Document:

a6618109ex10-n2b.htm

Exhibit 10-N-2b

 

SECOND AMENDMENT

OF

OTTER TAIL CORPORATION

EXECUTIVE SURVIVOR AND SUPPLEMENTAL RETIREMENT PLAN

(2005 Restatement)

 

The “OTTER TAIL CORPORATION EXECUTIVE SURVIVOR AND SUPPLEMENTAL RETIREMENT PLAN” established as of November 1, 1983, by the Board of Directors of OTTER TAIL CORPORATION, a Minnesota corporation, as amended and restated in a document entitled “Otter Tail Corporation Executive Survivor and Supplemental Retirement Plan (2005 Restatement) (hereinafter referred to as the “Plan Statement”) and previously amended, is hereby further amended in the following respects:

 

1.                COMPLIANCE WITH SECTION 409A OF THE CODE.  Effective January 1, 2005, Section 1.4 of the Plan Statement shall be amended to read in full as follows:

 

1.4.              Compliance with Section 409A of the Code.  Notwithstanding anything in this Plan to the contrary, for Plan years beginning on or after January 1, 2005, this Plan shall be administered in accordance with the provisions of Internal Revenue Service Notice 2005-1, Code Section 409A and the regulations.  This restatement will be administered and construed on a basis consistent with this intent.

 

2.                DISABILITY.  Effective January 1, 2009, Section 2.9 of the Plan Statement shall be amended by the addition of the following sentence:

 

However, the term “Disability” shall be construed to have a meaning consistent with the term “Disability” as defined in section 409A of the Code.

 

3.                EARLY RETIREMENT DATE.  Effective January 1, 2009, Section 2.10 of the Plan Statement shall be amended by replacing the phrase “terminates employment with the Employer if such termination date” with “experiences a Separation from Service with the Employer if such separation”.

 

4.                RETIREMENT.  Effective January 1, 2009, Section 2.20 of the Plan Statement shall be amended to read in full as follows:

 

2.20.           Retirement — a Participant’s Separation from Service with the Employer at the Participant’s Early Retirement Date or Normal Retirement Date.

 

5.                DEFINITION OF SEPARATION FROM SERVICE.  Effective January 1, 2009, Section 2 of the Plan Statement shall be amended by the addition of a new Section 2.22 (and all subsequent sections and cross references are renumbered) to read in full as follows:

 

  

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2.22.            Separation from Service — a severance of an employee’s employment relationship with the Employers and all Affiliates for any reason other than the employee’s death.

 

	
  

	
(a)

	
A transfer from employment with an Employer to employment with an Affiliate, or vice versa, shall not constitute a Termination of Employment.

 

	
  

	
(b)

	
Whether a Termination of Employment has occurred is determined based on whether the facts and circumstances indicate that the Employer and employee reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the employee would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding twelve (12) month period (or the full period of services to the employer if the employee has been providing services to the employer for less than twelve months).

 

	
  

	
(c)

	
Termination of Employment shall not be deemed to occur while the employee is on military leave, sick leave or other bona fide leave of absence if the period does not exceed six (6) months or, if longer, so long as the employee retains a right to reemployment with the Employer or an Affiliate under an applicable statute or by contract.  For this purpose, a leave is bona fide only if, and so long as, there is a reasonable expectation that the employee will return to perform services for the Employer or an Affiliate.  Notwithstanding the foregoing, a 29-month period of absence will be substituted for such 6-month period if the leave is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of no less than 6 months and that causes the employee to be unable to perform the duties of his or her position of employment.

 

	
  

	
(d)

	
Where as part of a sale or other disposition of assets by the Employer to an employer that is not an Affiliate, an employee providing services to the Employer immediately before the transaction and to the buyer immediately after the transaction (“Affected Employee”) would otherwise experience a Termination of Employment from the Employer as a result of the transaction, the Employer and the buyer shall have the discretion to specify that the Affected Employee has not experienced a Termination of Employment if (i) the transaction results from bona fide, arm’s length negotiations, (ii) all Affected Employees are treated consistently, and (iii) such treatment is specified in writing no later than the closing date of the transaction.

 

  

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6.                TERMINATION BENEFIT.  Effective January 1, 2009, Section 5.4 of the Plan Statement shall be amended by replacing the word “terminates” with the phrase “experiences a Separation from Service”.

 

7.                DISABILITY RETIREMENT BENEFIT.  Effective January 1, 2009, Section 5.5 of the Plan Statement shall be amended by removing the phrase “or discontinuance of benefits under the Otter Tail Long-Term Disability Program”.

 

8.                COMMENCEMENT OF BENEFIT PAYMENTS.  Effective January 1, 2009, Section 5.6(b) of the Plan Statement shall be amended by replacing the phrase “termination of employment” with the phrase “ Separation from Service” and removing the phrase “but not later than the rules prescribed under section 409A of the Code”.

