Document:

a50243750ex103.htm

Exhibit 10.3

OTTER TAIL CORPORATION

1999 STOCK INCENTIVE PLAN

2012 PERFORMANCE AWARD AGREEMENT

This Performance Award Agreement is between Otter Tail Corporation, a Minnesota corporation (the “Corporation”), and you, as an employee of the Corporation, effective as of the date of grant (the “Grant Date”) set forth in the attached Performance Award Certificate.

 

WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 1999 Stock Incentive Plan (the “Plan”), wishes to grant to you the opportunity and right to receive a number of the Corporation’s Common Shares, par value $5.00 per share (the “Common Shares”), subject to the terms and conditions contained in this Agreement and in the attached Performance Award Certificate, which is made a part of this Agreement.

 

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

 

1. Performance Award.  The Corporation hereby grants to you, effective as of the Grant Date, a Performance Award representing the right to receive a specified number of Common Shares, as set forth in the attached Performance Award Certificate and subject to the terms and conditions set forth in this Agreement, the Performance Award Certificate and the Plan.  The Performance Award, to the extent it becomes payable, shall be paid in Common Shares of the Corporation (the “Shares”).

 

2. Performance Period and Performance Goals.  The performance period for purposes of determining whether the Performance Award will be paid shall be January 1, 2012 through December 31, 2014 (the “Performance Period”).  The performance goals for purposes of determining whether, and the extent to which, the Performance Award will be paid are set forth in Exhibit 1 to this Agreement, which Exhibit is made a part of this Agreement.

 

3. Payment.  Subject to the provisions of Sections 4 and 5 of this Agreement, the Performance Award shall be paid within 59 days after the January 15 following the end of the Performance Period after the Compensation Committee of the Corporation’s Board of Directors (the “Committee”) determines, in its discretion, whether and to what extent the performance goals have been achieved in accordance with the terms set forth in Exhibit 1 to this Agreement.

 

4. Forfeiture; Early Vesting.  Notwithstanding the provisions of Section 3 of this Agreement, in the event your employment is terminated during the Performance Period, the Performance Award and your right to receive any Shares shall be immediately and irrevocably forfeited, unless such termination is by reason of:

 

(a) disability (as determined under any long-term disability program then maintained by the Corporation or any of its Affiliates that is applicable to you),

 

  

  

  

 

(b) retirement (normal or early retirement under any retirement plan of the Corporation or any of its Affiliates that is applicable to you), provided you are at least 62 years old at the time of such retirement.

 

(c) death,

 

(d) your resignation for “Good Reason” (as defined in your Executive Employment Agreement, dated on or before the Grant Date, between the Corporation and you), or

 

(e) your termination “Without Cause” (as defined in your Executive Employment Agreement, dated on or before the Grant Date, between the Corporation and you).

 

In the event your employment is terminated during the Performance Period for one of the reasons enumerated in clauses (a) through (c) above, then you or your estate shall be entitled to receive a payment of the Performance Award based on, and assuming that, the performance goal would be achieved at the Target level, as set forth in Exhibit 1 to this Agreement.  Such payment shall be made as soon as administratively feasible following your separation from service.  In the event your employment is terminated during the Performance Period for one of the reasons enumerated in clause (d) or (e) above or retirement before age 62, then you shall be entitled to receive a pro rata payment of the Performance Award based on the performance of the Company against the performance goal as of the date of such termination, as set forth in Exhibit 1 to this Agreement.  If a payment is made pursuant to this Section 4, no payment shall be made pursuant to Section 3 of this Agreement.

 

5. Change in Control.  Notwithstanding the provisions of Section 3 of this Agreement, in the event of a “Change in Control” (as defined in the Change in Control Severance Agreement, dated on or before the Grant Date, between the Corporation and you) during the Performance Period that occurs prior to your termination of employment, you shall be entitled to receive a payment of the Performance Award based on, and assuming that, the performance goal would have been achieved at the Target level, as set forth in Exhibit 1 to this Agreement.  Such payment shall be made promptly following the date of the Change in Control.  If a payment is made pursuant to this Section 5, no payment shall be made pursuant to Section 3 of this Agreement.  Notwithstanding the forgoing, no amount shall be paid under this Section 5 unless the event constitutes a “change in the ownership of the Corporation,” “change in effective control of the Corporation,” and/or a “change in the ownership of a substantial portion of the Corporation's assets” as defined under Treasury Regulation § 1.409A-3(i)(5) or such other regulation or guidance issued under Section 409A of the Code.

 

6. Restriction on Transfer.  The Performance Award, and the right to receive Shares, may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, other than by will or the laws of descent and distribution, and no attempt to transfer the Performance Award, and the right to receive the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Performance Award or the Shares.  No transfer by will or the applicable laws of descent and distribution of the Performance Award shall be effective to bind the Corporation unless the Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.

