Document:

exv10w21

 

Exhibit 10.21

AMERICA FIRST COMPANIES L.L.C.

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is effective as of October 1, 2005, by and
between AMERICA FIRST COMPANIES L.L.C., a Delaware limited liability company with its principal
place of business in Omaha, Nebraska (the “Company”), and PAUL BELDIN (“Employee”), a resident of
the State of Nebraska.

     WHEREAS, the Company desires to employ Employee with such duties and responsibilities as the
Company shall determine from time to time and Employee desires to be employed by the Company;

     NOW THEREFORE, the Company and Employee, each intending to be legally bound, agree to the
following terms and conditions:

     Section 1. EMPLOYMENT.

     (a) The Company hereby agrees to employ Employee on a full time basis in such capacities as
the Company may determine from time to time.

     (b) Employee hereby represents and warrants to the Company that (i) the execution, delivery
and performance of this Agreement by Employee does not and will not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment or decree to which
Employee is a party or by which he is bound, (ii) Other than disclosed to the Company, Employee is
not a party to or bound by any employment agreement, noncompete agreement or confidentiality
agreement with any other person or entity and (iii) upon the execution and delivery of this
Agreement by the Company, this Agreement shall be the valid and binding obligation of Employee,
enforceable in accordance with its terms.

     Section 2. TERM. The initial term of the Agreement will be expire on the third anniversary of
the effective date of this Agreement (the “Employment Period”), but will be automatically renewed
for additional one-year terms as of that date and each anniversary thereof unless the Company gives
Employee at least 60 days prior written notice that it will not renew the Agreement as of the next
such anniversary date. Notwithstanding the foregoing, the Employee’s employment with the Company
will terminate (i) upon the death of Employee, (ii) upon the expiration of a continuous period of
one hundred eighty (180) days during which Employee is disabled (as defined in the long-term
disability plan of the Company) (hereinafter “Disabled”), (iii) upon termination by Employee, or
(iv) termination by the Company for Cause (as hereinafter defined).

     Section 3. DUTIES; REPORTING.

     (a) During the term hereof, Employee shall have such authority, and shall carry out all
responsibilities and duties, as may be reasonably assigned to Employee by the Company’s Board of
Managers.

     (b) Employee shall perform faithfully the executive duties assigned to him to the best of his
ability in a diligent, trustworthy, businesslike and efficient manner and will devote his full
business time and attention to the business and affairs assigned to him hereunder; provided,
however, that Employee may serve as a director of or a consultant to other corporations which do
not compete with the Company or its subsidiaries or affiliates, nonprofit corporations, civic
organizations, professional groups and similar entities.

     (c) During the term hereof, Employee shall report to the Chief Executive Officer of the
Company, or his or her designee.

     Section 4. BASE SALARY. As compensation for his services hereunder, the Company shall pay to
Employee an annual base salary (the “Base Salary”) during the term hereof. The amount of the
Employee’s Base Salary shall be determined by the compensation committee of the Company’s Board of
Managers. Base Salary will be paid in equal installments on a semi-monthly basis pursuant to the
Company’s regular payroll practices and will not be less than the Base Salary at the effective date
of this agreement.

     Section 5. BONUS. In addition to the Base Salary, Employee shall be eligible to receive an
annual bonus based on Employee’s performance. The performance goals and amount of the Employee’s
bonus, if any, shall be determined by the compensation committee of the Company’s Board of
Managers. Any bonuses awarded to Employee will be paid pursuant to the Company’s regular payroll
practices.

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     Section 6. PARTICIPATION IN EMPLOYEE BENEFIT PLANS. Employee will be entitled to participate
in all Company salaried employee benefit plans and programs, subject to the terms and conditions of
each such employee benefit plan or program and to the extent commensurate with the position.

     Section 7. OTHER BENEFITS.

     (a) VACATION. Employee shall initially be entitled to paid vacation in accordance with the
Company’s vacation policies.

     (b) INSURANCE. The Company shall make available to Employee health and dental insurance
(including dependent coverage), and other benefits which the Company may provide to all employees
from time to time.

