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,
2
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
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