 

  

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7. Issuance of Shares.  After the Performance Award becomes payable pursuant to Section 3, 4 or 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 8 hereof, the Corporation shall promptly cause to be issued a certificate or certificates, registered in your name or in the name of your legal representatives, beneficiaries or heirs, as the case may be, representing the Shares (less any shares withheld to pay withholding taxes) and shall cause such certificate or certificates to be delivered to you or your legal representatives, beneficiaries or heirs, as the case may be.

 

8. Income Tax Matters.

 

(a)           You acknowledge that you will consult with your personal tax advisor regarding the income tax consequences of the grant of the Performance Award, the receipt of Shares upon any payment of the Performance Award, the subsequent disposition of the Shares and any other matters related to this Agreement.  In order to comply with all applicable federal or state income tax laws or regulations, the Corporation may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are your sole and absolute responsibility, are withheld or collected from you.

 

(b)            In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, you may elect to satisfy your federal and state income tax withholding obligations arising from the receipt of the Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the order of the Corporation, (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Corporation Common Shares having a Fair Market Value equal to the amount of such taxes.  The Corporation will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share.  Your election must be made on or before the date that the amount of tax to be withheld is determined.

 

9. Miscellaneous.

 

(a) Notwithstanding the foregoing, to the extent that any payment due hereunder is (i) deferred compensation subject to section 409A of the Internal Revenue Code, 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 Corporation on a basis consistent with regulations issued under section 409A, and consistently applied to all plans, programs, contracts, etc. maintained by the Corporation that are subject to section 409A.

 

  

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(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 Corporation 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.

(b) Nothing contained in this Agreement or the Plan shall confer on you 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 your employment at any time.

 

(c) You shall not have any rights of a holder of Common Shares unless and until Shares are actually issued to you after the end of the Performance Period as provided in this Agreement.

 

(d) The Corporation shall not be required to deliver any Shares until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied.

 

(e) This Agreement is subject to the terms of the Plan.  Terms used in this Agreement which are not defined herein shall have the respective meanings given to such terms in the Plan. A copy of the Plan is available to you upon request.

 

(f) This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without giving effect to the conflicts of laws principles thereof.

 

(g) 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.

 

(h) THIS PERFORMANCE AWARD AGREEMENT IS ATTACHED TO AND MADE A PART OF A PERFORMANCE AWARD CERTIFICATE AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH PERFORMANCE AWARD CERTIFICATE IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND YOU.

 

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OTTER TAIL CORPORATION

1999 STOCK INCENTIVE PLAN

 

PERFORMANCE AWARD CERTIFICATE

 

This certifies the Performance Award, as specified below, has been granted under the Otter Tail Corporation 1999 Stock Incentive Plan (the “Plan”), the terms and conditions of which are incorporated by reference herein and made a part hereof.  In addition, the award shown in this Certificate is nontransferable and is subject to the terms and conditions set forth in the attached 2012 Performance Award Agreement of which this Certificate is a part.

 

[Name and Address of the Participant]

 

[Social Security Number of the Participant]

 

You have been granted the following Award:

 

	
Grant Type:

	  	
Performance Award

	
Target Number of Common Shares Subject to Award:

	  	
______________________

	
Maximum Number of Common Shares Subject to Award:

	  	
______________________

	
Grant Date:

	  	
April 16 ̧ 2012

	
Performance Period:

	  	
January 1, 2012 – December 31, 2014

	
Performance Goals:

	  	
Set forth in Exhibit 1 to the

2012 Performance Award Agreement

 

By the Corporation’s and your signature below, it is agreed that this Performance Award is governed by the terms and conditions of the Performance Award Agreement, a copy of which is attached and made a part of this document, and the Plan.

 

	 	 
OTTER TAIL CORPORATION

	 	 	 	 
	 	By:	 	 
	 	 	 
[Name of Authorized Officer]

	 
	 	 	 
[Title]

	 
	 	 	 	 
	 	 	 	 
	 	[Name of Participant]	 

 

  

  

  

 

Exhibit 1

 

Performance Goals for Three-Year Performance Period

(January 1, 2012 – December 31, 2014)

 

 

	  	  	
Threshold

	
Target

	
Maximum

	
Performance Goal

	
Otter Tail TSR

performance

relative to peer

group

	
 

<25 %ile

	
 

25th %ile

	
 

50th %ile

	
 

85th %ile

or greater

 

	
Payment Levels

	
% of target shares

	
0%

	
50%

	
100%

	
200%

	
■  

	
Amounts payable for performance will be treated linearly from threshold to target and from target to maximum.

