issuers of letters of credit
other than commercial letters of credit; (h) in respect of synthetic leases (calculated as if such
leases were Capitalized Leases); (i) in respect of Permitted Sales and Leasebacks; and (j) in
respect of indebtedness attributable to Permitted Securitization Transactions (whether or not such
transactions include recourse to the Borrower or a Subsidiary).



     “Interest Expense” means, for any period of determination, the aggregate consolidated
amount, without duplication, of interest paid, accrued or scheduled to be paid in respect of any
Indebtedness of the Borrower and its Subsidiaries, including in all cases interest expense
determined in accordance with GAAP and, to the extent not otherwise included in GAAP interest
expense: (a) all but the principal component of payments in respect of conditional sale contracts,
Capitalized Leases and other title retention agreements; (b) commissions, discounts and other fees
and charges with respect to letters of credit and bankers’ acceptance financings; (c) net costs
under any interest rate swap, collar or other interest rate hedging agreements, in each case
determined in accordance with GAAP; (d) amounts calculated in respect of synthetic leases as if
such leases were Capitalized Leases, (e) interest attributable to Permitted Sales and Leasebacks,
as provided in the definition thereof, and (f) discount or other yield attributable Permitted
Securitization Transactions.



     “Interest Period” means, for any LIBOR Advance, the period commencing on the borrowing
date of such LIBOR Advance or the date a Base Rate Advance is converted into such LIBOR Advance, or
the last day of the preceding Interest Period for such LIBOR Advance, as the case may be, and
ending on the numerically corresponding day one, two, three or six months thereafter, as selected
by the Borrower pursuant to Section 2.3 or Section 2.4; provided that:




	 	(a)	 	any Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day unless such next succeeding Business
Day falls in another calendar month, in which case such Interest Period shall end on
the next preceding Business Day;
	 
	 	(b)	 	any Interest Period which begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar




5









 






	 	 	 	month at the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period; and
	 
	 	(c)	 	no Interest Period shall extend beyond the Termination Date.





     “Investment” means the acquisition, purchase, making or holding of any stock or other
security, any loan, advance, contribution to capital, extension of credit (except for trade and
customer accounts receivable for inventory sold or services rendered in the ordinary course of
business and payable in accordance with customary trade terms), any acquisitions of real or
personal property (other than real and personal property acquired in the ordinary course of
business) and any purchase or commitment or option to purchase stock or other debt or equity
securities of or any interest in another Person or any integral part of any business or the assets
comprising such business or part thereof.



     “Lead Arrangers” means JPMorgan Securities, Inc., KeyBank National Association and
Union Bank, N.A. as joint lead arrangers.



     “Lead Arrangers’ Fee Letter” means the letter agreement dated as of April 8, 2009
between the Borrower and the Lead Arrangers respecting certain fees payable to each Arranger for
its own account.



     “LIBOR Advance” means an Advance designated as such in a notice of borrowing under
Section 2.3 or a notice of continuation or conversion under Section 2.4.



     “LIBOR Interbank Daily Rate” means, for any day, the offered rate for deposits in
United States Dollars for interest periods of one month determined by the Agent from the Reuters
Screen LIBOR01 page or any successor thereto as of approximately 11:00 a.m., London time, on such
day (without taking into account the two-day future delivery convention applicable to such reports)
or, if such day is not a Business Day, as so determined for the immediately preceding Business Day.



     “LIBOR Interbank Rate” means the offered rate for deposits in United States Dollars
for delivery of such deposits on the first day of an Interest Period of a LIBOR Advance, for the
number of days comprised therein, quoted by the Agent from the Reuters Screen LIBOR01 page or any
successor thereto as of approximately 11:00 a.m., London time, on the day that is two Banking Days
preceding the first day of the Interest Period of such LIBOR Advance, or the rate for such deposits
determined by the Agent at such time based on such other published service of general application
as shall be selected by the Agent for such purpose; provided that if the LIBOR Interbank
Rate is not determinable in the foregoing manner, the Agent may determine the rate based on rates
offered to the Agent for deposits in United States Dollars in the interbank eurodollar market at
such time for delivery on the first day of the Interest Period for the number of days comprised
therein.



6









 





     “LIBOR Rate (Reserve Adjusted)” means a rate per annum calculated for the Interest
Period of a LIBOR Advance in accordance with the following formula:



	 	 	 	 	 	 
	LRRA

	 	=
	 	LIBOR Interbank Rate	 
	 
	 	 	 	 
	 
	 	 	 	1.00 – LRR	 






In such formula, “LRR” means “LIBOR Reserve Rate” and “LRRA” means “LIBOR Rate (Reserve Adjusted)”,
in each instance determined by the Agent for the applicable Interest Period. The Agent’s
determination of all such rates shall be conclusive in the absence of manifest error.



     “LIBOR Rate (Reserve Adjusted) Daily Floating” means a rate per annum calculated in
accordance with the following formula:



	 	 	 	 	 	 
	LRRADF
	 	=
	 	LIBOR Interbank Daily Rate	 
	 
	 	 	 	 
	 
	 	 	 	1.00 – LRR	 






     In such formula, “LRRADF” means “LIBOR Rate (Reserve Adjusted) Daily Floating” and
“LRR” means “LIBOR Reserve Rate”. The Agent’s determination of all such rates shall be
conclusive in the absence of manifest error.



     “LIBOR Reserve Rate” means a percentage equal to the daily average during such
Interest Period of the aggregate maximum reserve requirements (including all basic, supplemental,
marginal and other reserves), as specified under Regulation D of the Federal Reserve Board, or any
other applicable regulation that prescribes reserve requirements applicable to Eurocurrency
liabilities (as presently defined in Regulation D) or applicable to extensions of credit by the
Agent the rate of interest on which is determined with regard to rates applicable to Eurocurrency
liabilities. Without limiting the generality of the foregoing, the LIBOR Reserve Rate shall reflect
any reserves required to be maintained by the Agent against (a) any category of liabilities that
includes deposits by reference to which the LIBOR Interbank Rate or LIBOR Interbank Daily Rate is
to be determined, or (b) any category of extensions of credit or other assets that includes LIBOR
Advances.



     “Lien” means any security interest, mortgage, pledge, lien, hypothecation, judgment
lien or similar legal process, charge, encumbrance, title retention agreement or analogous
instrument or device (including the interest of the lessors under Capitalized Leases and the
interest of a vendor under any conditional sale or other title retention agreement).



     “Loans” has the meaning specified in Section 2.1.



     “Loan Documents” means this Agreement, any Note, the Agent’s Fee Letter, the Lead
Arrangers’ Fee Letter and each other instrument, document, guaranty, security agreement, mortgage,
or other agreement executed and delivered by the Borrower or any guarantor or party granting
security interests in connection with this Agreement, the Loans or any collateral for the Loans,
including any such document or agreement delivered pursuant to Section 12.2.



7









 





     “Long Term Debt Rating” means the rating assigned by S&P and Moody’s to the long term,
unsecured and unsubordinated indebtedness of the Borrower.



     “Material Subsidiary” means (a) the Subsidiaries listed on Schedule 1.1(b)
hereto, and (b) any Subsidiary acquired or formed after the date of this Agreement if at the time
of such acquisition or formation or at any time thereafter either (i) the consolidated assets of
such Subsidiary and its Subsidiaries shall exceed 5.00% of the consolidated assets of the Borrower
and its Subsidiaries, or (ii) the consolidated gross revenues of such Subsidiary and its
Subsidiaries shall exceed 5.00% of the consolidated gross revenues of the Borrower and its
Subsidiaries. Such assets and gross revenues shall be determined on a pro forma basis at the time
of such acquisition or formation, and shall be determined thereafter at the request of the Agent,
but not less than one time per fiscal year of the Borrower thereafter.



     “Merger Sub” is defined in Section 12.1.



     “Moody’s” means Moody’s Investors Service, Inc.



     “New OTC” is defined in Section 12.1.



     “Non-Power Company Assets” means all tangible and intangible assets of the Borrower
except for the Power Company Assets, and shall expressly include (a) stock of Varistar Corporation,
and (b) all notes payable by Varistar Corporation or any Subsidiary of Varistar Corporation to the
Borrower.



     “Note” means a promissory note of the Borrower described in Section 2.5,
substantially in the form of Exhibit A.



     “Payment Date” means (a) the Termination Date, (b) for each LIBOR Advance, the last
day of each Interest Period for such Advance and, if such Interest Period is in excess of three
months, each three-month anniversary of the first day of such Interest Period, and (c) for each
Base Rate Advance, the last day of each March, June, September and December.



     “PBGC” means the Pension Benefit Guaranty Corporation, established pursuant to
Subtitle A of Title IV of ERISA, and any successor thereto or to the functions thereof.



     “Percentage” means, as to any Bank, the proportion, expressed as a percentage, that
such Bank’s Commitment bears to the total Commitments of all Banks or, after the making of the
Loans, that the principal amount of such Bank’s Loan is of the aggregate principal amount of all
Loans. The Percentages of the Banks as of the date of this Agreement are set forth on Schedule
1.1(a).



     “Permitted Divestitures” means sales of stock or assets, transfers of stock or assets,
mergers resulting in divestiture of stock or assets or other divestitures of assets of the Borrower
and Subsidiaries, which, in the aggregate for all such transactions during any one fiscal year of
the Borrower, shall not result in the sale, transfer or other divestiture of stock or assets having
a value in excess of 10% of the consolidated assets of the Borrower and its Subsidiaries as of the
beginning of such fiscal year.



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     “Permitted Reorganization” means the transactions described in Article XII,
which transactions shall be deemed the Permitted Reorganization only when completed in accordance
with all of the requirements of Article XII and upon satisfaction, or waiver by the
Required Banks, or if so required by Section 13.2, all Banks, of all of the conditions
provided therein.



     “Permitted Sales and Leasebacks” means sales and leasebacks of assets of the Borrower
or a Subsidiary involving a sale price of assets of the Borrower and Subsidiaries not to exceed
$20,000,000 in the aggregate for all transactions after the date of this Agreement, that give rise
to Interest-bearing Debt calculated as if the relevant leases were Capitalized Leases (whether or
not actually constituting Capitalized Leases).



     “Permitted Securitization Transactions” means sales of accounts receivable and other
securitization transactions in nominal principal amounts not to exceed (a) $50,000,000 for Varistar
Corporation and its Subsidiaries, and (b) $50,000,000 for the Borrower and Subsidiaries other than
Varistar Corporation and its Subsidiaries; provided that such transactions may include only
recourse to the Borrower or a Subsidiary (i) under customary representations and warranties not
constituting credit support for the assets sold, and (ii) 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 Expense, shall each be determined on a reasonable basis
by the Borrower as if each such transaction were a financing transaction and not a sale.



     “Person” means any natural person, corporation, limited liability company,
partnership, joint venture, firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether acting in an individual,
fiduciary or other capacity.



     “Plan” means an employee benefit plan or other plan, maintained for employees of the
Borrower or of any ERISA Affiliate, and subject to Title IV of ERISA or Section 412 of the Code.



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



     “Preferred Stock” means stock of the Borrower other than common stock.



     “Prime Rate” means the rate of interest from time to time announced by the Agent as
its “prime rate.” For purposes of determining any interest rate which is based on the Prime Rate,
such interest rate shall be adjusted each time that the prime rate changes.



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



9









 





     “Related Party” means any Person (other than a Subsidiary): (a) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or is under common
control with, the Borrower, (b) which beneficially owns or holds 5% or more of the equity interest
of the Borrower; or (c) 5% or more of the equity interest of which is beneficially owned or held by
the Borrower or a Subsidiary. The term “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.



     “Reportable Event” means a reportable event as defined in Section 4043 of ERISA and
the regulations issued under such Section, with respect to a Plan, excluding, however, such events
as to which the PBGC by regulation has waived the requirement of Section 4043(a) of ERISA that it
be notified within 30 days of the occurrence of such event, provided that a failure to meet
the minimum funding standard of Section 412 of the Code and Section 302 of ERISA shall be a
reportable event regardless of the issuance of any such waivers in accordance with Section 412(d)
of the Code.



     “Required Banks” means Banks with Percentages aggregating more than 50.00%;
provided that if there are five or more Banks, no group of Banks shall constitute Required
Banks (regardless of their Percentages) unless such group includes three or more Banks.



     “Restricted Payments” means any expenditure by the Borrower or any Subsidiary for
purchase, redemption or other acquisition for value of any shares of the Borrower’s or any
Subsidiary’s stock, payment of any dividend thereon (other than stock dividends and dividends
payable solely by a Subsidiary to another Subsidiary or by a Subsidiary to the Borrower), any
distribution on, or payment on account of the purchase, redemption, defeasance or other acquisition
or retirement for value of, any shares of the Borrower’s or any Subsidiary’s stock, or the setting
aside of any funds for any such purpose (other than payment to, or on account of or for the benefit
of, the Borrower or any Subsidiary only). Consummation of the Permitted Reorganization in
accordance with the terms and conditions set forth in Article XII shall not be deemed to
constitute a Restricted Payment.



     “S&P” means Standard & Poor’s Ratings Group.



     “Senior Indebtedness Agreement” means any agreement under which the Borrower issues
notes or incurs obligations for Interest-bearing Debt, which notes and Interest-bearing Debt are
senior obligations of the Borrower, pari passu with the Loans and any Note, and shall include (a)
the Note Purchase Agreement, dated as of December 1, 2001, between the Borrower and the Noteholders
named therein pertaining to the $90,000,000, 6.63% Senior Notes of the Borrower due December 1,
2011, (b) prior to the Permitted Reorganization only, the Note Purchase Agreement, dated as of
February 23, 2007, between the Borrower and the Noteholders named therein pertaining to the
$50,000,000, 5.778% Senior Notes of the Borrower due November 30, 2017, and (c) the Note Purchase
Agreement, dated as of August 20, 2007, between the Borrower and the Noteholders named therein
pertaining to (i) the $33,000,000, 5.95% Senior Unsecured Notes, Series A, due 2017, (ii) the
$30,000,000, 6.15% Senior unsecured Notes, Series B, due 2022, (iii) the $42,000,000, 6.37% Senior
Unsecured Notes, Series C, due 2027, and (iv) the $50,000,000, 6.47% Senior Unsecured Notes, Series
D, due 2037.



10









 





     “Senior Indebtedness Prepayment Event” means the (a) occurrence of any event under any
Senior Indebtedness Agreement that would require the Borrower to prepay, or offer to prepay, any
Senior Indebtedness prior to its stated maturity, (b) occurrence of any event under any Senior
Indebtedness Agreement that would give the holder of Senior Indebtedness any right to put such
Senior Indebtedness to the Borrower or require the Borrower to repurchase or redeem such Senior
Indebtedness in each case prior to its stated maturity, or (c) voluntary offer by the Borrower to
prepay or purchase Senior Indebtedness prior to its stated maturity to remain in compliance with
any covenant or agreement of a Senior Indebtedness Agreement, but not any other voluntary offer by
the Borrower to prepay or purchase Senior Indebtedness prior to its stated maturity. Senior
Indebtedness Prepayment Events shall include any Transfer of Utility Assets Put Event or Debt
Prepayment Application, as defined in the Senior Indebtedness Agreements (or any Senior
Indebtedness Agreement).



     “Subsidiary” means any Person of which or in which the Borrower and its other
Subsidiaries own directly or indirectly 50% or more of: (a) the combined voting power of all
classes of stock having general voting power under ordinary circumstances to elect a majority of
the board of directors of such Person, if it is a corporation, (b) the capital interest or profit
interest of such Person, if it is a partnership, joint venture or similar entity, or (c) the
beneficial interest of such Person, if it is a trust, association or other unincorporated
organization.



     “Termination Date” means May 20, 2011.



     “Total Capitalization” means as of any date of determination, the sum of (a) the
amounts set forth on the consolidated balance sheet of the Borrower as the sum of the common stock,
preferred stock, additional paid-in capital and retained earnings of the Borrower (excluding
treasury stock); plus (b) the principal amount of Interest-bearing Debt of the Borrower and
the Subsidiaries.



     Section 1.2 Accounting Terms and Calculations. Except as may be expressly provided to
the contrary herein, all accounting terms used herein shall be interpreted and all accounting
determinations hereunder (including determination of compliance with financial ratios and
restrictions in Articles VIII and IX) shall be made in accordance with GAAP
consistently applied. Any reference to “consolidated” financial terms shall be deemed to refer to
those financial terms as applied to the Borrower and its Subsidiaries in accordance with GAAP.



     Section 1.3 Computation of Time Periods. In this Agreement, in the computation of a
period of time from a specified date to a later specified date, unless otherwise stated the word
“from” means “from and including” and the word “to” or “until” each means “to but excluding.”



     Section 1.4 Other Interpretive Provisions. Except as otherwise expressly provided
herein, any reference to (a) an Article, a Section, an Exhibit or a
Schedule is to an Article or a Section of, or an Exhibit or a Schedule to, this Agreement;
(b) an agreement or contract shall mean such agreement or contract as amended, amended and
restated, supplemented or otherwise modified from time to time; (c) a law shall mean such law as
amended, supplemented or otherwise modified from time to time (including any successor thereto) and
all rules, regulations, guidelines and decisions interpreting or implementing such law; and (d) a
time of day shall mean



11









 







such time in Chicago, Illinois. The term “including” means “including without limitation” and
derivatives of such term have a corresponding meaning.



