Confidential information has been omitted from this Exhibit and filed separately
with the Commission pursuant to a confidential treatment request under
Rule 24b-2.
Exhibit 10.3
Big Stone I and Big Stone II
2005 Joint Facilities
Agreement
By And Among
CENTRAL MINNESOTA MUNICIPAL POWER AGENCY,
GREAT RIVER ENERGY,
HEARTLAND CONSUMERS POWER DISTRICT,
MONTANA-DAKOTA UTILITIES CO., A DIVISION OF MDU
RESOURCES GROUP, INC.,
NORTHWESTERN CORPORATION dba NORTHWESTERN ENERGY,
OTTER TAIL CORPORATION dba OTTER TAIL POWER COMPANY,
SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY, AND
WESTERN MINNESOTA MUNICIPAL POWER AGENCY
June 30, 2005

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page i Big Stone II Power Plant   June 30,
2005  

TABLE OF CONTENTS

              Page
ARTICLE I RULES OF CONSTRUCTION AND INTERPRETATION, DEFINED TERMS
    2  
 
       
1.01 Rules of Construction
    2  
1.02 Termination of 2002 Joint Facilities Agreement
    2  
1.03 Failure of BSP II Owner to Participate in BSP II Financial Closing.
    3  
1.04 Defined Terms
    3  
 
       
ARTICLE II JOINT FACILITIES: IDENTIFICATION, OWNERSHIP, ADEQUACY, AND CHANGES
    10  
 
       
2.01 Identification and Common Use of Joint Facilities
    10  
2.02 Ownership of Joint Facilities
    10  
2.03 Waiver of Partition Rights
    10  
2.04 Right of Possession
    10  
2.05 Adequacy of Property
    10  
2.06 Changes to Joint Facilities
    11  
2.07 Construction of New Joint Facilities
    13  
 
       
ARTICLE III TRANSFER OF OWNERSHIP INTERESTS IN AND OF JOINT FACILITIES
    14  
 
       
3.01 Transfers of Ownership Interests in Joint Facilities
    14  
3.02 Right of First Refusal for Joint Facilities
    14  
3.03 Decommissioning
    15  
3.04 Covenants Run With Land
    15  
 
       
ARTICLE IV WATER RESOURCES JOINT FACILITIES
    15  
 
       
4.01 Water Resources Joint Facilities
    15  
4.02 Water Restrictions Caused By Drought or Other Conditions
    15  
4.03 New Brine Concentrator
    16  
4.04 Lake Water Intake and Pipeline Structure
    17  
4.05 Cooling Water Pond
    17  
4.06 Water Storage Ponds
    17  
4.07 BSP II Cooling Tower Blowdown Pond
    17  
4.08 Demineralizer Trains
    18  
4.09 Cold Lime Softener
    18  
 
       
ARTICLE V COAL AND ASH JOINT FACILITIES
    18  
 
       
5.01 Coal And Ash Joint Facilities.
    18  
5.02 Coal Dead Storage Area
    18  
5.03 BSP II Live Coal Storage
    19  
5.04 Coal Measuring Procedure
    19  
5.05 New Coal Yard Shop
    19  
5.06 Mobile Equipment
    19  
5.07 Coal Receiving System, Rail Spur and Coal Unloading Facilities
    20  
5.08 Rail Cars
    20  

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page ii Big Stone II Power Plant   June 30,
2005  

              Page
5.09 Ash Disposal Area
    20  
5.10 Relocation of Ash Silo
    20  
 
       
ARTICLE VI ADDITIONAL JOINT FACILITIES
    21  
 
       
 
       
6.01 Plant Joint Facilities
    21  
6.02 Warehouse
    21  
6.03 Office and Locker Room
    21  
6.04 Roads and Parking
    21  
6.05 Control Room
    21  
6.06 Common Fire System
    22  
 
       
ARTICLE VII ELECTRICAL SUBSTATION
    22  
 
       
7.01 MISO Interconnection Request
    22  
7.02 Transmission Owners’ Additions and Upgrades
    22  
7.03 Generation Owners’ Additions and Upgrades
    22  
7.04 Direct Cost Reimbursements Before Commercial Operation
    22  
7.05 No Cost Reimbursement After Commercial Operation
    23  
 
       
ARTICLE VIII CONSUMABLES, PRODUCT SALES AND EMISSIONS
    23  
 
       
8.01 Electricity Consumed by the Joint Facilities
    23  
8.02 Fuel Oil Sales to BSP II
    24  
8.03 Brine Concentrator Product Water and Steam Sales
    24  
8.04 Permits
    24  
8.05 Joint Scrubber
    25  
 
       
ARTICLE IX OPERATION OF JOINT FACILITIES, USAGE FEE AND PAYMENT, SINGLE OPERATOR
    25  
 
       
9.01 Operation of the Joint Facilities
    25  
9.02 Designated Representatives
    25  
9.03 Joint Facilities Charges
    25  
9.04 Netting of Payment
    25  
9.05 Joint Facilities Fee Formulas
    25  
9.06 Single Operator
    27  
9.07 Joint Ownership of Joint Facilities
    28  
 
       
ARTICLE X ACQUISITION OF PROPERTY AND ACCESS; INDEMNIFICATION
    28  
 
       
10.01 Option to Purchase Contract
    28  
10.02 Easement Agreement
    28  
10.03 Pre-Construction and Construction of the BSP II Plant
    29  
10.04 Liability and Indemnification
    30  
10.05 Compliance with Laws
    31  
10.06 Environmental Indemnification
    31  
10.07 Cross-Indemnification
    31  
10.08 Availability of Insurance Proceeds
    31  
10.09 Environmental Due Diligence
    32  
 