	
■  

	
Total Shareholders Return (TSR) = stock price appreciation plus value of dividends.

	
■  

	
Peer group = Edison Electric Institute Indexa50243750ex104.htm

Exhibit 10.4

OTTER TAIL CORPORATION

1999 STOCK INCENTIVE PLAN

2012 RESTRICTED STOCK UNIT AWARD AGREEMENT

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

 

WHEREAS, the Corporation, pursuant to the Otter Tail Corporation 1999 Stock Incentive Plan (the “Plan”), wishes to grant to the Participant the opportunity and right to receive a number of the Corporation’s Common Shares, par value $5.00 per share (the “Common Shares”), subject to the terms and conditions contained in this Agreement and in the attached Restricted Stock Unit Award Certificate, which is made a part of this Agreement.

 

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

 

1. Restricted Stock Unit Award.  The Corporation hereby grants to the Participant, effective as of the Grant Date, a Restricted Stock Unit Award representing the right to receive, on the vesting date or dates set forth in the attached Restricted Stock Unit Award Certificate, a specified number of Common Shares as set forth in the attached Restricted Stock Unit Award Certificate, subject to the terms and conditions set forth in this Agreement, the Restricted Stock Unit Award Certificate and the Plan.  This Restricted Stock Unit Award, to the extent it vests, shall be paid in Common Shares of the Corporation (the “Shares”).

 

2. Rights of the Participant with Respect to the Shares.  This Restricted Stock Unit Award does not represent Common Shares and does not give the Participant any of the rights and privileges of a holder of Common Shares.  With respect to the Shares, the Participant shall not exercise the rights of a holder of Common Shares, including the right to vote the Shares and the right to receive dividends on the Shares, until such time as this Restricted Stock Unit Award shall vest, and the restrictions with respect to this Restricted Stock Unit Award shall lapse, in accordance with Section 3, 4 or 5 hereof.

 

3. Vesting.  Subject to the terms and conditions of this Agreement, this Restricted Stock Unit Award shall vest, and the restrictions with respect to this Restricted Stock Unit Award shall lapse, on the date or dates and in the amount or amounts set forth in the attached Restricted Stock Unit Award Certificate if the Participant remains continuously employed by the Corporation or one of its Affiliates until the respective vesting dates.

 

4. Change of Control.  Notwithstanding the vesting provision contained in Section 3 above, but subject to the other terms and conditions set forth herein, upon the occurrence of a Change of Control (as defined below) prior to any termination of the Participant’s employment, the Participant shall become immediately and unconditionally vested in this Restricted Stock Unit Award, and the restrictions with respect to this Restricted Stock Unit Award shall lapse.  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) Notwithstanding the foregoing, none of the foregoing events shall constitute a Change of Control unless such event constitutes a Change in Control as defined in Section 409A of the Code and any regulations and other guidance in effect from time to time thereunder, including without limitation, Notice 2005-1.

 

5. Additional Vesting Rules; Forfeiture.

 

(a) Notwithstanding the vesting provision contained in Section 3 above, but subject to the other terms and conditions set forth herein, if the Participant ceases to be employed by the Corporation or any of its Affiliates by reason of disability (as determined under any long-term disability program then maintained by the Corporation or any of its Affiliates that is applicable to the Participant), retirement (normal or early retirement under any retirement plan of the Corporation or any of its Affiliates that is applicable to the Participant) or death prior to the vesting of this Restricted Stock Unit Award pursuant to Section 3 or 4 hereof, this Restricted Stock Unit Award shall immediately vest, and the restrictions with respect to this Restricted Stock Unit Award shall lapse, on the date or dates and in the amount or amounts set forth in the attached Restricted Stock Unit Award Certificate for the benefit of the Participant or the Participant’s legal representatives, beneficiaries or heirs, as the case may be.  No transfer by will or the applicable laws of descent and distribution of this Restricted Stock Unit Award by reason of the Participant’s death shall be effective to bind the Corporation unless the Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.

 

  

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(b) If the employment relationship of the Participant with the Corporation or any of its Affiliates is terminated other than for the reasons set forth in Section 5(a) hereof, the Participant’s rights to the unvested portion of this Restricted Stock Unit Award shall be immediately and irrevocably forfeited, unless the Participant is expressly entitled to retain the unvested portion of this Restricted Stock Unit Award or its value pursuant to an employment or severance agreement entered into on or before the Grant Date.