ARTICLE 2.

TERMS OF LENDING




     Section 2.1 The Commitments. Subject to the terms and conditions hereof and in
reliance upon the warranties of the Borrower herein, each Bank agrees, severally and not jointly,
to make a loan (each a “Loan” and collectively the “Loans”) to the Borrower on the
Closing Date in an amount equal to the amount of such Bank’s Commitment. The Commitments will
automatically terminate concurrently with the making of the Loans on the Closing Date.



     Section 2.2 Advance Options. Each Bank’s Loan shall be at all times either a LIBOR
Advance or a Base Rate Advance.



     Section 2.3 Borrowing Procedures.



     (a) Request by Borrower. The Borrower shall give irrevocable written notice to the
Agent (which shall promptly notify each Bank) of the proposed Closing Date not later than (i) if
the Loans are to be comprised of Base Rate Advances, 1:00 p.m. on the Business Day prior to the
date of the requested Loans; or (ii) otherwise, 12:00 noon at least three Business Days prior to
the date of the requested Loans. Such notice shall specify (A) the proposed Closing Date (which
shall be a Business Day), (B) the amount of the Loans and the type of Advances comprising the
Loans, and (C) if the Loans are to include LIBOR Advances, the initial Interest Period for each
such LIBOR Advance.



     (b) Funding of Agent. Not later than 11:00 a.m. on the Closing Date, each Bank shall
deliver the proceeds of its Loan to the Agent in immediately available funds. Unless the Agent
determines that any applicable condition specified in Article VI has not been satisfied,
the Agent will make such proceeds available to the Borrower at the Agent’s principal office in
Chicago, Illinois in immediately available funds not later than 5:00 p.m. on the Closing Date,
provided that the Agent shall not be required to make any amount available to the Borrower
unless the Agent shall have received such amount from the applicable Bank, and provided,
further, that unless the Agent shall have been notified in writing by a Bank prior to the
time the Loans are to be made hereunder that such Bank does not intend to make the proceeds of its
Loan available to the Agent, the Agent may assume that such Bank has made such proceeds available
to the Agent and the Agent may, in reliance on such assumption, make the corresponding amount
available to the Borrower. If the Agent has made a Loan to the Borrower on behalf of a Bank but has
not received the proceeds of such Loan from such Bank by the time herein required, such Bank shall
pay interest to the Agent on the amount so advanced at the overnight Federal Funds rate from the
date of such Loan to the date funds are received by the Agent from such Bank, such interest to be
payable with such remittance from such Bank of the principal amount of its Loan. If the Agent does
not receive payment from such Bank by the next Business Day after the Closing Date, the Agent shall
be entitled to recover such Loan, with interest thereon at the rate then applicable to such Loan,
on demand, from the Borrower, without prejudice to the Agent’s and the Borrower’s rights against
such Bank. If such Bank pays the Agent the amount herein required with interest



12









 







thereon before the Agent has recovered from the Borrower, such Bank shall be entitled to the
interest payable by the Borrower with respect to its Loan accruing from the date the Agent made
such Loan.



     Section 2.4 Continuation or Conversion of Loans. The Borrower may elect to
(a) continue any outstanding LIBOR Advance from one Interest Period into a subsequent Interest
Period to begin on the last day of the earlier Interest Period, or (b) convert any outstanding
Advance into another type of Advance (on the last day of an Interest Period only, in the instance
of a LIBOR Advance), by giving the Agent irrevocable notice in writing, or by telephone promptly
confirmed in writing, given so as to be received by the Agent not later than:



     (a) 1:00 p.m. on the Business Day prior to the date of the requested continuation or
conversion, if the continuing or converted Advance is to be a Base Rate Advance; or



     (b) 12:00 noon at least three Business Days prior to the date of the requested continuation or
conversion, if the continuing or converted Advance is to be a LIBOR Advance.



Each notice of continuation or conversion of an Advance shall specify (i) the effective date of the
continuation or conversion date (which shall be a Business Day), (ii) the amount and the type or
types of Advances following such continuation or conversion (subject to the limitation on amount
set forth in Section 2.2), and (iii) for continuation as, or conversion into, a LIBOR
Advance, the Interest Period for such Advance. Absent timely notice of continuation of a LIBOR
Advance, such LIBOR Advance shall (unless repaid in full) convert into a Base Rate Advance on the
last day of the Interest Period therefor. No Advance shall be continued as, or converted into, a
LIBOR Advance if the shortest Interest Period for such Advance may not transpire prior to the
Termination Date or if a Default or Event of Default exists.



     Section 2.5 Notes; Recordkeeping. Upon the request of any Bank made through the Agent,
such Bank’s Loan may be evidenced by a Note in the original principal amount of such Bank’s Loan.
Each Bank shall enter in its records the amount of its Loan, the rate of interest borne by each
Advance and the payments made on its Loan, and such records shall be deemed conclusive evidence of
the subject matter thereof, absent manifest error.



     Section 2.6 Funding Losses. In the event of (a) any failure of the Borrower to borrow,
continue or convert a LIBOR Advance on a date specified in a notice thereof, or (b) any payment
(including any payment pursuant to Section 4.2, 4.5 or 10.2), prepayment or
conversion of any LIBOR Advance on a date other than the last day of the Interest Period for such
Advance, the Borrower agrees to pay each Bank’s costs, expenses and Interest Differential (as
determined by such Bank) incurred as a result of such event. The term “Interest
Differential” shall mean an amount, not less than $0, equal to the financial loss incurred by a
Bank resulting from such event, calculated as the difference between the amount of interest such
Bank would have earned (from like investments in the Money Markets as of the first day of the
Interest Period of the relevant Advance) had such event not occurred and the interest the Bank will
actually earn (from like investments in the Money Markets as of the date of such event) as a result
of the redeployment of funds from such event. Because of the short-term nature of this facility,
the Borrower agrees that the Interest Differential shall not be discounted to its present value.
The term “Money Markets” refers to one or more wholesale funding markets available to the
Banks,



13









 







including negotiable certificates of deposit, commercial paper, LIBOR deposits, bank notes,
federal funds and others. Such determinations by each Bank of shall be conclusive in the absence of
manifest error.



     Section 2.7 Purpose of the Loans. The Loans shall be used for Otter Tail Power Company
electrical generation and transmission operations and other general corporate purposes of Otter
Tail Power Company not in contravention of any applicable law or of any Loan Document.



ARTICLE 3.

INTEREST AND FEES




     Section 3.1 Interest.



     (a) LIBOR Advances. The unpaid principal amount of each LIBOR Advance shall bear
interest prior to maturity at a rate per annum equal to the LIBOR Rate (Reserve Adjusted) in effect
for each Interest Period for such LIBOR Advance plus the Applicable Margin.



     (b) Base Rate Advances. The unpaid principal amount of each Base Rate Advance shall
bear interest prior to maturity at a rate per annum equal to the Base Rate as in effect from time
to time plus the Applicable Margin.



     (c) Interest After Maturity. Any portion of a Loan that is not paid when due, whether
at the date scheduled therefor or earlier upon acceleration, shall bear interest until paid in full
at a rate per annum equal to the greater of (i) 2.00% in excess of the rate applicable to the
unpaid principal amount thereof immediately before it became due, or (ii) the sum of 2.00%
plus the Base Rate as in effect from time to time plus the Applicable Margin for
Base Rate Advances.



     Section 3.2 Computation. Interest shall be computed on the basis of actual days
elapsed and a year of 360 days, provided that any interest or fee calculated with reference
to the Prime Rate shall be computed on the basis of actual days elapsed and a year of 365 days.



     Section 3.3 Payment Dates. Accrued interest under Section 3.1(a) and
(b) shall be payable on the applicable Payment Dates. Accrued interest under Section
3.1(c) shall be payable on demand.



     Section 3.4 Agent’s and Lead Arrangers’ Fees. The Borrower shall pay such fees (a) to
the Agent as are required under the Agent’s Fee Letter and (b) to each Lead Arranger as are
required under the Lead Arrangers’ Fee Letter.



ARTICLE 4.

PAYMENTS, PREPAYMENTS, REDUCTION OR TERMINATION

OF THE CREDIT AND SETOFF




     Section 4.1 Repayment. Principal of the Loans, together with all accrued and unpaid
interest thereon, shall be due and payable on the Termination Date.



14









 





     Section 4.2 Optional Prepayments. The Borrower may, upon at least three Business Days’
prior written or telephonic notice received by the Bank, prepay the Loans, in whole or in part, at
any time subject to the provisions of Section 2.6, without any other premium or penalty.
Any such prepayment must be accompanied by accrued and unpaid interest on the amount prepaid. Each
partial prepayment of the Loans shall be in an aggregate amount of $50,000 or an integral multiple
thereof.



     Section 4.3 Payments. Payments and prepayments of principal of, and interest on, the
Loans and all fees, expenses and other obligations under the Loan Documents shall be made (subject
only to required withholding by the Borrower in the case of non-compliance by a Bank with the
requirements of Section 13.3(e)) without set-off or counterclaim in immediately available
funds not later than 2:00 p.m. on the date due at the main office of the Agent in Chicago,
Illinois. Whenever any payment to be made hereunder shall be stated to be due on a day that is not
a Business Day, such payment shall be made on the next succeeding Business Day and such extension
of time shall be included in the computation of any interest or fees. The Agent is authorized to
debit the operating account of the Borrower designated by the Borrower for such purpose from time
to time for all payments when due hereunder (provided that if such account shall not have
sufficient available funds to pay interest when due, the Borrower shall pay such interest in
immediately available funds).



     Section 4.4 Proration of Payments. If any Bank or other holder of a Loan shall obtain
any payment or other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of, interest on, or fees with respect to its Loan in any case in
excess of the share of payments and other recoveries of other Banks or holders, such Bank or other
holder shall purchase from the other Banks or holders, in a manner to be specified by the Agent,
such participations in the Loans held by such other Banks or holders as shall be necessary to cause
such purchasing Bank or other holder to share the excess payment or other recovery ratably with
each of such other Banks or holders; provided that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Bank or holder, the purchase
shall be rescinded and the purchase price restored to the extent of such recovery, but without
interest.



     Section 4.5 Senior Indebtedness Prepayment Event.



     (a) If a Senior Indebtedness Prepayment Event shall occur, the Borrower shall offer to prepay
the Loans in Ratable Portion not later than the date of prepayment, purchase or redemption of the
relevant Senior Indebtedness, by written notice given to the Agent not later than any notice
required under the relevant Senior Indebtedness Agreement. The Agent shall promptly give notice of
such offer to the Banks and shall require such a prepayment unless directed not to require such a
prepayment by the Required Banks.



     (b) If a prepayment of the Loans is required pursuant to the foregoing clause (a), it
will be made prior to or concurrently with the prepayment, purchase or redemption by the Borrower
of the relevant Indebtedness under the relevant Senior Indebtedness Agreement. Failure by the
Borrower to make a payment when due pursuant to this Section 4.5 shall constitute an
immediate Event of Default under Section 10.1(a).



15









 





     (c) For purposes of this Section 4.5, a “Ratable Portion” shall mean a
fraction the numerator of which is equal to the amount of the prepayment, purchase or redemption of
the Indebtedness under the relevant Senior Indebtedness Agreement that the Borrower is required to
make or offer to make, and the denominator of which is the aggregate principal amount of such
Indebtedness outstanding.



ARTICLE 5.

ADDITIONAL PROVISIONS RELATING TO LOANS




     Section 5.1 Increased Costs. If, as a result of any change after the date hereof of
any law, rule, regulation, treaty or directive or in the interpretation or administration thereof,
or compliance by any Bank with any request or directive (whether or not having the force of law)
from any court, central bank, governmental authority, agency or instrumentality, or comparable
agency:



     (a) any tax, duty or other charge with respect to such Bank’s Commitment or Loan, or any Note
held by such Bank, is imposed, modified or deemed applicable, or the basis of taxation of payments
to such Bank of interest or principal of its Loan (other than taxes imposed on the overall net
income of such Bank by the jurisdiction in which such Bank has its principal office) is changed;



     (b) any reserve, special deposit, special assessment or similar requirement against assets of,
deposits with or for the account of, or credit extended by, such Bank (excluding any reserve or
other requirement reflected in the calculation of LIBOR Rate (Reserve Adjusted)) is imposed,
modified or deemed applicable;



     (c) any increase in the amount of capital required or expected to be maintained by such Bank
or any Person controlling such Bank is imposed, modified or deemed applicable as a consequence of
this Agreement or the Loan made by such Bank; or



     (d) any other condition (other than taxes described in the parenthetical clause set forth in
clause (a) above) affecting this Agreement or the Commitments is imposed on such Bank or
the relevant funding markets;



and such Bank determines that, by reason thereof, the cost to such Bank of committing to make,
making or maintaining its Loan increased, or the amount of any sum receivable by such Bank
hereunder in respect of its Loan is reduced to a level below which such Bank could have achieved
but for such change; then, the Borrower shall pay to such Bank upon demand such additional
amount or amounts as will compensate such Bank (or the controlling Person in the instance of
clause (c) above) for such additional costs or reduction (provided that the Banks
have not been compensated for such additional cost or reduction in the calculation of the LIBOR
Reserve Rate). Any Bank making such demand shall inform the Borrower of the basis for such demand,
and provide a statement showing, in reasonable detail, calculation of the amount demanded. The
Borrower will promptly notify such Bank if the Borrower does not agree to such Bank’s determination
of any such amount. Any Bank’s reasonable determination of such amount shall be presumed correct,
absent its manifest error or negligence in determining such amount. In determining such amount, the
Banks may use any reasonable averaging, attribution and



16









 







allocation methods. Notwithstanding the foregoing, no Bank shall charge the Borrower for additional
amounts for such additional costs or reductions: (i) which additional amounts applied or accrued
more than 90 days prior to the time that such Bank became aware of the event giving rise to such
additional costs or reductions; or (ii) unless such Bank is generally requiring payment under
comparable provisions of its agreements with similarly situated borrowers.



     Section 5.2 Deposits Unavailable or Interest Rate Unascertainable or Inadequate;
Impracticability. If the Agent determines (which determination shall be conclusive and binding
on the parties hereto), or in the case of clause (b) below, the Agent or the Required Banks
determine, that:



     (a) deposits of the necessary amount for the relevant Interest Period for any LIBOR Advance
are not available in the relevant markets or that, by reason of circumstances affecting such
market, adequate and reasonable means do not exist for ascertaining the LIBOR Interbank Rate for
such Interest Period; or



     (b) the LIBOR Rate (Reserve Adjusted) will not adequately and fairly reflect the cost to the
Banks of making, maintaining or funding a LIBOR Advance for a relevant Interest Period;



the Agent shall promptly give notice of such determination to the Borrower, and (i) any notice of a
new LIBOR Advance previously given by the Borrower and not yet borrowed, continued or converted
shall be deemed to be a notice to make a Base Rate Advance, and (ii) the Borrower shall be
obligated to either prepay in full any outstanding LIBOR Advances or convert any such LIBOR Advance
to a Base Rate Advance, without premium or penalty, on the last day of the current Interest Period
with respect thereto.



     Section 5.3 Changes in Law Rendering LIBOR Advances Unlawful. If at any time due to
the adoption of any law, rule, regulation, treaty or directive, or any change therein or in the
interpretation or administration thereof by any court, central bank, governmental authority, agency
or instrumentality, or comparable agency charged with the interpretation or administration thereof,
or for any other reason arising subsequent to the date of this Agreement, it shall become unlawful
or impossible for any Bank to make or fund any LIBOR Advance, the obligation of such Bank to
provide such Advance shall, upon the happening of such event, forthwith be suspended for the
duration of such illegality or impossibility. If any such event shall make it unlawful or
impossible for the Bank to continue any LIBOR Advance previously made by it hereunder, such Bank
shall, upon the happening of such event, notify the Agent and the Borrower thereof in writing, and
the Borrower shall, at the time notified by such Bank, either convert each such unlawful Advance to
a Base Rate Advance or repay such Advance in full, together with accrued interest thereon, subject
to the provisions of Section 2.6.



     Section 5.4 Discretion of the Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank shall be entitled to fund and maintain its
funding of all or any part of its Loan in any manner it elects; it being
understood, however, that for purposes of this Agreement, all determinations hereunder
shall be made as if the Banks had actually funded and maintained each LIBOR Advance during the
Interest Period for such Advance through the purchase of deposits having a term corresponding to
such Interest Period



17









 







and bearing an interest rate equal to the LIBOR Interbank Rate for such Interest Period
(whether or not any Bank shall have granted any participations in such Advances).



ARTICLE 6.

CONDITIONS PRECEDENT




     The obligations of the Banks to make Loans hereunder shall be subject to the satisfaction of
the following conditions precedent (and the date on which such conditions precedent are satisfied
is called the “Closing Date”):



     Section 6.1 Documents. The Agent shall have received all of the following in form and
substance reasonably satisfactory to the Agent:



     (a) Term Loan Agreement. This Agreement duly executed by each party hereto;



     (b) Notes. A Note, signed by a duly authorized officer of the Borrower, for each Bank
that has requested a Note.



