EXHIBIT 10-G
Confidential information has been omitted from this Exhibit and filed
separately with the Commission pursuant to a confidential treatment
request under Rule 24b-2.
COAL SUPPLY AGREEMENT
by and between
OTTER TAIL POWER COMPANY, NORTHWESTERN PUBLIC SERVICE,
MONTANA-DAKOTA UTILITIES CO.
and
KENNECOTT ENERGY COMPANY
2000 - 2001
December 16, 1999
TABLE OF CONTENTS
Page No.
--------
1. TERM . . . . . . . . . . . . . . . . . . . . . 1
2. QUANTITY . . . . . . . . . . . . . . . . . . . 2
3. SOURCE . . . . . . . . . . . . . . . . . . . . 3
4. COAL QUALITY . . . . . . . . . . . . . . . . . 3
5. PRICING . . . . . . . . . . . . . . . . . . . 4
6. BILLING AND PAYMENT . . . . . . . . . . . . . 5
7. SAMPLING AND ANALYSIS . . . . . . . . . . . . 6
8. WEIGHING AND LOADING . . . . . . . . . . . . . 8
9. FORCE MAJEURE . . . . . . . . . . . . . . . . 9
10. TITLE . . . . . . . . . . . . . . . . . . . . 10
11. TERMINATION AND CANCELLATION . . . . . . . . . 10
12. INDEMNITY AND LIABILITY . . . . . . . . . . . 10
13. LAWS AND REGULATIONS . . . . . . . . . . . . . 10
14. NOTICES . . . . . . . . . . . . . . . . . . . 10
15. CONFIDENTIALITY . . . . . . . . . . . . . . . 11
16. WARRANTY AND LIABILITY . . . . . . . . . . . . 11
17. DISPUTE RESOLUTION . . . . . . . . . . . . . . 11
18. MISCELLANEOUS . . . . . . . . . . . . . . . . 13
COAL SUPPLY AGREEMENT
by and between
OTTER TAIL POWER COMPANY, NORTHWESTERN PUBLIC SERVICE,
MONTANA-DAKOTA UTILITIES CO.
and
KENNECOTT ENERGY COMPANY
THIS COAL SUPPLY AGREEMENT ("Agreement") is made and entered into as
of December 16, 1999 (the "Effective Date"), by and between OTTER TAIL
POWER COMPANY, NORTHWESTERN PUBLIC SERVICE, a Division of Northwestern
Corporation, MONTANA-DAKOTA UTILITIES CO., a Division of MDU Resources
Group, Inc., hereinafter together called "Buyers or Buyer" and ▇▇▇▇▇▇▇
MINING COMPANY AND CABALLO ROJO INC., wholly owned subsidiaries of Kennecott
Energy and Coal Company, and Kennecott Energy Company, an affiliate of
Kennecott Energy and Coal Company, hereinafter together called "Seller."
BACKGROUND:
A. Seller desires to sell coal from its ▇▇▇▇▇▇▇ ▇▇▇▇ Complex,
consisting of the ▇▇▇▇▇▇▇ and Caballo Rojo mines located in ▇▇▇▇▇▇▇▇ County,
Wyoming ("the Mine"), under the terms and conditions herein set forth; and
B. Buyers are public utilities engaged in the production of
electricity and the furnishing of electric service to the public;
C. Buyers, pursuant to the Agreement for Sharing Ownership of
Generating Plant dated as of January 7, 1970, own and operate the Big Stone
Power Plant located near Milbank, South Dakota (the "Plant");
D. To produce electricity at the Plant, Buyers need to secure an
adequate supply of coal of the quality and quantity as set forth in this
Agreement; and
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements of the parties contained herein, Seller agrees to sell and
deliver to Buyers and Buyers agree to purchase, receive and pay for coal
from Seller upon the following terms and conditions:
1. TERM
----
The Term of this Agreement shall be for * years commencing on
January 1, 2000 and terminating on * unless sooner terminated as provided in
Section 11 of this Agreement.
2. QUANTITY
--------
(a) Minimum and Maximum Amounts
---------------------------
Throughout the Term, Seller shall supply and sell and Buyer shall
purchase a minimum of * tons and a maximum of * tons of coal each
calendar year. Buyer shall provide Seller a written nomination of the
annual tonnage amount within ten (10) days of the Effective Date for
calendar year 2000 and *. Said nominated amounts shall be within the range
of the above referenced minimum and maximum amounts and shall be the annual
quantity ("Annual Quantity") of coal that Buyer is obligated to purchase and
Seller is obligated to sell and supply for such calendar year.
