Otter Tail Corporation Amendment No. 3 Dated as of June 23, 2010 to Note Purchase Agreement Dated as of February 23, 2007 Re: $50,000,000 Senior Note due November 30, 2017

Exhibit 4.1

Otter Tail Corporation

Amendment No. 3
Dated as of June 23, 2010

to

Note Purchase Agreement
Dated as of February 23, 2007

Re: $50,000,000 Senior Note
due November 30, 2017

Amendment No. 3 to Note Purchase Agreement

     This Amendment dated as of June 23, 2010 (the or this “Amendment”) to the Note Purchase Agreement dated as of February 23, 2007 is between Otter Tail Corporation, a Minnesota corporation (the “Company”), and Cascade Investment, L.L.C. (“Cascade”).

Recitals:

     A. The Company and Cascade have heretofore entered into the Note Purchase Agreement, dated as of February 23, 2007, as amended by a letter agreement dated December 14, 2007 and an Amendment No. 2 dated as of June 30, 2009 (as so amended, the “Note Purchase Agreement”). The Company has heretofore issued the $50,000,000 5.778% Senior Note due November 30, 2017 (the “Note”) dated December 14, 2007 pursuant to the Note Purchase Agreement.

     B. The Company has indicated that it intends to enter into that certain Second Amended and Restated Credit Agreement (the “Credit Agreement”) by and between the Company, the banks from time to time party thereto (the “Banks”), Bank of America, N.A. and JPMorgan Chase Bank, National Association, as Co-Syndication Agents, Keybank National Association, as Documentation Agent, and U.S. Bank National Association, as administrative agent for the Banks and as Lead Arranger.

     C. The Company and Cascade now desire to amend the Note Purchase Agreement in the respects, but only in the respects, hereinafter set forth.

     D. Capitalized terms used herein shall have the respective meanings ascribed thereto in the Note Purchase Agreement (as amended hereby) unless herein defined or the context shall otherwise require.

     Now, therefore, in consideration of good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Company and Cascade do hereby agree as follows, which agreement shall become effective as of the Effective Time (as defined below) upon the full and complete satisfaction of each of the conditions precedent set forth in Section 3.1 hereof:

ARTICLE I
AMENDMENTS

     Section 1.1. Effective as of the Effective Time, the following definitions of “Credit Agreement,” “Debt” and “Investment” set forth in Annex A to the Note Purchase Agreement shall be amended in their entirety to read as follows:

     “Credit Agreement” shall mean the Second Amended and Restated Credit Agreement, dated as of May 4, 2010, among the Company (formerly known as Otter Tail Holding Company), the Banks referenced therein, Bank of America, N.A. and JPMorgan Chase Bank, National Association, as Co-Syndication Agents, Keybank National Association, as Documentation Agent, and U.S. Bank National Association, as Agent for

the Banks and as Lead Arranger, as amended from time to time, and any replacement or successor agreement or agreements thereto.

     “Debt” means, with respect to any Person, without duplication,

     (a) its liabilities for borrowed money and its redemption obligations in respect of Redeemable Preferred Stock;

     (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including, without limitation, all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property);

     (c) the principal component of its Capital Lease Obligations;

     (d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities);

     (e) net liabilities under (i) any hedging agreement constituting an interest rate swap, collar or other interest rate hedging agreement, (ii) any commodity price or foreign exchange rate hedging agreement having a duration of one year or less to the extent the aggregate amount of all such net liabilities exceeds $10,000,000; and (iii) any commodity price or foreign exchange rate hedging agreement having a duration in excess of one year;

     (f) undertakings or agreements to reimburse or indemnify issuers of letters of credit other than commercial letters of credit; and

     (g) any Guaranty of such Person with respect to Debt of a type described in any of clauses (a) through (f) hereof, excluding ordinary course endorsements.

     Debt of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP.

     “Investment” means the acquisition, purchase, making or holding of any stock or other security, any loan, advance, contribution to capital, extension of credit (except for trade and customer accounts receivable for inventory sold or services rendered in the ordinary course of business and payable in accordance with customary trade terms), any acquisitions of real or personal property (other than real and personal property acquired in the ordinary course of business), any hedging arrangement of the type referred to in the definition of “Debt” and any purchase or commitment or option to purchase stock or other debt or equity securities of or any interest in another Person or any integral part of any business or the assets comprising such business or part thereof.

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     In addition, the following definition of “Foreign Subsidiary” is added to Annex A to the Note Purchase Agreement:

     “Foreign Subsidiary” shall mean any Subsidiary of the Company that is not organized or incorporated under the laws of the United States, any state thereof or the District of Columbia.

     Section 1.2. Effective as of the Effective Time, Section 7.1(e)(i) of the Note Purchase Agreement shall be amended to read as follows:

     “(i) with respect to any Plan, any reportable event, as defined in section 4043(c) of ERISA and the regulations thereunder in effect as of January 1, 2010, for which notice thereof has not been waived pursuant to such regulations as in effect as of January 1, 2010.