     (c) Certificate of the Borrower. A certificate or certificates of the Secretary or an
Assistant Secretary of the Borrower attesting to and attaching (A) a copy of the corporate
resolution of the Borrower authorizing the execution, delivery and performance of the Loan
Documents, (B) an incumbency certificate showing the names and titles, and bearing the signatures,
of the officers of the Borrower authorized to execute the Loan Documents, (C) a copy of the
Articles or Certificate of Incorporation of the Borrower with all amendments thereto and (D) a copy
of the By-Laws of the Borrower with all amendments thereto.



     (d) Good Standing Certificate. A Certificate of Good Standing for the Borrower in the
jurisdiction of its incorporation, certified by the appropriate governmental officials.



     (e) Opinion of Borrower’s Counsel. An opinion of counsel to the Borrower in
substantially the form of Exhibit C.



     Section 6.2 Representation and Warranties. Before and after giving effect to the
Loans, the representation and warranties contained in Article VII shall be true and correct
as though made on the Closing Date.



     Section 6.3 No Default. Before and after giving effect to the Loans, no Default or
Event of Default shall have occurred and be continuing.



     Section 6.4 Payment of Fees and Expenses. The Borrower shall have paid all fees and
expenses payable pursuant to the Agent’s Fee Letter and the Lead Arrangers’ Fee Letter, in each
case to the extent then due and payable.



18









 





ARTICLE 7.

REPRESENTATIONS AND WARRANTIES




     To induce the Agent and the Banks to enter into this Agreement, to grant the Commitments and
to make the Loans hereunder, the Borrower represents and warrants to the Agent and the Banks:



     Section 7.1 Organization, Standing, Etc. The Borrower and each of its corporate
Material Subsidiaries are corporations duly incorporated and validly existing and in good standing
under the laws of the jurisdiction of their respective incorporation and have all requisite
corporate power and authority to carry on their respective businesses as now conducted, to (in the
instance of the Borrower) enter into the Loan Documents and to perform its obligations under the
Loan Documents. The Borrower and each of the Material Subsidiaries are duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the character of the properties
owned, leased or operated by it or the business conducted by it makes such qualification necessary,
and failure to so qualify or remain in good standing would constitute an Adverse Event.



     Section 7.2 Authorization and Validity. The execution, delivery and performance by the
Borrower of the Loan Documents have been duly authorized by all necessary corporate action by the
Borrower, and the Loan Documents constitute the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective terms, subject to
limitations as to enforceability which might result from bankruptcy, insolvency, moratorium and
other similar laws affecting creditors’ rights generally and subject to limitations on the
availability of equitable remedies.



     Section 7.3 No Conflict; No Default. The execution, delivery and performance by the
Borrower of the Loan Documents will not (a) violate any provision of any law, statute, rule or
regulation or any order, writ, judgment, injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having applicability to the Borrower,
(b) violate or contravene any provisions of the Articles (or Certificate) of Incorporation or
by-laws of the Borrower, or (c) result in a breach of or constitute a default under any indenture,
loan or credit agreement or any other agreement, lease or instrument to which the Borrower is a
party or by which it or any of its properties may be bound or result in the creation of any Lien on
any asset of the Borrower or any Material Subsidiary, which in any such case under this clause
(c) would constitute an Adverse Event. Neither the Borrower nor any Material Subsidiary is in
default under or in violation of any such law, statute, rule or regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, loan or credit agreement or other
agreement, lease or instrument in any case in which the consequences of such default or violation
could constitute an Adverse Event. No Default or Event of Default has occurred and is continuing.



     Section 7.4 Government Consent. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by, any governmental or
public body or authority is required on the part of the Borrower to authorize, or is required in
connection with the execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, the Loan Documents, provided that the Borrower is required to
make



19









 







an annual filing of its Capital Structure with the Minnesota Public Utilities Commission, and
such Commission may thereafter issue orders approving or disapproving of the Borrower’s capital
structure.



     Section 7.5 Financial Statements and Condition. The Borrower’s audited consolidated
financial statements as at December 31, 2008 and unaudited financial statements as at March 31,
2009, copies of which have been furnished to the Banks, were prepared in accordance with GAAP on a
consistent basis and fairly present the financial condition of the Borrower and the Subsidiaries as
at the dates thereof and the results of their operations for the fiscal periods then ended
(subject, in the case of such unaudited statements, to the absence of footnotes and ordinary
year-end adjustments). As of the date of such audited consolidated financial statements, neither
the Borrower nor any Material Subsidiary had any material obligation, contingent liability,
liability for taxes or long-term lease obligation which is not reflected in such consolidated
financial statements or in the notes thereto. Since December 31, 2008, no Adverse Event has
occurred.



     Section 7.6 Litigation and Contingent Liabilities. Except as described in Schedule
7.6, there are no actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any Material Subsidiary or any of their properties
before any court or arbitrator, or any governmental department, board, agency or other
instrumentality which, if determined adversely to the Borrower or such Material Subsidiary, could
constitute an Adverse Event. Except as described in Schedule 7.6, neither the Borrower nor
any Material Subsidiary has any contingent liabilities which are material to the Borrower and the
Subsidiaries as a consolidated enterprise.



     Section 7.7 Compliance. The Borrower and the Material Subsidiaries are in material
compliance with all statutes and governmental rules and regulations applicable to them.



     Section 7.8 Environmental, Health and Safety Laws. To the best of the Borrower’s
knowledge after due inquiry, there does not exist any violation by the Borrower or any Material
Subsidiary of any applicable federal, state or local law, rule or regulation or order of any
government, governmental department, board, agency or other instrumentality relating to
environmental, pollution, health or safety matters which will or threatens to impose a material
liability on the Borrower or a Material Subsidiary or which would require a material expenditure by
the Borrower or such Material Subsidiary to cure. Neither the Borrower nor any Material Subsidiary
has received any notice to the effect that any part of its operations or properties is not in
material compliance with any such law, rule, regulation or order or notice that it or its property
is the subject of any governmental investigation evaluating whether any remedial action is needed
to respond to any release of any toxic or hazardous waste or substance into the environment, the
consequences of which non-compliance or remedial action could constitute an Adverse Event.



     Section 7.9 ERISA. Each Plan complies with all material applicable requirements of
ERISA and the Code and with all material applicable rulings and regulations issued under the
provisions of ERISA and the Code setting forth those requirements. No Reportable Event, other than
a Reportable Event for which the reporting requirements have been waived by regulations of the
PBGC, has occurred and is continuing with respect to any Plan. As of each January 1, all



20









 







of the minimum funding standards applicable to such Plans have been satisfied and there exists
no event or condition which would permit the institution of proceedings to terminate any Plan under
Section 4042 of ERISA.



     Section 7.10 Regulation U. The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (as defined in Regulation U of the
Federal Reserve Board) and no part of the proceeds of any Loan will be used to purchase or carry
margin stock or for any other purpose which would violate any of the margin requirements of the
Federal Reserve Board.



     Section 7.11 Ownership of Property; Liens. Each of the Borrower and the Material
Subsidiaries has good and marketable title to its real properties and good and sufficient title to
its other properties, including all properties and assets referred to as owned by the Borrower and
the Material Subsidiaries in the audited consolidated financial statement of the Borrower referred
to in Section 7.5 (other than property disposed of since the date of such financial
statement in the ordinary course of business). None of the properties, revenues or assets of the
Borrower or any of the Material Subsidiaries is subject to a Lien, except for (a) Liens disclosed
in the consolidated financial statements referred to in Section 7.5, (b) Liens listed on
Schedule 7.11, or (c) Liens allowed under Section 9.8.



     Section 7.12 Taxes. Each of the Borrower and the Material Subsidiaries has filed all
federal, state and local tax returns required to be filed and has paid or made provision for the
payment of all taxes due and payable pursuant to such returns and pursuant to any assessments made
against it or any of its property and all other taxes, fees and other charges imposed on it or any
of its property by any governmental authority (other than taxes, fees or charges the amount or
validity of which is currently being contested in good faith by appropriate proceedings and with
respect to which reserves in accordance with GAAP have been provided on the books of the Borrower).
No tax Liens have been filed and no material claims are being asserted with respect to any such
taxes, fees or charges. The charges, accruals and reserves on the books of the Borrower in respect
of taxes and other governmental charges are adequate.



     Section 7.13 Trademarks, Patents. Each of the Borrower and the Material Subsidiaries
possesses or has the right, by way of ownership or license, to use all of the patents, trademarks,
trade names, service marks and copyrights, and applications therefor, and all technology, know-how,
processes, methods and designs used in or necessary for the conduct of its business, without known
conflict with the rights of others.



     Section 7.14 Investment Company Act. Neither the Borrower nor any Subsidiary is an
“investment company” or a company “controlled” by an investment company within the meaning of the
Investment Company Act of 1940.



     Section 7.15 Subsidiaries. Schedule 7.15 sets forth as of the date of this
Agreement a list of all Subsidiaries and the number and percentage of the shares of each class of
capital stock owned beneficially or of record by the Borrower or any Subsidiary therein, and the
jurisdiction of incorporation of each Subsidiary.



21









 





     Section 7.16 Partnerships and Joint Ventures. Schedule 7.16 sets forth as of
the date of this Agreement a list of all partnerships or joint ventures in which the Borrower or
any Subsidiary is a partner (limited or general) or joint venturer.



     Section 7.17 Senior Debt. The Loans are senior unsecured Indebtedness of the Borrower,
and are pari passu and of equal rank and seniority with all senior unsecured Indebtedness of the
Borrower.



ARTICLE 8.

AFFIRMATIVE COVENANTS




     From the date of this Agreement and thereafter until the Commitments are terminated or expire
and the Loans and all other liabilities of the Borrower to the Banks hereunder and under the Notes
(if any) have been paid in full, unless the Required Banks shall otherwise expressly agree in
writing, the Borrower will do, and will cause each Material Subsidiary (except in the instance of
Section 8.1) to do, all of the following:



     Section 8.1 Financial Statements and Reports. Furnish to the Agent for distribution to
the Banks:



     (a) As soon as available and in any event within 120 days after the end of each fiscal year of
the Borrower, the annual audit report of the Borrower and its Subsidiaries prepared on a
consolidated basis and in conformity with GAAP, consisting of at least statements of income, cash
flow, and a consolidated balance sheet as at the end of such year, setting forth in each case in
comparative form corresponding figures from the previous annual audit, certified without
qualification by independent certified public accountants of recognized standing selected by the
Borrower and acceptable to the Bank, together with any related management letters.



     (b) As soon as available and in any event within 45 days after the end of each of the first
three quarters of each fiscal year, a copy of the unaudited financial statement of the Borrower and
its subsidiaries prepared in the same manner as the audit report referred to in Section
8.1(a), signed by the Borrower’s chief financial officer, consisting of at least consolidated
statements of income and cash flow for the Borrower and the Subsidiaries for such quarter and for
the period from the beginning of such fiscal year to the end of such quarter, and a consolidated
balance sheet of the Borrower as at the end of such quarter.



     (c) Together with the consolidated financial statements furnished by the Borrower under
Sections 8.1(a) and 8.1(b), a Compliance Certificate signed by the chief financial
officer of the Borrower, which shall (i) confirm the Borrower’s Long Term Debt Rating; (ii) confirm
compliance with the Borrower’s covenants in Sections 9.13 and 9.14 (including the
calculations with respect thereto); and (iii) confirm either that as at the date of each such
financial statement there did not exist any Default or Event of Default or, that a Default or Event
of Default existed, in which case it shall specify the nature and period of existence thereof and
what action the Borrower proposes to take with respect thereto.



     (d) Immediately upon becoming aware of any Default or Event of Default, a notice describing
the nature thereof and what action the Borrower proposes to take with respect thereto.



22









 





     (e) Immediately upon becoming aware of the occurrence, with respect to any Plan, of any
Reportable Event (other than a Reportable Event for which the reporting requirements have been
waived by PBGC regulations) or any “prohibited transaction” (as defined in Section 4975 of the
Code), a notice specifying the nature thereof and what action the Borrower proposes to take with
respect thereto, and, when received, copies of any notice from PBGC of intention to terminate or
have a trustee appointed for any Plan.



     (f) Promptly upon the mailing or filing thereof, copies of all financial statements, reports
and proxy statements mailed to the Borrower’s shareholders, and copies of all registration
statements, periodic reports and other documents filed with the Securities and Exchange Commission
(or any successor thereto) or any national securities exchange.



     (g) Copies of any order issued by the Minnesota Public Utilities Commission regarding the
Borrower’s capital structure.



     (h) Immediately upon becoming aware of the occurrence thereof, notice of the institution of
any litigation, arbitration or governmental proceeding, or the rendering of a judgment or decision
in such litigation or proceeding, which is material to the Borrower and its Subsidiaries as a
consolidated enterprise, and the steps being taken by the Person(s) affected by such proceeding.



     (i) Immediately upon becoming aware of the occurrence thereof, notice of any violation as to
any environmental matter by the Borrower or any Material Subsidiary and of the commencement of any
judicial or administrative proceeding relating to health, safety or environmental matters (i) in
which an adverse determination or result could result in the revocation of or have a material
adverse effect on any operating permits, air emission permits, water discharge permits, hazardous
waste permits or other permits held by the Borrower or any Material Subsidiary which are material
to the operations of the Borrower or such Material Subsidiary, or (ii) which will or threatens to
impose a material liability on the Borrower or such Material Subsidiary to any Person or which will
require a material expenditure by the Borrower or such Material Subsidiary to cure any alleged
problem or violation.



     (j) From time to time, such other information regarding the business, operation and financial
condition of the Borrower and the Subsidiaries as any Bank may reasonably request.



     Section 8.2 Corporate Existence. Subject to Sections 9.1, 9.2 and
9.4 in the instance of a Material Subsidiary, maintain its corporate existence in good
standing under the laws of its jurisdiction of incorporation and its qualification to transact
business in each jurisdiction in which the character of the properties owned, leased or operated by
it or the business conducted by it makes such qualification necessary, provided that the
Borrower may cause any Material Subsidiary to be dissolved that has substantially no assets,
revenues or operations.



     Section 8.3 Insurance. Maintain with financially sound and reputable insurance
companies such insurance as may be required by law and such other insurance in such amounts and
against such hazards as is customary in the case of reputable corporations engaged in the same or
similar business and similarly situated.



23









 





     Section 8.4 Payment of Taxes and Claims. File all tax returns and reports which are
required by law to be filed by it and pay before they become delinquent all taxes, assessments and
governmental charges and levies imposed upon it or its property and all claims or demands of any
kind (including those of suppliers, mechanics, carriers, warehouses, landlords and other like
Persons) which, if unpaid, might result in the creation of a Lien upon its property;
provided that the foregoing items need not be paid if they are being contested in good
faith by appropriate proceedings, and as long as the Borrower’s or such Material Subsidiary’s title
to its property is not materially adversely affected, its use of such property in the ordinary
course of its business is not materially interfered with and adequate reserves with respect thereto
have been set aside on the Borrower’s or such Material Subsidiary’s books in accordance with GAAP.



     Section 8.5 Inspection. Permit any Person designated by any Bank to visit and inspect
any of its properties, corporate books and financial records, to examine and to make copies of its
books of accounts and other financial records, and to discuss the affairs, finances and accounts of
the Borrower and the Subsidiaries with, and to be advised as to the same by, its officers at such
reasonable times and intervals as such Bank may designate. So long as no Event of Default exists,
the expenses of the Banks for such visits, inspections and examinations shall be at the expense of
the Banks, but any such visits, inspections, and examinations made while any Event of Default is
continuing shall be at the expense of the Borrower.



     Section 8.6 Maintenance of Properties. Maintain its properties used or useful in the
conduct of its business in good condition, repair and working order, and supplied with all
necessary equipment, and make all necessary repairs, renewals, replacements, betterments and
improvements thereto, all as may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.



     Section 8.7 Books and Records. Keep adequate and proper records and books of account
in which full and correct entries will be made of its dealings, business and affairs.



     Section 8.8 Compliance. Comply in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject.



     Section 8.9 ERISA. Maintain each Plan in compliance with all material applicable
requirements of ERISA and of the Code and with all material applicable rulings and regulations
issued under the provisions of ERISA and of the Code, including minimum funding standards.



     Section 8.10 Environmental Matters. Observe and comply with all laws, rules,
regulations and orders of any government or government agency relating to health, safety,
pollution, hazardous materials or other environmental matters to the extent non-compliance could
result in a material liability or otherwise constitute or result in an Adverse Event.



     Section 8.11 Failure to Approve Capital Structure. If the Minnesota Public Utilities
Commission or any other governmental authority of appropriate jurisdiction shall issue an order
finally determining not to approve, or finally disapproving of, this Agreement, the Borrower will
either (a) terminate the Commitments immediately or (b) if the Loans have been made, repay the
Loans within 60 days after such order becoming final (or within such shorter period as such order
shall provide for such repayment).



24









 





     Section 8.12 Senior Debt. Take all actions necessary to assure that the Loans are
senior unsecured Indebtedness of the Borrower, and are and remain pari passu and of equal rank and
seniority with all senior unsecured Indebtedness of the Borrower (without limiting the obligation
of the Borrower to deliver collateral under certain circumstances, as specifically provided
herein).