 

6. Restriction on Transfer.  This Restricted Stock Unit Award, and the right to receive Shares, may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, other than by will or the laws of descent and distribution, and no attempt to transfer this Restricted Stock Unit Award, and the right to receive the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to this Restricted Stock Unit Award or the Shares.  No transfer by will or the applicable laws of descent and distribution of this Restricted Stock Unit Award shall be effective to bind the Corporation unless the Committee shall have been furnished with written notice of such transfer and a copy of the will or such other evidence as the Committee may deem necessary to establish the validity of the transfer.

 

7. Issuance of Shares.  After this Restricted Stock Unit Award has vested pursuant to Section 3, 4 or 5 hereof, and following payment of the applicable withholding taxes pursuant to Section 9 hereof, the Corporation shall promptly cause to be issued a certificate or certificates, registered in the Participant’s name or in the name of the Participant’s legal representatives, beneficiaries or heirs, as the case may be, representing the Shares (less any Shares withheld to pay withholding taxes) and shall cause such certificate or certificates to be delivered to the Participant or the Participant’s legal representatives, beneficiaries or heirs, as the case may be.

 

8. Adjustments.  If any portion of this Restricted Stock Unit Award vests subsequent to any change in the number or character of the Common Shares (through recapitalization, stock split, stock dividend, reorganization, merger, consolidation or otherwise), the Participant shall then receive upon such vesting the number and type of securities or other consideration which the Participant would have received if such portion of this Restricted Stock Unit Award had vested prior to the event changing the number or character of the outstanding Common Shares.

 

9. Income Tax Matters.

 

(a) The Participant acknowledges that the Participant will consult with the Participant’s personal tax advisor regarding the income tax consequences of the grant of this Restricted Stock Unit Award, the receipt of Shares upon any vesting of this Restricted Stock Unit Award, the subsequent disposition of the Shares and any other matters related to this Agreement.  In order to comply with all applicable federal or state income tax laws or regulations, the Corporation may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the Participant’s sole and absolute responsibility, are withheld or collected from the Participant.

 

  

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(b) In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, the Participant may elect to satisfy the Participant’s federal and state income tax withholding obligations arising from the receipt of the Shares by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the order of the Corporation or (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of the employer’s minimum statutory withholding requirements.  The Corporation will not deliver any fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share.  The Participant’s election must be made on or before the date that the amount of tax to be withheld is determined.

 

10. Miscellaneous.

 

(a) Nothing contained in this Agreement or the Plan shall confer on the Participant 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 Participant’s employment at any time.

 

(b) The Participant shall not have any rights of a holder of Common Shares unless and until Shares are actually issued to the Participant as provided in this Agreement.

 

(c) The Corporation shall not be required to deliver any Shares until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied.

 

(d) This Agreement is subject to the terms of the Plan.  Terms used in this Agreement which are not defined herein shall have the respective meanings given to such terms in the Plan. A copy of the Plan is available to the Participant upon request.

 

(e) This Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without giving effect to the conflicts of laws principles thereof.

 

(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 RESTRICTED STOCK UNIT AWARD AGREEMENT IS ATTACHED TO AND MADE A PART OF A RESTRICTED STOCK UNIT AWARD CERTIFICATE AND SHALL HAVE NO FORCE OR EFFECT UNLESS SUCH RESTRICTED STOCK UNIT AWARD CERTIFICATE IS DULY EXECUTED AND DELIVERED BY THE CORPORATION AND THE PARTICIPANT.

 

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OTTER TAIL CORPORATION

1999 STOCK INCENTIVE PLAN

 

RESTRICTED STOCK UNIT AWARD CERTIFICATE

 

This certifies the Restricted Stock Unit Award, as specified below, has been granted under the Otter Tail Corporation 1999 Stock Incentive Plan (the “Plan”), the terms and conditions of which are incorporated by reference herein and made a part hereof.  In addition, the award shown in this Certificate is nontransferable and is subject to the terms and conditions set forth in the attached Restricted Stock Unit Award Agreement of which this Certificate is a part.

 

[Name and Address of the Participant]

 

[Social Security Number of the Participant]

 

You have been granted the following Award:

 

	
Grant Type:

	  	
Restricted Stock Unit Award

	
Number of Common Shares Subject to Award:

	  	
_________________________

	
Grant Date:

	  	
April 16, 2012

	
Vesting Date:

	  	
April 8, 2016

 

By the Corporation’s and your signature below, it is agreed that this Restricted Stock Unit Award is governed by the terms and conditions of the Restricted Stock Unit Award Agreement, a copy of which is attached and made a part of this document, and the Plan, a copy of which is enclosed.

 

	 	 
OTTER TAIL CORPORATION

	 	 	 	 
	 	By:	 	 
	 	 	[Name of Authorized Officer]	 
	 	 	[Title]	 
	 	 	 	 
	 	 	 	 
	 	[Name of Participant]

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