     Section 8. BUSINESS EXPENSES. The Company shall reimburse Employee for all reasonable
expenses incurred by him in the course of performing his duties under this Agreement which are
consistent with the Company’s policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the Company’s requirements with respect to
report and documentation of such expenses.

     Section 9. TERMINATION OF EMPLOYMENT.

     (b) TERMINATION BY THE COMPANY. The Company may terminate this Agreement and discharge
Employee for “Cause” at any time. As used herein, the term “Cause” shall mean any material and
uncured breach of this Agreement by Employee, including a failure to perform his duties in a manner
consistent with the terms of this Agreement or the persistent failure or refusal to comply with any
lawful direction of the Board of Managers of the Company, or any action taken by Employee in
connection with his duties hereunder which is fraudulent or illegal, violates his duty of loyalty
or constitutes gross negligence. A termination of employment by the Company shall be deemed to be
effective immediately upon notification thereof to Employee.

     (b) TERMINATION BY THE EMPLOYEE. Any termination of employment by Employee shall be a
“Voluntary Termination” unless it is the result of (i) Employee’s death, (ii) Employee being
Disabled (iii) resignation due to a material and uncured breach by the Company of this Agreement or
(iv) termination of employment by the Company, as defined in Section 9(a.). A Voluntary
Termination shall be deemed to be effective immediately upon notification thereof to the Company.

     (c) CERTAIN EFFECTS OF TERMINATION OF EMPLOYMENT.

     (i) Upon the termination of Employee’s employment hereunder pursuant to a Voluntary
Termination or a termination for Cause, Employee shall have no further rights or claims
against the Company under this Agreement except to receive a lump sum payment within thirty
(30) days of the date of termination of (A) the unpaid portion of Employee’s Base Salary
earned through the date of termination and any unpaid Bonus relating to the year prior to the
year in which the date of termination occurs, and any current year Bonus based on
year-to-date performance results (such current year Bonus to be not less than 33 1/3% of the
budgeted Bonus for the current year), (B) any earned but unused vacation and (C)
reimbursement of any reimbursable expenses for which Employee shall not have theretofore been
reimbursed.

     (ii) Upon the termination of Employee’s employment hereunder by reason of Employee’s
death or Employee becoming Disabled for a continuous period of one hundred eighty (180) days,
the Company shall pay to Employee or Employee’s personal representative or custodian within
thirty (30) days of the date of the termination of Employee’s employment a lump sum equal to
(A) an amount equal to six months of Employee’s Base Salary at the date of termination, (B)
the unpaid portion of Employee’s Base Salary earned through the date of termination and any
unpaid Bonus relating to the year prior to the year in which the date of termination occurs,
and any current year Bonus based on year-to-date performance results (such current year Bonus
to be not less than 33 1/3% of the budgeted Bonus for the current year), (C) any earned but
unused vacation and (D) reimbursement of any reimbursable expenses for which Employee shall
not have theretofore been reimbursed. In addition, Employee or Employee’s personal
representative or custodian will be entitled to any benefits provided under any plans
maintained by the Company in which Employee is a participant on the date of termination in
accordance with the terms of such benefit plan;

     (iii) Upon the termination of Employee’s employment hereunder other than for Cause,
death, Disability or Voluntary Termination, the Company shall pay to Employee in accordance
with the Company’s regular payroll practices (A) severance payment equal to twelve months of
Employee’s Base Salary at the date of termination, (B) the unpaid portion of Employee’s Base
Salary earned through the date of termination and any unpaid Bonus relating to the year prior
to the year in which the date of termination occurs, and any current year Bonus based on
year-to-date performance results (such current year Bonus to be not less than 33 1/3% of the
budgeted Bonus for the current year), (C) any earned but unused vacation and (D) reimbursement of any reimbursable expenses for which Employee shall not have
theretofore been reimbursed.

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In addition, Employee will be entitled to any benefits provided
under any plans maintained by the Company in which Employee is a participant on the date of
termination in accordance with the terms of such benefit plan.