     Section 8.13 Ratings Triggers. If documentation applicable to any Indebtedness of the
Borrower or any Subsidiary shall hereafter include a Ratings Trigger, the Borrower shall promptly
notify the Agent of such Ratings Trigger. If any Ratings Trigger shall apply to the Borrower or any
Subsidiary and if the Agent shall so request of the Borrower, the Borrower agrees to enter into an
amendment to this Agreement to include a substantively similar Ratings Trigger in this Agreement
(subject to approval of the Required Banks, it being agreed that if the Required Banks shall not
enter into such an amendment, the Borrower shall not be deemed to have failed to comply with this
Section). For such purpose, a “Ratings Trigger” shall mean any provision in any document
applicable to any Indebtedness of the Borrower or any Subsidiary stating that if the Borrower or
any Subsidiary shall not maintain a minimum debt rating by S&P, Moody’s or any other ratings
agency: (a) the Borrower or such Subsidiary shall be deemed not to have complied with such
document, (b) a default or event of default or other acceleration event shall be deemed to have
occurred under such document, or (c) Indebtedness governed by such document shall be prepaid or the
holder of such Indebtedness shall have the option to require such prepayment (whether immediately
or with the giving of notice, passage of time or both).



ARTICLE 9.

NEGATIVE COVENANTS




     From the date of this Agreement and thereafter until the Commitments are terminated or expire
and the Loans and all other liabilities of the Borrower to the Banks hereunder and under the Notes
(if any) have been paid in full, unless the Required Banks shall otherwise expressly agree in
writing, the Borrower will not, and will not permit any Material Subsidiary to, do any of the
following:



     Section 9.1 Merger. Merge or consolidate or enter into any analogous reorganization or
transaction with any Person; provided that (a) any wholly-owned Subsidiary may be merged
with or liquidated into the Borrower (if the Borrower is the surviving corporation) or any other
wholly-owned Subsidiary; (b) the Borrower and Material Subsidiaries may enter Permitted
Divestitures; and (c) the Borrower may enter into the Permitted Reorganization.



     Section 9.2 Sale of Assets. Sell, transfer, lease or otherwise convey all or any
substantial part of its assets except for:



     (a) sales, subleases, leases and licensing of assets in the ordinary course of business;



     (b) sales or other transfers by a wholly-owned Subsidiary to the Borrower or another
wholly-owned Subsidiary;



     (c) Permitted Divestitures;




25











 






	 	(d)	 	Permitted Securitization Transactions;
	 
	 	(e)	 	the Permitted Reorganization;
	 
	 	(f)	 	Permitted Sales and Leasebacks;
	 
	 	(g)	 	sales of used, obsolete, worn out or surplus equipment;
	 
	 	(h)	 	sales of permitted cash equivalents for cash or cash equivalents;
	 
	 	(i)	 	synthetic leases described in clause (h) of the definition of Interest-bearing
Debt and clause (d) of the definition of Interest Expense;
	 
	 	(j)	 	abandonment of non-material intellectual property assets in the ordinary course of
business; and
	 
	 	(k)	 	surrender, release or waiver of contract rights in the ordinary course of business.





     Section 9.3 Plans. Permit any condition to exist in connection with any Plan which
might constitute grounds for the PBGC to institute proceedings to have such Plan terminated or a
trustee appointed to administer such Plan, or permit any Plan to terminate under any circumstances
which would cause the lien provided for in Section 4068 of ERISA to attach to any property, revenue
or asset of the Borrower or any Subsidiary.



     Section 9.4 Ownership of Stock. Take any action, or permit any Material Subsidiary to
take any action, which would result in a decrease in the Borrower’s or any Material Subsidiary’s
ownership interest in any Subsidiary (including decrease in the percentage of the shares of any
class of stock owned), other than: (a) Permitted Divestitures and (b) the Permitted Reorganization.



     Section 9.5 Other Agreements. Enter into any agreement, bond, note or other instrument
with or for the benefit of any Person other than the Banks which would: (a) be violated or breached
by the Borrower’s performance of its obligations under the Loan Documents or (b) prohibit any
Subsidiary of the Borrower from paying dividends or distributions on, or redeeming, acquiring or
retiring for value, any shares of stock or other ownership interest that the Borrower holds in such
Subsidiary, except for any such prohibition that applies only when a default shall exist under such
agreement or shall result from such payment, redemption, acquisition or retirement.



     Section 9.6 Restricted Payments. Either: (a) make any Restricted Payment if any
Default or Event of Default shall exist or shall result from the making of such Restricted Payment;
or (b) directly or indirectly make any payment on, or redeem, repurchase, defease, or make any
sinking fund payment on account of, or any other provision for, or otherwise pay, acquire or retire
for value, any Indebtedness of the Borrower or any Subsidiary that is subordinated in right of
payment to the Loans (whether pursuant to its terms or by operation of law), except for (i)
regularly-scheduled payments of interest and principal (which shall not include payments
contingently required upon occurrence of a change of control or other event) that are not otherwise
prohibited hereunder or under the document or agreement stating the terms



26









 







of such subordination, and (ii) refinancing of Indebtedness of the Borrower or any Subsidiary
that is subordinated in right of payment to the Loans (whether pursuant to its terms or by
operation of law) by the incurrence of Indebtedness that is similarly subordinated in right of
payment to the Loans.



     Section 9.7 Investments. Acquire for value, make, have or hold any Investments,
except:



     (a) Investments outstanding on the date hereof and listed on Schedule 9.7, and any
increases or decreases in the value thereof or write-ups, write-downs or write-offs with respect to
such Investments;



     (b) travel advances to officers and employees in the ordinary course of business;



     (c) Investments in readily marketable direct obligations of the United States of America
having maturities of one year or less from the date of acquisition;



     (d) certificates of deposit or bankers’ acceptances, each maturing within one year from the
date of acquisition, issued by any commercial bank organized under the laws of the United States or
any State thereof which has (i) combined capital, surplus and undivided profits of at least
$100,000,000, and (ii) a credit rating with respect to its unsecured indebtedness from a nationally
recognized rating service that is satisfactory to the Bank;



     (e) commercial paper maturing within 270 days from the date of issuance and given the highest
rating by a nationally recognized rating service;



     (f) repurchase agreements relating to securities issued or guaranteed as to principal and
interest by the United States of America;



     (g) extensions of credit in the nature of accounts receivable or notes receivable arising from
the sale of goods and services in the ordinary course of business;



     (h) share of stock, obligations or other securities received in settlement of claims arising
in the ordinary course of business;



     (i) Investments consisting of loans from any Subsidiary to the Borrower;



     (j) Investments outstanding on the date hereof in Subsidiaries by the Borrower and other
Subsidiaries;



     (k) provided that no Default or Event of Default shall exist, Investments consisting
of loans to or equity investments in (i) any Material Subsidiaries, or (ii) any Subsidiaries that
are not Material Subsidiaries, provided that such loans and equity investments in the
aggregate to any one Subsidiary that is not a Material Subsidiary shall not exceed $5,000,000 in
aggregate amount outstanding at any time (net of any repayment of loans or return of equity);



     (l) Investments by the Borrower or any Subsidiary in a Person that conducts only a Regulated
Business which Person will be a Subsidiary upon completion of such Investment;



27









 





     (m) Investments not otherwise permitted hereunder which shall not exceed (based on total
consideration paid by the Borrower or a Material Subsidiary) $20,000,000 for any single Investment
or series of related Investments in any Person; and



     (n) Investments made as part of the Permitted Reorganization.



     Section 9.8 Liens. Create, incur, assume or suffer to exist any Lien with respect to
any property, revenues or assets now owned or hereafter arising or acquired, except:



     (a) Liens in connection with the acquisition of property by way of purchase money mortgage and
security interests, conditional sale or other title retention agreement, Capitalized Lease or other
deferred payment contract, and attaching only to the property being acquired;



     (b) Liens existing on assets of Material Subsidiaries acquired after December 31, 2007, which
existed at the time of such acquisition and attach only to the assets of such Material
Subsidiaries;



     (c) Liens existing on the date of this Agreement and disclosed on Schedule 7.11 hereto
and Liens securing any extension, renewal, restatement or replacement of the credit facilities
described on Schedule 7.11, provided that Liens securing such extensions, renewals,
restatements or replacement credit facilities shall not attach to materially different assets than
the Liens disclosed on such Schedule 7.11 and shall not secure indebtedness exceeding the
amount of credit facilities described on Schedule 7.11;



     (d) Deposits or pledges to secure payment of workers’ compensation, unemployment insurance,
old age pensions or other social security obligations, in the ordinary course of business of the
Borrower or a Subsidiary;



     (e) Liens for taxes, fees, assessments and governmental charges not delinquent or to the
extent that payments therefor shall not at the time be required to be made in accordance with the
provisions of Section 8.4;



     (f) Liens of carriers, warehousemen, mechanics and materialmen, and other like Liens arising
in the ordinary course of business, for sums not due or to the extent that payment therefor shall
not at the time be required to be made in accordance with the provisions of Section 8.4;



     (g) Deposits to secure the performance of bids, trade contracts, leases, statutory obligations
and other obligations of a like nature incurred in the ordinary course of business;



     (h) Liens granted to secure obligations to any other holder of senior Indebtedness of the
Borrower (including obligations to insurers of bond obligations of the Borrower), provided
that (i) such Liens were required to be granted pursuant to agreements and instruments entered into
by the Borrower prior to the date of this Agreement, and (ii) the Agent is granted a pari passu
Lien, not subordinate in priority (whether due to time of filing or otherwise) to such Lien
attaching to either (x) the same assets and rights as the Lien in favor of such other holder of
senior Indebtedness (in which case if the Agent shall so notify the Borrower, the holder of such
senior Indebtedness shall enter into an inter-creditor agreement satisfactory to the Agent



28









 







confirming such respective priorities of such Liens), or (y) other assets that are acceptable
to the Required Banks in their sole discretion to secure all Indebtedness and obligations of the
Borrower hereunder, whether then existing or thereafter arising;



     (i) Liens arising under or related to any statutory or common law provisions 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 Borrower 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 to the
Borrower or any Subsidiary under any operating lease, and of licensor of intellectual property or
other rights to the Borrower or any Subsidiary;



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



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



     (n) Liens in favor of the Agent for the benefit of the Agent and the Banks under any
provisions of this Agreement or any replacement, additional or successor agreement hereto,
requiring such Liens; and



     (o) Liens not otherwise permitted by this Section securing Indebtedness not to exceed
$10,000,000 in the aggregate at any time outstanding. In no case shall Liens permitted hereunder
apply to the stock of any Subsidiary and in no case shall Liens under clauses (d),(f), (g),
(i), (j), (k), (l) or (m) secure any Indebtedness for borrowed money or
Indebtedness constituting obligations to issuers of letters of credit.



     Section 9.9 Contingent Liabilities. Guaranty obligations of any other Person, except
for:



     (a) Guaranties by the Borrower or any Material Subsidiary of obligations of any Material
Subsidiary as lessee under any lease that is not a Capitalized Lease;



     (b) Guaranties by Varistar Corporation of obligations of DMI Industries, Inc. in respect of
downpayments 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 (i) the dollar limitation set forth in any
such Guaranty, if applicable, or (ii) the amount of such downpayment so Guarantied;



29









 





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



     (d) Guaranties by any Material Subsidiary of the obligations of the Borrower under that
certain Note Purchase Agreement, dated as of December 1, 2001, among the Borrower and the various
purchasers which are parties thereto in respect of up to $90,000,000 of 6.63% notes, subject to
release to the extent provided in Section 12.1(e);



     (e) Guaranties by any Material Subsidiary of the obligations of the Borrower in respect of up
to $50,000,000 of 5.778% senior notes due November 30, 2017, subject to release to the extent
provided in Section 12.1(e);



     (f) Guaranties by the Borrower of the obligations of a Subsidiary under any Agreement
involving the sale of accounts receivable permitted by Section 9.2(h), 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



     (g) Guaranties by any Material Subsidiary that are Subsidiaries of Varistar Corporation of the
obligations of Varistar Corporation under that certain Credit Agreement dated as of December 23,
2008 among Varistar Corporation, the Banks named 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 and Lead Arranger;


provided that any such Guaranty shall be subject to release to the extent provided in
Section 12.1(e) if such Guaranty (i) is a Guaranty of the Borrower or of a Material
Subsidiary of the Borrower after the Permitted Reorganization and (ii) covers the Assumed
Liabilities.




     Section 9.10 Unconditional Purchase Obligations. Enter into or be a party to any
contract for the purchase or lease of materials, supplies or other property or services if such
contract requires that payment be made by it regardless of whether or not delivery is ever made of
such materials, supplies or other property or services.



     Section 9.11 Transactions with Related Parties. Enter into or be a party to any
transaction or arrangement, including the purchase, sale, lease or exchange of property or the
rendering of any service, with any Related Party, except in the ordinary course of and pursuant to
the reasonable requirements of the Borrower’s or the applicable Material Subsidiary’s business and
upon fair and reasonable terms no less favorable to the Borrower or such Material Subsidiary than
would obtain in a comparable arm’s-length transaction with a Person not a Related Party, and
excluding the Permitted Reorganization.



     Section 9.12 Use of Proceeds. Permit any proceeds of the Loans to be used for purposes
other than those set forth in Section 2.7, or permit any proceeds of the Loans to be used,
either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of
“purchasing or carrying any margin stock” within the meaning of Regulation U of the Federal Reserve
Board, and furnish to any Bank, upon its request, a statement in conformity with the requirements
of Federal Reserve Form U-1 referred to in Regulation U.



30









 





     Section 9.13 Interest-bearing Debt to Total Capitalization. Permit the ratio, as of
the last day of any fiscal quarter of the Borrower, of (a) Interest-bearing Debt to (b) Total
Capitalization to be greater than 0.60 to 1.00.



     Section 9.14 Interest and Dividend Coverage Ratio. Permit the Interest and Dividend
Coverage Ratio for any period of four consecutive fiscal quarters to be less than 1.50 to 1.00.



     Section 9.15 Restriction of Varistar Corporation Support. Prior to the consummation of
the Permitted Reorganization, issue any Indebtedness to support the operations of Varistar
Corporation or issue any Guaranty of the obligations of Varistar Corporation (other than any
Guaranty required pursuant to documentation existing prior to the date hereof); provided
that (a) the foregoing restrictions shall not apply to Varistar Corporation and its Subsidiaries
and (b) for the avoidance of doubt, the Borrower may make investments in Varistar Corporation with
the proceeds of common equity issued by the Borrower after the date hereof.



ARTICLE 10.

EVENTS OF DEFAULT AND REMEDIES




     Section 10.1 Events of Default. The occurrence of any one or more of the following
events shall constitute an Event of Default:



     (a) The Borrower shall fail to make when due, whether by acceleration or otherwise, any
payment of principal of or interest on the Note or any fee or other amount required to be made to
the Banks pursuant to the Loan Documents;



     (b) Any representation or warranty made or deemed to have been made by or on behalf of the
Borrower or any Material Subsidiary by any of the Loan Documents or by or on behalf of the Borrower
or any Material Subsidiary in any certificate, statement, report or other writing furnished by or
on behalf of the Borrower to the Banks pursuant to the Loan Documents shall prove to have been
false or misleading in any material respect on the date as of which the facts set forth are stated
or certified or deemed to have been stated or certified;



     (c) The Borrower shall fail to comply with Section 8.2 or any Section of Article
IX;



     (d) The Borrower shall fail to comply with any agreement, covenant, condition, provision or
term contained in the Loan Documents (and such failure shall not constitute an Event of Default
under any of the other provisions of this Section 10.1) and such failure to comply shall
continue for 30 calendar days after notice thereof to the Borrower by the Bank;



     (e) The Borrower or any Material Subsidiary shall become insolvent or shall generally not pay
its debts as they mature or shall apply for, shall consent to, or shall acquiesce in the
appointment of a custodian, trustee or receiver of the Borrower or such Material Subsidiary or for
a substantial part of the property thereof or, in the absence of such application, consent or
acquiescence, a custodian, trustee or receiver shall be appointed for the Borrower or a Material
Subsidiary or for a substantial part of the property thereof and shall not be discharged within 30
days;



31









 





     (f) Any bankruptcy, reorganization, debt arrangement or other proceedings under any bankruptcy
or insolvency law shall be instituted by or against the Borrower or a Material Subsidiary, and, if
instituted against the Borrower or a Material Subsidiary, shall have been consented to or
acquiesced in by the Borrower or such Material Subsidiary, or shall remain undismissed for 30 days,
or an order for relief shall have been entered against the Borrower or such Material Subsidiary, or
the Borrower or any Material Subsidiary shall take any corporate action to approve institution of,
or acquiescence in, such a proceeding;



     (g) Any dissolution or liquidation proceeding shall be instituted by or against the Borrower
or a Material Subsidiary and, if instituted against the Borrower or such Material Subsidiary, shall
be consented to or acquiesced in by the Borrower or such Material Subsidiary or shall remain for 30
days undismissed, or the Borrower or any Material Subsidiary shall take any corporate action to
approve institution of, or acquiescence in, such a proceeding;



     (h) A judgment or judgments for the payment of money in excess of the sum of $10,000,000 in
the aggregate shall be rendered against the Borrower or a Material Subsidiary and the Borrower or
such Material Subsidiary shall not discharge the same or provide for its discharge in accordance
with its terms, or procure a stay of execution thereof, prior to any execution on such judgments by
such judgment creditor, within 30 days from the date of entry thereof, and within said period of 30
days, or such longer period during which execution of such judgment shall be stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal;



     (i) The institution by the Borrower or any ERISA Affiliate of steps to terminate any Plan if
in order to effectuate such termination, the Borrower or any ERISA Affiliate would be required to
make a contribution to such Plan, or would incur a liability or obligation to such Plan, and the
requirement to make such contribution or the incurrence of such liability or obligation shall
constitute an Adverse Event, or the institution by the PBGC of steps to terminate any Plan;



     (j) The maturity of any Indebtedness of the Borrower (other than Indebtedness under this
Agreement) or a Material Subsidiary in the aggregate in excess of $10,000,000 shall be accelerated,
or the Borrower or a Material Subsidiary shall fail to pay any such Indebtedness (in excess of such
amount) when due or, in the case of such Indebtedness payable on demand, when demanded, or any
event shall occur or condition shall exist and shall continue for more than the period of grace, if
any, applicable thereto and shall have the effect of causing, or permitting (any required notice
having been given and grace period having expired) the holder of any such Indebtedness (in excess
of such amount) or any trustee or other Person acting on behalf of such holder to cause, such
Indebtedness to become due prior to its stated maturity or to realize upon any collateral given as
security therefor;



     (k) Any Loan Document shall not be, or shall cease to be, enforceable and binding in
accordance with its terms, or the Borrower, any Material Subsidiary, or any other obligor
thereunder (except for the Agent or the Banks) shall disavow or contest, or attempt to disavow or
contest, its obligations under such Loan Document; or



     (l) Except as a part of the Permitted Reorganization, 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



32









 







Borrower shall have acquired more than 25% of the shares of such voting stock, or after
consummation of the Permitted Reorganization, either (i) any Person, or group of Persons acting in
concert, that owned less than 5% of the shares of any voting class of stock of New OTC shall have
acquired more than 25% of the shares of such voting stock, or (ii) New OTC shall cease to own all
of the shares of the Borrower.