     Section 1.3. Effective as of the Effective Time, Section 10.3 of the Note Purchase Agreement shall be amended by deleting the word “and” appearing at the end of clause (k) and deleting the existing clause (l) in its entirety and replacing it with clauses (l) through (o) as follows:

     “(l) Liens on securities that are the subject of repurchase agreements permitted by Section 10.10(f) that arise in connection with the Company’s cash management program in the ordinary course of business consistent with past practices;

     (m) Liens created as a result of any agreement to sell, transfer or otherwise dispose of assets permitted to be sold, transferred or otherwise disposed of hereunder; provided that such Liens relate solely to the assets to be sold, transferred or otherwise disposed of;

     (n) Liens encumbering cash collateral or other financial assets not exceeding $10,000,000 in aggregate value at any time outstanding securing Investments or Debt consisting of hedging arrangements not otherwise prohibited hereunder constituting interest rate, commodity price or foreign exchange rate exposure not entered into for any speculative purpose; and

     (o) Liens created, assumed or incurred after the date of the Closing given to secure Debt of the Company or any Subsidiary in addition to the Liens permitted by the preceding clauses (a) through (n) hereof; provided that all Debt secured by Liens permitted under this Section 10.3(o) does not exceed $5,000,000 in the aggregate at any time outstanding;”

     Section 1.4. Effective as of the Effective Time, Section 10.10 of the Note Purchase Agreement shall be amended by deleting clause (k) and replacing it with clauses (k) through (o) as follows:

     “(k) Any Material Subsidiary may make Investments constituting loans to the Company and provided that no Default or Event of Default shall have occurred and continued, the Company and any Material Subsidiary may make Investments

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constituting loans to (i) any Material Subsidiaries, or (ii) any Subsidiaries that are not Material Subsidiaries and are not Otter Tail Power Company or its Subsidiaries, provided, that such loans to any one such Subsidiary shall not exceed $15,000,000 in aggregate principal amounts outstanding at any time, other than short-term loans arising from the Company’s cash management program in the ordinary course of business consistent with past practices;

     (l) in the case of Foreign Subsidiaries that are not Otter Tail Power Company or its Subsidiaries and that become Material Subsidiaries, short-term Investments consisting of the following:

     (i) marketable direct obligations and repurchase agreements relating to securities issued by, or unconditionally guaranteed by, the sovereign nation in which such Foreign Subsidiary is organized and is conducting business or issued by any agency of such sovereign nation and backed by the full faith and credit of such sovereign nation, in each case maturing within one year from the date of acquisition, so long as the indebtedness of such sovereign nation is rated at least A- by S&P or A3 by Xxxxx’x or carries an equivalent rating from a comparable foreign rating agency, and

     (ii) investments of the type and maturity described in clauses (d) and (e) above of foreign obligors, which investments or obligors have capital and/or ratings described in such clauses or equivalent ratings from comparable foreign rating agencies;

     (m) Investments consisting of hedging arrangements not otherwise prohibited hereunder constituting interest rate swaps, collars or other interest rate, commodity price or foreign exchange rate hedging agreements not entered into for any speculative purpose;

     (n) Investments in the form of contingent liabilities permitted by Section 10.11; and

     (o) Investments of a Material Subsidiary acquired after the date hereof or of a corporation merged into the Company or merged into or consolidated with a Material Subsidiary in accordance with Section 10.4 after the date hereof to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation.”

     Section 1.5. Effective as of the Effective Time, Section 10.11 of the Note Purchase Agreement shall be amended to by deleting the word “and” appearing at the end of clause (vii) and adding clauses (viii) and (ix) as follows:

     “(viii) guaranties by the Company in connection with worker’s compensation, unemployment insurance and other like laws, and obligations to carriers, warehousemen and statutory landlords and guaranties of the performance of bids, tenders or trade

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contracts, statutory obligations, surety or appeal bonds or other guaranties of like general nature, in any case incurred in the ordinary course of business consistent with past practices and not incurred in connection with the borrowing of money; and

     (ix) guaranties by the Company or any Subsidiary of the obligations of the Company or any Material Subsidiary under any unsecured interest-bearing obligation the incurrence of which does not cause a Default or Event of Default; provided, however, that:

     (1) prior to the issuance of a Subsidiary guaranty permitted in accordance with this clause (ix), if such Subsidiary is not currently a Subsidiary Guarantor or an Additional Subsidiary Guarantor under this Agreement, such Subsidiary shall become an Additional Subsidiary Guarantor in accordance with Section 9.7;

     (2) neither Otter Tail Power Company nor any of its Subsidiaries shall provide any guaranties of the obligations of the Company or any Material Subsidiary; and

     (3) the aggregate amount guaranteed with respect to all guaranties permitted under this clause (ix) does not exceed $10,000,000 in the aggregate at any time outstanding.”

     Section 1.6. Effective as of the Effective Time, Schedule 1 to the Note Purchase Agreement shall be amended and restated to read as set forth on Exhibit A to this Amendment, which Exhibit A is hereby made a part of the Note Purchase Agreement as Schedule 1 thereto.

     Section 1.7. Effective as of the Effective Time, a new Schedule 5.4 to the Note Purchase Agreement shall be inserted to read as set forth on Exhibit B to this Amendment, which Exhibit B is hereby made a part of the Note Purchase Agreement as Schedule 5.4 thereto.

     Section 1.8. Effective as of the Effective Time, a new Schedule 5.8 to the Note Purchase Agreement shall be inserted to read as set forth on Exhibit C to this Amendment, which Exhibit C is hereby made a part of the Note Purchase Agreement as Schedule 5.8 thereto.