 

9.                SIX MONTH DELAY FOR SPECIFIED EMPLOYEES.  Effective January 1, 2009, Section 5.6(c) of the Plan Statement shall be amended to read in full as follows:

 

	
  

	
(c)

	
Six-Month Distribution Freeze.  Notwithstanding the foregoing Paragraph (b), if payments are to be made on account of Separation from Service to a Specified Employee, payment of the portion of that Participant’s benefit payable under Paragraph (b) above shall be suspended until a date that is six (6) months after the date of the Separation from Service.  As soon as administratively feasible after the six (6) month anniversary of the Participant’s Separation from Service, the Participant shall receive all payments, without interest, the Participant would have been entitled to receive during this six month period had the Participant not been a Specified Employee.  Thereafter, payments shall be made in accordance with Paragraph (b) above.  If a Participant dies prior to receiving a payment under this Section any suspended payments shall be paid to the Participant’s Estate within 60 days following the Participant’s death.

 

10.              TERMINATION BENEFIT.  Effective January 1, 2009, Section 6.4 of the Plan Statement shall be amended by replacing the word “terminates” with the phrase “experiences a Separation from Service”.

 

11.              DISABILITY RETIREMENT BENEFIT.  Effective January 1, 2009, Section 6.5 of the Plan Statement shall be amended by removing the phrase “or discontinuance of benefits under the Otter Tail Long-Term Disability Program”.

 

12.              COMMENCEMENT OF BENEFIT PAYMENTS.  Effective January 1, 2009, Section 6.6(b) of the Plan Statement shall be amended by replacing the phrase “termination of employment” with the phrase “ Separation from Service”.

 

  

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13.              SIX MONTH DELAY FOR SPECIFIED EMPLOYEES.  Effective January 1, 2009, Section 6.6(c) of the Plan Statement shall be amended to read in full as follows:

 

	
  

	
(c)

	
Six-Month Distribution Freeze.  Notwithstanding the foregoing Paragraph (b), if payments are to be made on account of Separation from Service to a Specified Employee, payment of the portion of that Participant’s benefit payable under Paragraph (b) above shall be suspended until a date that is six (6) months after the date of the Separation from Service.  As soon as administratively feasible after the six (6) month anniversary of the Participant’s Separation from Service, the Participant shall receive all payments, without interest, the Participant would have been entitled to receive during this six month period had the Participant not been a Specified Employee.  Thereafter, payments shall be made in accordance with Paragraph (b) above.  If a Participant dies prior to receiving a payment under this Section any suspended payments shall be paid to the Participant’s Estate within 60 days following the Participant’s death.

 

14.              PAYMENT OF BENEFITS.  Effective January 1, 2009, Section 7.2.2 of the Plan Statement shall be amended to read in full as follows:

 

7.2.2                   Payment of Benefits.  Except as provided in Section 7.4, this benefit (minus the withholding, payroll and other taxes which must be deducted therefrom) shall be paid to the Participant directly from the general assets of the Otter Tail Corporation as elected by the Participant.

 

	
  

	
(a)

	
Form of Benefit Payment.  The Supplemental Retirement Benefit shall be paid in the form elected by the Participant within thirty (30) days of becoming eligible to participate in the Plan; provide the Participant has not been eligible for another nonqualified non-account balance plan sponsored by the Employer or any of its affiliates.  A Participant who is a Participant prior to December 31, 2008 and does not have a Separation from Service prior to December 31, 2008 shall make a one-time election regarding time and form of payment.  The following options shall be available:

 

	
  

	
(i)

	
a single-life annuity;

 

	
  

	
(ii)

	
a one hundred percent (100%) joint and survivor annuity;

 

	
  

	
(iii)

	
a seventy-five percent (75%) joint and survivor annuity

 

	
  

	
(iv)

	
a sixty-six and two thirds percent (66 2/3%) joint and survivor annuity;

 

	
  

	
(v)

	
a fifty percent (50%) joint and survivor annuity; or

 

  

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(vi)

	
a ten (10) year certain and life;

 

Benefits paid in a form other than a single-life annuity will be calculated on an Actuarial Equivalent basis.  In the event an election is not on file at the time benefit payments commence, benefits shall be paid as a single-life annuity if the Participant is unmarried or a fifty percent (50%) joint and survivor annuity if the Participant is married.  A Participant shall be permitted to elect to change from one form of life annuity to another form of life annuity.  The Participant may make this election, in writing, on forms provided by and filed with the Employer at any time prior to the Participant’s Separation from Service.  Provided such life annuities constitute annuities under Treasury Regs. §1.409A-2(b)(2)(ii).  For this purpose, the term life annuity means a series of substantially equal periodic payments, payable not less frequently than annually for the life of the Participant and/or the Participant’s joint annuitants.  The optional forms of life annuity shall be actuarially equivalent, applying reasonable actuarial methods and assumptions.  Actuarial Equivalent means equivalence in value between two (2) or more forms and/or times of payment based on a determination by an actuary chosen by the Corporation, using the same actuarial assumptions as used in the Pension Plan at the time of such determination.