     Section 10.2 Remedies. If (a) any Event of Default described in Sections
10.1(e), (f) or (g) shall occur with respect to the Borrower, the outstanding
unpaid principal balance of any Note, the accrued interest thereon and all other obligations of the
Borrower to the Banks and the Agent under the Loan Documents shall automatically become immediately
due and payable; or (b) any other Event of Default shall occur and be continuing, then the Agent
may take any or all of the following actions (and shall take any or all of the following actions on
direction of the Required Banks): (i) declare that the outstanding unpaid principal balance of any
Note, the accrued and unpaid interest thereon and all other obligations of the Borrower to the
Banks and the Agent under the Loan Documents to be forthwith due and payable, whereupon any Note,
all accrued and unpaid interest thereon and all such obligations shall immediately become due and
payable, in each case without demand or notice of any kind, all of which are hereby expressly
waived, anything in this Agreement or in any Note to the contrary notwithstanding, (ii) exercise
all rights and remedies under any other instrument, document or agreement between the Borrower and
the Agent or the Banks, and (iii) enforce all rights and remedies under any applicable law.



     Section 10.3 Security Agreement in Accounts and Setoff. As additional security for the
payment of all Obligations, the Borrower grants to the Agent, each Bank and each holder of a Note a
security interest in, a lien on, and an express contractual right to set off against each deposit
account and all deposit account balances, cash and other property of the Borrower now or hereafter
maintained with, or in the possession of, the Agent, such Bank or such other holder of a Note. Upon
the occurrence of any Event of Default, upon written direction by the Agent to such effect, the
Agent, each Bank and each other holder of a Note may: (a) refuse to allow withdrawals from any such
deposit account; (b) apply the amount of such deposit account balances and the other assets of the
Borrower described above to the Obligations; and (c) offset any other obligation of the Agent, such
Bank or such holder of a Note against the Obligations; all whether or not the Obligations are then
due or have been accelerated and all without any advance or contemporaneous notice or demand of any
kind to the Borrower, such notice and demand being expressly waived.



ARTICLE 11.

THE AGENT




     Section 11.1 Appointment and Grant of Authority. Each Bank hereby appoints the Agent,
and the Agent hereby agrees to act, as agent under the Loan Documents. The Agent shall have and may
exercise such powers under the Loan Documents as are specifically delegated to the Agent by the
terms hereof and thereof, together with such other powers as are reasonably incidental thereto.
Each Bank hereby authorizes, consents to, and directs the Borrower to deal with the Agent as the
true and lawful agent of such Bank to the extent set forth in the Loan Documents.



33









 





     Section 11.2 Non-Reliance on Agent. Each Bank agrees that it has, independently and
without reliance on the Agent or any other Bank, and based on such documents and information as it
has deemed appropriate, made its own credit analysis of the Borrower and decision to enter into
this Agreement and that it will, independently and without reliance upon the Agent, and based on
such documents and information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement. The Agent shall not be
required to keep informed as to the performance or observance by the Borrower of this Agreement and
the Loan Documents or to inspect the properties or books of the Borrower. Except for notices,
reports and other documents and information expressly required to be furnished to the Banks by the
Agent hereunder, the Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the affairs, financial condition or business of the Borrower
(or any of its related companies) which may come into the Agent’s possession.



     Section 11.3 Responsibility of the Agent and Other Matters.



     (a) The Agent shall have no duties or responsibilities except those expressly set forth in
this Agreement and those duties and liabilities shall be subject to the limitations and
qualifications set forth in this Section. The duties of the Agent shall be mechanical and
administrative in nature.



     (b) Neither the Agent nor any of its directors, officers or employees shall be liable for any
action taken or omitted (whether or not such action taken or omitted is within or without the
Agent’s responsibilities and duties expressly set forth in this Agreement) under or in connection
with this Agreement, or any other instrument or document in connection herewith, except for gross
negligence or willful misconduct. Without limiting the foregoing, neither the Agent nor any of its
directors, officers or employees shall be responsible for, or have any duty to examine: (i) the
genuineness, execution, validity, effectiveness, enforceability, value or sufficiency of any Loan
Document; (ii) the collectibility of any amounts owed by the Borrower; (iii) any recitals or
statements or representations or warranties in connection with this Agreement or any Note; (iv) any
failure of any party to this Agreement to receive any communication sent; or (v) the assets,
liabilities, financial condition, results of operations, business or creditworthiness of the
Borrower.



     (c) The Agent shall be entitled to act, and shall be fully protected in acting upon, any
communication in whatever form believed by the Agent in good faith to be genuine and correct and to
have been signed or sent or made by a proper person or persons or entity. The Agent may consult
counsel and shall be entitled to act, and shall be fully protected in-any action taken in good
faith, in accordance with advice given by counsel. The Agent may employ agents and
attorneys-in-fact and shall not be liable for the default or misconduct of any such agents or
attorneys-in-fact selected by the Agent with reasonable care. The Agent shall not be bound to
ascertain or inquire as to the performance or observance of any of the terms, provisions or
conditions of this Agreement or any Note on the Borrower’s part.



     Section 11.4 Action on Instructions. The Agent shall be entitled to act or refrain
from acting, and in all cases shall be fully protected in acting or refraining from acting under
this Agreement or any Note or any other instrument or document in connection herewith or therewith



34









 







in accordance with instructions in writing from (i) the Required Banks except for instructions
which under the express provisions hereof must be received by the Agent from all the Banks, and
(ii) in the case of such instructions, from all the Banks.



     Section 11.5 Indemnification. To the extent the Borrower does not reimburse and save
the Agent harmless according to the terms hereof for and from all costs, expenses and disbursements
in connection herewith or with the other Loan Documents, such costs, expenses and disbursements to
the extent reasonable shall be borne by the Banks ratably in accordance with their Percentages and
the Banks hereby agree on such basis (a) to reimburse the Agent for all such reasonable costs,
expenses and disbursements on request and (b) to indemnify and save harmless the Agent against and
from any and all losses, obligations, penalties, actions, judgments and suits and other reasonable
costs, expenses and disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent, other than as a consequence of actual gross negligence
or willful misconduct on the part of the Agent, arising out of or in connection with this Agreement
or any Note or any instrument or document in connection herewith or therewith, or any request of
the Banks, including the reasonable costs, expenses and disbursements in connection with defending
itself against any claim or liability, or answering any subpoena, related to the exercise or
performance of any of its powers or duties under this Agreement or the other Loan Documents or the
taking of any action under or in connection with this Agreement or any Note.



     Section 11.6 JPMorgan Chase Bank, N.A. and Affiliates. With respect to JPMorgan Chase
Bank, N.A.’s Commitment and the Loan by JPMorgan Chase Bank, N.A. under this Agreement and any Note
and any interest of JPMorgan Chase Bank, N.A. in any Note, JPMorgan Chase Bank, N.A. shall have the
same rights, powers and duties under this Agreement and such Note as any other Bank and may
exercise the same as though it were not the Agent. JPMorgan Chase Bank, N.A. and its affiliates may
accept deposits from, lend money to, and generally engage, and continue to engage, in any kind of
business with the Borrower as if JPMorgan Chase Bank, N.A. were not the Agent.



     Section 11.7 Notice to Holder of Note. The Agent may deem and treat the payee of any
Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof has been filed with the Agent. Any request, authority or consent of any holder of
any Note shall be conclusive and binding on any subsequent holder, transferee or assignee of such
Note.



     Section 11.8 Successor Agent. The Agent may resign at any time by giving at least 30
days written notice thereof to the Banks and the Borrower. Upon any such resignation, the Required
Banks shall have the right to appoint a successor Agent. If no successor Agent shall have been
appointed by the Required Banks and shall have accepted such appointment within 30 days after the
retiring Agent’s giving notice of resignation, then the retiring Agent may, but shall not be
required to, on behalf of the Banks, appoint a successor Agent.



     Section 11.9 Other Agents; Lead Arrangers. No Person named herein as the Syndication
Agent, the Documentation Agent or a Lead Arranger shall have any duty, responsibility or liability
in such capacity.



35









 





ARTICLE 12.

PERMITTED REORGANIZATION




     Section 12.1 Proposed Transaction. Without any representation or warranty that the
following transaction will be consummated, the Borrower has informed the Agent and the Banks that
it is planning the following transaction (the “Permitted Reorganization”):



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



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



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



     (d) assumption by New OTC of all liabilities and obligations of the Borrower except (i) those
under this Agreement and any Note issued hereunder, (ii) those under the Senior Indebtedness
Agreements listed on Schedule 12.1 and any Note described on such Schedule 12.1,
and (iii) all liabilities and obligations that pertain to the Borrower’s electric generation and
transmission business and do not pertain to the operation of the Borrower as a holding company
(such liabilities and obligations other than those described in (i), (ii) and (iii) hereof are
called the “Assumed Liabilities”);



     (e) release of the Borrower from the Assumed Liabilities by each holder thereof;



     (f) release of Varistar Corporation and its Subsidiaries from guaranties of Senior
Indebtedness Agreements listed on Schedule 12.1 and any Note described on such Schedule
12.1;



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



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



     (i) the Borrower (now named Otter Tail Power Company) will remain obligated under this
Agreement and the other Loan Documents.



     Section 12.2 Conditions to Permitted Reorganization. The following shall constitute
terms and conditions (in addition to those set forth in Section 12.1) that must be
satisfied for the proposed transaction to constitute the Permitted Reorganization under this
Agreement:



     (a) New OTC and Merger Sub shall have been duly incorporated as Minnesota corporations;



36









 





     (b) the Power Company Assets shall be owned by the Borrower, and all assets of the Borrower
that are not Power Company Assets shall have been assigned or contributed to the capital of New
OTC;



     (c) the stock of the Borrower shall be owned by New OTC;



     (d) the Permitted Reorganization shall not result in ownership by 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
Borrower of more than 25% of the shares of voting stock of New OTC (other than the ownership by the
Borrower of the stock of New OTC prior to the effectiveness of the Permitted Reorganization);



     (e) New OTC shall have submitted copies of its Articles of Incorporation and By-laws to the
Agent, and such Articles of Incorporation and By-laws shall be satisfactory to the Agent in form
and substance. Pursuant to such documents, New OTC shall have elected a board of directors and New
OTC shall have elected and qualified officers authorized to act for New OTC. New OTC shall have
received a tax identification number from the Internal Revenue Service; and



     (f) New OTC and the Borrower shall have received approval of the reorganization from the
Minnesota Public Utilities Commission.



     (g) The Agent shall have received all of the following, in form and substance satisfactory to
the Agent, each duly executed by all necessary parties:



          (i) copies of (A) the agreement and articles of merger entered and filed in connection with
the Merger; (B) any amendment to the articles of incorporation and bylaws of the Borrower filed or
made in connection with the Permitted Reorganization, including amendment to change the Borrower’s
name to Otter Tail Power Company;




          (ii) certified copies of the articles of incorporation and bylaws of New OTC;




          (iii) certificate of Good Standing for the Borrower and New OTC in the jurisdictions of their
incorporation, certified by the appropriate governmental officials;




          (iv) copies of the instruments or documents entered into by all necessary parties (A)
pertaining to the transfer by the Borrower of all assets other than the Power Company Assets to New
OTC, (B) pertaining to transfer to New OTC of the Assumed Liabilities and assumption thereof by New
OTC, (C) constituting the release of the Borrower from the Assumed Liabilities by the holders of
the Assumed Liabilities as provided in Section 12.1(e), and (D) constituting the release of
the guaranties by Varistar Corporation and its Subsidiaries of guaranties, as provided in
Section 12.1(f);




          (v) an instrument or agreement by the Borrower confirming to the Agent that the Permitted
Reorganization has been consummated in accordance with the terms and condition of this Article
XII, confirming the name change of the Borrower and confirming that the Borrower, under such
new name, remains obligated under this Agreement, any Note, the Agent’s Fee Letter, the Lead
Arrangers’ Fee Letter and that this Agreement, any Note, the Agent’s Fee



37









 






Letter and the Lead Arrangers’ Fee Letter remain in full force and effect, enforceable against
the Borrower in accordance with their respective terms;




          (vi) an opinion of counsel to the Borrower, addressed to the Bank, in substantially the form
of Exhibit D;




          (vii) a balance sheet of the Borrower giving effect to the Permitted Reorganization, prepared
in accordance with GAAP, and projections and budgets for the Borrower following the Permitted
Reorganization, prepared in good faith by the Borrower; and




          (viii) any necessary revised versions of Schedules 1.1(b), 7.6, 7.11,
7.15 and 7.16, as provided in Section 12.2(h)(i).



Upon delivery, the instruments or documents described in clauses (iv) and
(v) above shall be deemed to be “Loan Documents” under this Agreement.




     (h) No Default or Event of Default shall have occurred and shall have continued hereunder.
Upon and after consummation of the Permitted Reorganization:



          (i) all representations and warranties of the Borrower hereunder, as applied to the Borrower
shall be true and correct, except the Borrower shall prepare and submit to the Agent revised drafts
of Schedules 1.1(b), 7.6, 7.11, 7.15 and 7.16, which shall,
for purposes of the representations and warranties, be deemed to replace the corresponding
Schedules to this Agreement. Such revised Schedule 7.15 shall include all Subsidiaries
included in the Power Company Assets;




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




          (iii) the Subsidiaries and Material Subsidiaries of the Borrower prior to the Permitted
Reorganization which do not constitute Power Company Assets shall be deemed to no longer be
Subsidiaries or Material Subsidiaries for purposes of reference thereto in this Agreement.




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



     (j) The Agent shall have received satisfactory evidence that upon consummation of the
transactions described herein, the unsecured long term debt of the Borrower shall be rated no lower
than BBB- by S&P and Baa2 by Moody’s.



     Section 12.3 Acknowledgement of No Liability of New OTC. The Banks and the Agent
acknowledge and agree that if the Permitted Reorganization is conducted as described in Section
12.1, and the terms and conditions set forth in Section 12.2 are satisfied, that New
OTC will have no obligations or liabilities to the Banks or the Agent under this Agreement, any
Note, the Agent’s Fee letter and the Lead Arrangers’ Fee Letter, and such entity shall not be
deemed to have assumed such obligations and liabilities under Section 12.1(d).



38









 





ARTICLE 13.

MISCELLANEOUS




     Section 13.1 No Waiver and Amendment. No failure on the part of the Banks or the
holder of any Note to exercise and no delay in exercising any power or right hereunder or under any
other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of
any power or right preclude any other or further exercise thereof or the exercise of any other
power or right. The remedies herein and in any other instrument, document or agreement delivered or
to be delivered to the Banks hereunder or in connection herewith are cumulative and not exclusive
of any remedies provided by law. No notice to or demand on the Borrower not required hereunder or
under any Note shall in any event entitle the Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the right of the Banks or any holder of
the Note to any other or further action in any circumstances without notice or demand.



     Section 13.2 Amendments, Etc. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Borrower and the Agent upon direction of the
Required Banks and then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided that no amendment, waiver or consent
shall, unless agreed to by the Agent and each directly-affected Bank:



     (a) increase the amounts of or extend the terms of the Commitments or subject the Banks to any
additional obligations;



     (b) change the principal of, or interest on, any Note or any fees or other amounts payable
hereunder;



     (c) postpone any date fixed for any payment of principal of, or interest on, any Note or any
fees or other amounts payable hereunder; or



     (d) release any collateral held subject to Section 10.3, except as contemplated by
such Section; and


provided, further, that (i) any amendment to the definition of Required Banks or to
this Section 13.2 shall require the consent of all Banks; and (ii) any amendment, waiver or
consent affecting the rights of the Agent shall require the consent of the Agent.