     Section 1.9. Effective as of the Effective Time, a new Schedule 5.15 to the Note Purchase Agreement shall be inserted to read as set forth on Exhibit D to this Amendment, which Exhibit D is hereby made a part of the Note Purchase Agreement as Schedule 5.15 thereto.

     Section 1.10. Effective as of the Effective Time, a new Schedule 10.6 to the Note Purchase Agreement shall be inserted to read as set forth on Exhibit E to this Amendment, which Exhibit E is hereby made a part of the Note Purchase Agreement as Schedule 10.6 thereto.

     Section 1.11. Effective as of the Effective Time, a new Schedule 10.10 to the Note Purchase Agreement shall be inserted to read as set forth on Exhibit F to this Amendment,

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which Exhibit F is hereby made a part of the Note Purchase Agreement as Schedule 10.10 thereto.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Section 2.1. To induce Cascade to execute and deliver this Amendment (which representations shall survive the execution and delivery of this Amendment), the Company represents and warrants to Cascade that:

     (a) (i) this Amendment has been duly authorized by all requisite corporate action on the part of the Company, and (ii) this Amendment has been executed and delivered by the Company and constitutes the legal, valid and binding agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally;

     (b) each of the Note Purchase Agreement, as amended by this Amendment, and the Note, constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally;

     (c) the execution and delivery by the Company of this Amendment and the performance by the Company of its obligations under this Amendment will not (A) violate the Articles of Incorporation of the Company, as amended, or Bylaws of the Company, as amended, (B) violate Section 673 of the Minnesota Business Corporation Act (the “MBCA”) or Minnesota Statutes Section 216B.48, or (C) violate, result in the breach or modification of, conflict with, constitute a default or result in an acceleration of any obligation under, result in the imposition of any encumbrance pursuant to, or affect the validity or effectiveness of, any contract, permit, order or other law applicable to the Company, except (as to clause (C) only) for any violation, breach, modification, conflict, default, acceleration, encumbrance or effect which would not have a material adverse effect on the Company and its Subsidiaries taken as a whole. No approval or consent, filings, notifications, waivers or exemptions on the part of any (A) Minnesota, North Dakota or South Dakota or (B) New York or federal, governmental authority is required to be obtained or made by the Company in connection with the execution and delivery by it of this Amendment and the performance by the Company of its obligations under this Amendment, except such as have been obtained or made;

     (d) as of the date hereof and after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing;

     (e) all the representations and warranties contained in Article V of the Note Purchase Agreement are true and correct in all material respects with the same force and effect as if made by the Company on and as of the date hereof, except as set forth on Schedule A hereto and as modified pursuant to Exhibits A through F hereto; and

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     (f) none of the Material Subsidiaries listed on Schedule 1 to the Note Purchase Agreement are Subsidiaries of Otter Tail Power Company.

ARTICLE III
CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT

     Section 3.1. Conditions Precedent. The amendments contained in this Amendment shall become effective (the “Effective Time”) upon delivery by the Company of, and compliance by the Company with, the following:

     (a) executed counterparts of this Amendment, duly executed by the Company and Cascade, shall have been delivered to Cascade;

     (b) (i) the representations and warranties of the Company set forth in Section 2.1 hereof are true and correct on and with respect to the date hereof and at the Effective Time, and (ii) the Company shall have complied with all of the obligations contained in this Amendment;

     (c) no Default or Event of Default under the Note Purchase Agreement has occurred and is continuing;

     (d) Cascade shall have received the favorable opinions of counsel to the Company as to the matters set forth in Sections 2.1(a), 2.1(b) and 2.1(c) hereof, which opinions shall be in form and substance satisfactory to Cascade and shall cover the matters set forth in Exhibit G to this Amendment attached hereto;

     (e) the Company shall have paid the reasonable fees, charges and disbursements of Cascade’s special counsel, Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx LLP, in connection with the negotiation, preparation, approval, execution and delivery of this Amendment to the extent reflected in a statement of such counsel rendered to Cascade and delivered to the Company; and

     (f) the Company shall have paid to Cascade a mutually agreed upon fee, which shall be non-refundable.

ARTICLE IV
PAYMENT OF NOTEHOLDER’S COUNSEL FEES AND EXPENSES

     Section 4.1. The Company agrees to pay upon demand, the reasonable fees and expenses of Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx LLP, counsel to Cascade, in connection with the negotiation, preparation, approval, execution and delivery of this Amendment.

ARTICLE V
NOTEHOLDER REPRESENTATIONS AND WARRANTIES

     Section 5.1. Cascade represents that it holds all of the outstanding principal amount of the Note.

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ARTICLE VI
MISCELLANEOUS

     Section 6.1. This Amendment shall be construed in connection with and as part of the Note Purchase Agreement, and except as modified and expressly amended by this Amendment, all terms, conditions and covenants contained in the Note Purchase Agreement and the Note are hereby ratified and shall be and remain in full force and effect.

     Section 6.2. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Amendment may refer to the Note Purchase Agreement without making specific reference to this Amendment but nevertheless all such references shall include this Amendment unless the context otherwise requires.

     Section 6.3. The descriptive headings of the various Sections or parts of this Amendment are for convenience only and shall not affect the meaning or construction of any of the provisions hereof.