(b) Delivery Schedule
-----------------
Deliveries shall be scheduled to occur in monthly quantities during
each calendar year, with the first shipments of coal to be delivered to the
Plant in sufficient quantities to allow the Plant to begin burning the coal
on or before January 1, 2000. Within ten (10) days of the Effective Date,
Buyer shall provide Seller with its written monthly schedule for calendar
year 2000; *. In providing the monthly schedules to Seller, Buyer shall use
its best faith efforts to provide an accurate estimate of its projected need
for coal on a monthly basis. Buyer shall use best efforts to keep monthly
quantities approximately equal except for scheduled overhaul and test burn
periods. However, the parties agree that the monthly schedules are for the
convenience of the parties and in no way binding on the Buyer and that no
penalty of any kind shall accrue to Buyer if for any reason the Buyer is (1)
unable to take delivery of the amount of monthly coal scheduled or (2) takes
delivery of more coal than scheduled in order to make-up for any previous
months' deficiencies. Except as provided in Section 2(c) below, any
variance in the amount of monthly coal scheduled and actually delivered
shall not relieve either Seller or Buyer from their respective obligations
to sell and purchase the minimum amounts of coal set forth in Section 2(a).
(c) Reduction in Quantities
-----------------------
Where, through fault of the Buyer, Buyer fails to take delivery of the
amount of coal scheduled for any month because an appropriate amount of
suitable and compatible unit trains is not provided to Seller, the following
shall apply: Seller shall have the option at its discretion to reduce, in
the affected calendar year, the amount of coal that it is obligated to
provide under Section 2(a) in the amount that Buyer fails to take delivery.
Seller may reduce its supply obligation only by giving Buyer written notice
of its intent to do so within 10 days of the end of the calendar quarter in
which the failure to take delivery occurs. When Seller provides such notice
to Buyer, such notice shall also relieve Buyer of any further obligation
with regard to purchasing or taking delivery of the reduced amount. Seller's
option to reduce its supply obligation as provided above does not apply when
the failure to provide an appropriate amount of suitable and compatible unit
trains is not through any fault of Buyer. Failure by the rail car carrier
to provide an appropriate amount of suitable and compatible unit trains to
Seller shall not be considered the fault of the Buyer. Buyer agrees,
however, to use its best efforts to assure that the appropriate amount of
suitable and compatible unit trains is provided to the Seller by the rail
car carrier, in order to take the amount of coal scheduled for delivery
during each calendar month.
(d) Additional or Lesser Quantities
-------------------------------
Buyer and Seller may agree to increase or decrease the Annual Quantity
as nominated by Buyer in Section 2(a) throughout the Term by designating any
such increase or decrease in a written instrument signed by duly authorized
representatives of the parties.
(e) Additional Cost to Buyer through Fault of Seller
------------------------------------------------
Where Seller fails, through no fault of the Buyer or rail car carrier,
to load Buyer's rail cars with coal on a timely basis that causes coal to be
delivered to Buyer on an untimely basis or not at all, and where, as a
result, Buyer incurs additional costs in a commercially prudent and
verifiable manner, either because Buyer must use coal that it did not plan
to use from its outside, inactive storage stockpile or secure coal from
other sources, Seller shall be responsible to Buyer for these prudent and
verifiable additional costs. Seller shall have the right of first refusal
to provide the coal to replenish Buyer's outside inactive storage stockpile.
Any additional coal provided by Seller under this section will increase the
nominated amount of coal (pursuant to Section 2(a)) on a ton-per-ton basis.
3. SOURCE
------
The source of coal to be sold pursuant to this Agreement shall be
mined and supplied from the Mine. Seller represents and warrants that the
Mine contains coal of a quality and in quantities which will be sufficient
to satisfy the requirements of this Agreement. Seller further warrants that
the title to all coal delivered under this Agreement shall be good and that
such coal shall be delivered free from any claim, lien or other encumbrance.
4. COAL QUALITY
------------
Coal supplied hereunder will be substantially free from impurities and
foreign matter such as, but not limited to, dirt, bone, slate, earth, rock,
pyrite, wood, tramp metal and mine debris prior to leaving the Mine. Coal
will be raw, run-of-mine, crushed to 2" x 0" (ASTM). Seller represents that
typical values of BTUs, moisture, ash, sulfur, and the values for other
quality characteristics are as set forth in Exhibit A to this Agreement.
Seller shall make its best commercial efforts to provide Buyer by facsimile
transmission an analysis of the trainload of coal within twenty-four hours
of loading the coal on the train for shipment to the Plant, Sunday through
Thursday, and within forty-eight hours Friday and Saturday. Where the
analysis shows that the coal fails to meet the minimum of the specification
set forth in Exhibit A for BTUs by * or maximums of the specifications set
forth in Exhibit A by the following amounts - * Ash; * Sulfur; or * Moisture
- Buyer shall have the right but not the obligation to reject the coal within
twenty-four (24) hours of receiving the analysis from Seller.1 In the event
Buyer rejects such non-conforming coal, title to and risk of loss of the coal
shall be considered to have never passed to Buyer and Buyer may, at its sole
option, stop the shipment of the non-conforming coal in route, prevent the
unloading of the non-conforming coal, return the coal to Seller, or agree
with Seller on a different disposition for such coal, all at Seller's cost
and risk. Within twenty (20) working days from notice of rejection Seller
shall replace the non-conforming coal with coal conforming to the
specifications set forth above.