     Section 13.3 Assignments and Participations.



     (a) Assignments. Each Bank shall have the right, subject to the further provisions of
this Sections 13.3, to sell or assign all or any part of its Commitment, its Loan, its Note
and other rights and obligations under this Agreement and related documents (such transfer, an
“Assignment”) to any commercial lender, other financial institution or other entity (an
“Assignee”). Upon such Assignment becoming effective as provided in Section
13.3(b), the assigning Bank shall be relieved from the portion of its Commitment, obligations
to indemnify the Agent and other obligations hereunder to the extent assumed and undertaken by the
Assignee, and to such extent the Assignee shall have the rights and obligations of a “Bank”



39









 







hereunder. Notwithstanding the foregoing, unless otherwise consented to by the Borrower and
the Agent, each Assignment shall be in the initial principal amount of not less than $3,000,000 in
the aggregate for the Commitment or Loan assigned, or an integral multiple of $1,000,000 if above
such amount Each Assignment shall be documented by an agreement between the assigning Bank and the
Assignee (an “Assignment and Assumption Agreement”) substantially in the form of
Exhibit E attached hereto.



     (b) Effectiveness of Assignments. An Assignment shall become effective hereunder when
all of the following shall have occurred: (i) the Agent and the Borrower shall consent to such
Assignment (which consent shall not be unreasonably withheld), by either notice of such consent or
by executing and delivering such Assignments, provided that the Agent only (and not the
Borrower) shall consent (A) if the assignee is another Bank, an affiliate of the assigning Bank or
an approved fund or (B) if an Event of Default has occurred and is continuing, (ii) either the
assigning Bank or the Assignee shall have paid a processing fee of $3,500 to the Agent for its own
account, (iii) the Assignee shall have submitted the Assignment and Assumption Agreement to the
Agent with a copy for the Borrower, and shall have provided to the Agent information the Agent
shall have reasonably requested to make payments to the Assignee, and (iv) the assigning Bank and
the Agent shall have agreed upon a date upon which the Assignment shall become effective. Upon the
Assignment becoming effective, (x) if requested by the assigning Bank, the Agent and the Borrower
shall make appropriate arrangements so that new Notes are issued to the assigning Bank and the
Assignee; and (y) the Agent shall forward all payments of interest, principal, fees and other
amounts that would have been made to the assigning Bank, in proportion to the percentage of the
assigning Bank’s rights transferred, to the Assignee.



     (c) Participations. Each Bank shall have the right, subject to the further provisions
of this Section 13.3, to grant or sell a participation in all or any part of its
Commitment, its Loan or its Note (a “Participation”) to any commercial lender, other
financial institution or other entity (a “Participant”) without the consent of the
Borrower, the Agent of any other party hereto. The Borrower agrees that if amounts outstanding
under this agreement and any Note are due and unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed
to have the right of setoff in respect of its Participation in amounts owing under this Agreement
and any Note to the same extent as if the amount of its Participation were owing directly to it as
a Bank under this agreement or any note; provided that such right of setoff shall be
subject to the obligation of such Participant to share with the Banks, and the Banks agree to share
with such Participant, as provided in Section 4.4. The Borrower also agrees that each
Participant shall be entitled to the benefits of Article V with respect to its
Participation, provided that no Participant shall be entitled to receive any greater amount
pursuant to such Sections than the transferor Bank would have been entitled to receive in respect
of the amount of the Participation transferred by such transferor Bank to such Participant had no
such transfer occurred.



     (d) Limitation of Rights of any Assignee or Participant. Notwithstanding anything in
the foregoing to the contrary, except in the instance of an Assignment that has become effective as
provided in Section 13.3(b), (i) no Assignee or Participant shall have any direct rights
hereunder, (ii) the Borrower, the Agent and the Banks other than the assigning or selling Bank
shall deal solely with the assigning or selling Bank and shall not be obligated to extend any
rights or make any payment to, or seek any consent of, the Assignee or Participant, (iii) no



40









 







Assignment or Participation shall relieve the assigning or selling Bank from its Commitment to
make its Loan hereunder or any of its other obligations hereunder and such Bank shall remain solely
responsible for the performance hereof, the (iv) no Assignee or Participant, other than an
affiliate of the assigning or selling Bank, shall be entitled to require such Bank to take or omit
to take any action hereunder, except that such Bank may agree with such Assignee or Participant
that such Bank will not, without such Assignee’s or Participant’s consent, take any action which
would, in the case of any principal, interest or fee in which the Assignee or Participant has an
ownership or beneficial interest: (w) extend the final maturity of such Bank’s Loan, (x) reduce the
interest rate on such Loan, (y) forgive any principal of, or interest on, such Loan, or (z) release
all or substantially all of the Collateral (if any) for the Loans.



     (e) Tax Matters. No Bank shall be permitted to enter into any Assignment or
Participation with any Assignee or Participant who (i) is not a United States Person or (ii) is a
United States Person that the Borrower may not treat as an “exempt recipient” within the meaning of
Treasury Regulations Section 1.6049-4(c) based on the indicators set forth therein, unless such
Assignee or Participant represents and warrants to such Bank, the Agent and the Borrower that, as
at the date of such Assignment or Participation, it is entitled to receive interest payments
without withholding or deduction of any taxes and such Assignee or Participant executes and
delivers to such Bank on or before the date of execution and delivery of documentation of such
Participation or Assignment, a United States Internal Revenue Service Form W8BEN, W8ECI, W-8 IMY
and/or W-9 or any successor to either of such forms, as appropriate, properly completed an claiming
complete exemption from withholding and deduction of all Federal Income Taxes. A “United States
Person” means any citizen, national or resident of the United States, any corporation or other
entity created or organized in or under the laws of the United States or any political subdivision
hereof or any estate or trust, in each case that is not subject to withholding of United States
Federal income taxes or other taxes on payment of interest, principal of fees hereunder.



     (f) Information. Each Bank may furnish any information concerning the Borrower in the
possession of such Bank from time to time to Assignees and Participants and potential Assignees and
Participants.



     (g) Federal Reserve Bank. Nothing herein stated shall limit the right of any Bank to
assign any interest herein and in any Note to a Federal Reserve Bank.



     Section 13.4 Costs, Expenses and Taxes; Indemnification.



     (a) The Borrower agrees, whether or not any Advance is made hereunder, to pay on demand: (i)
all reasonable and documented costs and expenses of the Agent (including the reasonable and
documented fees and expenses of counsel and paralegals for such persons who may be employees of
such persons) incurred in connection with the preparation, execution and delivery of the Loan
Documents and the preparation, negotiation and execution of any and all amendments to each thereof,
and (ii) all reasonable and documented costs and expenses of the Agent and each of the Banks
incurred after the occurrence of an Event of Default in connection with the enforcement of the Loan
Documents. The Borrower agrees to pay, and save the Banks harmless from all liability for, any
stamp or other taxes which may be payable with respect to the execution or delivery of the Loan
Documents. The Borrower agrees to indemnify and hold the



41









 







Banks harmless from any loss or expense which may arise or be created by the acceptance in
good faith by the Agent of telephonic or other instructions for making Advances or disbursing the
proceeds thereof.



     (b) The Borrower agrees to defend, protect, indemnify, and hold harmless the Agent and each
and all of the Banks, each of their respective Affiliates and each of the respective officers,
directors, employees and agents of each of the foregoing (each an “Indemnified Person” and,
collectively, the “Indemnified Persons”) from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including the fees and disbursements of counsel to
such Indemnified Persons in connection with any investigative, administrative or judicial
proceeding, whether direct, indirect or consequential and whether based on any federal or state
laws or other statutory regulations, including securities and commercial laws and regulations,
under common law or at equitable cause, or on contract or otherwise, the capitalization of the
Borrower, the Commitments, the making of, management of and participation in the Advances or the
use or intended use of the proceeds of the Advances, provided that the Borrower shall have
no obligation under this Section 13.4(b) to an Indemnified Person with respect to any of
the foregoing to the extent resulting from the gross negligence or willful misconduct of such
Indemnified Person or arising solely from claims between one such Indemnified Person and another
such Indemnified Person. The indemnity set forth herein shall be in addition to any other
obligations or liabilities of the Borrower to each Indemnified Person under the Loan Documents or
at common law or otherwise.



     (c) The obligations of the Borrower under this Section 13.4 shall survive any
termination of this Agreement.



     Section 13.5 Notices.



     (a) Except when telephonic or electronic notice is expressly authorized by this Agreement, any
notice or other communication to any party in connection with this Agreement shall be in writing
and shall be sent by manual delivery, facsimile transmission, overnight courier or United States
mail (postage prepaid) addressed to such party at the address specified on the signature page
hereof, or at such other address as such party shall have specified to the other party hereto in
writing. All periods of notice shall be measured from the date of delivery thereof if manually
delivered, from the date of sending thereof if sent by facsimile transmission, from the first
Business Day after the date of sending if sent by overnight courier, or from four days after the
date of mailing if mailed; provided that any notice to the Agent under Article II
shall be deemed to have been given only when received by the Agent.



     (b) Financial statements, reports and letters under Section 8.1(a), (b),
(c), (f) and (g) and other ordinary course requests or communications by
the Borrower to the Agent may be sent by the Borrower to the Agent by e-mail, and may be
distributed by the Agent to the Bank by similar means or by posting to Intralinks®, or
other coded commercial service selected for such purpose by the Agent.



     Section 13.6 Successors. This Agreement shall be binding upon the Borrower, the Banks
and the Agent and their respective successors and assigns, and shall inure to the benefit of



42









 







the Borrower, the Banks and the Agent and the successors and assigns of the Banks. The
Borrower shall not assign its rights or duties hereunder without the written consent of the Banks.



     Section 13.7 Severability. Any provision of the Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other jurisdiction.



     Section 13.8 Subsidiary References. The provisions of this Agreement relating to
Subsidiaries shall apply only during such times as the Borrower has one or more Subsidiaries.



     Section 13.9 Captions. The captions or headings herein and any table of contents
hereto are for convenience only and in no way define, limit or describe the scope or intent of any
provision of this Agreement.



     Section 13.10 Entire Agreement. The Loan Documents embody the entire agreement and
understanding between the Borrower, the Banks and the Agent with respect to the subject matter
hereof and thereof. This Agreement supersedes all prior agreements and understandings relating to
the subject matter hereof.



     Section 13.11 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same instrument, and either
of the parties hereto may execute this Agreement by signing any such counterpart.



     Section 13.12 Governing Law. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS
AGREEMENT AND ANY NOTE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE
UNITED STATES APPLICABLE TO NATIONAL BANKS.



     Section 13.13 Consent to Jurisdiction. AT THE OPTION OF THE BANKS, THIS AGREEMENT AND
ANY NOTE MAY BE ENFORCED EXCLUSIVELY IN THE STATE OR FEDERAL COURTS LOCATED IN THE BOROUGH OF
MANHATTAN IN NEW YORK CITY; AND THE BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE
BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE BANKS AT ITS
OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.



     Section 13.14 Waiver of Jury Trial. THE BORROWER, THE BANKS AND THE AGENT EACH WAIVE
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER
THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION



43









 







HEREWITH OR (b) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS
AGREEMENT, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.



     Section 13.15 Customer Identification — USA PATRIOT Act Notice. Each Bank (for itself
and not on behalf of any other party) hereby notifies the Borrower that, pursuant to the
requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56, signed into law October 26, 2001
(the “Act”), it is required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other information that will
allow such Bank, as applicable, to identify the Borrower in accordance with the Act.



     Section 13.16 OFAC and Asset Control Regulations. The Borrower shall (a) ensure, and
cause each Subsidiary to ensure, that no Person who owns a controlling interest in or otherwise
controls the Borrower or any Subsidiary is or shall be listed on the Specially Designated Nationals
and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control
(“OFAC”), the Department of the Treasury, or included in any Executive Orders, and (b) not use or
permit the use of the proceeds of the Loans to violate any of the foreign asset control regulations
of OFAC or any enabling statute or Executive Order relating thereto.



     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date first above.



	 	 	 	 	 	 	 
	 	 	OTTER TAIL CORPORATION, d/b/a

OTTER TAIL POWER COMPANY

as Borrower	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kevin Moug	 	 
	 	 	 	 	 
	 

	 	Title:
	 	Chief Financial Officer	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	P.O. Box 496

Fergus Falls, MN 56538-0496

Attention: Mr. Kevin G. Moug

Chief Financial Officer

Telephone: (701) 451-3562

Fax: (701) 232-4108	 	 






44









 






	 	 	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.,

as Agent and as a Bank	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Nancy A. Barwig	 	 
	 	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Notices (Credit Matters)

10 South Dearborn Street, 9th Floor,
IL1-0090

Chicago, IL 60603

Attention: Helen Davis

Telephone: (312) 732-1759

Fax: (312) 732-1762	 	 
	 
	 	 	 	 	 	 
	 	 	Notices (Loan Operations)

10 South Dearborn Street, 7th Floor,
IL1-0010

Chicago, IL 60603

Attention: Joyce King

Telephone: (312) 385-7025

Fax: (312) 385-7096	 	 






45









 






	 	 	 	 	 	 	 
	 	 	KEYBANK NATIONAL ASSOCIATION, as

Syndication Agent and as a Bank	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keven D. Smith	 	 
	 	 	 	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	127 Public Square

Cleveland, Ohio 44114	 	 
	 
	 	 	 	 	 	 
	 	 	Notices (Credit Matters)

Keven D. Smith

Senior Vice President-Energy

Telephone: 425-709-4579

Fax: 425-709-4565	 	 
	 
	 	 	 	 	 	 
	 	 	Notices (Loan Operations)

Margie Vacca

Loan Servicing Officer

Telephone: (216) 689-3580

Fax: (216) 370-6116	 	 






46









 






	 	 	 	 	 	 	 
	 	 	UNION BANK, N.A., as Documentation Agent and

as a Bank	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert Cole	 	 
	 	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Energy Capital Services

445 S. Figueroa Street, 15th Floor

Los Angeles, CA 90071	 	 
	 
	 	 	 	 	 	 
	 	 	Notices (Loan Operations)

Maria Suncin

Telephone: (323) 720-2870

Fax: (800) 446-9951	 	 






47









 






	 	 	 	 	 	 	 
	 	 	BANK OF THE WEST,

as a Bank	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Philip Krump	 	 
	 	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	1977 Saturn Street, 3rd Floor

Monterey Park, CA 91755	 	 
	 
	 	 	 	 	 	 
	 	 	Notices (Credit Matters)

250 Marquette Avenue, Suite 575

Minneapolis, MN  55401

Attention: Philip Krump

Vice President

Telephone: (612) 359-3600

Fax: (612) 339-6362	 	 
	 
	 	 	 	 	 	 
	 	 	Notices (Loan Operations)

Attention: Sandra Fox

Commercial Loans Services Manager

Telephone: (323) 727-3065

Fax: (323) 727-3099	 	 






48









 






	 	 	 	 	 	 	 
	 	 	COBANK, ACB,

as a Bank	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Dale Keyes	 	 
	 	 	 	 	 
	 

	 	Title:
	 	Vice President	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	5500 South Quebec Street

Greenwood Village, CO 80111	 	 
	 
	 	 	 	 	 	 
	 	 	Notices (Credit Matters)

Dale Keyes

Vice President

Telephone: (303) 694-5850

Fax: (303) 740-4002	 	 
	 
	 	 	 	 	 	 
	 	 	Notices (Loan Operations)

Nancy Tucker

Sr. Syndication/Participation Closer

5500 South Quebec St.

Greenwood Village, CO 80111

Telephone: (303) 740-4004

Fax: (303) 740-4021

Email: Agencybank@cobank.com	 	 






49









 






	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,

as a Bank	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ A. Quinn Richardson	 	 
	 	 	 	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Suite IL4-135-07-65

135 S. LaSalle Street

Chicago, IL 60603	 	 
	 
	 	 	 	 	 	 
	 	 	Notices (Credit Matters)

A. Quinn Richardson

Senior Vice President

Telephone: (312) 992-2160

Fax: (312) 453-2662	 	 
	 
	 	 	 	 	 	 
	 	 	Notices (Loan Operations)

Jennifer Baines

Credit Service Officer

Telephone: (925) 675-8409

Fax: (888) 969-2294	 	 






50









 






EXHIBITS




	 	 	 
	Exhibit	 	Contents
	 
	 	 
	A

	 	Form of Note
	 
	 	 
	B

	 	Form of Compliance Certificate
	 
	 	 
	C

	 	Form of Legal Opinion for Closing
	 
	 	 
	D

	 	Form of Legal Opinion for Permitted Reorganization
	 
	 	 
	E

	 	Form of Assignment and Assumption
	 
	 	 
	Schedules
	 	 
	 
	 	 
	1.1(a)

	 	Commitments and Percentages
	 
	 	 
	1.1(b)

	 	Material Subsidiaries
	 
	 	 
	7.6

	 	Litigation (Section 7.6)
	 

	 	Contingent Liabilities (Section 7.6)
	 
	 	 
	7.11

	 	Existing Liens (Sections 7.11 and 9.8)
	 
	 	 
	7.15

	 	Subsidiaries (Section 7.15)
	 
	 	 
	7.16

	 	Partnerships/Joint Ventures (Section 7.16)
	 
	 	 
	9.7

	 	Investments (Section 9.7)
	 
	 	 
	12.1

	 	Senior Indebtedness Agreements and Any Notes to be Retained as Obligations of the Borrower
following Permitted Reorganization







51









 








EXHIBIT A




PROMISSORY NOTE




			
	 	 	 
	$[INSERT NUMERICAL COMMITMENT AMOUNT]
	 	May 22, 2009






     FOR VALUE RECEIVED, the undersigned OTTER TAIL CORPORATION, d/b/a OTTER TAIL POWER COMPANY, a
Minnesota corporation (the “Borrower”), promises to pay to the order of [INSERT BANK NAME]
(the “Bank”), on the Termination Date, or any other due date or dates determined under the
Term Loan Agreement referred to below, the principal sum of [INSERT COMMITMENT AMOUNT] DOLLARS
($[INSERT NUMERICAL COMMITMENT AMOUNT]). All payments of principal shall be recorded by the holder
in its records which records shall be conclusive evidence of the subject matter thereof, absent
manifest error.