     Section 6.4. This Amendment shall be governed by and construed in accordance with New York law.

     Section 6.5. The execution hereof by you shall constitute a contract between us for the uses and purposes hereinabove set forth, and this Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement.

     Section 6.6. This Amendment shall terminate and have no effect on the Note Purchase Agreement and the Note if the Effective Time has not occurred by June 30, 2010.

[Remainder of page intentionally left blank]

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     The foregoing is hereby agreed to as of the date hereof.

	Otter Tail Corporation
	By:	/s/ Xxxxxx X. Xxxxx

ACCEPTED AND AGREED TO:

CASCADE INVESTMENT, L.L.C.

By:	/s/ Xxxx Xxxxxxxxx
	Name: Xxxx Xxxxxxxxx
	Title: Authorized Signatory

(signature page to Amendment No. 3
to Note Purchase Agreement)

SCHEDULE A
(to Amendment No. 3 to Note Purchase Agreement)

Exceptions to Representations and Warranties
as applied to Otter Tail Corporation upon and after
consummation of the Permitted Reorganization

1.		The information provided in each Schedule delivered to Cascade as required by Section 5.1(g)(i) of the Amendment is true and correct only as of the date of delivery thereof, notwithstanding any statement to the contrary in Article V of the Note Purchase Agreement.
2.		For purposes of Section 5.7, no order of the Minnesota Public Utilities Commission approving the capital structure of Otter Tail Corporation is required.
3.		With respect to Section 5.19, Otter Tail Corporation was incorporated in June 2009 and will not be subject to SEC reporting requirements until the Effective Time.
4.		With respect to Section 5.20, Otter Tail Corporation was incorporated in June 2009.

EXHIBIT A
(to Amendment No. 3 to Note Purchase Agreement)

SCHEDULE 1
(to Note Purchase Agreement)

MATERIAL SUBSIDIARIES

1.		Aevenia, Inc.
2.		BTD Manufacturing, Inc.
3.		DMI Industries, Inc.
4.		DMS Health Technologies, Inc.
5.		DMS Imaging, Inc.
6.		Xxxxx Company
7.		Idaho-Pacific Corporation
8.		Idaho Pacific Holdings, Inc.
9.		Xxxxxx Welding & Iron Works, Inc.
10.		Northern Pipe Products, Inc.
11.		ShoreMaster, Inc.
12.		Varistar Corporation
13.		Vinyltech Corporation
14.		X.X. Xxxxx Corporation
15.		T.O. Plastics, Inc.

EXHIBIT B
(to Amendment No. 3 to Note Purchase Agreement)

SCHEDULE 5.4
(to Note Purchase Agreement)

SUBSIDIARIES OF THE COMPANY AND OWNERSHIP OF SUBSIDIARY STOCK

The following sets forth a list of the Company’s Subsidiaries upon and after consummation of the Permitted Reorganization showing, in each case, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary.

		State of		Number and Class of Shares Issued and Owned by Otter Tail
Company		Organization		Corporation or its Subsidiaries		Footnote Ref.
AWI Acquisition Company Limited		Xxxxxx Xxxxxx Island		1 Share Common			(8	)
		Canada
Aevenia, Inc.		Minnesota		100 Shares Common			(1	)
AgraWest Investments Limited		Xxxxxx Xxxxxx Island		5,000,000 Shares Common 1,500 Shares Class C Preferred			(9	)
		Canada
Aviva Sports, Inc.		Minnesota		100 Shares Common			(6	)
BTD Manufacturing, Inc.		Minnesota		200 Shares Common			(1	)
DMI Industries, Inc.		North Dakota		980 Shares Common			(1	)
DMI Canada, Inc.		Canada		1 Share Common			(4	)
DMI Equipment, LLC		Delaware		100 Membership Units			(4	)
DMS Health Technologies, Inc.		North Dakota		8,500 Shares Class A			(1	)
				5,100 Shares Class B
DMS Health Technologies —		North Dakota		1,000 Shares Common			(10	)
Canada, Inc.
DMS Imaging, Inc.		North Dakota		1,606 Shares Common Voting			(2	)
DMS Leasing Corporation**		North Dakota		2,500 Shares Common			(2	)
X. X. Xxxxx Corporation		North Dakota		100 Shares Common			(1	)
Foley Company		Missouri		50,000 Shares Common			(1	)
Galva Foam Marine Industries, Inc.		Missouri		100,000 Shares Common			(6	)
Green Hills Energy, LLC		Minnesota		1,000 Membership Units			(5	)
Idaho Pacific Holdings, Inc.		Delaware		10,002 Shares Class A Common (voting)			(1	)
Idaho-Pacific Corporation		Idaho		400 Shares Common			(8	)
Idaho-Pacific Colorado Corporation		Delaware		100 Shares Common			(8	)
Xxxxxx Welding & Iron Works, Inc.		Minnesota		1,000 Shares Common			(11	)
Xxxxxxxx Electric, Inc.		Minnesota		80 Shares Common			(3	)
Northern Pipe Products, Inc.		North Dakota		10,000 Shares Common			(1	)
Otter Tail Assurance Limited		Cayman Islands		50,000 Shares Common			(7	)
Otter Tail Energy Services Company, Inc.		Minnesota		1,000 Shares Common			(7	)
Otter Tail Power Company		Minnesota		100 Shares Common			(7	)
Overland Mechanical Services, Inc.		Minnesota		100 Shares Common			(5	)
Sheridan Ridge I, LLC		Minnesota		1,000 Membership Units			(5	)
Xxxxxxxx Xxxxx XX, LLC		Minnesota		1,000 Membership Units			(5	)