5. PRICING
-------
The price of coal supplied hereunder shall be based on the following
schedule. Prices will be per ton F.O.B. Buyer's railcars at the Mine (the
"Base Price"). The Base Price for each year includes all Governmental
Impositions as of December 16, 1999.
BASE PRICE
YEAR PER TON
---- -------
* *
* *
(a) Base Price
----------
The Base Price may be adjusted only in accordance with Paragraph b and
c of this Section 5.
(b) Governmental Impositions and Taxes
----------------------------------
Seller represents that the Mine is in compliance with all governmental
laws, rules and regulations in effect as of December 16, 1999, and that the
cost of such compliance, including Mine closure and all reclamation costs,
is included in the Base Price set forth in Section 5(a). If the imposition
or repeal of any law, regulation or ruling (including changes in
interpretations or administration of existing laws, regulations or rulings),
or change in tax rate, is adopted or becomes effective on or after
December 16, 1999 (hereinafter called "Governmental Imposition") and the
imposition, repeal, or change in tax rate was not known as of the Effective
Date, Seller shall demonstrate to Buyer, to Buyer's satisfaction, that such
Governmental Imposition has
____________
1 For example, Buyer shall have the right but not the obligation to
reject the coal where the analysis shows that the BTUs are less than *
or has an Ash content of more than *.
increased or decreased the cost of owning or operating the Mine as it
relates to the production of coal from the Mine for sale to Buyer under
this Agreement. Upon agreement of the parties, the then effective Base
Price shall be adjusted by adding or subtracting the per ton cost of the
Governmental Imposition to determine an adjusted Base Price. If the
Governmental Imposition will continue for the life of this Agreement,
then the Base Price, to be included in an extension of the term of this
Agreement, if any, shall also be adjusted by the per ton amount of the
Governmental Imposition.
Seller shall submit to Buyer in writing, an analysis identifying the
Governmental Imposition causing the cost impact and the extent of such cost
impact on ownership or operation of the Mine or on the production of coal
purchased hereunder and showing the calculation of the amount of change in
the Base Price. The effective date of any price increase or decrease
pursuant to this Section 5(b) shall be the effective date of the
Governmental Imposition causing the cost increase or decrease but, in no
event prior to the date of actual expenditure or accrual thereof by Seller.
(c) Adjustment for Calorific Value
------------------------------
The Base Price is calculated on the assumption of an average monthly
calorific coal value of * per pound (the "Specified Average");
provided, however, the parties recognize that the calorific value of coal
actually delivered hereunder may vary from such Specified Average. If the
weighted average calorific value of the coal furnished in any month deviates
from the Specified Average, then an adjustment will be made to the Base
Price of coal according to the following equation:
A = (B/C) X (D)
Where:
A - Adjusted Price rounded to the nearest mil ($.001)
B - Weighted average (BTUs per pound) calorific value of coal
delivered during the month.
C - Specified Average (BTUs per pound) calorific value of coal
which is * per pound.
D - Base Price
6. BILLING AND PAYMENT
-------------------
On or before the fifth (5th) and twentieth (20th) working day of each
month, Seller shall render to Buyer at its Plant address provided in Section
14 a semi-monthly invoice which shall indicate the actual tonnage and
weighted average calorific value of coal shipped during the previous billing
period and the Adjusted Price which takes calorific value into account as
defined in Section 5(c) and changes resulting from the changes in
Governmental Impositions, if any.
Buyer shall electronically pay such invoice within ten (10) working
days after receipt thereof. Unless advised in writing to send all payments
to another address, payment shall be sent by electronic means to:
First Security Bank of Utah
ABA No. ▇▇▇▇▇▇▇▇▇
Account Number: ▇▇▇-▇▇▇▇▇-▇▇
Account Name: ▇▇▇▇▇▇▇ Mining Company/Caballo Rojo Inc. Receipts
If Buyer defaults on any payment, Buyer shall pay simple interest
thereon at the rate, not to exceed applicable State of Wyoming and Federal
laws, that shall be equal to two percent (2%) over the base rate of interest
charged by Citibank of New York or any successor bank on new ninety-day
loans to responsible and substantial commercial borrowers on the date the
interest charge begins. Such interest shall run from the date the payment
was due until it is paid.