 

	
  

	
(b)

	
Commencement of Benefit Payments.  Benefits shall be paid as follows:

 

	
  

	
(i)

	
If the Participant has a Separation from Service prior to Retirement, benefits shall commence on the first day of the month after the Participant attains age sixty-five (65); and

 

	
  

	
(ii)

	
If Separation from Service occurs after Retirement, benefits shall commence on the first day of the month following Separation from Service.

 

15.              SIX MONTH DELAY FOR SPECIFIED EMPLOYEES.  Effective January 1, 2009, Section 7.4 of the Plan Statement shall be amended to read in full as follows:

 

7.4.              Six-Month Distribution Freeze.  Notwithstanding the foregoing Section 7.2.2, if payments are to be made on account of Separation from Service to a Specified Employee, payment of the portion of that Participant’s benefit payable under Section 7.2.2 above shall be suspended until a date that is six (6) months after the date of the Separation from Service.  As soon as administratively feasible after the six (6) month anniversary of the Participant’s Separation from Service, the Participant shall receive all payments, without interest, the Participant would have been entitled to receive during this six month period had the Participant not been a Specified Employee.  Thereafter, payments shall be made in accordance with Section 7.2.2 above.  If a Participant dies prior to receiving a payment under this Section any suspended payments shall be paid to the Participant’s Estate within 60 days following the Participant’s death.

 

  

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

 

 

-6-a6618109ex10-p1.htm

Exhibit 10-P-1

Otter Tail Corporation

Executive Employment Agreement

Amended July 2009

John Erickson

The Executive Employment Agreement (the “Agreement”) entered into on the 1st day of July, 2009, by and between Otter Tail Corporation, a Minnesota corporation (the “Corporation”) and John Erickson (“You”), which does amend and supersede that certain Employment Agreement dated December 31, 2008.  The Corporation agrees to employ You and You agree to be employed under the terms of this Agreement as follows:

1.           Employment.  The Corporation agrees to continue to employ You and You agree to continue to be employed as President and CEO consistent with the terms and conditions set forth in this Agreement.

2.           Duties.  You shall have such duties as are assigned or delegated to You by the Corporation’s Board of Directors or its designee.  Except as provided for in Section 7 of this Agreement or subsequently agreed upon by You and the Corporation, You agree to devote Your entire business time, attention, skill, and energy exclusively to the business of the Corporation, to use Your best efforts to promote the success of the Corporation's business, and to cooperate fully with the Board of Directors in the advancement of the best interests of the Corporation.

3.           Compensation and Benefits.

	
  

	
a.

	
Base Pay.  You shall be paid an annual salary (“Base Pay”) of $490,000, which shall be payable in equal periodic installments according to the Corporation's customary payroll practices, but no less frequently than monthly, and subject to such withholdings and deductions as required by law.  Your Base Pay shall be reviewed in April of each year by the Board of Directors, and any change in Base Pay approved by the Board shall become effective April 1 of the year in which it is approved.

	
  

	
b.

	
Incentive Compensation. You shall participate in an annual incentive and a long term incentive plan as approved by the Corporation’s Board of Directors, and based on the rules of the plan.  Your annual incentive payment shall be paid to You no later than March 15, following approval of the Corporation’s financial results after the close of each calendar year.  Any long term incentive plan payment due You shall be made in accordance with the plan as adopted by the Board but not any later that may be required under section 409A of the Internal Revenue Code (“409A”).

	
  

	
c.

	
Benefits.  In addition to the compensation described above and subject to rules of eligibility, You shall participate in the benefit plans (such as the  post-retirement medical plan, medical and disability plans, executive survivor and supplemental retirement plan, pension plan, 401k plan, non-qualified incentive and deferral plan (all such plans are referred to collectively as the “Other Plans”)) available to full time executive level employees of the Corporation as they now exist and may from time to time be modified or established by the Corporation.  The plan documents shall govern Your participation in any benefit plan.

 

  

  

  

 

	
  

	
d.

	
Vehicle Allowance.   In addition to reimbursement for business mileage, You shall receive a monthly vehicle allowance of $800.

4.           Expenses.  The Corporation shall reimburse You for Your business expenses.  Without limiting the foregoing, the Corporation shall pay Your dues in such professional societies and organizations as are appropriate for Your position, and shall pay on Your behalf (or reimburse You for) reasonable expenses incurred by You on behalf of the Corporation in the performance of the Your duties pursuant to this Agreement, including reasonable expenses incurred by You in attending conventions, seminars, and other business meetings, in appropriate business entertainment activities, and for promotional expenses.  You shall file such expense reports as are required by the Corporation's policies and federal income tax laws and regulations.