		State of		Number and Class of Shares Issued and Owned by Otter Tail
Company		Organization		Corporation or its Subsidiaries		Footnote Ref.
Shoreline Industries, Inc.		Minnesota		1,000 Shares Common			(6	)
ShoreMaster, Inc.		Minnesota		100 Shares Common			(1	)
ShoreMaster Costa Rica SRL		Costa Rica		50 quotas			(6	)
T.O. Plastics, Inc.		Minnesota		100 Shares Common			(1	)
Varistar Corporation		Minnesota		100 Shares Common			(7	)
Vinyltech Corporation		Arizona		100 Shares Common			(1	)

(1)		Subsidiary of Varistar Corporation
(2)		Subsidiary of DMS Health Technologies, Inc.
(3)		Subsidiary of Aevenia, Inc.
(4)		Subsidiary of DMI Industries, Inc.
(5)		Subsidiary of Otter Tail Energy Services Company, Inc.
(6)		Subsidiary of ShoreMaster, Inc.
(7)		Subsidiary of Otter Tail Corporation
(8)		Subsidiary of Idaho Pacific Holdings, Inc.
(9)		Subsidiary of AWI Acquisition Company Limited
(10)		Subsidiary of DMS Imaging, Inc.
(11)		Subsidiary of BTD Manufacturing, Inc.
**		Inactive

Subsidiary Guarantors include:

BTD Manufacturing, Inc.
DMI Industries, Inc.
DMS Health Technologies, Inc.
DMS Imaging, Inc.
Xxxxx Company
Idaho Pacific Holdings, Inc.
Aevenia, Inc. (formerly known as Midwest Construction Services, Inc.)
Northern Pipe Products, Inc.
ShoreMaster, Inc.
Vinyltech Corporation
Idaho Pacific Corporation
Varistar Corporation
X.X. Xxxxx Corporation
T.O. Plastics, Inc.
Xxxxxx Welding & Iron Works, Inc.

EXHIBIT C
(to Amendment No. 3 to Note Purchase Agreement)

SCHEDULE 5.8
(to Note Purchase Agreement)

CERTAIN LITIGATION

All material litigation matters affecting the Company or a Material Subsidiary are reported in Otter Tail Corporation’s 10-K (See Item 3) filed with the SEC on February 26, 2010.

EXHIBIT D
(to Amendment No. 3 to Note Purchase Agreement)

SCHEDULE 5.15
(to Note Purchase Agreement)

INDEBTEDNESS

The following table provides a breakdown of the assignment of the Company’s consolidated short-term and long-term debt outstanding as of March 31, 2010:

														Otter Tail
										Otter Tail				Corporation
(in thousands)		OTP				Varistar				Corporation				Consolidated
Lines of Credit		$	63,499							$	47,000			$	110,499
Senior Unsecured Notes 6.63%, due December 1, 2011			90,000												90,000
Pollution Control Refunding Revenue Bonds, Variable, 3.00% at March 31, 2010, due December 1, 2012			10,400												10,400
9.000% Notes, due December 15, 2016											100,000				100,000
Senior Unsecured Notes 5.95%, Series A, due August 20, 2017			33,000												33,000
Grant County, South Dakota Pollution Control Refunding Revenue Bonds 4.65%, due September 1, 2017			5,125												5,125
Senior Unsecured Note 8.89%, due November 30, 2017											50,000				50,000
Senior Unsecured Notes 6.15%, Series B, due August 20, 2022			30,000												30,000
Xxxxxx County, North Dakota Pollution Control Refunding Revenue Bonds 4.85%, due September 1, 2022			20,390												20,390
Senior Unsecured Notes 6.37%, Series C, due August 20, 2027			42,000												42,000
Senior Unsecured Notes 6.47%, Series D, due August 20, 2037			50,000												50,000
Obligations of Varistar Corporation — Various up to 13.31% at March 31, 2010						$	6,471								6,471
Total		$	280,915			$	6,471			$	150,000			$	437,386
Less:
Current Maturities			—				916				—				916
Unamortized Debt Discount			—				386				6				392
Total Long-Term Debt		$	280,915			$	5,169			$	149,994			$	436,078
Total Short-Term and Long-Term Debt (with current maturities)		$	344,414			$	6,085			$	196,994			$	547,493

The 8.89% Senior Unsecured Note due 2017 is guaranteed by Varistar Corporation and certain of its Subsidiaries. The Grant County and Xxxxxx County pollution control refunding revenue bonds are covered under a financial guaranty insurance policy provided by Ambac Assurance Corporation.

The Company’s obligations under that certain Second Amended and Restated Credit Agreement dated May 4, 2010 with U.S. Bank National Association, as Administrative Agent and other lenders thereunder are guaranteed by certain of the Company’s Subsidiaries.