If any invoice is in dispute, Buyer nevertheless shall pay the
undisputed amount, and if Buyer or Seller is due any credit or payment
pursuant to the resolution of the dispute, the simple interest on the credit
or payment shall be paid by the party owing such credit or payment at the
rate, not to exceed applicable State of Wyoming and Federal laws, that shall
be equal to two percent (2%) over the base rate of interest charged by
Citibank of New York or any successor bank on new ninety-day loans to
responsible and substantial commercial borrowers on the date of Buyer's
payment or credit from Seller of the disputed invoice and shall run until
the date payment or credit is made following resolution of the dispute.
Should Buyer fail to pay Seller for any amount due and owing in
accordance with this Section 6 within thirty (30) days after its receipt of
Seller's written demand for payment, then Seller shall also have the right,
but not the obligation, to suspend deliveries under this Agreement by so
notifying Buyer in writing. Should Buyer fail to pay Seller for any amount
due and owing in accordance with this Section 6 within ninety (90) days
after its receipt of Seller's written demand for payment, then Seller shall
have the right, but not the obligation to terminate this Agreement by so
notifying Buyer in writing.
Such suspension or termination shall become effective as of the date
that said written notice is received by Buyer. Neither Party shall accrue
any additional rights against the other as a result of a suspension or
termination permitted in this Section 6. Seller shall lose the right
provided in this Section 6 to suspend or terminate if it has not sent
written notice of such suspension or termination prior to Buyer's payment of
the amount due and owing. Seller's failure to exercise its right to suspend
or terminate as provided in this Section 6 shall not be deemed a waiver of
its right to suspend or terminate for any subsequent default by Buyer to
perform as provided in this Section 6.
7. SAMPLING AND ANALYSIS
---------------------
(a) Seller shall cause, at its expense, each shipment of coal to be
sampled and analyzed at the applicable mine in accordance with applicable
ASTM standards. Buyer shall have the right, at its risk and expense, to
have a representative present at any and all times to observe sampling and
analysis procedures. All samples shall be divided into three (3) parts and
put in suitable airtight containers. One part shall be furnished to Buyer
for its analysis, one part shall be retained for analysis by Seller or its
designee (which analysis shall be the basis for payment), and the third part
shall be retained by Seller or its designee in one of the aforesaid
containers properly sealed and labeled for a period forty-five (45) days
after the date of sample collection. Buyer's samples are to be clearly
labeled as to mine, date of sampling, date of preparation, and other
identification as to shipment (such as train identification number) and are
to be sent within forty-eight (48) hours of train loading, or prior to
arrival of train at destination, whichever comes first, to Buyer at the
address provided in Section 14.
(b) Seller shall perform at Seller's cost a "short proximate"
analysis (for moisture, ash, sulfur, sodium, and calorific value) for each
trainload sample and will forward such analysis to Buyer by a mutually
agreed upon method of electronic communication.
(c) If a dispute arises between Buyer and Seller concerning a
trainload sample due to a difference between Buyer's and Seller's analyses
within forty-five (45) days of the date on which the subject trainload was
loaded, an analysis of the third part shall be made by an independent
commercial testing laboratory, mutually chosen by Buyer and Seller. The
average of the results of the two (2) closest analyses with respect to the
disputed quality characteristic (among Seller's, Buyer's and the independent
laboratory's analyses) shall be controlling for purposes of the trainload in
question. The cost of analysis made by such independent commercial
laboratory shall be borne by the party whose analysis is not used in the
final determination; provided, however, in the event the commercial
laboratory's results are inconclusive and therefore not used, the cost of
the analysis shall be shared equally by the parties hereto.
(d) Seller shall provide Buyer the results of the proximate analysis
for each trainload of coal as soon as the results are available, but in any
event prior to the arrival of the subject train at the Plant. Upon Buyer's
written request and at Buyer's cost, Seller shall analyze shipments
designated by Buyer for mercury and chlorine content and submit such
analysis to Buyer.
(e) The results of the sampling and analysis performed by Seller
shall govern for purposes of determining any adjustments to the Base Price
of coal set forth in Section 5(c) for variations in calorific value, except
in the event a dispute arises under Section 7(c), in which event Section
7(c) shall control.
8. WEIGHING AND LOADING
--------------------
(a) Point of Delivery
-----------------
Coal will be delivered F.O.B. Buyer's railcars at Seller's railroad
loadout facility at the Mine. Upon completion of the loading of each
railcar, title and risk of loss for all coal loaded therein will pass to
Buyer. Buyer will arrange for the provision of suitable and compatible unit
trains of open-top railcars for the transportation of coal purchased by
Buyer under this Agreement.
(b) Loading Facilities and Procedure
--------------------------------
Seller will operate its loading facilities twenty-four (24) hours per
day, 365 days per year. Seller will load each unit train at Seller's
expense as closely as practicable to its full visible capacity. Seller will
complete the loading of each unit train within four (4) hours after the
first empty railcar is placed into position for loading. Unless excused by
Force Majeure as provided below, Seller will pay Buyer for any increased
transportation charges incurred as a result of Seller's failure to comply
with the freetime, overloading and underloading set forth in the excerpts
from Buyer's transportation agreement provisions as set forth in Exhibit C.
