SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A-1
(Mark One)
[ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-368
OTTER TAIL POWER COMPANY
(Exact name of registrant as specified in its charter)
Minnesota 41-0462685
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
215 South Cascade Street, Box 496, Fergus Falls, Minnesota 56538-0496
(Address of principal executive offices) (Zip Code)
218-739-8200
(Registrant's telephone number, including area code)
Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of Common Stock, as of the latest practicable date:
November 1, 1994 - 11,180,136 Common Shares ($5 par value)
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits:
10-A Coal Purchase Agreement dated June 30, 1994 by and
between the Company, Montana-Dakota Utilities Company,
Northwestern Public Service Company, and Westmoreland
Resources, Inc.
10-B Coal Transportation Agreement dated July 18, 1994 by
and between the Company, Montana-Dakota Utilities
Company, Northwestern Public Service Company, and
Burlington Northern Railroad Company.
27 Financial Data Schedule
b) Report on Form 8-K.
No reports on Form 8-K were filed during the fiscal quarter
ended September 30, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
OTTER TAIL POWER COMPANY
By: /s/A.E. Anderson
Andrew E. Anderson
Controller/Chief Accounting Officer
Authorized Officer
Dated: December 21, 1994
<PAGE>
Exhibit Index
to
Quarterly Report
on Form 10-Q/A-1
For Quarter Ended September 30, 1994
Exhibit Number
10-A* Coal Purchase Agreement dated June 30, 1994 by and
between the Company, Montana-Dakota Utilities
Company, Northwestern Public Service Company, and
Westmoreland Resources, Inc.
10-B* Coal Transportation Agreement dated July 18, 1994 by
and between the Company, Montana-Dakota Utilities
Company, Northwestern Public Service Company, and
Burlington Northern Railroad Company.
27 Financial Data Schedule
* Exhibit filed herewith. Confidential information has been
omitted from such exhibit and filed separately with the
Commission pursuant to a confidential treatment request under
Rule 24b-2.
Exhibit 10-A
(*) Confidential information has been omitted and filed
separately with the Commission pursuant to Rule 24b-2.
COAL PURCHASE AGREEMENT
THIS AGREEMENT is executed on June 30, 1994, between OTTER
TAIL POWER COMPANY, a Minnesota corporation with its main office
in Fergus Falls, Minnesota, NORTHWESTERN PUBLIC SERVICE COMPANY,
a Delaware corporation with its main office in Huron, South
Dakota, MONTANA-DAKOTA UTILITIES CO., a Division of MDU Resources
Group, Inc., a Delaware corporation with its main offices in
Bismarck, North Dakota, ("Buyers"), and WESTMORELAND RESOURCES,
INC., a Delaware corporation with its main office in Billings,
Montana ("Westmoreland").
The Background of this Agreement is as follows:
A. Westmoreland is lessee of coal lands at Sarpy Creek,
Montana, under a lease ("Tract #3") dated June 6, 1972, from the
Crow Tribe of Indians as lessor, as amended and renamed Amended
Coal Mining Lease Indian Lands ("Crow Lease"), and as
subsequently amended. The coal lands are hereinafter referred to
as the "Coal Reserves" and are shown on the map attached hereto
as Exhibit A.
B. Westmoreland has made contracts to mine and sell coal
from the Coal Reserves to others, and intends to make other such
contracts hereafter.
C. The mining of coal under the Crow Lease requires various
consents, permits, and approvals from agencies, officers and
other representatives of federal, state, and local governments
from time to time. Westmoreland is currently mining coal under
mining plans which cover locations, as shown on Exhibit A, and
which have received state and federal approvals.
D. Buyers are investor-owned utilities whose purpose, among
other things, is to supply electricity to retail and wholesale
customers. Buyers are co-owners of the Big Stone Plant, an
electrical generation station, for which they desire to purchase
a dependable source of fuel. Otter Tail Power Company is the
operating agent of Big Stone Plant.
The Terms of this Agreement are as follows:
1. Quantity and Term: Westmoreland will sell and deliver,
and Buyers will take and pay for coal from the Rosebud-McKay seam
in the Coal Reserves in the following amounts:
a. In calendar year 1995, a minimum of 300,000 tons and
a maximum of 700,000 tons.
b. In each calendar year 1996 through 1999, both
inclusive, a minimum of 1,200,000 tons and a maximum of
2,000,000 tons.
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c. In the event the Buyers purchase less than the
minimum tonnage in any year, Buyers shall pay Westmoreland, for
each ton under the minimum not taken, 30 percent of the fourth
quarter adjusted Base Tonnage price as calculated under Section
8 and Appendix A.
Shipments will be in approximately equal monthly amounts with
the exception of scheduled overhauls. The Buyers will provide
to Westmoreland, in November of each year, a monthly budget of
coal tonnage for the following year.
Westmoreland agrees to reserve 8,700,000 tons from the Coal
Reserves to perform this Agreement. However, Buyers shall not
thereby acquire any economic interest in the Coal Reserves. The
term "ton" shall mean a net ton of 2,000-pounds avoirdupois.
Westmoreland guarantees that it will not at any time sell coal to
others from the Coal Reserves in amounts that would jeopardize
its ability to supply, from the Coal Reserves for fulfillment of
its obligations to Buyers, the then remaining amounts of coal
which it is obligated to deliver to Buyers during the remaining
term of this Agreement.
d. Westmoreland agrees to a 45 day full load test burn to be
completed by September 15, 1995. Buyers have the option of
terminating the contract if, at the buyers' discretion, the fuel
is not suitable. A force majeure event would be reason to extend
the test burn completion deadline beyond September 15, 1995 by an
equal number of days equal to the force majeure event.
2. Delivery: The coal shall be sold and delivered, and
title shall pass f.o.b. railroad cars at Westmoreland's Absaloka
Mine at Sarpy Creek, Montana.
3. Weighing: Westmoreland shall weigh the coal at its mine,
and such weights shall be the basis for billing. Weights shall
be determined by belt scales maintained by Westmoreland at the
mine. If Westmoreland's scales are inoperative, weighing shall
be performed by procedures mutually determined by the parties.
Westmoreland's scales shall be inspected and certified at least
every six months by inspectors satisfactory to Buyers and the
Burlington Northern, and calibrated using methods agreeable to
both parties at least monthly by Commercial Testing and
Engineering Co. (or other entity satisfactory to both parties),
and shall be inspected and calibrated at other times at Buyers'
request. Westmoreland will send copies of inspection reports and
calibration results to Buyers on request. Buyers may have their
representatives present during each weight and each calibration
inspection and certification. Scales shall be considered
accurate if the tolerance is no greater than 1/4 of 1%. Scale
corrections shall not be applied to change the weights of coal
previously weighed. Westmoreland will prepare bills of lading as
required by the shipper.
4. Loading: Loading of coal shall be under Westmoreland's
control. Buyers shall not unreasonably withhold their consent to
reasonable variations in Buyers' shipment schedule in order to <PAGE>
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treat fairly all Westmoreland's purchasers of coal and users of
its loading facilities. Westmoreland shall not unreasonably
withhold its consent to reasonable variations in Buyers' shipment
schedule as requested by Buyers, from time to time, provided that
such variations shall not reduce the annual tonnage Buyers are
obligated to purchase, nor result in additional costs to
Westmoreland. Westmoreland agrees to maintain adequate loading
facilities to allow uniform loading of unit trains not to exceed
115 cars with a maximum of 12,200 tons in four hours and to
operate them 24 hours a day, seven days a week. Westmoreland
will load coal to between 98.5 tons and 102 tons in each car,
provided Buyers supply cars capable of loading to 100% of
capacity. Should buyers operate with equipment other than the
presently owned fleet of cars such tonnages shall be adjusted
based on specific equipment provided. Westmoreland shall be
liable for added charges or increased rates by the transporting
railroad under Buyers' railroad tariff or transportation contract
by virtue of any delay caused by Westmoreland which causes
loading to exceed four hours or to overload a railcar or
underload a unit train in violation of such tariff or contract.
5. Railroad Tariff or Transportation Contract: Buyers will
consult with Westmoreland with respect to Buyers' negotiation of
all tariffs and rail contracts with the transporting railroad
(including supplements and amendments to existing tariffs and
contracts) and will agree with Westmoreland on the details of
those tariffs and contracts which relate to Westmoreland's
loading and shipping requirements, before the tariff is published
or the contract becomes effective. Westmoreland's consent shall
not be unreasonably withheld.
6. Size and Quality:
a. The coal delivered shall be 3 x 0 inch size with a
maximum of 10% oversize. The coal will be unwashed, undried, and
untreated by oil or other chemical agents, unless such additional
preparation is mutually agreed upon by the parties.
Westmoreland, and its mining contractor, will utilize sound and
clean mining practices to avoid excessive contamination of the
coal, and buyers may send representatives to observe the mining
at all reasonable times.
b. Westmoreland guarantees the following minimum and
maximum specifications of each unit trainload of coal:
Maximum ash content (%AR) 12.0%
Maximum Sodium (%AR Ash) 5.0%
Maximum Sulfur (%AR) .75%
Minimum Btu (AR) 8450
Minimum Sodium (%AR Ash) 1.5%
Westmoreland further guarantees that the following
minimum and maximum specifications as a monthly weighted average:
Maximum moisture content (%AR) 24.4%
Maximum ash content (%AR) 9.5%
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Minimum Btu per pound (AR) 8650
Maximum sulfur content (%AR) 0.65%
Maximum Sodium oxide (%Ash) 3.0%
Should the coal fail to conform to the minimum and maximum
specifications set forth above, Buyers may suspend acceptance of
any further shipments hereunder until it receives reasonable
assurance from Westmoreland that future shipments will conform to
the specifications, and the obligations of the Buyers pursuant to
Section 1 shall be reduced proportionately during the period of
such suspension. If Westmoreland cannot thereafter, for a period
of three months following the date of such suspension, give such
reasonable assurance of meeting size and quality specifications
to Buyers, Buyers shall have the right to cancel this Agreement
at any time within 30 days following such three-month period.