5.           Confidentiality of Information.

	
  

	
a.

	
You acknowledge that the Corporation possesses and will continue to develop and acquire valuable Confidential Information (as defined below), including information that You may develop or discover as a result of your employment with the Corporation.  The value of that Confidential Information depends on it remaining confidential.  The Corporation depends on You to maintain the confidentiality, and You accept that position of trust.

	
  

	
b.

	
As used in this Agreement, “Confidential Information” means any information (including any formula, pattern, compilation, program, device, method, technique or process) that derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use and includes information of the Corporation, its customers, suppliers, joint ventures, licensors, distributors and other persons and entities with whom the Corporation does business.

	
  

	
c.

	
You shall not disclose or use at any time, either during or after your employment with the Corporation, any Confidential Information except for the exclusive benefit of the Corporation as required by your duties or as the Corporation expressly may consent to in writing.  You shall cooperate with the Corporation to implement reasonable measures to maintain the secrecy of, and use your best efforts to prevent the unauthorized disclosure, use or reproduction of all Confidential Information.

 

  

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d.

	
Upon leaving employment with the Corporation for any reason, You shall deliver to the Corporation all tangible, written, graphical, machine readable and other materials (including all copies) in your possession or under your control containing or disclosing Confidential Information.

6.           Termination/Severance.  Either party may terminate the employment relationship as evidenced by this Agreement at any time and for any reason upon ninety days written notice to the other.

	
  

	
a.

	
If You elect to terminate the employment relationship, or if You are terminated by the Company for Cause, You shall receive Base Pay and benefits through the date of termination.  Cause means your termination of employment with the Corporation based upon embezzlement or other intentional misconduct which is materially injurious to the Corporation, monetarily or otherwise.

	
  

	
b.

	
If the Corporation elects to terminate the employment relationship or if You elect to resign for Good Reason, You shall receive a severance payment equal to one and one-half (1-1/2) times the sum of your present Base Pay plus your most recent annual incentive payment (the “Severance Payment”), in full satisfaction of the Corporation’s obligations to You as an employee.  The Severance Payment will be paid within fifteen (15) days of the date of termination and shall be subject to payroll taxes and any withholding obligations.  Good Reason means the occurrence of any of the following events provided the event results in negative change to You:

	
  

	
(1)

	
a material change in your responsibilities or title which are not of comparable responsibility and status as those held upon execution of this Agreement;

	
  

	
(2)

	
a reduction in your Base Pay, or a modification of the Corporation’s incentive compensation program or benefits in a manner materially adverse to You;

	
  

	
(3)

	
a breach or alteration of any material term of this contract without your consent.

You shall evidence a voluntary termination for Good Reason by written notice to the Corporation given within 90 days after the date of the occurrence of any event that You know or should reasonably have known constitutes Good Reason for voluntary termination and the Corporation has 30 days from the date the Corporation receives the notice from You to remedy the condition.  Such notice need only identify You and set forth in reasonable detail the facts and circumstances claimed by You to constitute Good Reason.

 

	
  

	
c.

	
If You are terminated in connection with a Change in Control, as defined by the Change in Control Severance Agreement entered into by You and the Corporation (the “Severance Agreement”), and You receive payment of the severance benefits under Section 4 of the Severance Agreement, no Severance Payment shall be due to You under this Agreement.

 

  

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d.

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

 

	
  

	
(i)

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

 

	
  

	
(ii)

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

 

	
  

	
(iii)

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

7.           Special Considerations.  None.

8.           Entire Agreement.  Except for the Corporation’s Other Plans, this Agreement and the Change in Control Severance Agreement represent the entire agreement between You and the Corporation concerning the employment relationship of the parties and, thus, supersedes any and all previous written or oral employment agreements or understandings concerning such matter.

9.           Disputes.  Disputes under this Agreement shall be determined by arbitration consistent with rules of the American Arbitration Association.  The costs of Arbitration shall be borne equally between You and the Corporation and You shall bear your own attorney fees; provided, however, if You are the prevailing party in Arbitration, all costs and attorney fees shall be paid by the Corporation.

 

  

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10.         Amendment/Governing Law.  This Agreement may only be modified or amended by a writing signed by both parties.  This Agreement is made in and shall be governed by the substantive laws of the State of Minnesota.

FOR THE CORPORATION:

	
/s/ John MacFarlane

	
7/16/09

	  	
Date

 

ACKNOWLEDGED AND ACCEPTED BY:

	
/s/ John Erickson

	
7/16/09

	  	
Date

 

 

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