The parties agree that "Actual Placement," as set forth in Exhibit C
(section 10(B)(2)), means when the first empty railcar is placed under the
spout and ready for loading.
(c) Weighing
--------
The weight of coal sold and delivered under this Agreement shall be
determined on a per shipment basis by certified commercial scales at
Seller's train loading facility at the Mine. The weights thus determined
shall be accepted as the quantity of coal for which invoices are to be
rendered and payments made in accordance with Section 6. Seller shall
furnish the railroad company transporting the coal with copies of the
weights determined under this Agreement. Coal supplied under this Agreement
will be weighed at Seller's expense. Seller's scales used to determine such
weight shall be tested, calibrated and certified in accordance with
intervals of approximately every six (6) months by a qualified testing
agency. Seller shall use its best efforts to give Buyer no less than ten
(10) days notice of the anticipated time of scale test. Buyer shall also
have the right, at Buyer's expense and upon reasonable notice, to have the
scales checked for accuracy at any reasonable time or frequency. If the
scales are found to be over or under the tolerance range allowable for the
scale based on ASTM standards, either party shall pay to the other any
amounts owed due to such inaccuracy for a period not to exceed thirty (30)
days before the time any inaccuracy of scales is determined.
Buyer shall have the right, at its own cost and expense, to have a
representative present at any and all times to observe the weighings or
scale test, and in a manner that does not interfere with Seller's operation
of its Mines.
(d) Data Transmission
-----------------
Seller shall provide to Buyer within 48 hours of completion of loading
each train a train loading manifest for each train by a mutually agreed upon
method of electronic transmission.
9. FORCE MAJEURE
-------------
(a) Definition
----------
For purposes of this Agreement, the term "Force Majeure" is defined as
any cause or causes beyond the reasonable control and without the
intentional fault or willful negligence of the party affected thereby which
is the proximate cause of a party's whole or partial inability to perform
its obligations under this Agreement. For purposes of this Agreement, Force
Majeure includes, without limitation, Acts of God, unusual accumulations of
snow or ice, floods, frozen coal, interruptions of transportation,
interruptions or breakdowns of the power facilities connecting with Buyer or
Seller's facilities, embargoes, acts of civil authority (including State and
Federal agencies and courts of competent jurisdiction), acts of military
authority, war, insurrections, riots, strikes, lockouts, work stoppages,
labor or material shortages, or explosions, fires or unanticipated or non-
routine mechanical breakdowns (including shutdowns for emergency maintenance
or the like which may be necessary to mitigate or eliminate the imminent
threat of explosions, fires, or mechanical breakdowns) at the Mine or at
Buyer's Plant . Force Majeure also includes other causes of a similar
nature which wholly or partially prevent the mining, hauling, processing, or
loading of coal by Seller or the receiving, transporting, storing, unloading
or utilizing of coal by Buyer.
(b) Effect of Force Majeure
-----------------------
If, because of an event of Force Majeure, either Seller or Buyer is
unable to carry out any of its obligations under this Agreement, except
obligations to pay money to the other party due to coal already sold, and if
such party shall promptly give to the other party written notice of such
event of Force Majeure, then the obligations under this Agreement of the
party giving such notice shall be suspended to the extent made necessary by
such event of Force Majeure and will continue throughout the continuance of
such event; provided, however, that the party giving such notice shall use
good faith efforts to eliminate such event of Force Majeure or its effect
insofar as possible with a minimum of delay. Nothing herein contained shall
cause the party invoking Force Majeure to submit to what it considers to be
unreasonable conditions or restrictions, to make an unreasonable expenditure
of money or to submit to a labor Agreement it deems unfavorable, and it is
agreed that any settlement of labor strikes or difference with workmen shall
be entirely within the sole discretion of the affected party. Deficiencies
in receiving coal caused by a Force Majeure event shall be made up only upon
mutual consent between Buyer and Seller.
10. TITLE
-----
Title, right of possession and risks of loss of the coal shall pass
From Seller to Buyer upon loading into the railcar. Seller agrees to load in
equipment supplied by Buyer or Buyer's agent in accordance with industry
standards or rail carrier's instructions.
11. TERMINATION AND CANCELLATION
----------------------------
Either party to this Agreement may cancel this Agreement upon
written notice to the other party of such party's failure to comply with any
of the material provisions or obligations in this Agreement, provided that
notice of such failure has been given and not less than thirty (30) days
have elapsed with no curative action having commenced. Seller and Buyer may
terminate this Agreement immediately upon written notice to the other in the
event the other becomes insolvent or files for protection under any
applicable bankruptcy laws. Buyer shall remain obligated to pay for all
coal delivered by Seller and accepted by Buyer prior to the date of
termination or cancellation.