Nothing in this section shall excuse Westmoreland from supplying
coal meeting the above specifications in the event methods of
overburden removal are causing variations in quality of coal
delivered beyond the minimums and maximums specified herein. If
Buyers do not exercise their right to cancel within such 30-day
period, Westmoreland shall resume shipments of coal hereunder,
and Buyers shall take and pay for such coal under all of the
provisions of this Agreement, provided that Buyers may again
suspend acceptance as aforesaid for subsequent failures to meet
the aforesaid specifications.
7. Sampling and Analysis: Three representative split
samples from each train that carries a shipment of coal under
this agreement shall be taken by Westmoreland at Westmoreland's
mine as the coal is loaded into railroad cars. One of these
shall be analyzed by Westmoreland, and such sampling and analysis
shall determine coal quality with respect to all of the
provisions of Section 6 above. The second sample shall be sent
to Buyers for analysis. Each sampling and analysis shall be
performed in accordance with methods approved by the American
Society of Testing Materials, or such other methods as may be
agreed upon by the parties.
As soon as possible after the train leaves the mine but
not less than four hours before the train arrives at the Big
Stone Power Plant, Westmoreland shall telephone or telecopy to
Big Stone Plant the weight of the coal in the train and a short
proximate analysis, including as received Btu/lb., ash, sulfur,
moisture, and %NA2O in the ash. In addition, Westmoreland shall
telecopy to Buyers, as soon as available, a mine manifest
detailing number of cars loaded, their serial numbers, the total
weight of coal loaded, and the time at which it was loaded. A
written analysis certified by Commercial Testing and Engineering
Company, or other mutually agreeable laboratory shall be
delivered by Westmoreland to Buyers within 10 days following
delivery of the coal.
Westmoreland will retain the third referee sample to be
analyzed if Buyers so request within 30 days following delivery
of the coal analyzed. If Buyers so request, the analysis of the <PAGE>
<PAGE>
referee sample retained by Westmoreland shall be made by
Commercial Testing and Engineering Company or by any other
laboratory mutually agreed to by the parties, and its results
shall be controlling for purposes of determining coal quality
under Section 6 and heating value under Section 11. The cost of
the laboratory's analysis of the referee sample shall be shared
equally by the parties.
8. Base Price: The Base Price per ton of coal sold under
this Agreement shall be a price f.o.b. railroad cars at
Westmoreland's Absaloka Mine. The base price shall be $(*) per
ton from the date of this agreement through March 31, 1996.
Beginning April 1, 1996, the base price shall be adjusted in
accordance with the following provisions: On the first day of
each January, April, July, and October ("Adjustment Date"),
beginning April 1, 1996, Westmoreland will determine an Adjusted
Base price using the formula and methodology set forth in
Appendix A, attached hereto. Each change in the Base Price will
be applicable to all coal shipped on or after the effective date
of such change until the date of the next change.
9. Taxes and Royalties: The Base Price, as of the effective
date of this Agreement, contains components equal to the per ton
cost of taxes and royalties, in effect as of July 1, 1994,
affecting the sale or production of coal under this Agreement.
These components are shown on Appendix A, attached hereto.
The Base Price shall be adjusted downward to reflect any
decreases in or elimination of any of the taxes or royalties
listed on Appendix A. Such adjustment shall be made as soon as
the decrease or elimination becomes effective.
If any tax or royalty rate is increased after July 1, 1994,
or if any new tax is enacted or becomes effective after that
date, and if Buyers are unwilling to agree to an increase in the
Base Price in the per ton amount of that increase, Westmoreland
may attempt to renegotiate with Buyers the Terms of this
Agreement, and if that fails, Westmoreland may terminate this
Agreement on 30-days' notice to Buyers.
10. Payment of Price: Buyers shall make payments semi-
monthly, within 22 days after the date of the invoice, to
Westmoreland by wire transfer. Failure to make full payment
within such period shall give Westmoreland the right to suspend
further shipments until all previous shipments are paid for, and
upon the exercise of this right, notice thereof shall be given to
Buyers.
11. Adjustment for Btu Content: Within forty-five (45) days
following the end of each calendar quarter (including the quarter
in which deliveries commence)(or within 10 days after the receipt
by Westmoreland of the analysis of the third sample if made under
Section 7), Westmoreland will calculate a weighted average Btu
value for all coal shipped during that quarter, and a price
adjustment will be made in accordance with this section. The Btu
value shall be based on Westmoreland's certified analysis of the
(*) Confidential information has been omitted and filed
separately with the Commission pursuant to Rule 24b-2.<PAGE>
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coal, provided that if an analysis is made of the third sample
under Section 7, it shall determine the Btu value of that coal.
If the weighted average Btu value is 8876 or greater, or 8724
or less, then the following calculation shall be made to the
nearest mill ($0.001), and Westmoreland will issue a debit or
credit invoice.
Adjustment = P x (as received Btu - Warranted Btu)
Warranted Btu
P = Base Price, as adjusted under Section 8 and is
weighted to reflect the different base prices during the
quarter.
Warranted Btu = 8800
Example:(*)
Weighted Average Btu is 8724
3-mos. Tonnage: 500,000
$(*) x 8724 - 8800 =
8800
$(*) x 76 =
8800
$(*) x $.00864 (5 places) =
$(*) (3 places) x 500,000 tons = $(*)
(Westmoreland would issue a credit for this amount.)
12. Force Majeure: Neither of the parties shall be liable
for any failure in whole or in part to perform any obligation
under this Agreement, other than an obligation to make payments,
if such failure is due to a force majeure.
"Force Majeure" as used herein shall mean any cause beyond
the reasonable control of the party affected thereby, whether
foreseeable or not, and whether or not of a kind hereinafter
listed, which prevents or materially interferes with the mining,
processing, loading, transportation, unloading, handling, or
utilization of coal. Such causes shall include, but are not
limited to, acts of God; warlike acts of any kind, such as riot,
rebellion, or revolution; strikes, whether authorized or wildcat,
and other labor disputes; fire, explosion, or other casualty;
breakdown, damage to or destruction of property, plant, or
equipment; shortages of labor, materials, or supplies; faults or
interruptions in coal seams; railroad car shortages,
interruptions in transportation or inability of the railroad to
deliver coal in accordance with Buyers' transportation contract
or tariff; acts of government, such as embargoes, blockades,
export or import restrictions, or federal, state, or local law or
regulation, and including denial by any government agency of the
renewal of any necessary permit or approval, or of any necessary
new or additional permit or approval, and any change in
environmental regulations that Buyers are unable to meet using
Westmoreland's coal without making significant capital
investment; court orders or judgments; and storms, floods,
freezing conditions, and the like.
(*) Confidential information has been omitted and filed
separately with the Commission pursuant to Rule 24b-2.
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The party affected by such event shall be completely excused
from performing under this Agreement for the duration of such
event, where in the case of Westmoreland, such event causes a
complete cessation in the mining, preparing, or loading of coal,
or where, in the case of Buyers, such event causes a complete
cessation in the transportation, unloading, handling, or
utilization of coal. Where such event causes only a reduction
(and not a complete cessation) in the mining, preparing, or
loading of coal by Westmoreland, or in the transportation,
unloading, handling, or utilization of coal by Buyers, the
obligation of the party affected thereby to perform under this
agreement shall, for the duration of such event, be reduced by
the same percentage as the percentage in reduction in operations.
If an occurrence of force majeure continues for 365 or more days,
the party not affected by the force majeure may terminate this
Agreement on 60 days notice to the party affected thereby.
The party subject to a force majeure shall give notice to
the other party, within ten working days after the occurrence of
any event of force majeure, and shall use its best efforts to
remove or remedy such cause.
Coal not delivered during a period of force majeure shall not
be made up thereafter, unless the parties mutually agree, nor
shall the term of this Agreement be extended by virtue of any
event of force majeure.
13. Pro-ration of Coal: If for reasons of force majeure,
Westmoreland is unable to perform in full all coal sales,
contracts in effect at any time with respect to coal from the
Coal Reserves for sale under this Agreement, and all other
contracts under which Westmoreland is able to make such a
pro-ration shall be equitably pro-rated among all such contracts,
and Buyers shall accept such apportioned tonnage in full
satisfaction of the tonnage called for in this Agreement for the
period involved in the apportionment.
14. Disclaimer of Warranties: EXCEPT AS SPECIFICALLY
PROVIDED IN THIS AGREEMENT, WESTMORELAND MAKES NO WARRANTIES WITH
RESPECT TO THE COAL TO BE SOLD HEREUNDER, EXPRESS OR IMPLIED,
INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
PURPOSE.
15. Waivers and Remedies:
A. The failure of any party to insist in any one or more
instances upon strict performance of any of the provisions of
this Agreement, or to take advantage of its rights hereunder,
shall not be construed as a waiver of any such provisions or the
relinquishment of any such right, but the same shall continue and
remain in full force and effect.
B. Except as otherwise provided in this Agreement, no
default by either party to this Agreement in the performance of
any of its covenants or obligations hereunder, which, except for
this provision, would be the legal basis for rescission or
termination of this Agreement by the other party, shall give or <PAGE>
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result in such a right, unless and until the party committing
such default shall fail to correct the default within sixty (60)
days after written notice of claim of such default and a
statement setting forth the nature thereof is given to such
defaulting party by the party claiming such default.
16. Notices: All notices, or other communication, to be
given by either party to the other under this Agreement shall be
in writing and shall be deemed to have been sent when delivered
by hand or when deposited in the United States mail, postage
prepaid, and properly addressed:
a. If to Buyers:
Otter Tail Power Company
215 South Cascade Street
P.O. Box 496
Fergus Falls, MN 56538-0496
Attention: Secretary
b. If to Westmoreland:
Westmoreland Resources, Inc.
P.O. Box 7087
Billings, MT 59103
Attention: President
or at such other address as either party may hereafter designate
to the other in writing.