EXHIBIT E
(to Amendment No. 3 to Note Purchase Agreement)

SCHEDULE 10.6
(to Note Purchase Agreement)

TRANSACTIONS WITH RELATED PARTIES

None

EXHIBIT F
(to Amendment No. 3 to Note Purchase Agreement)

SCHEDULE 10.10
(to Note Purchase Agreement)

INVESTMENTS

The following is a list of Investments of the Company and its Material Subsidiaries as of March 31, 2010:

Investment in Affordable Housing (OTC)			908,249
Investment in Loan Pools (OTP)			465,116
Investments — Bank of Xxxxxxxxxxx (OTAL)			8,609,449
CoBank (St Xxxx Bank for Coop’s) (VSC)			183,819
Other Miscellaneous (OTP, OTESCO)			107,162
Total Investments of Otter Tail Corporation and Subsidiaries		$	10,273,795

EXHIBIT G
(to Amendment No. 3 to Note Purchase Agreement)

DESCRIPTION OF OPINION OF COUNSEL

[See attached]

[Form of Opinion of Xxxxxx & Whitney LLP]

June 23, 2010

Cascade Investment, L.L.C.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000

Ladies and Gentlemen:

     We have acted as special counsel to Otter Tail Corporation, a Minnesota corporation (the “Company”), in connection with that certain Amendment No. 3 dated as of June 23, 2010, to the Note Purchase Agreement dated as of February 23, 2007 (the “Amendment”), between the Company and Cascade Investment, L.L.C. (“Cascade”), which amends that certain Note Purchase Agreement, dated as of February 23, 2007 (the “Original Note Purchase Agreement”), as amended by a letter agreement dated December 14, 2007 (the “Letter Agreement”) and Amendment No. 2 dated as of June 30, 2009 (“Amendment No. 2”) (the Original Note Purchase Agreement, as amended by the Letter Agreement and Amendment No. 2, being referred to herein as the “Note Purchase Agreement”), between the Company and Cascade relating to the issuance and sale by the Company of its 8.89% Senior Note due November 30, 2017 in the aggregate principal amount of $50,000,000 (the “Note”; the Amendment, the Note Purchase Agreement and the Note may be referred to herein as the “Transaction Documents”). This opinion is being delivered to you pursuant to Section 3.1(b) of the Amendment. Capitalized terms used herein, except as otherwise specifically defined herein, are used with the same meaning as defined in the Note Purchase Agreement, as amended by the Amendment.

     In connection with this opinion, we have examined such documents and reviewed such questions of law as we have considered necessary and appropriate for the purposes of this opinion.

     In rendering the opinions expressed below, we have assumed, with Cascade’s permission and without verification:

	(a)		the authenticity of all documents submitted to us as originals,
	(b)		the genuineness of all signatures,
	(c)		the legal capacity of natural persons,
	(d)		the conformity to originals of all documents submitted to us as copies and the authenticity of the originals of such copies,

June 23, 2010
Page 2

	(e)		the accuracy as to factual matters of the representations and warranties of the Company and Cascade contained in the Transaction Documents,
	(f)		that all conditions precedent to the effectiveness of the Amendment have been satisfied or waived,
	(g)		that each party to the Transaction Documents is validly existing and in good standing under the laws of its jurisdiction of organization and has the requisite power and authority to execute, deliver and perform its obligations under each of the Transaction Documents to which it is a party,
	(h)		that the execution and delivery of the Transaction Documents has been duly authorized by all necessary corporate action and proceedings on the part of each party to the Transaction Documents, and the Transaction Documents have been duly executed and delivered by each party to the Transaction Documents,
	(i)		that execution, delivery and performance of the Transaction Documents does not violate any provision of the articles or certificate of incorporation, by-laws or other organizational documents of any party to the Transaction Documents or require the approval of such party’s shareholders, except any approval which has been obtained and remains in effect,
	(j)		that each of the Transaction Documents constitutes the valid and binding obligation of each of the parties thereto other than the Company, enforceable against such parties in accordance with their respective terms,
	(k)		that the execution and delivery by the Company of, and performance of its respective obligations under, each Transaction Document to which the Company is a party will not violate any order of any governmental authority to which the Company is subject or (except as provided in numbered paragraphs 3, 4 and 5) the laws under which the Company is organized, and
	(l)		that the execution and delivery by the Company of, and performance of its respective obligations under, each Transaction Document to which the Company is a party will not constitute or result in a breach or modification of, conflict with, constitute a default or result in an acceleration of any obligation under, result in any encumbrance pursuant to, or affect the validity or effectiveness of any contract, permit, order or (except as provided in numbered paragraphs 3, 4 and 5) other law applicable to the Company.

     Our opinions expressed below as to certain factual matters are qualified as being limited “to our knowledge” or by other words to the same or similar effect. Such words, as used herein, mean that prior to or during the course of this firm’s representation of the Company in connection with the specific transactions contemplated by the Note Purchase Agreement, as amended by the Amendment, no contrary information came to the attention (but not including any constructive or imputed notice) of the attorneys currently with our firm who have given substantive attention to matters on behalf of the Company. In rendering such opinions, we have not conducted any independent investigation of the Company, consulted with other attorneys in our firm with respect to the matters covered thereby, or reviewed any of our prior files involving

June 23, 2010
Page 3

the Company. Finally, no inference as to our knowledge with respect to the factual matters upon which we have so qualified our opinions should be drawn from the fact of our representation of the Company.