     (d) EFFECT OF BREACH OF NONCOMPETITION PROVISIONS. In the event Employee breaches or
otherwise fails to comply with the provisions of Sections 11 through 13 below, then, in addition to
any other remedies provided herein or at law or in equity, the Company shall have the right to
require return of any severance payment made to Employee pursuant to Section 9(c) above. Return of
such severance payment pursuant to the preceding sentence shall not relieve Employee’s obligations
pursuant to Sections 11 through 13 below.

     Section 10. ASSIGNMENT AND SUCCESSION.

     (a) The rights and obligations of the Company under this Agreement shall inure to the benefit
of and be binding upon its respective successors and assigns, and Employee’s rights and obligations
hereunder shall inure to the benefit of and be binding upon his successors and permitted assigns,
whether so expressed or not.

     (b) Employee acknowledges that the services to be rendered by him hereunder are unique and
personal. Accordingly, Employee may not pledge or assign any of his rights or delegate any of his
duties or obligations under this Agreement without the express prior written consent of the
Company.

     (c) The Company may assign its interest in or obligations under this Agreement without the
prior written consent of Employee.

     Section 11. CONFIDENTIAL INFORMATION.

     (a) Employee agrees at all times during the term of his relationship with the Company and
thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Company
or its subsidiaries or affiliates, or to disclose to any person, firm, corporation or other entity
without written authorization of the Board of Managers of the Company, any Confidential Information
of the Company or its subsidiaries or affiliates which Employee obtains or creates, by whatever
means. Employee further agrees not to make copies of such Confidential Information except as
authorized by the Company.

     (b) For purposes of this Agreement, “Confidential Information” shall be construed broadly and
includes all Company (including its subsidiaries and affiliates) proprietary information, technical
data, trade secrets or know-how, including, but not limited to, research, product plans, products,
services, suppliers, customer lists and customers, prices and costs, markets, software,
developments, inventions, notebooks, processes, technology, designs, drawings, engineering,
hardware configuration information, marketing, licenses, finances, budgets or other business
information disclosed to Employee by the Company or its subsidiaries or affiliates either directly
or indirectly in writing, orally or by observation by Employee during the term hereof, whether or
not during working hours. Employee understands that Confidential Information includes, but is not
limited to, information pertaining to any aspects of the business of the Company or its
subsidiaries or affiliates which is either information not known by actual or potential competitors
of the Company or its subsidiaries or affiliates or is proprietary information of the Company, its
subsidiaries or affiliates or their respective investors, customers or suppliers, of any nature
whatsoever. Confidential Information does not include any of the foregoing items which have become
publicly and widely known and made generally available through no wrongful act of Employee’s or of
others who were under confidentiality obligations as to the item or items involved.

     (c) Employee agrees that, at the time of termination of his relationship with the Company, he
will deliver to the Company (and will not keep in his possession, recreate or deliver to anyone
else) any and all devices, records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, notebooks, materials, flow charts, equipment, other
documents or property, or reproductions of any aforementioned items developed by Employee pursuant
to the relationship or otherwise belonging to the Company, or its subsidiaries or affiliates.
Employee further agrees that any property situated on the Company’s premises and owned by the
Company, or its subsidiaries or affiliates, including disks and other storage media, filing
cabinets or other work areas, is subject to inspection by Company personnel at any time with or
without notice.

     Section 12. FORMER EMPLOYER INFORMATION. Employee represents that as an employee of the
Company, he has not breached and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by Employee in confidence or trust prior or subsequent to
the commencement of Employee’s relationship with the Company, and Employee will not disclose to the
Company, or induce the Company to use, any inventions, confidential or proprietary information or
material belonging to any previous employer or any other party.

     Section 13. NONCOMPETITION; NONSOLICITATION.