17. Assignment: This Agreement may not be assigned by either
party without the written consent of the other, which shall not
be unreasonably withheld.
18. Indemnification: Each party shall defend, indemnify, and
hold harmless the other against all claims, suit, proceeding,
liabilities, expenses, losses, and damages, including court
costs, reasonable attorney's fees, and settlements arising out of
or resulting from the goods purchased and sold under this
agreement including third party injury suits and/or from any
act, omission, or negligence of it, its agents, employees,
suppliers, or subcontractors. This provision shall be in
addition to any insurance coverage that directly or indirectly
protects a party and shall be in addition to the warranty
obligation of either party, if any. Either party may be
represented by and actively participate through its own counsel
in any such suits, proceedings, or settlements if so desired at
its cost and expense.
19. Nondiscrimination in Employment: Westmoreland is an
Equal Opportunity Employer, and in the performance of this <PAGE>
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Agreement shall not engage in any conduct or practice which
violates any applicable law, order, or regulation prohibiting
discrimination against any person by reason of his or her race,
color, religion, national origin, sex, or age.
A copy of the Equal Opportunity and Nondiscrimination
Provision of the Certification of Nonsegregated Facilities will
be supplied as promptly as practicable, and made a part of this
Agreement, and will be incorporated herein by this reference.
20. Interpretation: The terms and provision of this
Agreement shall be interpreted and construed in accordance with
the law of the State of Montana.
21. Integration: This Agreement supersedes all prior and
other agreements and undertakings between the parties and
constitutes their entire agreement on the sale and purchase of
coal contemplated herein.
IN WITNESS WHEREOF, the parties have hereto caused this
Agreement to be duly executed, in several counterparts, by their
respective officers thereunto duly authorized, as of the day and
year first above written.
Executed in one or more counterparts as of the date first
above written
OTTER TAIL POWER COMPANY WESTMORELAND RESOURCES, INC.
By: John MacFarlane By: C. J. Presley
Title: President & CEO Title: President
NORTHWESTERN PUBLIC SERVICE COMPANY
By: M. D. Lewis
Title: President & CEO
MONTANA-DAKOTA UTILITIES CO., a Division
of MDU Resources Group, Inc.
By: Joseph R. Maichel
Title: President & CEO
<PAGE>
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APPENDIX A to Big Stone - WRI Agreement
Agreement dated June 30, 1994
Section 8:
Base Tonnage Price Components effective 4/1/96:
Severance Tax $(*)
Gross Proceeds Tax (*)
Resource Indemnity Trust Tax (*)
Federal Reclamation Fees (*)
Federal Black Lung Fees (*)
Crow Royalty (*)
Commodity Price (*)
Base Tonnage Price (*)
On each Adjustment Date Seller will determine Adjusted Base
Tonnage component values as follows: (Each component to be
rounded to the nearest third decimal place)
C = Adjusted Commodity Price
P = C + R + T1 + T2 + T3 + T4 + T5
P = Adjusted Base Tonnage Price
R = Crow Royalty = .125(P-T1-T2-T3-T4-T5)
T1 = Montana Severance Tax = .15(P-T1-T2-T3-T4-T5-(R-.15)) T2 =
Montana Gross Proceeds Tax = .05(P-T1-T2-T3-T4-T5-(R-.15)) T3 =
Montana Resource Indemnity Trust Tax = .004(P-T1-T2-T3-T4-
T5-(R-.15))
T4 = Federal Reclamation Fee = $.350
T5 = Federal Black Lung Fee = .044(P-T5)
The Commodity Price will be adjusted on each Adjustment Date as
follows:
The Seller will determine the index number for the Consumer Price
Index - All Urban consumers (CPI-U) by ascertaining the number as
issued by the U.S. Dept. of Labor, Bureau of Labor Statistics as
of two months preceding the Adjustment Date ("Reference Month"),
which will be November when the Adjustment Date is January 1,
February when the Adjustment Date is April, and so on. For the
purposes of this Appendix, the value for February 1996 equals
* (1982 = 100) and the previous Reference Month Index at
November 1995 equals * (1982=100).
The Seller will determine the index number for the Gross National
Product - Implicit Price Deflator (GNP-IPD) as issued by the U.S.
Dept. of Commerce by ascertaining the number for two quarters
preceding the Adjustment Date ("Reference Quarter"), which will
be third quarter of the preceding year when the Adjustment date
is January 1, the fourth quarter of the preceding year when the
Adjustment Date is April 1, the first quarter of the then current
(*) Confidential information has been omitted and filed
separately with the Commission pursuant to Rule 24b-2.
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year when the Adjustment date is July 1, and the second quarter
of the then current year when the Adjustment Date is October 1.
For the purposes of this Appendix the value for the fourth
quarter 1995 equals * (1987 = 100) and the previous
Reference Quarter Index for the third quarter 1995 equals *
(1987=100).
The Seller will determine the index number for the preliminary
Employment and Earnings Standard Industrial Commodity Index #122
AHE (SIC-122 AHE) as issued by the U.S. Dept. of Labor, Bureau
of Labor Statistics as of two months preceding the Adjustment
Date ("Reference Month"), which will be November when the
Adjustment Date is January 1, February when the Adjustment Date
is April 1, and so on. For the purposes of this Appendix, the
value for February 1996 equals * and the previous
Reference Month Index at November 1995 equals * .
* - Index will be inserted once it becomes available
Example of Adjusted Base Tonnage Price effective 01/xx/xx:
Adjusted Commodity Price = ((((((Reference Month Index for CPI-U
minus previous Reference Month Index for CPI-U) divided by
previous Reference Month Index for CPI-U) times .333) plus
(((Reference Quarter Index for GNP-IPD minus previous Reference
Quarter Index for GNP-IPD) divided by previous Reference Quarter
Index for GNP-IPD) times .333) plus (((Reference Month Index for
SIC-122 minus previous Reference Month Index for SIC-122) divided
by previous Reference Month Index for SIC-122) times .333)) times
.8) plus 1) times Commodity Price. For example, if the Reference
Month CPI-U equals 128, the Reference Quarter GNP-IPD equals 130,
and the Reference Month SIC-122 equals 17.75:
((((((128-125.9)/125.9)*.333) = .00555 (Rounded to 5 decimal
places) + (((130-126.9)/126.9)*.333) = .00813 (Rounded to 5
decimal places)+(((17.75-17.70)/17.70)*.333)=.00094 (Rounded to 5
decimal places))*.8) + 1) = 1.01170 (Rounded to 5 decimal
places)*(*) (Rounded to three decimal places) = Adjusted
Commodity Price
Severance Tax $(*)
Gross Proceeds Tax (*)
Resource Indemnity Trust Tax (*)
Federal Reclamation Fees (*)
Federal Black Lung Fees (*)
Crow Royalty (*)
Commodity Price (*)
Adjusted Base Tonnage Price (*)
(*) Confidential information has been omitted and filed
separately with the Commission pursuant to Rule 24b-2.
<PAGE>
ICC-BN-C-2913 Exhibit 10-B
(*) Confidential information has been omitted and filed
separately with the Commission pursuant to Rule 24b-2.
COAL TRANSPORTATION AGREEMENT
BY AND BETWEEN
OTTER TAIL POWER COMPANY
NORTHWESTERN PUBLIC SERVICE COMPANY
MONTANA-DAKOTA UTILITIES CO.,
A Division of MDU Resources Group, Inc.
AND
BURLINGTON NORTHERN RAILROAD COMPANY
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS 4
SECTION 2. EFFECTIVE DATE AND TERM 5
2(A) Effective Date of Agreement 5
2(B) Term of Agreement 5
SECTION 3. MOVEMENTS COVERED BY THE AGREEMENT 5
3(A) Covered Mines, Origins or Mine Origins 5
3(B) Route of Movement 6
3(C) Movement of Empty Trains and Change of Origin 6
SECTION 4. TRANSPORTATION BASE RATES 6
4(A) Base Rates 6
SECTION 5. ADJUSTMENT OF RATES AND CHARGES 7
5(A) Periodic Adjustments 7
5(B) Adjustment Percentage Change Application 7
5(C) Rounding 8
5(D) Elimination or Material Alteration of Indices 8
SECTION 6. ENTIRE COMPENSATION 8
SECTION 7. DESCRIPTION OF TRANSPORTATION AND TONNAGE
REQUIREMENTS 8
7(A) Transportation Services and Obligations of the
Parties 8
7(B) Coal Cars 9
7(C) Minimum Tonnage Requirement or BTU Equivalent 9
7(D) Level of Service 9
SECTION 8. FURNISHING OF SHIPMENTS; CONFLICTING TERMS
IN BILLS OF LADING OR TARIFFS 10
SECTION 9. WEIGHING 10
9(A) Weighing 10
9(B) Breakdown Of Scales 10
9(C) Gross Load Limit and Overloads 10
SECTION 10. LOADING AND UNLOADING 10
10(A) Advance Notice and Loading 10
10(B) Placement and Free Time - Origin 11
10(C) Advance Notice and Unloading 11
10(D) Placement and Free Time - Destination 12
SECTION 11. SUPPLY OF EQUIPMENT AND SERVICE; MAINTENANCE;
CAR DAMAGE AND DESTRUCTION; MINIMUM TRAIN SIZE 13
11(A) Applicable Rules 13
11(B) Damage to Coal Cars 13
11(C) Destruction of Coal Cars 14
11(D) Substitute Coal Cars 14
11(E) Removal and Replacement of Cars for Maintenance14
11(F) To Maintenance Facility and Return to Service 14
11(G) Switching to Connecting Rail Carrier 14
11(H) Maintenance Facility Off Route of Movement 15
11(I) Bad Order Switching 15
11(J) Minimum Train Size 15
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SECTION 12. HOLDING OF EMPTY TRAINS 16
12(A) Removal, Storage and Return of Train 16
12(B) Switching to Connecting Carrier 16
12(C) Storage Off Route of Movement 16
12(D) Simultaneous Handling of Trains 16
SECTION 13. BILLING AND PAYMENT 16
SECTION 14. FORCE MAJEURE 17
14(A) Defined 17
14(B) Effect of Force Majeure 17
14(C) Effect on Minimum Tonnage Requirement or BTU
Equivalent 17
SECTION 15. LIMITATIONS ON ACTIONS FOR COAL LOSS OR DAMAGE 18
15(A) Liability 18
15(B) Claims 18
SECTION 16. INDUSTRIAL TRACK AGREEMENT 18
SECTION 17. TERMINATION 18
SECTION 18. ASSIGNMENT AND BINDING EFFECT 18
SECTION 19. ENTIRETY, AMENDMENTS AND SEVERABILITY 19
SECTION 20. WAIVERS AND REMEDIES 19
SECTION 21. NOTICE 11 19
SECTION 22. LIABILITY AND INDEMNIFICATION 19
SECTION 23. GOVERNING LAWS 20
SECTION 24. CONFIDENTIALITY 20
SECTION 25. RESOLUTION OF DISPUTES 20
SECTION 26. REPRESENTATIONS AND WARRANTIES 21
26(A) Otter Tail Power Company 22
26(B) Northwestern Public Service Company 22
26(C) Montana-Dakota Utilities Co., a Division of MDU
Resources Group, Inc. 22
26(D) Burlington Northern Railroad Company 22
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COAL TRANSPORTATION AGREEMENT
This Agreement made on this 18th day of July, 1994, by and
between Burlington Northern Railroad Company, a Delaware
corporation (hereinafter referred to as "BN"), and Otter Tail
Power Company, a Minnesota corporation, Northwestern Public
Service Company, a Delaware corporation, Montana-Dakota Utilities
Co., a Division of MDU Resources Group, Inc., a Delaware
corporation, (hereinafter jointly referred to as "UTILITIES").