     Based on the foregoing, we are of the opinion that:

     1. The Amendment constitutes the legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms.

     2. Each of the Note Purchase Agreement, as amended by the Amendment, and the Note constitutes the legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms. Notwithstanding the execution of the Amendment, pursuant to the Sections 4(a) and 4(c) of the Guaranty Agreement, the guaranty under the Guaranty Agreement by each of the Subsidiary Guarantors listed in Schedule 5.4 to the Amendment remains in full force and effect.

     3. No approval or consent of, filing with, notification to, or waiver or exemption from, any Minnesota, New York or federal governmental authority (other than any Minnesota, New York or federal governmental authority regulating public utilities or public utility holding companies, as to which we express no opinion) is required to be obtained or made by the Company in connection with its execution and delivery of the Amendment or the performance by the Company of its obligations pursuant to the Note Purchase Agreement, as amended by the Amendment, except for such approvals, consents, filings, notifications, waivers or exemptions as have been obtained or made and except that we express no opinion regarding any federal securities laws (other than as provided in our opinion in paragraph 5, below), or the securities or “Blue Sky” laws of any state.

     4. Assuming the accuracy and performance of, and compliance with, the representations, warranties and agreements of the Company and Cascade in the Note Purchase Agreement, as amended by the Amendment, the issuance and delivery of the Note under the circumstances contemplated by the Note Purchase Agreement, as amended by the Amendment, do not, under existing law, require the registration of the Note under the Securities Act of 1933.

     5. The Company is not an “investment company” as such term is defined in the Investment Company Act of 1940, as amended, and to our knowledge, based solely on our review of the statements of beneficial ownership of the Company’s stock filed as of the date hereof with the SEC, and in reliance upon certificates of officers of the Company, the Company is not “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

     The opinions set forth above are subject to the following qualifications and exceptions:

(a) Our opinions above in paragraphs 1 and 2 are subject to the effect of any applicable bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent transfer, statutes of limitation or other similar laws and judicial decisions affecting or relating to the rights of creditors generally.

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Page 4

(b) Our opinions above in paragraphs 1 and 2 above are subject to the effect of general principles of equity, including without limitation, concepts of materiality, reasonableness, good faith and fair dealing, estoppel, election of remedies and other similar doctrines affecting the enforceability of agreements generally (regardless of whether considered in a proceeding in equity or at law). In addition, the availability of specific performance, injunctive relief, the appointment of a receiver or other equitable remedies is subject to the discretion of the tribunal before which any proceeding therefor may be brought.

(c) We express no opinion as to the enforceability of provisions in the Transaction Documents to the extent they contain obligations of the Company to pay any prepayment premium, default interest rate or other form of liquidated damages if the payment of such premium, interest rate or damages may be construed as unreasonable in relation to the actual damages or disproportionate to actual damages suffered by the Purchaser as a result of such prepayment or default.

(d) We express no opinion as to the enforceability of the 2001 Note Purchase Agreement and any Credit Agreement which may be deemed to be incorporated by reference into the Note Purchase Agreement pursuant to Section 10.7 of the Note Purchase Agreement or as to the effect such incorporation may have on the enforceability of the Note Purchase Agreement or the Note.

(e) We express no opinion as to the validity, binding effect or enforceability of (i) any provision of the Transaction Documents related to choice of law, forum selection or submission to jurisdiction (including, without limitation, any express or implied waiver of any objection to venue in any court or of any objection that a court is an inconvenient forum) to the extent that the validity, binding effect or enforceability of any such provision is to be determined by any court other than a court of the State of New York, (ii) waivers by the Company of any statutory or constitutional rights or remedies, (iii) terms which excuse any person or entity from liability for such person’s or entity’s negligence or willful misconduct, (iv) cumulative remedies to the extent such cumulative remedies purport to compensate, or would have the effect of compensating, the party entitled to the benefits thereof in an amount in excess of the actual loss suffered by such party, (v) provisions providing that waivers or consents by a party may not be given effect unless in writing or that one or more waivers may not under certain circumstances constitute a wavier of other matters of the same kind, or (vi) terms purporting to establish evidentiary standards.

(f) We express no opinion as to compliance or the effect of noncompliance by Cascade with any state or federal laws or regulations applicable to Cascade in connection with the transactions described in the Transaction Documents.

(g) In rendering our opinion in paragraph 3 above, we do not express any opinion with respect to any approval or consent of, filing with, notification to, or waiver or exemption from, any Minnesota, New York or federal governmental authority required generally in connection with the business or operations of the Company.

June 23, 2010
Page 5

     The opinions expressed above are limited to the laws of the States of Minnesota and New York and the federal laws of the United States and we express no opinion as to the laws of any other jurisdiction.

     The opinions expressed herein are based on an analysis of existing laws and court decisions and cover certain matters not directly addressed by such authorities. This opinion is solely for the benefit of the addressee hereof in connection with the transaction described in the first paragraph of this letter, may not be relied upon by the addressee hereof for any other purpose, and may not be relied upon or used by, circulated, quoted, or referred to, nor may copies hereof be delivered to, another person for any purpose without our prior written approval, provided, however, that such permitted reliance shall not imply or establish an attorney-client relationship between such relying party and this firm with respect to the Transaction Documents or the transactions contemplated thereby, and such relying party by relying on our opinion disclaims any such attorney-client relationship with respect to the Transaction Documents or the transactions contemplated thereby. We disclaim any obligation to update this opinion letter for events occurring or coming to our attention, or any changes in the law taking effect, after the date hereof.