     The Borrower further promises to pay to the order of the Bank interest on the aggregate unpaid
principal amount hereof from time to time outstanding from the date hereof until paid in full at
the rates per annum which shall be determined in accordance with the provisions of the Term Loan
Agreement. Accrued interest shall be payable on the dates specified in the Term Loan Agreement.



     All payments of principal and interest under this Note shall be made in lawful money of the
United States of America in immediately available funds at the office of JPMorgan Chase Bank, N.A.,
10 South Dearborn Street, Chicago, IL 60603, or at such other place as may be designated by the
Agent to the Borrower in writing.



     This Note is one of the Notes referred to in, and evidences indebtedness incurred under, a
Term Loan Agreement dated as of May 22, 2009 (as amended, modified or supplemented from time to
time, the “Term Loan Agreement”) among the Borrower, the Banks, as defined therein
(including the Bank) and JPMorgan Chase Bank, N.A., as Administrative Agent, to which Term Loan
Agreement reference is made for a statement of the terms and provisions thereof, including those
under which the Borrower is permitted and required to make prepayments and repayments of principal
of such indebtedness and under which such indebtedness may be declared to be immediately due and
payable.



     All parties hereto, whether as makers, endorsers or otherwise, severally waive presentment,
demand, protest and notice of dishonor in connection with this Note.



     This Note is made under and governed by the internal laws of the State of New York.



	 	 	 	 	 
	 	 	OTTER TAIL CORPORATION, d/b/a

OTTER TAIL POWER COMPANY
	 
	 	 	 	 
	 

	 	By:	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 






52









 






Exhibit B




COMPLIANCE CERTIFICATE




                                        , 20                    




10 South Dearborn Street, 9th Floor

Mail Code IL1-0090

Chicago, IL 60603




Attention: Helen Davis




Ladies/Gentlemen:




     Reference is made to the Term Loan Agreement, dated as of May 22, 2009 (as amended from time
to time, the “Term Loan Agreement”), among OTTER TAIL CORPORATION (the “Borrower”),
the Banks named therein and JPMorgan Chase Bank, N.A., as Administrative Agent (in such capacity,
the “Agent”). Terms not otherwise expressly defined herein shall have the meanings set
forth in the Term Loan Agreement.



     As required pursuant to Section 8.1(c) of the Term Loan Agreement, the Borrower hereby
certifies that as of                     , 20                    , the following is true, correct and accurate in all
respects:



     1. The consolidated financial statements submitted herewith are fairly presented in all
material respects.



     2. No Default and no Event of Default, has occurred and continued.



     3. All representations and warranties of the Borrower contained in Article VII of the Term
Loan Agreement are true and correct, as though made on such date;



     4. The Borrower’s Long Term Debt Rating is:



	 	 	 	 	 
	Standard & Poor’s:
	 	 	 	 
	 
	 	 	 
	 
	 	 	 	 
	Moody’s:
	 	 	 	 
	 
	 	 	 





1









 






     5. Covenant compliance is demonstrated as follows:



     Section 9.13 Interest-bearing Debt to Total Capitalization



	 	 	 	 	 
	Interest-bearing Debt:
	 	$	 	 
	 
	 	 	 	 
	to:
	 	 	 	 
	 
	 	 	 	 
	Total Capitalization:
	 	$	 	 
	 
	 	 	 	 
	(Required: not greater than 0.60 to 1.00.)
	 	 	 	 






     Section 9.14 Interest and Dividend Coverage Ratio. For the four-quarter period ending
on the date of the enclosed consolidated financial statements:



	 	 	 	 	 
	EBIT:
	 	$	 	 
	 
	 	 	 	 
	to:
	 	 	 	 
	 
	 	 	 	 
	sum of
	 	 	 	 
	Interest Expense:
	 	$	 	 
	Dividends on Preferred Stock:
	 	$	 	 
	 
	 	$	 	 






Ratio: ___ to 1.00




(Required: not less than 1.50 to 1.00.)




	 	 	 	 	 
	 	 	OTTER TAIL CORPORATION, d/b/a

OTTER TAIL POWER COMPANY
	 
	 	 	 	 
	 

	 	By:	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	[chief financial officer]






2









 






Exhibit C




OPINION OF COUNSEL




May 22, 2009



To: The Banks party to the

Loan Agreement described herein




[address to each bank]




Ladies and Gentlemen:




     I have acted as counsel to Otter Tail Corporation, d/b/a Otter Tail Power Company, a Minnesota
corporation (the “Company”), in connection with the transactions contemplated by that certain Term
Loan Agreement, dated as of May 22, 2009, entered into among the Company, the Banks, as defined
therein, KeyBank National Association, as Syndication Agent, Union Bank, N.A., as Documentation
Agent, and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Loan Agreement”). This opinion
is being delivered to you pursuant to Section 6.1(e) of the Loan Agreement. Capitalized terms used
herein, except as otherwise specifically defined herein, are used with the same meaning as defined
in the Loan Agreement.



     In connection with this opinion, I have examined the following documents:




     (a) The Restated Articles of Incorporation of the Company, as amended (the “Articles”);




     (b) The Restated Bylaws of the Company, as amended (the “Bylaws”);




     (c) Resolutions of the Board of Directors of the Company;




     (d) An executed copy of the Loan Agreement; and




     (e) An executed copy of each Note issued on the date hereof pursuant to the Loan
Agreement.



     I also have examined such other 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) 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, 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. As to questions of fact material to my



3









 







opinion, I have relied upon representations and certificates of officers and other employees
of the Company (known by me to have authority to make such representations and certifications on
behalf of the Company) and certificates of public officials.



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




     (1)  The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Minnesota, and is duly qualified and in good
standing as a foreign corporation in all other jurisdictions in which its respective present
operations or properties require such qualification, except where failure so to qualify or
to be in good standing would not constitute an Adverse Event.




     (2) The Company has corporate power and authority to (a) own and operate its properties
and assets and carry on its business as presently conducted, as described in the Company’s
Annual Report or Form 10-K for the year ended December 31, 2008, and (b) enter into and
perform its obligations under the Loan Documents to which it is a party.




     (3)  The execution and delivery of the Loan Documents, the borrowing by the Company
under the Loan Agreement and the performance by the Company of its obligations under the
Loan Documents to which it is a party have been duly authorized by all necessary corporate
action, and the Loan Documents have been duly executed and delivered on behalf of the
Company, and constitute valid and binding obligations of the Company, enforceable in
accordance with their respective terms.




     (4)  There is no provision in (a) the Articles or Bylaws, (b) any indenture, mortgage,
contract or agreement to which the Company is a party or by which the Company or its
properties are bound, (c) any law, statute, rule or regulation or (d) to my knowledge, any
writ, order or decision of any court or governmental instrumentality binding on the Company
which would be contravened by the execution, delivery or performance by the Company of the
Loan Documents to which it is a party, except in the case of clause (b) for any such
contravention which would not constitute an Adverse Event.




     (5)  There are no actions, suits or proceedings pending or, to the best of my
knowledge, threatened against the Company before any court or arbitrator or by or before any
administrative agency or government authority, which, if adversely determined, could
reasonably be expected to constitute an Adverse Event.



     The opinion set forth in paragraph (3) above is subject to the following qualifications and
exceptions:




     (i) Such opinion is 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.



4









 






     (ii) Such opinion is 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.




     (iii) I express no opinion as to the enforceability of provisions in the Loan Documents
to the extent they contain obligations of the Company 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 party claiming such amounts as a result
of such prepayment or default.




     (iv) I express no opinion (A) as to the validity, binding effect or enforceability of
(1) any provision of the Loan Documents 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), (2) waivers by the Company of any statutory or constitutional rights or remedies,
(3) terms which excuse any person or entity from liability for such person’s or entity’s
negligence or willful misconduct, or (4) 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; or
(B) 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 Loan
Documents.



     I draw your attention to the fact that, under certain circumstances, the enforceability of
terms to the effect that provisions may not be waived or modified except in writing may be limited.



     The opinions expressed above are limited to the laws of the State of Minnesota and the federal
laws of the United States and I express no opinion as to the laws of any other jurisdiction. I call
your attention to the fact that certain of the Loan Documents state that they are governed by New
York law. My opinion is based on the assumption that the internal laws of the State of Minnesota
would govern the provisions of each such agreement and the transactions contemplated thereby.



5









 





     The foregoing opinions are being furnished to you solely for your benefit 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




6









 





Exhibit D




OPINION OF COUNSEL

OTTER TAIL POWER COMPANY




[date]



To: The Banks party to the

Loan Agreement described herein




[address to each bank]




Ladies and Gentlemen:




     I have acted as counsel to Otter Tail Power Company, a Minnesota corporation (the “Company”),
in connection with the transactions contemplated by Article 12 (the “Reorganization”) of that
certain Loan Agreement, dated as of May 22, 2009, entered into among the Company, the Banks, as
defined therein, KeyBank National Association, as Syndication Agent, Union Bank, N.A., as
Documentation Agent, and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Loan Agreement”).
This opinion is being delivered to you pursuant to Section 12.2(g)(vi) of the Loan Agreement.
Capitalized terms used herein, except as otherwise specifically defined herein, are used with the
same meaning as defined in the Loan Agreement.



     In connection with this opinion, I have examined the following documents:




     (a)  The Restated Articles of Incorporation of the Company, as amended (the
“Articles”);




     (b) The Restated Bylaws of the Company, as amended (the “Bylaws”);




     (c)  Resolutions of the Board of Directors of the Company; and




     (d)  Articles of Merger, dated as of  [                    ] (the “Articles of Merger”), pursuant
to which [Otter Tail Merger Sub, a Minnesota corporation] merged with Otter Tail
Corporation, with the Company being the surviving entity (the “Merger”);




     (e)  Instruments of assignment and assumption (the “Assumption Agreements”) pursuant to
which the Company has transferred to [Otter Tail Holding Company], a Minnesota corporation,
the name of which corporation has been changed to Otter Tail Corporation (“New OTC”), the
Non-Power Company Asset, as defined in the Loan Agreement, and New OTC has assumed the
Assumed Liabilities, as defined in the Loan Agreement; and




     (f)  Other instruments and document pertaining to the Reorganization.



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



7









 





     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) 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, 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. As to questions of fact material to my opinion, I have relied upon
representations and certificates of officers and other employees of the Company (known by me to
have authority to make such representations and certifications on behalf of the Company) and
certificates of public officials.



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




     (1)  The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Minnesota, and is duly qualified and in good
standing as a foreign corporation in all other jurisdictions in which its respective present
operations or properties require such qualification, except where failure so to qualify or
to be in good standing would not constitute an Adverse Event.




     (2)  The Company has corporate power and authority to (a) own and operate its
properties and assets and carry on the business of electrical generation and transmission
business as presently conducted, as described in the Company’s Annual Report or Form 10-K
for the year ended December 31, 2008, and (b) enter into and perform its obligations under
the additional Loan Documents delivered in connection with the Reorganization to which it is
a party.




     (3)  The execution and delivery of the Loan Documents (including the Assumption
Agreements and any other Loan Documents delivered in connection with the Reorganization),
the borrowing by the Company under the Loan Agreement and the performance by the Company of
its obligations under the Loan Documents to which it is a party have been duly authorized by
all necessary corporate action, and the Loan Documents have been duly executed and delivered
on behalf of the Company, and constitute valid and binding obligations of the Company,
enforceable in accordance with their respective terms.




     (4)  There is no provision in (a) the Company’s Articles or Bylaws, (b) any indenture,
mortgage, contract or agreement to which the Company is a party or by which the Company or
its properties are bound, (c) any law, statute, rule or regulation or (d) to my knowledge,
any writ, order or decision of any court or governmental instrumentality binding on the
Company which would be contravened by the execution, delivery or performance by the Company
of the Loan Documents to which it is a party, except in the case of clause (b) for any such
contravention which would not constitute an Adverse Event.




8











 






     (5)  The Merger has been completed substantially in accordance with the Articles of
Merger.




     (6)  There are no actions, suits or proceedings pending or, to the best of my
knowledge, threatened against the Company before any court or arbitrator or by or before any
administrative agency or government authority, which either (1) challenge or attempt to
enjoin, prevent or invalidate the Reorganization, or (2) if adversely determined, could
reasonably be expected to constitute an Adverse Event.



     The opinion set forth in paragraph (3) above is subject to the following qualifications and
exceptions:




     (i) Such opinion is 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.




     (ii) Such opinion is 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.




     (iii) I express no opinion as to the enforceability of provisions in the Loan Documents
to the extent they contain obligations of the Company 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 party claiming such amounts as a result
of such prepayment or default.




     (iv) I express no opinion (A) as to the validity, binding effect or enforceability of
(1) any provision of the Loan Documents 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), (2) waivers by the Company of any statutory or constitutional rights or remedies,
(3) terms which excuse any person or entity from liability for such person’s or entity’s
negligence or willful misconduct, or (4) 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; or
(B) 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 Loan
Documents.



9









 





     I draw your attention to the fact that, under certain circumstances, the enforceability of
terms to the effect that provisions may not be waived or modified except in writing may be limited.



     The opinions expressed above are limited to the laws of the State of Minnesota and the federal
laws of the United States and I express no opinion as to the laws of any other jurisdiction. I call
your attention to the fact that certain of the Loan Documents state that they are governed by New
York law. My opinion is based on the assumption that the internal laws of the State of Minnesota
would govern the provisions of each such agreement and the transactions contemplated thereby.



     The foregoing opinions are being furnished to you solely for your benefit 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

 	 
	 	 	 
	 	 	 
	 	 	 
	 




10









 








Exhibit E




FORM OF ASSIGNMENT AND ASSUMPTION




ASSIGNMENT AND ASSUMPTION AGREEMENT

(Otter Tail Corporation)





     This Assignment and Assumption Agreement (this “Agreement”) dated as of the date set
forth in Item I (each reference to an “Item” herein shall be deemed to refer to
such Item on Schedule I hereto) is between the party named in Item II (the
“Assignor”) and the party named in Item III (the “Assignee”).



WITNESSETH




     The Assignor is a party to a Term Loan Agreement dated as of May 22, 2009 (as amended or
otherwise modified from time to time, the “Term Loan Agreement”) among OTTER TAIL
CORPORATION (the “Borrower”), various lenders (including the Assignor, collectively, the
“Bank Group”) and JPMORGAN CHASE BANK, N.A., as Agent, pursuant to which the Assignor has
an outstanding term loan (the “Term Loan”) in the principal amount set forth in Item
IV. Unless otherwise defined herein or the context clearly indicates otherwise, capitalized
terms used in this Agreement shall have the meanings given them by, and shall be construed as set
forth in, the Term Loan Agreement.



     The Assignor and the Assignee agree as follows:



     1. Assignment and Assumption. Subject to the terms and conditions of this Agreement,
the Assignor hereby sells, transfers, assigns and delegates to the Assignee, and the Assignee
hereby purchases, assumes and undertakes from the Assignor, without recourse and without
representation or warranty (except as expressly provided in this Agreement), for an agreed
consideration, $                      of the outstanding principal amount of the Term Loan, together with a
proportionate share (based on the percentage that the principal amount of the Term Loan transferred
hereby is of the entire principal amount of the Term Loan prior to such transfer) of all rights,
benefits, obligations, liabilities and indemnities of the Assignor under or in connection with the
Term Loan Agreement, including (i) the right to receive payment of principal and (ii) the
obligation to indemnify the Agent or any other party under the Term Loan Agreement and to pay all
other amounts payable by a Bank under or in connection with the Term Loan Agreement.



     The interest of the Assignor under the Term Loan Agreement assigned hereby (including the
principal amount of the Term Loan being assigned to the Assignee and all rights, benefits,
obligations, liabilities and indemnities referred to above) is referred to as the “Assigned
Share”. The date of the effectiveness of the assignment contemplated hereby is referred to as
the “Effective Date”. The portion of the Term Loan assigned hereunder constitutes the
percentage set forth in Item V of all outstanding Loans under the Term Loan Agreement.
Upon completion of the assignment hereunder, the Assignor will have the percentage set forth in
Item VI of all outstanding Loans under the Term Loan Agreement.



 









 





     2. Future Payments. The Assignor shall notify the Agent to make all payments with
respect to the Assigned Share after the Effective Date directly to the Assignee. The Assignor and
Assignee agree and acknowledge that all interest accrued up to the Effective Date is the property
of the Assignor, and not the Assignee. The Assignee shall, upon receipt of any payment of interest
under the Term Loan Agreement, remit to the Assignor the portion of such interest accrued to the
Effective Date.