WITNESSETH:
WHEREAS, common carriers by rail are authorized under
Section 208 of 49 U.S.C. S. 10713 ("Staggers Act") to enter into
contracts with purchasers of rail services and the parties desire
to enter into this contract pursuant to said statute;
WHEREAS, UTILITIES own and operate an electric generating
plant described herein, known as the Big Stone Plant; and
WHEREAS, BN is a common carrier by rail with railway track
extending into the Wyoming and Montana Powder River Basin and in
the vicinity of the Big Stone Plant; and
WHEREAS, UTILITIES desire BN to transport, and BN desires to
transport for UTILITIES, pursuant to the terms of this Agreement,
certain tonnage's of coal in Unit Trains to Big Stone Plant; and
NOW, THEREFORE, in consideration of the premises and the
agreements and conditions which hereinafter follow, the parties
hereto agree as follows:
SECTION 1. DEFINITIONS
Base Charges: The charges expressed in United States dollars and
cents applicable to services or occurrences specified in Sections
9, 10, 11, and 12 of this Agreement.
Base Rates: The rates as set forth in Section 4 of this
Agreement, expressed in United States dollars and cents per net
Ton applicable to the transportation of Coal from Mine Origins to
Destination.
Coal: That mineral substance classified as lignite to bituminous
(including sub-bituminous) and whose Standard Transportation
Commodity Code (STCC) begins with the digits 112, as set forth in
the STCC Tariff ICC STCC 6001-Series in effect on the date this
Agreement is executed.
Coal Cars or Cars: Open-top, rotary dump, railroad cars having a
net capacity of approximately 100 or more Tons per car, supplied
by UTILITIES, or temporarily substituted by BN, suitable for use
in Unit Train service between Origins and Destination. It is
understood that UTILITIES Coal Cars are of non-standard railroad
industry design and BN does not own nor does BN intend to
purchase the type of Car that UTILITIES have in their service,
therefore, BN will be unable to substitute a Car of similar
design.<PAGE>
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Destination: UTILITIES own and operate the Big Stone Plant
(hereafter referred to as "Big Stone Plant").
Effective Charges: The Base Charge(s) plus all increases or
decreases made pursuant to Section 5 of this Agreement, used to
compute the amount due as compensation for services specified in
Sections 9,10, 11, and 12 of this Agreement.
Effective Rates: The Base Rate(s) specified in Section 4 of this
Agreement, plus all increases or decreases made pursuant to
Section 5 of this Agreement, and applicable to the transportation
of Coal on the date the loaded Train is released to BN for
transportation pursuant to this Agreement.
Free Time: The time allowed for a Unit Train to load or unload
free of train detention charges. Free Time can be extended under
conditions described in this Agreement.
ICC: The Interstate Commerce Commission or its successor agency
or body having the same or similar jurisdiction over rail common
carriers operating in interstate commerce.
Loading Facility: All equipment necessary for loading of Trains
at Origins including, rail track, raw Coal hopper, crusher,
storage/loadout silos, and conveyor systems.
Origins or Mine Origins: The Coal Unit Train Loading Facilities
located at the mines identified in Section 3(A) of this
Agreement.
Route of Movement: The rail route of loaded and empty Trains
moving pursuant to this Agreement from or to any Wyoming or
Montana Powder River Basin Origin(s) specified in Section 3(A)
via BN system through Terry, Montana and Mobridge, South Dakota
to or from Destination and/or from a North Dakota Origin
specified in Section 3(A) via BN system through Mobridge, South
Dakota to or from Destination.
Ton: A ton of 2,000 pounds avoirdupois.
Tender: An offer by UTILITIES to BN of Coal loaded in a Unit
Train and ready for shipment from one Origin to one Destination
pursuant to the terms of this Agreement.
Train or Unit Train: A specialized train of Coal Cars consisting
of a specified number of Coal Cars furnished as a unit for
shipment from one Origin to one Destination on one bill of lading
at one time.
Unloading Facility: All equipment strictly necessary for
unloading of Trains at Destination including: rail track;
indexer; dumper, including feeders and hopper; and dumper
conveyor.
SECTION 2. EFFECTIVE DATE AND TERM
2(A) Effective Date of Agreement.
This Agreement is made pursuant to 49 U.S.C. S. 10713 and shall be
effective on the date a non confidential summary hereof is filed<PAGE>
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with the ICC; provided, however, performance under this Agreement
is subject to the conditions of Section 1313.3 of Title 49 of the
Code of Federal Regulations. However, transportation service
under this Agreement shall not commence until March 1, 1995. If
the ICC disapproves this Agreement, it shall be null and void ab
initio, and BN shall immediately notify UTILITIES.
2(B) Term of Agreement.
This Agreement shall terminate at 11:59 p.m. Central Standard
Time on December 31, 1999.
SECTION 3. MOVEMENTS COVERED BY THE AGREEMENT
3(A) Covered Mines, Origins or Mine Origins.
BN will transport Coal to Destination from any of the Mine
Origins specified below; provided that these Origins have
adequate Loading Facilities and procedures as contemplated under
this Agreement capable of consistently loading at least 102 Coal
Cars in continuous motion in four (4) hours or less.
GROUP A
Mine BN Origin
Gascoyne Mine Gascoyne, ND
GROUP B
Mine BN Origin
Absaloka Kuehn, MT
Rosebud Colstrip, MT
Big Sky Colstrip, MT
GROUP C
Mine BN Origin
East Decker Decker, MT
West Decker Decker, MT
Spring Creek Nerco Jct., MT
GROUP D
Mine BN Origin
Buckskin Buckskin Jct., WY
Rawhide Rawhide Jct., WY
Eagle Butte Eagle Jct., WY
Dry Fork Dry Fork Jct., WY
Fort Union Union Jct., WY
Clovis Point East Gillette Jct., WY
Caballo Caballo Jct., WY
Belle Ayr Belle Ayr, WY
Cordero Cordero Jct., WY
Caballo Rojo Rojo Jct., WY
Coal Creek Coal Creek Jct., WY
3(B) Exception to Route of Movement.
BN may use any available alternate route when operating
conditions exist which make use of the route identified herein
inadvisable or impractical; provided, however, that when using
alternate routes, BN shall use its best efforts to select the
least circuitous routing and to otherwise minimize delays to
UTILITIES.<PAGE>
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3(C) Movement of Empty Trains and Change of Origin.
BN will move empty Trains from Destination to one of the Origins
as part of the service included under the rates provided in
Section 4. UTILITIES' notice of any change in Origin from the
last loaded movement must be given to BN prior to departure of
empty Trains from Big Stone Plant. Notice may be given by
telephone, or other means of direct communication with BN's Coal
Operating Department. BN will use best efforts to accommodate
UTILITIES should it become necessary to change the Origin after
the empty Train has departed from Big Stone Plant.
SECTION 4. TRANSPORTATION BASE RATES
4(A) Base Rates.
UTILITIES shall pay the following Base Rates in U.S. Dollars per
net Ton for the movement of Coal from Origins to Destination in
Unit Trains, which shall be subject to adjustment pursuant to
Section 5 in accordance with this agreement, via BN Direct:
Origin Base Rates*
Group A $(*) per net ton
Group B $(*) per net ton
Group C $(*) per net ton
Group D $(*) per net ton
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* Base Rates are on the basis of Trains cycling
continuously
SECTION 5. ADJUSTMENT OF RATES AND CHARGES
5(A) Periodic Adjustments.
Except as otherwise provided in this Agreement, the rates and
charges set forth in this Agreement, including the Base Rate(s)
set forth in Section 4, shall be adjusted quarterly, upward or
downward, by an amount equal to (*) of the change in the ICC's
Forecasted Index of the Rail Cost Adjustment Factor, unadjusted
for Railroad Productivity ("RCAFU") (described in Subsection
5(B)) to produce the "Effective Rate(s) and Effective Charges."
Adjustments shall become effective quarterly on January 1, April
1, July 1, and October 1 of each calendar year, with the first
adjustment to become effective on April 1, 1995. BN shall notify
UTILITIES in writing of all adjustments and furnish supporting
calculations, at least two (2) days prior to the effective date
of the adjustment, or, as soon thereafter as the information
necessary to calculate the adjustment is made by the ICC. The
new Effective Rates and Effective Charges so determined shall be
applicable retroactive to the adjustment date in question. 5(B)
Adjustment Percentage Change Application.