12. INDEMNITY AND LIABILITY
-----------------------
Each party hereby agrees to indemnify, save and hold harmless the
other, from and against all liability from damage to property or injury or
death of any person or persons arising out of or resulting from the willful
or negligent acts or omissions of such party, its agents and employees;
provided however, that when employees or agents of either party hereto enter
upon the premises of the other party, such entry shall be at the sole risk
of the party who is the employer of such employee or agent, and such
employer shall hold harmless the other party from all claims by its
employees or agent, unless such injury or death or damage to property is a
result of gross negligence.
13. LAWS AND REGULATIONS
--------------------
The Seller and Buyer shall comply with all applicable federal, state
and local laws, ordinances, statutes, codes, rules, and regulations in the
performance of its obligations under this Agreement.
14. NOTICES
-------
All notices required hereunder will be in writing and will be deemed
properly given when sent by telecopy, to the addresses as provided below, or
to such other addresses as Buyer or Seller may hereafter specify for such
purpose, provided that all notices will be confirmed immediately by
commercial delivery service, e.g., Federal Express or U.P.S. or registered
certified mail.
Buyer's address is: Seller's address is;
------------------- --------------------
Big Stone Plant Kennecott Energy Company
c/o Otter Tail Power Company ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
P.O. Box 218 Caller box ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Fuel Supervisor Attn: Contract Administration
Fax (▇▇▇) ▇▇▇-▇▇▇▇ Fax (▇▇▇) ▇▇▇-▇▇▇▇
With a courtesy notice to: With a courtesy notice to:
-------------------------- --------------------------
Attn: Production Services ▇▇▇▇ ▇▇▇▇▇, Manager Sales
Otter Tail Power Company Kennecott Energy Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇, 6300 South Syracuse
Fergus Falls, MN 56537 ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
15. CONFIDENTIALITY
---------------
Except as hereinafter provided, the terms and conditions set forth in
this Agreement, and all information supplied to the other party pursuant to
this Agreement, are considered by both Buyer and Seller to be confidential,
and neither party shall disclose any such information to any third party
without the advance written consent of the other party, which consent shall
not be unreasonably withheld, except where such disclosure may be required
by law or in connection with the assertion of a claim or defense in judicial
or administrative proceedings involving the parties hereto, in which event
the party required to make such disclosure shall advise the other in advance
in writing and shall cooperate to the extent practicable to minimize the
disclosure of any such information.
16. WARRANTY AND LIABILITY
----------------------
OTHER THAN THE WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT,
SELLER MAKES NO OTHER EXPRESS OR IMPLIED WARRANTIES, INCLUDING WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
OR ARISING FROM A COURSE OF DEALING OR TRADE USAGE AND SELLER SHALL NOT BE
LIABLE, WHETHER AS TO COAL SHIPPED OR FOR THE FAILURE TO SHIP COAL
HEREUNDER, FOR ANY EXEMPLARY, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES
WHATSOEVER.
17. DISPUTE RESOLUTION
------------------
(a) No Party to this Agreement shall be entitled to take legal action
with respect to any dispute arising from or relating to the Agreement until
it has complied, in good faith, with the procedures set forth in sections
(b) and (c) below.
(b) Negotiation
-----------
(1) The parties shall attempt promptly and in good faith to
resolve any dispute arising out of or relating to this Agreement through
negotiations between representatives who have the authority to settle the
controversy. All negotiations pursuant to this clause shall be confidential
and treated as compromise and settlement negotiations for the purpose of the
federal and state rules of evidence.
(2) Either party may give the other written notice of any
dispute not resolved in the normal course of business. As soon as mutually
agreeable after delivery of this notice, representatives of the parties
shall meet at a mutually acceptable time and place (or by telephone), and
thereafter as often as they reasonably may deem necessary to attempt to
resolve the dispute. Unless the parties to the dispute agree that the
dispute cannot be resolved through unassisted negotiation, negotiations
shall not be deemed at an impasse until 60 days after the first settlement
conference.
(3) If a negotiator intends to be accompanied at a meeting by
any attorney, the other negotiator(s) shall be given at least three working
days' notice of such intention and may also be accompanied by an attorney.
(c) Alternative dispute resolution procedure
----------------------------------------
(1) If a dispute has reached impasse, either party may suggest
use of alternative dispute resolution ("ADR") procedures. Once that party
has notified the other of desire to initiate ADR, the parties may select the
ADR method they may wish to use by mutual agreement. That ADR method may
include arbitration, mediation, mini-trial, or any other method that best
suits the circumstances of the dispute. The parties shall agree in writing
to an ADR method selected and to the procedural rules to be followed as
promptly as possible. To the extent the parties are unable to agree on
procedural rules in whole or in part, the current center for public
resources ("CPR") model procedure for mediation of business disputes, CPR
model mini-trial procedure, or CPR commercial arbitration rules-whichever
applies to the chosen ADR method-shall control, to the extent such rules are
consistent with the provisions of this section.