     3. No Warranty or Recourse. The sale, transfer, assignment and delegation of the
Assigned Share is made without warranty or recourse against the Assignor of any kind, except that
the Assignor warrants that it has not sold or otherwise transferred any other interest in the
Assigned Share to any other party. The Assignor may, however, have sold and may hereafter sell
Participations in, or may have assigned or may hereafter assign, portions of its interest in the
Term Loan Agreement that in the aggregate (together with the portion assigned hereby), do not
exceed 100% of the Assignor’s interest in the Term Loan Agreement.



     4. Covenants and Warranties. To induce the other to enter into this Agreement, each
of the Assignee and the Assignor warrants and covenants with respect to itself that:



          (a) Existence. It is (i) in the case of the Assignee, a [                    ] organized under
the laws of [                    ] and (ii) in the case of the Assignor, a [                    ] organized under the laws
of [                    ];




          (b) Authority. It is duly authorized to execute, deliver and perform this Agreement;




          (c) No Conflict. Its execution, delivery and performance of this Agreement do not
conflict with any provision of law or of its charter or by-laws (or equivalent constituent
documents) or of any agreement binding upon it; and




          (d) Valid and Binding. All acts, conditions and things required to be done and
performed and to have occurred prior to its execution, delivery and performance of this Agreement,
and to constitute the same its legal, valid and binding obligation enforceable against it in
accordance with the terms hereof, have been done and performed and have occurred in due and strict
compliance with all applicable laws.




     5. Covenants and Warranties by the Assignee. To induce the Assignor to enter into
this Agreement, the Assignee warrants and covenants that (a) it is purchasing and assuming the
Assigned Share in the course of making loans in the ordinary course of its commercial lending
business, and (b) it has, independently and without reliance upon the Assignor, and based upon such
financial statements and other documents and information as it has deemed appropriate, made its own
credit analysis and decision to engage in this purchase and transfer of the Assigned Share. The
Assignee acknowledges that the Assignor has not made and does not make any representations or
warranties or assume any responsibility with respect to the validity, genuineness, enforceability
or collectibility of the Term Loan Agreement or any related instrument, document or agreement.



     6. Promissory Note. Any Note of the Assignor shall be delivered to the Agent or the
Borrower at such time and by such means as the Assignor and the Agent or the Borrower shall



12









 







agree, with the request by the Assignor that the Borrower issue new notes payable to the
Assignee and, if applicable, to the Assignee to reflect the assignment of the Assigned Share
hereunder.



     7. Payments to the Assignor. All amounts payable to the Assignor hereunder shall be
paid in U.S. Dollars by transfer of federal funds to the Assignor, ABA No. [                    ], Account No:
[                    ], Reference: [Borrower].



     8. Other Transactions. The Assignee shall have no interest in any property in the
Assignor’s possession or control, or in any deposit held or other indebtedness owing by the
Assignor, which may be or become collateral for or otherwise available for payment of the Advances
by reason of the general description of secured obligations contained in any security agreement or
other agreement or instrument held by the Assignor or by reason of the right of set-off,
counterclaim or otherwise, except that if such interest is provided for in provisions of the Term
Loan Agreement regarding sharing of set-off, the Assignee shall have the same rights as any other
Bank under the Term Loan Agreement. The Assignor and its affiliates may accept deposits from, lend
money to, act as trustee under indentures for and generally engage in any kind of business with the
Borrower, and any person who may do business with or own securities of the Borrower, or any of the
Borrower’s subsidiaries. The Assignee shall have no interest in any property taken as security for
any other loans or any other credits extended to the Borrower or any of its subsidiaries by the
Assignor to the Borrower.



     9. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Assignor and the Assignee.



     10. Expenses. In the event of any action to enforce the provisions of this Agreement
against a party hereto, the prevailing party shall be entitled to recover all costs and expenses
incurred in connection therewith, including attorneys’ fees and expenses and, without duplication,
the allocable cost of in-house legal counsel and staff.



     11. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.



     12. Amendments, Changes and Modifications. This Agreement may not be amended,
changed, modified, altered, or terminated except by an agreement in writing signed by the Assignor
and the Assignee or their permitted successors or assigns).



     13. Withholding Taxes. The Assignee represents and warrants to the Assignor, the
Agent and the Borrower that (a) it is a United States Person that the Borrower may treat as an
“exempt recipient” within the meaning of Treasury Regulation Section 1.6049-4(c) based on the
indicators set forth therein; or (b) it is organized under the laws of a jurisdiction other than
the United States or any State thereof and, as of the date hereof, it is entitled to receive
interest payments under the Term Loan Agreement without withholding or deduction of any taxes; and
(c) it will comply with all applicable U.S. laws and regulations with regard to any withholding tax
exemption. If the Assignee is not a United States Person, the Assignee agrees to furnish to the
Assignor, the Agent and the Borrower, prior to the time that the Agent or the Borrower is required
to make any payment of principal or interest to the Assignee under the Term Loan



13









 







Agreement, U.S. Internal Revenue Service Form W8ECI, WBEN, W-8IMY and/or W-9 or any successor
to such forms, in accordance with applicable U.S. law and regulations and amendments thereto, duly
executed and completed by the Assignee.



     14. Entire Agreement. This Agreement sets forth the entire understanding of the
parties except for the consents contemplated hereby, and supersedes all prior agreements,
arrangements, and understandings relating to the subject matter hereof. No representation, promise,
inducement or statement of intent has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any alleged representation, promise,
inducement or statement of intention not expressly set forth herein.



     15. Counterparts. This Agreement may be executed by the Assignor and the Assignee in
separate counterparts, each of which when so executed and delivered shall be deemed to be an
original and all of which taken together shall constitute one and the same Agreement.



[Remainder of page intentionally left blank]




14









 








     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on their behalf by
their duly authorized officers as of the date and year first above written.



	 	 	 	 	 	 	 
	 	 	[Assignor]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	[Assignee]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 





[Consents required to become effective as provided in Section 13.3 of the Term Loan Agreement]




	 	 	 	 	 
	Consented to this ___day

of                     , 20___.	 	 
	 
	 	 	 	 
	JPMORGAN CHASE BANK, N.A., as Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Consented to this ___day

of                     , 20___.	 	 
	 
	 	 	 	 
	OTTER TAIL CORPORATION

d/b/a OTTER TAIL POWER COMPANY, as Borrower	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 







15









 








Schedule I




to




Assignment and Assumption




	 	 	 
	Item I:

	 	Date of Assignment:                      ___, 20___
	 
	 	 
	Item II:

	 	Assigning Bank: [Name]
	 
	 	 
	Item III:

	 	Assignee: [Name]
	 
	 	 
	Item IV:

	 	Principal Amount of Assignor’s Loan: $                    
	 
	 	 
	Item V:

	 	Percentage Assigned:                     %
	 
	 	 
	 

	 	(Expressed as a percentage of the total aggregate Commitments of
the Bank Group, carry out to 10 decimal places; upon the
effectiveness of the Assignment, [this will be the Assignee’s
“Percentage” under the Term Loan Agreement] [the Assignee’s
“Percentage” under the Term Loan Agreement will be increased by
such Percentage].)
	 
	 	 
	Item VI:

	 	Revised Percentage of the Assignor:                     %
	 
	 	 
	 

	 	(Expressed as a percentage of the total aggregate Commitments of
the Bank Group, carry out to 10 decimal places; upon
effectiveness of the Assignment, this will constitute the
Assignor’s “Percentage” under the Term Loan Agreement.)






16









 






Schedule 1.1(a)




Commitments and Percentages




	 	 	 	 	 	 	 	 	 
	 	 	Initial	 	 
	Bank:	 	Commitment:	 	Percentage:
	JPMorgan Chase Bank, N.A.
	 	$	16,000,000	 	 	 	21.333333333	%
	 
	Union Bank, N.A.
	 	$	16,000,000	 	 	 	21.333333333	%
	 
	KeyBank National Association
	 	$	16,000,000	 	 	 	21.333333333	%
	 
	Bank of America, N.A.
	 	$	11,000,000	 	 	 	14.666666667	%
	 
	CoBank, ACB
	 	$	11,000,000	 	 	 	14.666666667	%
	 
	Bank of the West
	 	$	5,000,000	 	 	 	6.666666667	%
	 
	Total:
	 	$	75,000,000	 	 	 	100.000000000	%







17









 








Schedule 1.1(b)




Material Subsidiaries of Otter Tail Corporation




(as of May 22, 2009)




Varistar Corporation

Aevenia, Inc. (f/k/a Midwest Construction Services, Inc.)

BTD Manufacturing, Inc.

DMI Industries, Inc.

DMS Health Technologies, Inc.

DMS Imaging, Inc.

Foley Company

Idaho Pacific Corporation

Idaho Pacific Holdings, Inc.

Northern Pipe Products, Inc.

ShoreMaster, Inc.

Vinyltech Corporation





18









 








Schedule 7.6




Litigation & Contingent Liabilities (Section 7.6)



1. Sierra Club v. Otter Tail Corporation d/b/a Otter Tail Power Company, MDU Resources, Inc. and
Northwestern Corporation d/b/a Northwestern Energy.*



2. Renewable Energy Systems Americas Inc. and PEAK Wind Development, LLC v. Otter Tail Power
Company and Minnkota Power Cooperative, Inc.*






 




			
	*	 	For further details regarding these matters, see the Borrower’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2008, and in the case of item 1, the Borrower’s Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31, 2009, in each case filed with the Securities
and Exchange Commission.






19









 








Schedule 7.11




Existing Liens (Sections 7.11 and 9.8)



Any Lien existing or arising by virtue of Section 10.4 of the Credit Agreement, dated as of July
30, 2008, among the Borrower, 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.





20









 








Schedule 7.15


Subsidiaries (Section 7.15)




	 	 	 	 	 	 	 
	 	 	 	 	Number and Class of	 	 
	 	 	 	 	Shares Issued and	 	 
	 	 	 	 	Owned by Otter Tail	 	 
	 	 	State of	 	Corporation or its	 	Footnote
	Company	 	Organization	 	Subsidiaries	 	Ref.
	AC Equipment, Inc.
	 	Minnesota	 	100 Shares Common	 	(3)
	AWI Acquisition Company Limited
	 	Prince Edward	 	1 Share Common	 	(8)
	 
	 	Island	 	 	 	 
	 
	 	Canada	 	 	 	 
	Aerial Contractors, Inc.
	 	North Dakota	 	10 Shares Common	 	(3)
	AgraWest Investments Limited
	 	Prince Edward	 	5,000,000 Shares Common	 	(9)
	 
	 	Island	 	1,500,000 Shares Class A Preferred	 	 
	 
	 	Canada	 	1,500,000 Shares Class B Preferred	 	 
	 
	 	 	 	1,500 Shares Class C Preferred	 	 
	Aviva Sports, Inc.
	 	Minnesota	 	100 Shares Common	 	(6)
	BTD Manufacturing, Inc.
	 	Minnesota	 	200 Shares Common	 	(1)
	Chassis Liner Corporation**
	 	Minnesota	 	100 Shares Common	 	(1)
	DMI Industries, Inc.
	 	North Dakota	 	980 Shares Common	 	(1)
	DMI Canada, Inc.
	 	Canada	 	1 Share Common	 	(4)
	DMS Health Technologies, Inc.
	 	North Dakota	 	8,500 Shares Class A	 	(1)
	 
	 	 	 	5,100 Shares Class B	 	 
	DMS Imaging, Inc.
	 	North Dakota	 	1,606 Shares Common Voting	 	(2)
	DMS — Imaging Partners, LLC**
	 	Delaware	 	 	 	(10)
	DMS — Imaging Partners II, LLC**
	 	Delaware	 	 	 	(10)
	DMS Leasing Corporation**
	 	North Dakota	 	2,500 Shares Common	 	(2)
	E. W. Wylie Corporation
	 	North Dakota	 	100 Shares Common	 	(1)
	Foley Company
	 	Missouri	 	50,000 Shares Common	 	(1)
	Galva Foam Marine Industries, Inc.
	 	Missouri	 	100,000 Shares Common	 	(6)
	Green Hills Energy, LLC
	 	Minnesota	 	 	 	(5)
	Idaho Pacific Holdings, Inc.
	 	Delaware	 	10,002 Shares Class A Common (voting)	 	(1)
	Idaho-Pacific Corporation
	 	Idaho	 	400 Shares Common	 	(8)
	Idaho-Pacific Colorado Corporation
	 	Delaware	 	100 Shares Common	 	(8)
	Lynk3 Technologies, Inc.
	 	Minnesota	 	100 Shares Common	 	(3)
	Aevenia, Inc. (f/k/a Midwest Construction Services, Inc.)
	 	Minnesota	 	100 Shares Common	 	(1)
	Miller Welding & Iron Works, Inc.
	 	Minnesota	 	1,000 Shares Common	 	(11)
	Moorhead Electric, Inc.
	 	Minnesota	 	80 Shares Common	 	(3)
	Northern Pipe Products, Inc.
	 	North Dakota	 	10,000 Shares Common	 	(1)
	Otter Tail Assurance Limited
	 	Cayman Islands	 	50,000 Shares Common	 	(7)
	Otter Tail Energy Services Company, Inc.
	 	Minnesota	 	1,000 Shares Common	 	(7)
	Overland Mechanical Services, Inc.
	 	Minnesota	 	100 Shares Common	 	(5)
	Sheridan Ridge I, LLC
	 	Minnesota	 	 	 	(5)
	Sheridan Ridge II, LLC
	 	Minnesota	 	 	 	(5)
	Shoreline Industries, Inc.
	 	Minnesota	 	1,000 Shares Common	 	(6)
	ShoreMaster, Inc.
	 	Minnesota	 	100 Shares Common	 	(1)
	ShoreMaster Costa Rica SRL
	 	Costa Rica	 	50 quotas	 	(6)






21









 






	 	 	 	 	 	 	 
	 	 	 	 	Number and Class of	 	 
	 	 	 	 	Shares Issued and	 	 
	 	 	 	 	Owned by Otter Tail	 	 
	 	 	State of	 	Corporation or its	 	Footnote
	Company	 	Organization	 	Subsidiaries	 	Ref.
	St. George Steel Fabrication, Inc.**
	 	Utah	 	1,000 Shares Common	 	(1)
	T.O. Plastics, Inc.
	 	Minnesota	 	100 Shares Common	 	(1)
	Varistar Corporation
	 	Minnesota	 	100 Shares Common	 	(7)
	Ventus Energy Systems, Inc.
	 	Minnesota	 	100 Shares Common	 	(3)
	Vinyltech Corporation
	 	Arizona	 	100 Shares Common	 	(1)








 




			
	(1)	 	Subsidiary of Varistar Corporation
	 
	(2)	 	Subsidiary of DMS Health Technologies, Inc.
	 
	(3)	 	Subsidiary of Aevenia, Inc. (f/k/a Midwest Construction Services,
Inc.)
	 
	(4)	 	Subsidiary of DMI Industries, Inc.
	 
	(5)	 	Subsidiary of Otter Tail Energy Services Company, Inc.
	 
	(6)	 	Subsidiary of ShoreMaster, Inc.
	 
	(7)	 	Subsidiary of Otter Tail Corporation
	 
	(8)	 	Subsidiary of Idaho Pacific Holdings, Inc.
	 
	(9)	 	Subsidiary of AWI Acquisition Company Limited
	 
	(10)	 	Subsidiary of DMS Imaging, Inc.
	 
	(11)	 	Subsidiary of BTD Manufacturing, Inc.
	 
	**	 	Inactive






22









 








Schedule 7.16




Partnerships/Joint Ventures (Section 7.16)




     None.




23









 








Schedule 9.7




Investments (Section 9.7)

Otter Tail Corporation




Detail of Investments




	 	 	 	 	 
	 	 	3/31/2009	 
	Investment in Affordable Housing — Otter Tail Corporation (OTC)
	 	$	1,325,324	 
	Investment in Loan Pools – Otter Tail Power Company (OTP)
	 	 	510,604	 
	Investment in Otter Tail Ag (OTP)
	 	 	500,000	 
	Investment — Moorhead State Lighting – Otter Tail Energy
Servcies Company, Inc. (OTESCO)
	 	 	128,113	 
	Bank of Butterfield discretionary fixed income portfolio (Otter
Tail Assurance Limited)
	 
	Corporate Bonds
	 	 	3,502,765	 
	US Treasuries
	 	 	3,201,316	 
	CoBank (St Paul Bank for Coop’s) — Varistar Corporation
	 	 	183,819	 
	Other Miscellaneous (DMS Imaging, Inc., OTESCO-Overland Inv, OTP)
	 	 	159,401	 
	 
	 	 	 
	 
	 	$	9,511,341	 
	 
	 	 	 







24









 








Schedule 12.1




Senior Indebtedness Agreements and Any Notes

to be Retained as Obligations of the Borrower following

Permitted Reorganization




     1. Notes issued under the Note Purchase Agreement, dated as of August 20, 2007, as thereafter
amended, between the Borrower 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. $20,790,000, 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. $5,185,000, 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 the Borrower and the
noteholders party thereto, outstanding as of the Permitted Reorganization.



     6. Credit Agreement, dated as of July 30, 2008, among the Borrower, 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 the Borrower issued pursuant thereto.