(*) Confidential information has been omitted and filed
separately with the Commission pursuant to Rule 24b-2.<PAGE>
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The percentage charge shall be equal to the "Current Quarter's
RCAFU Forecast Index" minus the "Prior Quarter's RCAFU Forecast
Index," divided by the "Prior Quarter's RCAFU Forecast Index" for
each current adjustment time period. An example of the quarterly
percentage change calculation is described below:
((Q1 1995 MINUS Q4 1994) DIVIDED BY Q4 1994)
OR
((1.032-1.025)/1.025)=.006829268 rounded to .00683
The quarterly RCAFU index percentage change (in decimal) will be
multiplied by (*) to produce the Adjustment Percentage Change (in
decimal). The previous quarterly Effective Rates and Effective
Charges are multiplied by the Adjustment Percentage Change to
produce the "Change Amount." The previous Effective Rate, or
Effective Charge plus the Change Amount equals the new quarter's
Effective Rates and Effective Charges. For Example:
Adjustment Percentage Change (decimal):
(*)
Change Amount:
$10.00 (Previous Effective Rate) X .0057 = $0.057
rounded = $0.06.
New Effective Rate per net Ton:
$10.00 (Previous Effective Rate) + $0.06 (Change
Amount) = $10.06.
5(C) Rounding.
All calculated numbers shall be rounded to the nearest fifth
digit after the decimal point (i.e. .00001499 = .00001). All
final adjustment computations shall be rounded to the nearest
whole one cent by going to the lower one cent when computations
result in a balance of less than one-half cent and to the next
higher whole one cent when computations result in a balance of
one-half cent or more.
5(D) Elimination or Material Alteration of Indices.
It is the intent of the parties that the adjustment index (the
RCAFU) reflects changes in railroad input costs. If the ICC or
any successor organizations cease to publish the RCAFU index
required for the calculations outlined in this Section, or
materially alters the methodology by which the index or indices
are derived (that is, cease to measure changes in railroad input
costs), the parties shall mutually determine and agree upon the
most appropriate substitute index or indices which most closely
matches the economic structure (that is, to measure changes in
railroad input costs) of the discontinued or altered index or
indices to be used for adjustments for the remainder of the
Agreement term immediately following such action. The RCAFU
index, adjusted for productivity, is not an appropriate
substitute index. If the parties do not come to an agreement as
to the substitute index or indices by an adjustment date, the
Effective Rate and Effective Charges shall not be adjusted until
such time as the index or indices are agreed to, at which time a
(*) Confidential information has been omitted and filed
separately with the Commission pursuant to Rule 24b-2.<PAGE>
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retroactive adjustment shall be made retroactive to said
adjustment date. If the parties do not come to an agreement as
to the substitute index or indices by 60 days following an
adjustment date, the provisions of Section 25 shall apply.
SECTION 6. ENTIRE COMPENSATION
The rates and charges specified in this Agreement shall
constitute the entire compensation payable to BN for the rail
transportation services specified under this Agreement, except
where otherwise provided herein. BN shall not, by tariff or
otherwise, seek to collect from UTILITIES any additional amounts
in connection with such specified services. The adjustment
mechanism specified in Section 5 of this Agreement shall
constitute the sole means of adjusting the rates and other
charges specified in this Agreement during the term hereof. If
UTILITIES request BN to perform additional services, not
specified under this Agreement, charges for such services shall
be established by separate agreement or applicable tariffs.
SECTION 7. DESCRIPTION OF TRANSPORTATION AND TONNAGE REQUIREMENTS
7(A) Transportation Services and Obligations of the Parties. BN
agrees to transport UTILITIES' Coal and return the Trains between
Origin and Destination pursuant to the terms of this Agreement.
The transportation services to be provided by BN pursuant to this
Agreement shall include all rail services and operations, as
described below, required for movements in Trains of loaded Coal
Cars from Origin to Destination and the return movement in Trains
of the empty Coal Cars to Origin, both via Route of Movement.
These services are described at follows:
(1) Transportation services including such switching and
Car handling at Origin and Destination as may be required for
loading and weighing at Origin and Unloading at Destination.
(2) Transportation services required for rail movements in
Trains between Origin and Destination, including all
marshaling of Cars, line-haul transportation, inspection of Coal
Cars and other accessorial services required for efficient Train
operations. BN shall provide the locomotives, cabooses (if
required), end-of-train devices, materials, supplies and labor
deemed necessary by BN in its sole discretion to enable it to
transport UTILITIES' Coal.
Should Utilities request services not covered by this Agreement,
the terms, provisions, charges and conditions of the request not
specifically addressed by this Agreement shall be governed by BN
Tariff 6041, and other applicable railroad Tariffs. If there is
any conflict between this Agreement and a Tariff, this Agreement
shall govern.
7(B) Coal Cars.
UTILITIES hereby agree to supply at least one hundred and two
(102) Coal Cars plus at least 10 percent spare Coal Cars suitable
for interchange under Interchange Rules adopted by the
Association of American Railroads for each Unit Train Tendered,
for use by BN in accordance with the terms of this Agreement in
order to allow BN to transport the Coal tonnages to be Tendered
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thereunder. Said Coal Cars shall be provided at no cost to BN.
BN agrees to lease Cars, if available, to UTILITIES, upon
reasonable request by UTILITIES, for movement of Coal pursuant to
this Agreement at BN's current lease rates. It is understood
that UTILITIES Coal Cars are of non-standard railroad industry
design and BN does not own nor does BN intend to purchase the
type of Car that UTILITIES have in their service, therefore, BN
will be unable to substitute a Car of similar design.
7(C) Minimum Tonnage Requirement or BTU Equivalent.
(1) Beginning January 1, 1996 and continuing through December
31, 1999, UTILITIES agree to Tender, in reasonable monthly
quantities, no less than the Minimum Tonnage Requirement or BTU
Equivalent of Coal, from Origins in Section 3(A) combined,
equivalent to 1.234 E 14 BTU's as adjusted pursuant to this
Agreement, under the conditions and in the manner specified
herein. Total BTU's from each Origin shall be calculated by
multiplying the number of tons times 2,000 lb/ton times the "As
Received" calorific value of the Coal in BTU/lb, as determined by
the third party laboratory analyzing as loaded samples at each
Origin.
EXAMPLE: Group B Origin
1,650,000 tons/year X 2,000 pounds X 9,350 btu's X 4
years = 1.234 E 14 BTU's
(2) If during the term in Section 7(C)(1), UTILITIES are
unable to tender to BN the Minimum Tonnage Requirement or BTU
Equivalent, as adjusted pursuant to this Agreement, UTILITIES
agree to pay BN an amount equal to thirty percent (30%) of the
Group B Effective Rate times the difference between the Minimum
Tonnage Requirement (as adjusted pursuant to this Agreement)and
the total equivalent tonnage Tendered by Utilities to BN during
such term.
7(D) Level of Service
It is the intent of the parties that the UTILITIES' trainsets
are cycled between Origin and Destination in a continuous mode
such that deliveries approximately equal burn rates on a weekly
basis and that Big Stone's "dead stockpile" is only required for
emergencies.
If circumstances under the sole control of BN such as
availability of power, availability of crews, diversion of
manpower or equipment to other movements, convenience to BN,
etc., delay deliveries to Big Stone Plant such that Utilities are
required to reclaim from the Big Stone stockpile, the BTU
equivalent of those tons reclaimed shall be credited towards from
the Minimum Tonnage Requirement equivalent in Section 7(C).
UTILITIES shall notify BN in writing of all such claims within
ten days of the start of reclaiming. If BN disputes any claim,
it must respond in writing to the UTILITIES within ten days of
receipt of the claim.
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This Section 7(D) is subject to approval by BN of an annual
operating plan submitted to BN by the UTILITIES outlining Big
Stone tonnage requirements and their origins.
SECTION 8. FURNISHING OF SHIPMENTS; CONFLICTING TERMS IN BILLS
OF LADING OR TARIFFS.
UTILITIES shall arrange for shipments of Coal to be furnished to
BN on a standard bill of lading in accordance with the Uniform
Straight Bill of Lading or other shipping documents approved by
BN, subject to the conditions of this Agreement and the terms of
such bill of lading. Each bill of lading or shipping document
shall contain a reference to the ICC contract number assigned to
this Agreement, i.e., ICC-BN-C-2913. The rates identified in
this Agreement shall not appear on the bill of lading. In the
event there is a conflict between the terms of this Agreement and
the terms of a bill of lading or the terms of any tariff which
would otherwise apply to the movement of UTILITIES' Coal, the
terms of this Agreement shall govern and control.
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,
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.
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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 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 <PAGE>
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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 UTILITIES' 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
10(C) Advance Notice and Unloading.
(1) BN will transport loaded Trains to Destination for
unloading. BN shall furnish UTILITIES not less than four (4)
hours advance notice by radio, telex, telephone or other
reasonable means of the arrival of loaded Trains at Destination.
BN also shall allow UTILITIES access to BN s LYNX computer train
location monitoring system, or any successor system, at no cost
to UTILITIES.
(2) UTILITIES will provide the Unloading Facility at
Destination to permit continuous uninterrupted delivery by BN of
loaded Coal Cars.
(3) Upon request from UTILITIES, BN will move Coal Cars
through the Unloading Facility in a manner which is consistent
with the safe, efficient and complete unloading of the Coal Cars.
10(D) Placement and Free Time - Destination.