(2) If the parties are unable to agree on an ADR method or
unwilling to use ADR to resolve the dispute, either party shall be free to
resort to litigation.
(3) If the parties agree on an ADR method other than
arbitration, the decision rendered in that proceeding shall not be binding
on any party except by agreement of the parties, and either party may seek
resolution of the dispute through litigation. If the parties agree on
arbitration as an ADR method, the decision of the arbitrator(s) shall be
binding on all parties, pursuant to the United States Arbitration Act 9 USCA
Sec. 1 et seq. The arbitrator(s) shall not award punitive or exemplary
damages against either party.
18. MISCELLANEOUS
-------------
(a) Governing Law. This Agreement shall be subject to and governed
by the laws of the State of Minnesota.
(b) Binding Effect. This Agreement shall inure to the benefit of and
be binding on the parties hereto, their successors and assigns.
(c) Assignment. Neither party hereto may assign this Agreement or
any rights or obligations hereunder, in whole or in part, without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or denied. However, consent shall not be required for merger,
consolidation or sale of all or substantially all of the assets of a party.
(d) Severability. If any provision of this Agreement is found to be
contrary to law or unenforceable by a court of competent jurisdiction, the
remaining provisions shall be severable and enforceable in accordance with
their terms, unless such unlawful or unenforceable provision is material to
the transactions contemplated hereby, in which case the parties shall
negotiate in good faith a substitute provision.
(e) Amendments. Except as otherwise provided herein, this Agreement
may not be amended, supplemented or otherwise modified except by written
instrument signed by duly authorized representatives of the parties hereto.
(f) Headings. The descriptive headings contained in this Agreement
are for convenience only and do not constitute a part of this Agreement.
(g) Entire Agreement. This Agreement contains the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and there are no representations, understandings or
agreements, oral or written, expressed or implied, that are not included
herein.
(h) Survival. At the time of termination of this Agreement or any
cancellation hereof, the appropriate provisions hereof shall survive as
necessary to complete any payment or credit provided for hereunder with
respect to coal sold and delivered prior to the date of such termination or
cancellation.
(i) Agreement Drafted Jointly. The parties agree that both parties
shared equally in the drafting of the Agreement and/or had full opportunity
to provide suggestions and/or language that reflects the intent of the
parties.
OTTER TAIL POWER COMPANY NORTHWESTERN PUBLIC SERVICE,
COMPANY a Division of
Northwestern Corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------------------ -----------------------------------
Chief Operating Officer,
Title: Energy Supply Title: Executive Vice President & COO
--------------------------- ------------------------------
MONTANA-DAKOTA UTILITIES KENNECOTT ENERGY COMPANY, as
CO., a Division of Agent for and on behalf of
MDU Resources Group, Inc. ▇▇▇▇▇▇▇ Mining Company and
Caballo Rojo Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- ---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President Energy Supply Title: Vice President Market & Sales
----------------------------- ------------------------------
EXHIBIT A
1999-2001 ▇▇▇▇▇▇▇/ROJO COMPLEX FORECAST QUALITY 12/09/998
*
EXHIBIT B
(Estimated Governmental Impositions as of December 9, 1999)
*
Exhibit C - Attached
Excerpt from Coal Transportation Agreement By and Between Otter Tail Power
Company, Northwestern Public Service Company, Montana-Dakota Utilities Co.,
and Burlington Northern Railroad Company.
SECTION 9. WEIGHING
9(A) Weighing.
The parties agree that the weight of the Coal in the Coal Cars will be
determined at Origins by the UTILITIES' Origin Mine operator. BN shall not
be responsible for such weight determinations. The weights ascertained by
said operators pursuant to Section 11(J) shall be used for the assessment of
the freight charges thereunder. Weighing shall be performed on scales
inspected semi-annually, at no cost to BN, in accordance with the then-
current AAR Scale Handbook specifications for such scales, and subject to
supervision and verification by BN or its agent.
9(B) Breakdown Of Scales.
If weights cannot be determined due to a breakdown of the scales at Origins,
the weight per Train to be used for the assessment of freight charges
thereunder shall be determined by averaging the per car weights on the ten
(10) immediately preceding weighed shipments from the same Origin to
Destination, adjusted to any variance in the number of cars per shipment.
9(C) Gross Load Limit and Overloads.