Very truly yours,

LJG/SK

[Form of Opinion of General Counsel]

June 23, 2010

Cascade Investment, L.L.C.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000

Ladies and Gentlemen:

     I have acted as counsel to Otter Tail Corporation, a Minnesota corporation (the “Company”), in connection with that certain Amendment No. 3 dated as of June 23, 2010 to Note Purchase Agreement dated as of February 23, 2007 (the “Amendment No. 3”), between the Company and Cascade Investment, L.L.C. (“Cascade”), which amends that certain Note Purchase Agreement, dated as of February 23, 2007 (the “Original Note Purchase Agreement”), as amended by a letter agreement dated December 14, 2007 (the “Letter Agreement”) and Amendment No. 2 dated as of June 30, 2009 (“Amendment No. 2”) (the Original Agreement, as amended by the Letter Agreement and Amendment No. 2 being referred to herein as the “Note Purchase Agreement”), between the Company and Cascade relating to the issuance and sale by the Company of its 8.89% Senior Note due November 30, 2017 in the aggregate principal amount of $50,000,000. This opinion is being delivered to you pursuant to Section 3.1(b) of the Amendment No. 3. Capitalized terms used herein, except as otherwise specifically defined herein, are used with the same meaning as defined in the Note Purchase Agreement.

     In connection with this opinion I have examined such documents and reviewed such questions of law as I have considered necessary and appropriate for the purposes of this opinion.

     In rendering my opinions set forth below, I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures (other than the signatures of officers of the Company) and the conformity to authentic originals of all documents submitted to me as copies. I also have assumed the legal capacity for all purposes relevant hereto of all natural persons and, with respect to all parties to agreements or instruments relevant hereto other than the Company, that such parties had the requisite power and authority (corporate or otherwise) to execute, deliver and perform such agreements or instruments, that such agreements or instruments have been duly authorized by all requisite action (corporate or otherwise), executed and delivered by such parties and that such agreements or instruments are the valid, binding and enforceable obligations of such parties. I have also assumed that all conditions precedent to the effectiveness of Amendment No. 3 have been satisfied or waived contemporaneously with the delivery of this opinion letter. As to questions of fact material to my opinion, I have relied upon representations and certificates of officers and other employees of the Company and its subsidiaries (in each case known by me to have authority to make such representations and certifications on behalf of the Company), and certificates of public officials.

June 23, 2010
Page 2

     Based on the foregoing, I am of the opinion that:

	1.		The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary, except where failure to be so licensed or to so qualify or to be in good standing would not result in a Material Adverse Effect.
	2.		No approval or consent of, filing with, notification to, or waiver or exemption from, any Minnesota or North Dakota governmental authority or any Minnesota, North Dakota or other federal governmental authority regulating public utilities or public utility holding companies, is required to be obtained or made by the Company in connection with its execution and delivery of Amendment No. 3 or the performance by the Company of its obligations pursuant to the Note Purchase Agreement, as amended by Amendment No. 3, except for such approvals, consents, filings, notifications, waivers or exemptions as have been obtained or made.
	3.		The execution and delivery by the Company of Amendment No. 3 and the performance by the Company of its obligations under Amendment No. 3 will not (a) violate the articles of incorporation or bylaws of the Company, (b) violate Section 673 of the Minnesota Business Corporation Act or Minnesota Statutes Section 216B.48, or (c) violate, result in the breach or modification of, conflict with, constitute a default or result in an acceleration of any obligation under, result in the imposition of any encumbrance pursuant to, or affect the validity or effectiveness of, any contract, permit, order or other law applicable to the Company, except (as to clause (c) only) for any violation, breach, modification, conflict, default, acceleration, encumbrance or effect which would not have a Material Adverse Effect and except that I express no opinion regarding any federal securities laws or the securities or “Blue Sky” laws of any state.
	4.		The execution and delivery by the Company of Amendment No. 3 and the performance by the Company of its obligations under the Note Purchase Agreement, as amended by Amendment No. 3, have been duly authorized by all requisite corporate actions on the part of the Company, and Amendment No. 3 and has been duly executed and delivered by the Company.
	5.		There is no litigation pending or, to the best of my knowledge, threatened which in my opinion could reasonably be expected to have a Material Adverse Effect on the Company or that would impair the ability of the Company to comply with the provisions of the Note Purchase Agreement.

June 23, 2010
Page 3

6. Notwithstanding the execution of the Amendment, pursuant to Sections 4(a) and 4(c) of the Guaranty Agreement, the guaranty under the Guaranty Agreement by each of the Subsidiary Guarantors listed in Schedule 5.4 to the Amendment remains in full force and effect.

     The opinions expressed above are limited to the laws of the States of Minnesota and North Dakota and the federal laws of the United States. I express no opinion as to the laws of any other jurisdiction.

     The foregoing opinions are being furnished to you solely for your benefit (and the benefit of your successors and assigns) and may not be relied upon by, nor may copies be delivered to, any other person without my prior written consent.

Very truly yours,

Xxxxxx X. Xxxxx
General Counsel and Corporate Secretary