(1) Four (4) hours free time will be allowed for the
unloading at Destination of a Train of Coal Cars, with such free
time commencing after the Actual or Constructive Placement of a
Train at the designated notification point at Destination and the
Train crew has requested unloading instructions, which train is
ready for unloading ( Unloading Free Time ); PROVIDED, HOWEVER,
that Unloading Free Time shall be extended for a period of time
equivalent to that by which unloading was prevented as a result <PAGE>
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of (i) an Unloading Disability, or (ii) any occurrence
attributable to BN which prevents unloading. If BN fails to
provide four (4) hours advance notice of arrival at Destination,
a Train's Unloading Free Time shall be extended by the additional
amount of time (but not to exceed four (4) additional hours) that
it takes to unload a Train due to BN's failure to provide the
required notice. If a Train is not unloaded and released during
the applicable Unloading Free Time, BN may collect from UTILITIES
a Destination Detention Charge of $308.00 for each hour
(including any fraction of an hour) until such time as the Train
is unloaded and released.
(2) For purposes of this Section 10, "Actual Placement is
made when the Train has been placed at the designated
notification point at Destination. In the event a Train can not
be Actually Placed at Destination, notice shall be given
immediately by UTILITIES to BN by radio, telex, telephone, or
other reasonable means and BN may place the Train at an available
hold point until such time as UTILITIES notifies BN that Actual
Placement can be made.
(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
Unloading Free Time; (ii) because the Train arrived at
Destination with Coal Cars out of proper alignment to permit
continuous and smooth operation of the rotary coupler system
during unloading; or (iii) because the Unloading Free Time for
another Train ahead of the Train in question has not expired (
Destination Bunching ). The time required for the movement of a
Constructively Placed Train from a hold point to Destination will
not be included in the computation of Free Time.
(4) Unloading Disability means any of the following events
which directly result in the inability to unload a Train at
Destination: (i) an Act of God; (ii) a strike or other labor
disturbance; (iii) a riot or other civil disturbance; (iv) snow
and/or ice accumulation sufficient to immobilize Train operations
or prevent unloading of such Trains (including frozen Coal in
Coal Cars on arrival at Destination to the extent that thawing or
loosening is required to permit unloading; PROVIDED, HOWEVER,
that any extension of Unloading Free Time resulting from frozen
Coal shall not exceed twenty-four (24) hours); (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 the Unloading Facility at Destination or
affecting BN's locomotives or other railroad equipment. UTILITIES
shall notify BN by telephone (i) within one and one-half (1.5)
hours of the commencement of an Unloading Disability as to the
nature and time of commencement of the Unloading Disability, and
<PAGE>
<PAGE>
(ii) within one and one-half (1.5) hours after the termination of
an Unloading Disability as to the time of termination of the
Unloading Disability, except that the telephone notifications in
(i) and (ii) above shall not be necessary if the Unloading
Disability lasts for a period of one and one-half (1.5) hours or
less. If a Train cannot be unloaded due to an event of Force
Majeure as set out in Section 14 hereof, or due to an Unloading
Disability as provided above, UTILITIES must notify BN of this
condition within four hours after actual placement and advise BN
which of the following three options it requests:
(a) If UTILITIES request that the locomotives and crew
remain with the Train during the continuance of the Force Majeure
so that said locomotives and crew shall be in position at
completion of unloading, then UTILITIES shall pay a charge of
$934.00 for each additional eight hours (including any fraction
of eight hours), in excess of Free Time until the Train is
unloaded and released for movement to Origin or until the
locomotives and crew are released from the train.
(b) If UTILITIES request that the locomotives and crew be
released from the Train prior to the expiration of unloading Free
Time under the circumstances specified in (1) above, a charge of
$1,452.00 be assessed. If such request is made after the
expiration of the Free Time allowance specified in paragraph (1)
above, the charge of $1,452.00 will be assessed in addition to
the charge provided in paragraph (1) above.
(c) If UTILITIES requests the option set out in paragraph
(1) above and later request that the locomotives and crew be
released, then Utilities shall pay the charge set out in
paragraph (1) until the time locomotives and crew are released
from the Train plus the charge set out in paragraph (2) above.
Under any of the above three options, no charge will be assessed
for returning the locomotives and crew to pick up the Train at
Destination after the disability has been relieved. If the
unloading of the Coal Cars is started, continued, or recommenced
after the return of the locomotives and crew, the charge provided
in paragraph (1) of this subsection 10(D) will be assessed from
the time of the return of the locomotives and crew.
SECTION 11. SUPPLY OF EQUIPMENT AND SERVICE; MAINTENANCE;
CAR DAMAGE AND DESTRUCTION; MINIMUM TRAIN SIZE
11(A) Applicable Rules.
The parties agree that each party hereto will assume separate
responsibilities for the Coal Cars as those responsibilities are
designated in the Field Manual of Interchange Rules and Office
Manual of the Interchange Rules adopted by the Association of
American Railroads ("AAR Interchange Rules") presently in effect
and as they may be changed hereafter from time to time. The
parties further agree to comply with any rules and regulations
of the Federal Railroad Administration applicable to such Coal
Cars. Notwithstanding any provision to the contrary, BN shall <PAGE>
<PAGE>
not be liable for any loss of or damage to the Commodity or
UTILITIES Coal Cars due to defects in the design or manufacture
said Coal Cars or due to improper loading.
11(B) Damage to Coal Cars.
If UTILITIES furnished Coal Cars are damaged under circumstances
in which the AAR Interchange Rules make BN responsible for such
damage, BN will give UTILITIES written notification of the damage
and will provide the Car initials and numbers for each affected
Coal Car. BN will repair or cause to be repaired such damaged
Coal Cars at its expense and shall transport such Coal Cars for
repairs and return them to Train service pursuant to the AAR
Interchange Rules. BN will use its best efforts to make such
repairs in a timely fashion. While said Coal Cars are being
repaired, BN shall, if sufficient spare UTILITIES owned Coal Cars
are not available, furnish suitable substitute Coal Cars, if
available, for use thereunder at no cost to UTILITIES until said
Coal Cars are repaired and returned to service, PROVIDED,
HOWEVER, that if, at UTILITIES' request, said Coal Cars are
repaired at a shop of UTILITIES' choosing, BN shall furnish
substitute Coal Cars until damaged Coal Cars are repaired and
returned to service or until 180 days from the date of damage,
whichever event occurs first.
11(C) Destruction of Coal Cars.
In the event that Coal Cars are destroyed under circumstances in
which the AAR Interchange Rules make BN responsible for such
destruction, BN will give UTILITIES written notification of such
destruction and provide the Coal Car initials and numbers of each
affected Coal Car. BN shall, if sufficient spare UTILITIES owned
Coal Cars are not available, furnish suitable substitute Coal
Cars, if available, for use thereunder at no cost to UTILITIES
for a period not to exceed 365 days following the date of such
Coal Car destruction. Settlement to UTILITIES for any such
destroyed Coal Car shall be in accordance with the applicable
rule(s) of the Field Manual of the AAR Interchange Rules as in
effect on the date of such destruction. Such amounts so
determined and undisputed will be paid to UTILITIES within thirty
(30) days of BN's receipt of UTILITIES invoice therefor.
11(D) Substitute Coal Cars.
For the purposes of Subsections (B) and (C) of this Section
"suitable substitute Coal Cars" shall mean open top rotary
coupler Cars of approximately 4,000 cubic feet and 100 Ton
capacity. However, if BN is unable, after best efforts, to
furnish substitute Cars of the above capacity or with rotary
couplers, it may, with UTILITIES' consent, substitute Cars having
non-rotary couplers and/or Cars of lesser capacity, as long as
the substitute Cars have a total aggregate capacity equal to that
of the Coal Cars for which substitute Coal Cars are being
furnished. For each such substitute Coal Car that does not have
rotary couplers, the Free Time for unloading at Destination
specified in Section 10(C) shall be extended by ten (10) minutes
per substitute Coal Car.
<PAGE>
<PAGE>
11(E) Removal and Replacement of Cars for Maintenance.
Upon request of UTILITIES, BN will, on the return movement from
Destination to Origin, stop a Train at a UTILITIES designated
maintenance facility at an intermediate point on the Route of
Movement where track is available to deliver or recover Cars from
such Train. UTILITIES shall pay BN a switching charge for
removal and replacement of Coal Cars in such Train of $308.00 per
hour (including any fraction of an hour), to be computed from the
time the Train stops for removal or replacement of individual
Coal Cars until such time as the last Coal Car is removed from
the Train or until the last Coal Car is placed into the Train.
11(F) Switching to Maintenance Facility and Return to Service.
Upon request of UTILITIES, BN will, on the return movement from
Destination to Origin, place an entire empty Train at a UTILITIES
designated maintenance facility at an intermediate point on the
Route of Movement. Upon subsequent request of UTILITIES,
BN will remove the entire Train from such maintenance facility
and return it to service. UTILITIES will pay $1,452.00 to BN for
its services in placing each such Train at such maintenance
facility and removing such Train from such maintenance facility
and returning it to service. In addition, UTILITIES shall pay BN
at the rate of $308.00 per hour (including any fraction of an
hour) required for such placement or removal, with such charges
to commence 30 minutes after the locomotives first stop for such
placement or removal, and to end when the last Coal Car is added
to, or removed from, the Train.
11(G) Switching to Connecting Rail Carrier.
If a Car maintenance facility selected by UTILITIES is served by
another rail carrier which necessitates, at an intermediate point
on the Route of Movement, a switch movement of Coal Cars, or a
switch movement of a Train, to or from a connecting railroad, BN
will provide the necessary switching services. BN will be paid
by UTILITIES in accordance with Section 11(E) for a switch
movement of Coal Cars, and in accordance with Section 12(B) for a
switch movement of Train. Any switching or any other charges
imposed by the connecting railroad shall be paid by UTILITIES.
11(H) Switching to Maintenance Facility Off Route of Movement.
If a Car maintenance facility selected by UTILITIES is located at
a point which is not on the Route of Movement, BN will be paid
the following line-haul charge, covering any movement on the BN
system not on the Route of Movement, in addition to the charges
specified in Subsections (E), (F) or (G) of this Section, as
appropriate:
Rates in Dollars Per
Car, Per Mile,
Minimum 75 Miles Number of Coal Cars
$1.11 25 or Less
$1.02 26 to 75
$0.95 More Than 75
The charges set out in Subsections (E), (F), (G) and (H) of this
Section shall not apply to the movement of Coal Cars damaged by
BN to a maintenance facility for repair.