If a loaded Coal Car is found by BN to weigh in excess 270,000 pounds, BN
shall, if necessary, switch said overloaded Coal Car and remove it from the
Train. BN retains the right to refuse to accept or transport overloaded
Car(s). BN is not be obligated to reduce the lading of such Car(s), which
obligation is solely UTILITIES' under this Agreement. After UTILITIES, at no
expense to BN, cause any excess Coal to be removed from the overloaded Coal
Car, BN shall replace the Coal Car into the Train. For such services in
removing and replacing each such Coal Car, UTILITIES shall pay a charge to
BN of $372.00 per Coal Car. If the excess Coal is removed during the Free
Time at Origin without removing the Coal Car from a Train, there shall be
no charge to UTILITIES. BN reserves the right to increase the maximum
gross weight on rail above 270,000 pounds. UTILITIES are not obligated
to ship in excess of 270,000 pounds.
SECTION 10. LOADING AND UNLOADING
10(A) Advance Notice and Loading.
(1) BN will make Trains of empty Coal Cars available at Origins for
loading. BN shall furnish the Origin Mine Operator not less than
four (4) hours advance notice by radio, telex, telephone or other
reasonable means of the arrival of such Trains of Coal Cars at
Origin for loading.
(2) UTILITIES and/or its Mine Operator shall be responsible for the
loading of Coal Cars. The parties agree to cooperate with the
Mine Operator to provide for the efficient loading of the Coal
Cars at an Origin. BN shall provide Locomotives and Train crews
to move Trains through the Loading Facility at a controlled
speed as designated by UTILITIES Mine Operator; PROVIDED,
HOWEVER, that BN will not be required to move Cars at a speed
less than five tenths (.5) mile per
CONFIDENTIAL CONTRACT ICC-BN-C-2913
10
hour, but to the extent it is able to operate at a lesser speed,
will upon request use its best efforts to do so.
10(B) Placement and Free Time - Origin.
(1) Four (4) hours free time will be allowed to load all empty Coal
Cars in a Train, commencing after the Actual or Constructive
Placement of the Train at the designated notification point at
the Origin ready for loading "Loading Free Time"); PROVIDED,
HOWEVER, that Loading Free Time shall be extended for a period
of time equivalent to that by which loading was prevented as a
result of (i) a Loading Disability, or (ii) any occurrence
attributable to BN which prevents loading. If BN fails to
provide four (4) hours advance notice of arrival at Origin, a
Train's Loading Free Time shall be extended by the additional
amount of time (but not to exceed four (4) hours) that it
takes to load a Train due to BN's failure to provide the required
notice. If a Train is not loaded and released during the
applicable Loading Free Time, BN may collect from UTILITIES an
Origin Detention Charge of $308.00 per hour (including any
fraction of an hour) until such time as the Train is loaded and
released.
(2) For purposes of this Section 10. "Actual Placement" is made
when a Unit Train arrives at Origin Mine's designated
notification point (as described in the BN timetable and the
Train crew has requested loading instructions. In the event a
Train cannot be Actually Placed at an Origin, notice shall be
given immediately to Origin Mine Operator by radio, telex,
telephone or other reasonable means, and BN may place
the Train at an available hold point until such time as Origin
Mine Operator notifies BN that Actual Placement can be made,
whereupon it shall be moved to Origin.
(3) For purposes of this Section 10, "Constructive Placement" begins
when a Train is placed at an available hold point because it is
prevented from being Actually Placed; PROVIDED, HOWEVER, that
Constructive Placement shall not take place when Actual
Placement is prevented (i) due to any cause that would extend
Loading Free Time, or (ii) because the Loading Free Time for
another Train ahead of the Train in question has not expired
("Origin Bunching"). The time required for the movement of a
Constructively Placed Train from a hold point to an Origin will
not be included in the computation of Free Time.
(4) "Loading Disability" means any of the following events which
directly result in the inability to load Coal into a Train at an
Origin: (i) an Act of God; (ii) a strike or other labor
disturbance; (iii) a riot or other civil disturbance; (iv) rain,
snow and/or ice accumulation sufficient to immobilize Train or
Mine operations or prevent loading of such Train; (v) an act of
regulation of local, state or federal government authorities;
or (vi) mechanical or electrical breakdown, explosion or fire
(including shutdown for emergency maintenance or the like which
may be necessary to mitigate or eliminate the imminent threat of
explosion, fire or mechanical or electrical breakdown), or
accident affecting a Loading Facility at the Origin then being
utilized by UTILITIES or affecting BN's locomotives or other
railroad equipment. UTILITIES or UTILTIES' Mine Operator shall
notify BN by telephone, telegraph, radio or other reasonable
means (i) within one and one-half (1.5) hours of the
commencement of a Loading Disability as to the nature and time
of commencement of the Loading Disability, and (ii) within one
and one-half (1.5) hours after the termination of a Loading
Disability as to the time of termination of the Loading
Disability, except that the notifications in (i) and (ii) above
shall not be necessary if the Loading Disability lasts for a
period of one and one-half (1.5) hours or less
(*) Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