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     (a) During the term hereof and for a period of one (1) year following the termination of
Employee’s employment relationship with the Company (whether or not this Agreement is extended), as
it relates to subsidiaries or affiliates of the Company for which the Employee has directly
performed job duties, the Employee shall not:

     (i) directly or indirectly, as principal, agent, representative, shareholder, consultant
or in any other capacity engage in or assist any other person or entity in performing
services or engaging in business activities within the United States of America which would
be in direct competition with the business of the Company, its subsidiaries or affiliates, or
any company for which the Company provides (or has provided within the preceding twelve (12)
months) advisory or management services;

     (ii) induce or attempt to induce any employee, supplier or person or company having a
business relationship with the Company or its subsidiaries or affiliates to terminate their
employment or other such business relationship with the Company or its subsidiaries or
affiliates or to hire any person who had been employed by the Company or its subsidiaries or
affiliates during the preceding six months; or

     (iii) become a direct employee of, or serve as a consultant to, any company for which
the Company (or any subsidiary or affiliate of the Company) then provides advisory or
management services or has provided such advisory or management services during the preceding
twelve (12) months.

     (b) Employee acknowledges that the foregoing restrictions are reasonable and necessary in
order to protect the Company’s legitimate interests.

     Section 14. ARBITRATION AND EQUITABLE REMEDIES.

     (a) Except as provide in Section 14(b) hereof, the parties agree that any dispute or
controversy arising out of, relating to, or concerning the interpretation, construction,
performance or breach of this Agreement, shall be settled by arbitration to be held in Nebraska, in
accordance with the Employment Dispute Resolution rules of the American Arbitration Association
then in effect. The arbitrator may grant injunctions or other relief in such dispute or controversy
and the decision of the arbitrator shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction.
The Company and Employee shall each pay one-half of the costs and expenses of such arbitration, and
each shall separately pay the fees and expenses of their respective legal counsel.

     THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL AND RELATES
TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP.

     (b) Notwithstanding paragraph (a) of this Section 14, the parties agree that, in the event of
the breach or threatened breach of Sections 11 through 13 of this Agreement by Employee, monetary
damages alone would not be an adequate remedy to the Company and its affiliates for the injury that
would result from such breach, and that the Company and its affiliates shall be entitled to apply
to any court of competent jurisdiction for specific performance and/or injunctive relief (without
posting bond or other security) in order to enforce or prevent any violation of such provisions of
this Agreement. Employee further agrees that any such injunctive relief obtained by the Company or
any of its affiliates shall be in addition to monetary damages.

     Section 15. INDEMNIFICATION. The Company agrees to indemnify and hold harmless Employee for
any and all actions taken by Employee in carrying out his duties under this Agreement to the extent
provided in the Company’s Operating Agreement, as it may be amended from time to time.

     Section 16. ENTIRE AGREEMENT. This Agreement represents the entire agreement between the
parties relating to the subject matters covered hereby and shall supersede any prior
understandings, agreements or representations by or between the parties, written or oral, which may
have related to the subject matter hereof in any way and shall not be amended or waived except in a
writing signed by the parties hereto.

     Section 17. NOTICES. Any notice or request required or permitted to be given hereunder shall
be in writing and will be deemed to have been given (i) when delivered personally, sent by telecopy
(with hard copy to follow) or overnight express courier or (ii) five days following mailing by
certified or registered mail, postage prepaid and return receipt requested, to the addresses below
unless another address is specified by such party in writing:

	 	 	 	 	 	 	 
	 

	 	To the Company:
	 	America First Companies LLC	 	 
	 

	 	 	 	1004 Farnam Street	 	 

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	 	 	 	Suite 400	 	 
	 

	 	 	 	Omaha, NE 68102	 	 
	 

	 	 	 	Attention: Chief Executive Officer	 	 
	 

	 	 	 	Telephone: (402) 444-1630	 	 
	 

	 	 	 	Telecopy: (402) 930-3047	 	 
	 
	 	 	 	 	 	 
	 

	 	To Employee:
	 	At the Employee’s regular
place of business
	 	s

     Section 18. HEADINGS. The article and section headings herein are for convenience of
reference only and shall not define or limit the provisions hereof.

     Section 19. APPLICABLE LAW. All other questions concerning the construction, validity and
interpretation of this Agreement shall be governed by the internal laws of the State of Nebraska.

     Section 20. SEVERABILITY. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held prohibited by, invalid or unenforceable in any respect under applicable
law, such provision will be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions of this Agreement.

     Section 21. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be amended or waived
only with the prior written consent of the Company and Employee.