11(I) Bad Order Switching.
No charges will be assessed by BN for switching occasioned by bad
ordering of Coal Cars by its personnel, including both switching<PAGE>
<PAGE>
out of bad ordered Coal Cars and/or switching in of spare Coal
Cars in substitution for bad ordered Coal Cars. 11(J) Minimum
Train Size.
11(J) Minimum Train Size.
(1) Each Train furnished at Origin for loading shall contain
no less than 98 Cars ("Minimum Train Size"), except as provided
in this Section. The weight for determination of freight charges
shall be the greater of (i) the actual weight of the lading of
the Train as determined pursuant to Section 9; or (ii) 98 tons
per car for all of the Coal Cars in the Train.
(2) If UTILITIES are prevented from furnishing at least 98
Coal Cars because their Coal Cars have been damaged or destroyed
by BN and BN is liable therefor, and if BN is unable to
substitute sufficient suitable Coal Cars pursuant to Subsections
(B), (C) and (D) of this Section, Minimum Train Size shall be
reduced to the number of suitable Coal Cars UTILITIES and BN
together are able to provide; however, Any such train shall be
deemed to contain 98 Coal Cars for the assessment of freight
charges.
(3) In the event UTILITIES are unable to furnish at least 98
Coal Cars because certain Coal Cars are found enroute or at
Origin to be unsuitable for loading, excluding open doors which
can be secured, the Minimum Train Size shall be reduced by the
number of Coal Cars found to be unsuitable for loading; however,
the Minimum Train Size under this Subsection (J)(3) shall be 98
Coal Cars.
(4) If UTILITIES' Coal Cars are damaged or destroyed by BN
and BN is unable to substitute sufficient suitable Coal Cars as
provided for in Subsections (B), (C), and (D) of this Section,
the Minimum Annual Tonnage Requirement shall be reduced by 98
Tons for each Coal Car less than 98 in any Train shipment
resulting from BN's inability to substitute suitable Coal Cars.
(5) If, due only to the unexcused fault of UTILITIES,
sufficient Coal Cars are not available for loading to meet the
Minimum Train Size, BN will accept loaded Coal Cars furnished for
transportation and the Effective Rate shall be assessed on actual
Tons loaded plus 98 Tons per Coal Car for each Car short of the
Minimum Train Size. Such Tons which are not actually moved but
for which charges are paid pursuant to this Subsection J(5) will
be considered as Tons received in meeting the Minimum Annual
Tonnage Requirement.
SECTION 12. HOLDING OF EMPTY TRAINS
12(A) Storage On the Route of Movement.
If BN-owned trackage is available at a location on the Route of
Movement, upon request of UTILITIES, BN will, on the return
movement from Destination to Origin, place an entire Train of
empty Coal Cars on such trackage for storage. BN will be paid
$1,452.00 in total (payable at the time the Train is placed in
storage) plus a charge of $308.00 per hour (including any
fraction of an hour) for any requested switching for its services
<PAGE>
<PAGE>
in placing and removing such Train. In addition, a storage
charge of $193.00 per Train shall be paid by UTILITIES for each
24 hours period (including any fraction of 24 hours), that the
Train is stored on any such storage track owned by BN. UTILITIES
must notify BN that the prior and subsequent loaded movement of
said Train was and will be made pursuant to the terms of this
Agreement.
12(B) Switching to Connecting Carrier.
Except as provided in Subsection (D) of this Section, UTILITIES
shall pay $750.00 for each switch to or from a connecting
carrier. In addition, UTILITIES shall pay BN at the rate of
$308.00 per hour (including any fraction of an hour) required for
any such switching, with such charges to commence 30 minutes
after the locomotives' first stop for such switching. Any
switching or other charges imposed by the connecting railroad
shall be paid by UTILITIES.
12(C) Storage Off Route of Movement.
If UTILITIES owned or leased storage track is located at a point
which is not on the Route of Movement, BN will move UTILITIES
Trains to and from such storage track and UTILITIES shall pay the
following line haul charges for any such movement on the BN
system in addition to the charges specified in Subsection (B) of
this Section, as appropriate:
Rates in Dollars Per
Car, Per Mile,
Minimum 75 Miles Number of Coal Cars
$1.11 25 or Less
$1.02 26 to 75
$0.95 More Than 75
12(D) Simultaneous Handling of Trains.
If at the same time and place BN provides services described in
Subsections (A), (B) and/or (C) of this Section, BN
simultaneously (i) places another Train for storage or
maintenance, (ii) removes another Train from storage or
maintenance, or (iii) switches one Train for another Train,
UTILITIES shall pay one-half the charges (excluding storage
charges under Subsection (A) of this Section) otherwise payable
by UTILITIES under such Subsections for each of its Trains. The
term "Train" as used in this Subsection (D) includes Trains
serving UTILITIES and Trains serving other shippers.
SECTION 13. BILLING AND PAYMENT
All statements for any charge pursuant to this agreement shall be
sent to Otter Tail Power Company, as agent for the UTILITIES, at
the following address:
Production Department
Otter Tail Power Company
215 South Cascade Street
Fergus Falls, MN 56538-0496
<PAGE>
<PAGE>
All payments due BN from UTILITIES thereunder for Train service
shall be due and payable on or within five (5) working days of
the receipt of written statement of the charge or charges. If
payment is sent by means of the U. S. Postal Service, the date of
the postmark shall be deemed to be the date of receipt by the BN.
There shall be a late charge at the same interest rate as is
charged by the Internal Revenue Service on tax overpayments and
paid on tax overpayments or the maximum permitted by law, if
less, for any period such payment is late.
All payments due Utilities from BN shall also be made pursuant to
this Section.
SECTION 14. FORCE MAJEURE
14(A) Defined.
The term "Force Majeure" as used herein shall mean any cause or
causes beyond the control of the party affected thereby which, by
exercise of due diligence, it shall be unable to overcome,
including, without limitation, the following causes: Acts of
God; acts of the public enemy; blockades; strikes; lockouts;
labor disputes or other industrial disturbances; riots;
disorders; storms; landslides; floods; washouts; earthquake;
lightning; unusually large snow accumulation; civil disturbances;
restraint by court or governmental or other public authority;
boycotts; embargoes, including embargoes pursuant to AAR service
orders; war or acts of military authorities; shortage of diesel
fuel for locomotives or generator start-up; derailments; failure
of mine operators to supply coal (whether excused by reason of a
Force Majeure condition under UTILITIES coal purchase contract
with such mine operator; or unexcused and in violation of such
contract); frozen coal; or fire or explosion or mechanical
breakdown or damage affecting BN's facilities or equipment,
UTILITIES Big Stone Plant or equipment or facilities related
thereto including the Unloading Facilities, or affecting the
mine(s) of UTILITIES' coal supplier(s), or equipment or
facilities related thereto, including Loading Facilities.
The parties intend that "Force Majeure" shall include events
whether foreseeable or foreseen, unforeseeable or unforeseen.
Events of Force Majeure shall not, however, include any change in
demand or projected demand for electrical power or generating
facilities or a reduction in demand for electricity or any change
in demand for rail transportation services due to any cause not
listed above whether foreseeable or not.
14(B) Effect of Force Majeure.
If because of Force Majeure, any party hereto is unable to carry
out its obligations under this Agreement, and if such party shall
promptly give to the other party written notice of such Force
Majeure, then the obligation of the party giving such notice
shall be suspended to the extent made necessary by such Force
Majeure and during its continuance. However, the party giving
such notice shall use its best efforts to eliminate such Force
Majeure insofar as possible with a minimum of delay, and
<PAGE>
<PAGE>
thereupon promptly give notice to the other party when the Force
Majeure has terminated. Nothing herein contained shall cause the
party affected by an event of Force Majeure to submit to what it
believes to be an unfavorable labor agreement, and it is agreed
that any settlement of labor strikes or differences with workmen
shall be entirely within the sole discretion of the affected
party.
14(C) Effect on Minimum Tonnage Requirement or BTU Equivalent. In
the event shipments of Coal cannot be made or utilized due to
Force Majeure, as defined in this Section affecting either party,
the Minimum Tonnage Requirement or BTU Equivalent shall be
reduced by 1/365th for each day during which the event of Force
Majeure continues. Any day in which two or more such events
occur must be considered as one day. An event of Force Majeure
shall last for a continuous 24 hour period before the Minimum
Tonnage Requirement or BTU Equivalent shall be reduced. Force
Majeure days shall not be carried over into succeeding years for
purposes of calculating compliance with the Minimum Tonnage
Requirement or BTU Equivalent thereunder.
SECTION 15. LIMITATIONS ON ACTIONS FOR COAL LOSS OR DAMAGE
15(A) Liability.
Subject to paragraph 11(A), standard common carrier liability
pursuant to 49 U.S.C. S. 11707 shall apply to damage to or loss of
or damage to the Coal being transported pursuant to this
Agreement. In the event of a conflict between said terms and
this Agreement, this Agreement shall govern.
15(B) Claims.
Claims for loss of or damage to Coal enroute must be made in
writing by UTILITIES to BN within nine (9) months after receipt
of BN's written statement of charges for transporting such Coal.
Suits must be filed against BN within two years and one day from
the day when notice in writing from BN is received by UTILITIES
stating that BN has disallowed UTILITIES' claim or any part or
parts thereof as specified in BN's notice. If claims are not
made and/or suits are not instituted thereon in accordance with
the foregoing provisions, BN shall not be liable and such claims
will not be paid. This Section 15(B) shall only apply to loss of
or damage to Coal which occurs while such Coal is being
transported by BN between Origin and Destination.
