Exhibit 10.1
CHANGE IN CONTROL
SEVERANCE AGREEMENT
THIS AGREEMENT is made as of the 29
th day
of October, 2007, between Otter Tail Corporation, a Minnesota
corporation, with its principal offices at 215 South Cascade
Street, P.O. Box 496, Fergus Falls, Minnesota 56538-0496 (the
“Corporation ”) and John D. Erickson
(“You”), residing at 1098 Westside Drive, Fergus Falls,
MN 56537.
WITNESSETH THAT:
WHEREAS, this Agreement is intended
to specify the financial arrangements that the Corporation will
provide to You upon Your separation from employment with the
Corporation under any of the circumstances described herein;
and
WHEREAS, this Agreement is entered
into by the Corporation in the belief that it is in the best
interests of the Corporation and its shareholders to provide stable
conditions of employment for You notwithstanding the possibility,
threat or occurrence of certain types of change in control, thereby
enhancing the Corporation ‘s ability to attract and retain
highly qualified people.
NOW, THEREFORE, to assure the
Corporation that it will have Your continued dedication
notwithstanding the possibility, threat or occurrence of a bid to
take over control of the Corporation, and to induce You to remain
in the employ of the Corporation, and for other good and valuable
consideration, the Corporation and You agree as follows:
1. Termination of
Employment.
(i) Prior to a Change in
Control . Your rights upon termination of employment prior to a
Change in Control (as defined in Section 2(i) hereof) shall be
governed by the Corporation ‘s standard employment
termination policy applicable to You in effect at the time of
termination or the Your Employment Agreement.
(ii) After a Change in
Control .
(a) From
and after the date of a Change in Control during the term of this
Agreement, the Corporation shall not terminate You from employment
with the Corporation except as provided in this Section 1(ii)
or as a result of Your Disability (as defined in Section 2(iv)
hereof) or death.
(b) From
and after the date of a Change in Control during the term of this
Agreement, the Corporation shall have the right to terminate You
from employment with the Corporation at any time during the term of
this Agreement for Cause (as defined in Section 2(iii)
hereof), by written notice to You, specifying the particulars of
Your conduct forming the basis for such termination.
(c) From
and after the date of a Change in Control during the term of this
Agreement: (x) the Corporation shall have the right to
terminate Your employment without Cause at any time; and (y) You
shall, upon the occurrence of such a termination by the Corporation
without Cause, or upon the voluntary termination of employment by
You for Good Reason (as defined in Section 2(ii) hereof), be
entitled to receive the benefits provided in Section 3 hereof.
You shall evidence a voluntary termination for Good Reason by
written notice to the Corporation given within 60 days after
the date of the occurrence of any event that You know or should
reasonably have known constitutes Good Reason for voluntary
termination. Such notice need only identify You and set forth in
reasonable detail the facts and circumstances claimed by You to
constitute Good Reason.
Any notice given by You pursuant to
this Section 1 shall be effective five business days after the
date it is given by You.
2. Definitions
(i) A “Change in
Control” shall mean:
(a) a
change in control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), or successor
provision thereto, whether or not the Corporation is then subject
to such reporting requirement;
(b) any
“person” (as such tennis used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the
Corporation representing 35% or more of the combined voting power
of the Corporation ‘s then outstanding securities;
(c) the
Continuing Directors (as defined in Section 2(v) hereof) cease to
constitute a majority of the Corporation ‘s Board of
Directors; provided that such change is the direct or
indirect result of a proxy fight and contested election or
elections for positions on the Board of Directors; or
(d) the
majority of the Continuing Directors (as defined in Section 2(v)
hereof) determine in their sole and absolute discretion that there
has been a change in control of the Corporation.
(ii) “Good Reason”
shall mean the occurrence of any of the following events, except
for the occurrence of such an event in connection with the
termination or reassignment of You by the Corporation for Cause,
for Disability or for death:
(a) the
assignment to You of employment responsibilities which are not of
comparable responsibility and status as the employment
responsibilities held by You immediately prior to a Change in
Control;
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(b) a
reduction by the Corporation in Your base salary as in effect
immediately prior to a Change in Control;
(c) an
amendment or modification of the Corporation ‘s incentive
compensation program (except as may be required by applicable law)
which affects the terms or administration of the program in a
manner adverse to Your interest as compared to the terms and
administration of such program immediately prior to a Change in
Control;
(d) the
Corporation ‘s requiring You to be based anywhere other than
within 50 miles of Your office location immediately prior to a
Change in Control, except for requirements of temporary travel on
the Corporation ‘s business to an extent substantially
consistent with Your business travel obligations immediately prior
to a Change in Control;
(e) except
to the extent otherwise required by applicable law, the failure by
the Corporation to continue in effect any benefit or compensation
plan, stock ownership plan, stock purchase plan, stock incentive
plan, bonus plan, life insurance plan, health-and-accident plan, or
disability plan in which You are participating immediately prior to
a Change in Control (or plans providing You with substantially
similar benefits), the taking of any action by the Corporation
which would adversely affect Your participation in, or materially
reduce Your benefits under, any of such plans or deprive You of any
material fringe benefit enjoyed by You immediately prior to such
Change in Control, or the failure by the Corporation to provide You
with the number of paid vacation days to which You are entitled
immediately prior to such Change in Control in accordance with the
Corporation ‘s vacation policy as then in effect; or
(f) the
failure by the Corporation to obtain, as specified in Section 5(i)
hereof, an assumption of the obligations of the Corporation to
perform this Agreement by any successor to the Corporation.
(iii) “Cause” shall
mean termination by the Corporation of Your employment based upon
(a) the willful and continued failure by You substantially to
perform Your duties and obligations (other than any such failure
resulting from Your incapacity due to physical or mental illness or
any such actual or anticipated failure resulting from Your
termination for Good Reason) or (b) the willful engaging by
You in misconduct which is materially injurious to the Corporation
, monetarily or otherwise. For purposes of this
Section 2(iii), no action or failure to act on Your part shall
be considered “willful” unless done, or omitted to be
done, by You in bad faith and without reasonable belief that such
action or omission was in the best interests of the
Corporation.
(iv) “Disability”
shall mean any physical or mental condition which would qualify You
for a disability benefit under the Corporation ‘s long-term
disability plan.
(v) “Continuing Director”
shall mean any person who is a member of the Board of Directors of
the Corporation, while such person is a member of the Board of
Directors, who is not an Acquiring Person (as hereinafter defined)
or an Affiliate or Associate (as hereinafter defined) of an
Acquiring Person, or a representative of an Acquiring Person or of
any such Affiliate or Associate, and who (a) was a member of
the Board of Directors on the
3
date of
this Agreement as first written above or (b) subsequently
becomes a member of the Board of Directors, if such person’s
nomination for election or initial election to the Board of
Directors is recommended or approve
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