     Section 22. NO STRICT CONSTRUCTION. The language used in this Agreement will be deemed to be
the language chosen by the parties hereto to express their mutual intent, and no rule of strict
construction will be applied against any party hereto.

     Section 23. COUNTERPARTS. This Agreement may be executed in separate counterparts, each of
which is deemed to be an original and all of which taken together constitute one and the same
agreement.

     Section 24. SURVIVAL. Sections 11, 12, 13 and 15 shall survive and continue in full force in
accordance with their terms notwithstanding any termination of the term hereof.

     IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its duly authorized
officer and Employee has signed this Agreement.

	 	 	 	 	 	 	 
	 	 	AMERICA FIRST COMPANIES L.L.C.	 	 
	 
	 	 	 	 	 	 
	 

	 	By
	 	/s/ Lisa Y. Roskens
 

	 	 
	 	 	Lisa Y. Roskens, President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EMPLOYEE	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Paul Beldin
 

	 	 
	 	 	Paul Beldin	 	 

5exv10wnw7

 

Exhibit 10-N-7

OTTER TAIL CORPORATION

1999 STOCK INCENTIVE PLAN

2005 NONQUALIFIED STOCK OPTION AGREEMENT

     This 2005 Nonqualified Stock Option Agreement between Otter Tail Corporation, a Minnesota
corporation (the “Corporation”), and the person named in the attached Stock Option Award
Certificate who is an employee of the Corporation or one of its Affiliates (the “Optionee”),
effective as of the date of grant set forth in the attached Stock Option Award Certificate (the
“Grant Date”).

     WHEREAS, the Corporation desires to provide the Optionee with an opportunity to purchase
shares of the Corporation’s Common Stock, par value $5.00 per share (the “Common Shares”), as
hereinafter provided in order to carry out the purpose of the Corporation’s 1999 Stock Incentive
Plan (the “Plan”).

     WHEREAS, this 2005 Nonqualified Stock Option Agreement applies to all options with a Grant
Date of January 2005 and thereafter (the “Effective Date”). No change is intended or made to
Options issued prior to the Effective Date.

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

     1. Grant of Option. The Corporation hereby grants to the Optionee the right and
option (the “Option”) to purchase all or any part of the aggregate number of Common Shares set
forth in the attached Stock Option Award Certificate, on the terms and conditions set forth in this
Agreement and the Plan. The Option granted hereunder shall not be an incentive stock option within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

     2. Exercise Price. The per share purchase price of the Common Shares subject to the
Option shall be the option price per share set forth in the attached Stock Option Award
Certificate.

     3. Duration and Exercisability. The term of the Option shall be for a period of ten
years from the Grant Date, terminating at the close of business on the expiration date set forth in
the attached Stock Option Award Certificate (the “Expiration Date”) or such shorter period as is
prescribed in paragraph 6 hereof. The Option becomes exercisable in its entirety on October 11,
2005, subject to the provisions of paragraphs 4 and 6 hereof. Except as provided in paragraph 6
hereof, the Option may not be exercised unless the Optionee shall, at the time of exercise, be an
employee of the Corporation or one of its Affiliates. The Optionee shall not have any of the
rights of a shareholder with respect to any of the Common Shares subject to the Option until such
shares shall be issued to the Optionee upon due exercise of the Option.

 

 

     4. Change of Control. Notwithstanding the provisions of paragraph 3 hereof, from and
after a Change of Control (as hereinafter defined) the Option shall become immediately exercisable
in full. As used herein, “Change of Control” shall mean any of the following events:

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

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

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

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

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

     5. Transferability. The Option shall not be transferable other than by will or the
laws of descent and distribution, and the Option may be exercised during the lifetime of the
Optionee only by the Optionee. More particularly (but without limiting the generality of the
foregoing), the Option may not be assigned, transferred (except as aforesaid), pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation, or other disposition of the Option contrary to the provisions hereof and the levy of
an execution, attachment or similar process upon the Option shall be void. Notwithstanding the
foregoing,

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Optionee may, in the manner established by the Committee, designate a beneficiary or beneficiaries
to exercise the rights of the Optionee with respect to the Option upon the death of the Optionee.