SECTION 16. INDUSTRIAL TRACK AGREEMENT
Nothing in this Agreement shall alter the rights and obligations
of UTILITIES or BN under any present or future contract or
agreement covering operating rights over UTILITIES tracks at
Destination named and hereinafter referred to as "Industrial
Track Agreement." In the event there is a conflict between the
terms of this Agreement and the terms of the Industrial Track
Agreement described herein, the terms of the latter agreement
shall govern.
<PAGE>
<PAGE>
SECTION 17. TERMINATION
If either party hereto shall default in any material obligation
of this Agreement which is not excused as Force Majeure as
defined in Section 14, and continues in such default for a period
of sixty (60) days after written notice thereof is given by the
non-defaulting party to such other party of the existence of such
default, or, if more than sixty (60) days are required to correct
with reasonable diligence the default set forth in said notice
and such defaulting party shall fail within said sixty (60) day
period to commence the action necessary to correct such matters
and thereafter prosecute the same to completion with reasonable
diligence, the non-defaulting party may, at its option, and
without prejudice to its other rights and remedies thereunder, at
law or in equity, terminate this Agreement by written notice
thereof to the party in default.
SECTION 18. ASSIGNMENT AND BINDING EFFECT
This Agreement shall bind and inure to the benefit of the parties
and their successors and assigns. Either party hereto may assign
any receivables due them under this Agreement, provided however,
such assignment shall not relieve the assignor of any of its
rights or obligations under this Agreement. With the exception
of assignment of said receivables and UTILITIES' right to assign
to a successor in ownership of Big Stone Plant, neither party may
assign this Agreement or any other rights or obligations
thereunder without the prior written consent of the other, which
consent shall not be unreasonably withheld; provided, however,
that no assignment shall be effective unless and until the
assignee shall assume in writing the obligation of the assignor
and such assignment shall have been approved by the ICC, if
necessary.
SECTION. 19. ENTIRETY, AMENDMENTS AND SEVERABILITY This
Agreement comprises the entire Agreement, and merges and
supersedes all prior oral and written understandings and
representations between UTILITIES and BN concerning the subject
matter hereof.
All amendments of the terms of this Agreement shall be in
writing, signed by the parties hereto and shall comply with any
applicable laws and regulations.
If any provision of this Agreement is held to be illegal,
invalid, void or unenforceable by a court or other tribunal
having jurisdiction over this contract, the parties agree that
such provision shall be severed from this Agreement unless such
provision is a material financial term or its omission would
render administration of this contract unworkable.
SECTION 20. WAIVERS AND REMEDIES
The failure of either party hereto to insist in any one or more <PAGE>
<PAGE>
instances upon strict performance of any of the obligations of
the other party pursuant to this Agreement or to take advantage
of any of its rights thereunder shall not be construed as a
waiver of the performance of any such obligation or the
relinquishment of any such rights for the future, but the same
shall continue and remain in full force and effect.
Upon a material breach of this Agreement, all remedies provided
by law or in equity, including specific performance of this
Agreement, shall be available to the affected party.
SECTION 21. NOTICE
Any notice required or permitted thereunder, including notice of
an event of Force Majeure, except for invoices and payments and
as otherwise provided in this Agreement, shall be made in writing
and shall be deemed effective when delivered personally to the
party to whom directed, or when deposited in United States Mail
properly addressed to the following:
Burlington Northern Railroad Company
3700 Continental Plaza
777 Main Street
Fort Worth, TX 76102-5384
ATTN: Vice President Coal Marketing
Otter Tail Power Company, as agent for UTILITIES
215 South Cascade Street
Fergus Falls, MN 56538-0496
ATTN: The Secretary
These addresses may be changed by written notice to the other
party.
SECTION 22. LIABILITY AND INDEMNIFICATION
Except as otherwise provided in this Agreement, each party shall
assume and be responsible for any and all liability for loss and
damage to property whatsoever, and for personal injury, including
death to any person whomsoever caused by its own negligence, and
arising out of or connected with the performance of this
Agreement, provided, however, that no party shall be liable for
consequential damages or loss of profit.. In the event any
liability is due to the joint and concurring negligence of the
parties hereto, it shall be shared by them in accordance with
Minnesota law.
SECTION 23. GOVERNING LAWS
For all purposes, this Agreement shall be deemed to be an
Agreement made in the state of Minnesota and governed by and
construed according to the laws of that state except that matters
related to loss and damage to coal shall be construed and
interpreted consistent with relevant agency and court decisions
and U.S. statutes and regulations thereunder establishing or
determining rights and obligations of carriers providing
interstate common carriage by rail.<PAGE>
<PAGE>
SECTION 24. CONFIDENTIALITY
Except when required by law, the parties shall not reveal the
terms of this Agreement to persons not employed by a party to
this Agreement and shall protect the confidentiality of the
information developed in connection with this Agreement;
provided, however, that neither party will be precluded from
revealing such information in obtaining or attempting to obtain
financing or in filing reports and information with the
Securities and Exchange Commission, or the appropriate
governmental authorities, or making public information required
thereby, or when advised by legal counsel that such disclosure is
required. Prior to disclosure of this Agreement or of
information related to it to governmental authorities, including
without limitation courts and regulators of public utilities, the
disclosing party shall provide advance notice to the other party
and shall cooperate in seeking confidential treatment of the
Agreement and information by the governmental authority. When
required, the parties may also submit information to consultants
and contractors performing work related to this Agreement who
agree in writing to protect the confidentiality of such
information.
SECTION 25. RESOLUTION OF DISPUTES
If at any time a question or controversy arises out of or
relating to this Agreement, or breach thereof, and the parties
cannot agree, such question or controversy shall be submitted for
arbitration to a disinterested person or persons. Such questions
or controversy shall be submitted to a single competent
disinterested arbitrator if the parties are able to agree upon
such single arbitrator within twenty (20) days after the party
desiring such arbitration shall notify in writing the other party
of such question or controversy. If such single arbitrator cannot
be agreed upon before the expiration of such period of twenty
(20) days, arbitration shall be had before a board of three
disinterested persons to be named as follows: the party demanding
such arbitration shall, within twenty (20) days after the
expiration period for agreement to a single arbitrator, give the
other party notice of such demand, stating specifically the
question or questions to be submitted for decision and nominating
a person who has the required qualifications to act as one
arbitrator. The party to whom such notice is given shall appoint
a second arbitrator having like qualifications and give the party
demanding arbitration notice in writing of such appointment
within twenty (20) days from the time of receipt of the demanding
party's notice. If the responding party does not, within this
twenty (20) day period, notify the party demanding arbitration of
its selection, the party making the demand shall, within the next
twenty (20) days, make such selection. The first and second
arbitrators chosen shall select a third, and if the arbitrators
chosen shall be unable to agree upon a third arbitrator within a
period of twenty (20) days from the date of appointment of the
second arbitrator, either party may, within the next ten (10)
days, file a motion or application with the American Arbitration
Association ("AAA") to appoint a third arbitrator in accordance
with its Commercial Arbitration Rules.<PAGE>
<PAGE>
Upon selection of the arbitration board of either one or three
members, the board shall proceed to inquire into and determine
the questions and controversy at issue and shall give to both
parties reasonable notice of the time and place (of which the
board shall be the judge) where the board may take such evidence
as may be deemed reasonable, and may hear arguments of counsel.
If any arbitrator shall decline or fail to act, the party (or
parties in the case of a single arbitrator) by whom he or she was
chosen or the AAA (in the case of an arbitrator selected through
application to the AAA) shall appoint another to act in his or
her place. After considering the evidence and hearing the
testimony and arguments which may be submitted by each party, the
board shall state its decision or award, in writing, within
ninety (90) days after the final submission of evidence, which
decision or award, when delivered to both parties, shall be final
and binding, and each party expressly agrees to be bound
conclusively thereby as to any of the matters submitted to
arbitration. Judgment may be entered upon such decision or award
in any court of competent jurisdiction. Discovery proceedings in
an arbitration shall be in accordance with the Federal Rules of
Civil Procedure and the parties shall bear equally all the fees
and expenses of the single or neutral arbitrator.
SECTION 26. REPRESENTATIONS AND WARRANTIES
26(A) Otter Tail Power Company represents and warrants to BN:
(1) It is a corporation duly organized, validly existing and
in good standing under the laws of the state of Minnesota.
(2) The execution and delivery by it of this Agreement and
the performance by it of its obligations are within is power and
authority and have been duly authorized.
(3) This Agreement is a legal, valid and binding obligation
of it enforceable against it in accordance with the Agreement's.
26(B) Northwestern Public Service Company represents and
warrants to BN:
(1) It is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware.
(2) The execution and delivery by it of this Agreement and
the performance by it of its obligations are within is power and
authority and have been duly authorized.
(3) This Agreement is a legal, valid and binding obligation
of it enforceable against it in accordance with the Agreement's.
26(C) Montana-Dakota Utilities Co., a Division of MDU Resources
Group, Inc., represents and warrants to BN:
(1) It is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
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(2) The execution and delivery by it of this Agreement and
the performance by it of its obligations are within is power and
authority and have been duly authorized.
(3) This Agreement is a legal, valid and binding obligation
of it enforceable against it in accordance with the Agreement's.
26(D) BN represents and warrants to UTILITIES:
(1) It is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(2) The execution and delivery by it of this Agreement and
the performance by BN of its obligations thereunder are within
its corporate powers, have been duly authorized by all corporate
action, and do not and will not contravene or conflict with any
provision or of its charter or by-laws.
(3) This Agreement is a legal, valid and binding obligation
of BN enforceable against BN in accordance with its terms.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first written above.
OTTER TAIL POWER COMPANY
By: John MacFarlane
Title: President & CEO
NORTHWESTERN PUBLIC SERVICE COMPANY
By: M. D. Lewis
Title: President & CEO
MONTANA-DAKOTA UTILITIES CO., a Division of MDU Resources Group,
Inc.
By: Joseph R. Maichel
Title: President & CEO
BURLINGTON NORTHERN RAILROAD COMPANY
By: John Q. Anderson
Title: Executive Vice President