     6. Effect of Termination of Employment.

          (a) In the event the Optionee shall cease to be employed by the Corporation or any of its
Affiliates for any reason other than termination for cause, death, disability, termination within
two years following a Change in Control, or retirement after reaching age 55, the Optionee may
exercise the Option at any time within three months after such termination of employment, but not
thereafter; provided, however, that the Option may not be exercised after the Expiration Date and
may be exercised only to the extent of the number of shares the Optionee was entitled to purchase
under the Option on the date of such termination.

          (b) In the event the Optionee shall cease to be employed by the Corporation or any of its
Affiliates upon termination for cause, the Option shall be terminated as of the date of such
termination. Termination for cause shall mean termination of Optionee’s employment with the
Corporation or any of its Affiliates for the following acts: dishonesty, fraud, conviction or
confession of a felony or of a crime involving moral turpitude, destruction or theft of the
property of the Corporation or any of its Affiliates, willful malfeasance or gross negligence,
misconduct materially injurious to the Corporation or any of its Affiliates, participation in fraud
against the Corporation or any of its Affiliates, entering into competition against the Corporation
or any of its Affiliates, and/or a material breach or threatened material breach of any other
agreements with the Corporation or any of its Affiliates.

          (c) In the event the Optionee shall cease to be employed by the Corporation or any of its
Affiliates within two years following a Change in Control, the Optionee may exercise the Option at
any time after such termination of employment, provided, however, that the Option may not be
exercised after the Expiration Date.

          (d) In the event the Optionee terminates employment due to retirement from the Corporation or
any of its Affiliates after reaching age 55, the Option shall remain in full force and effect, and
continue to vest in accordance with paragraph 3 hereof.

          (e) In the event that the Optionee shall cease to be employed by the Corporation or any of its
Affiliates as the result of death or disability, or the Optionee shall die within three months
after the termination of the Optionee’s employment other than for cause, the Option may be
exercised by the Optionee or, if applicable, by the Optionee’s personal representative or
administrator or by any person or persons to whom the Option is transferred by will or the
applicable laws of descent and distribution, at any time within a period of one year after the
termination of employment of the Optionee, but not after the Expiration Date, to the full extent of
the Common Shares covered by the Option not previously purchased, whether or not such shares had
become purchasable by the Optionee at the date of the Optionee’s termination of employment. For
purposes of this Agreement, an Optionee shall be deemed to have a disability if such Optionee is
deemed to be disabled under any long-term disability program then

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maintained by the Corporation or any of its Affiliates that is applicable to the Optionee; provided, however,
that if no such long-term plan is then maintained, the determination of disability shall be in the
exclusive and sole discretion of the Corporation.

     (f) The Option shall not be affected by any change of the duties or position of the Optionee
(or by a temporary leave of absence approved by the Corporation) so long as the Optionee continues
to be an employee of the Corporation or of an Affiliate.

     (g) Nothing herein contained shall confer on the Optionee any right to continue in the employ
of the Corporation or any Affiliate or affect in any way the right of the Corporation or any
Affiliate to terminate the employment of the Optionee at any time.

     7. Anti-dilution Adjustments. If any portion of the Option is exercised subsequent to
any stock dividend, split-up, recapitalization, merger, consolidation, combination or exchange of
shares or the like occurring after the Grant Date as a result of which shares of any class shall be
issued in respect of the outstanding Common Shares, or Common Shares shall be changed into the same
or a different number of shares of the same or another class or classes, the person or persons
exercising the Option shall receive for the aggregate price paid upon such exercise the aggregate
number of shares which, if Common Shares (as authorized at the Grant Date) had been purchased at
the Grant Date for the same aggregate price (on the basis of the price per share set forth in
paragraph 2 hereof) and had not been disposed of, such person or persons would be holding at the
time of such exercise as a result of such purchase and any and all such stock dividends, split-ups,
recapitalizations, mergers, consolidations, combinations or exchanges of shares, or the like;
provided, however, that no fractional share shall be issued upon any such exercise,
and the aggregate price paid shall be appropriately reduced on account of any fractional share not
issued.

     8. Manner of Exercise. The Option may be exercised by written notice to Wells Fargo
Investment, LLC as prescribed by the Corporation. The notice shall state the number of shares with
respect to which the Option is being exercised. The notice shall be accompanied by payment of the
full purchase price and the Corporation or its agent shall issue and deliver a certificate
representing such shares as soon as practicable after the notice is received. Payment of the
purchase price shall, unless otherwise consented to by the Corporation, be made by delivery of
cash, check (bank check, certified check or personal check) or money order payable to the order of
the Corporation Certificates for the shares purchased shall be registered in the name of the person
exercising the Option (or if the Option shall be exercised by the Optionee and if the Optionee
shall so request in the notice exercising the Option, shall be registered in the name of the
Optionee and another person as joint tenants) and shall be delivered to the person exercising the
Option. In the event the Option shall be exercised pursuant to paragraph 6(d) hereof by any person
other than the Optionee, the notice shall be accompanied by appropriate proof of such person’s
right to exercise the Option. All shares issued upon the exercise of the Option shall be fully
paid and non-assessable.

     9. Taxes. The Optionee acknowledges that the Optionee will consult with the
Optionee’s personal tax advisor regarding the income tax consequences of exercising the Option

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or any other matters related to this Agreement. In order to provide the Corporation with the
opportunity to claim the benefit of any income tax deduction which may be available to it upon
exercise of the Option, and in order to comply with all applicable income tax laws or regulations,
the Corporation may take such action as it deems appropriate to insure that, if necessary, all
applicable federal or state payroll, withholding, income or other taxes are withheld or collected
from the Optionee. In accordance with the terms of the Plan, and such rules as may be adopted by
the Committee under the Plan, the Optionee may elect to satisfy the Optionee’s federal and state
income tax withholding obligations upon exercise of the Option by (a) delivering cash, check (bank
check, certified check or personal check) or money order payable to the order of the Corporation,
or (b) having the Corporation withhold a portion of the Common Shares otherwise to be delivered
upon exercise of the Option having a Fair Market Value equal to the amount of federal and state
income tax required to be withheld upon such exercise, in accordance with such rules as the
Corporation may from time to time establish.

     10. Miscellaneous.

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

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

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

          (d) This Option is granted pursuant to the Plan and is subject to all the terms and conditions
contained therein. A copy of the Plan is available to the Optionee upon request.

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

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

          (g) THIS 2005 NONQUALIFIED STOCK OPTION AGREEMENT IS ATTACHED TO AND MADE A PART OF A STOCK
OPTION AWARD CERTIFICATE AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH STOCK OPTION AWARD
CERTIFICATE IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND THE OPTIONEE.

* * * * * * * *

5

 

OTTER TAIL CORPORATION

1999 STOCK INCENTIVE PLAN

STOCK OPTION AWARD CERTIFICATE

[Name and address of Optionee]

[Social Security Number of Optionee]

     You have been granted options to purchase shares of Otter Tail Corporation Common Stock as
follows:

	 	 	 	 	 	 	 
	 

	 	Grant Type:
	 	Nonqualified Stock Option
	 	 
	 

	 	Grant Date:
	 	April 11, 2005
	 	 
	 

	 	Stock Option Plan:
	 	1999 Stock Incentive Plan
	 	 
	 
	 	 	 	 	 	 
	 

	 	Option Price Per Share:
	 	$
 

	 	  
	 

	 	Total Number of Shares Granted:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Expiration Date:
	 	April 11, 2015
	 	 

     By the Corporation’s and your signature below, it is agreed that these options are granted
under and governed by the terms and conditions of the 2005 Nonqualified Stock Option Agreement, a
copy of which is attached and made a part of this document, and the Corporation’s 1999 Stock
Incentive Plan, a copy of which is enclosed.

OTTER TAIL CORPORATION

	 	 	 	 	 
	 

	 	 	OTTER TAIL CORPORATION
	 
	 

	 	 	By:	 
	 

	 	 	 	 
	 

	 	 	 	John Erickson
	 

	 	 	 	Its: President & Chief Executive Officer
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name of Optionee]

6

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