       
ARTICLE XI CASUALTY LOSS AND INSURANCE
    32  

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page iii Big Stone II Power Plant   June 30,
2005  

              Page
11.01 Repair or Replacement
    32  
11.02 Insurance
    33  
 
       
ARTICLE XII LIABILITY
    33  
 
       
12.01 Remedies and Limitation of Damages
    33  
12.02 Release of Liability and Associated Covenant
    33  
 
       
ARTICLE XIII FORCE MAJEURE
    34  
 
       
ARTICLE XIV DISPUTE RESOLUTION
    34  
 
       
14.01 Joint Meeting of Committees
    34  
14.02 Continued Performance
    34  
 
       
ARTICLE XV RELATIONSHIP OF PARTIES
    34  
 
       
15.01 Nature of Obligations
    34  
 
       
ARTICLE XVI TERM AND TERMINATION
    35  
 
       
16.01 Term
    35  
16.02 Automatic Termination
    35  
 
       
ARTICLE XVII REPRESENTATIONS, WARRANTIES
    35  
 
       
ARTICLE XVIII MISCELLANEOUS
    36  
 
       
18.01 Publicity Policy
    36  
18.02 Successors and Assigns
    37  
18.03 Notices
    37  
18.04 Amendments
    37  
18.05 Waiver
    37  
18.06 Severability
    37  
18.07 Governing Law
    38  
18.08 Consent to Jurisdiction
    38  
18.09 Waiver of Trial by Jury
    38  
18.10 No Third-Party Beneficiaries
    38  
18.11 Cooperation
    38  
18.12 Consents and Delivery of Documents
    39  
18.13 Captions
    39  
18.14 Entire Agreement
    39  
18.15 Counterparts
    39  
18.16 No Waiver
    39  
18.17 Cumulative Rights
    39  
18.18 Certain Limitations
    39  
 
       
EXHIBIT A
    41  
 
       
SCHEDULE 4.01
    43  
 
       
SCHEDULE 4.04
    44  
 
       
SCHEDULE 4.05
    45  
 
       
SCHEDULE 4.07
    46  

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page iv Big Stone II Power Plant   June 30,
2005  

              Page
SCHEDULE 5.01
    47  
 
       
SCHEDULE 5.03
    48  
 
       
SCHEDULE 5.06
    49  
 
       
SCHEDULE 5.07
    50  
 
       
SCHEDULE 6.01
    54  
 
       
SCHEDULE 9.05
    55  
 
       
SCHEDULE 10.01(A)
    61  
 
       
SCHEDULE 10.01(B)
    69  
 
       
SCHEDULE 10.02(A)
    76  
 
       
SCHEDULE 10.02(C)
    99  
 
       
SCHEDULE 11.02
    102  

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 1 Big Stone II Power Plant   June 30,
2005  

Joint Facilities Agreement
     THIS JOINT FACILITIES AGREEMENT (the “Agreement”) is made as of June 30,
2005 (the “Effective Date”), by and among Central Minnesota Municipal Power
Agency, an agency incorporated under the laws of Minnesota (“CMMPA”), Great
River Energy, a cooperative corporation incorporated under the laws of Minnesota
(“GRE”), Heartland Consumers Power District, a consumers power district formed
and organized under the South Dakota Consumers Power District Law (Chapter 49-35
of the South Dakota Codified Laws) (“Heartland”), Montana-Dakota Utilities Co.,
a Division of MDU Resources Group, Inc., a corporation incorporated under the
laws of the State of Delaware, (“Montana-Dakota”), NorthWestern Corporation
(formerly known as NorthWestern Public Service Company), a corporation
incorporated under the laws of the State of Delaware, doing business as
NorthWestern Energy (“NorthWestern”), Otter Tail Corporation, a corporation
incorporated under the laws of Minnesota, doing business as Otter Tail Power
Company (“Otter Tail”), Southern Minnesota Municipal Power Agency, a municipal
corporation and political subdivision of the State of Minnesota (“SMMPA”), and
Western Minnesota Municipal Power Agency, a municipal corporation and political
subdivision of the State of Minnesota (“WMMPA”) (each individually a “Party” or
“Owner” and, collectively, the “Parties” or “Owners”).
RECITALS
     WHEREAS, Montana-Dakota, NorthWestern, and Otter Tail, together with such
other Persons that from time to time may be Owners of BSP I (as such term is
defined below) (collectively, the “BSP I Owners”) as tenants in common, own an
undivided interest in one hundred percent (100%) of the existing 450 MW
coal-fired electric generating plant located in Grant County, South Dakota,
known as the Big Stone Plant (“BSP I”); and
     WHEREAS, CMMPA, GRE, Heartland, Montana-Dakota, Otter Tail, SMMPA and
WMMPA, for as long as they remain Owners of BSP II (as such term is defined
below), along with such other Persons that from time to time may be Owners of
BSP II (collectively, the “BSP II Owners”), are contemporaneously with the
execution of this Agreement, entering into that certain BSP II Participation
Agreement (as such term is defined below), which sets forth their agreement and
the terms under which they will jointly develop, own and operate a new,
approximately 600 MW coal-fired electric generating plant to be known as the Big
Stone II Power Plant (“BSP II”) to be located adjacent to BSP I; and
     WHEREAS, the BSP I Owners and the BSP II Owners have determined that, when
compared to the cost of independent facilities, sharing the use of certain
critical facilities will satisfy their respective requirements for operations
that are efficient, economical and in accord with Prudent Utility Practice (as
such term is defined below); and
     WHEREAS, the BSP I Owners believe that the development of BSP II will yield
benefits to them, whether or not they participate in BSP II as an Owner; and

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 2 Big Stone II Power Plant   June 30,
2005  

     WHEREAS, the BSP I Owners and BSP II Owners have determined that certain
BSP I assets must be purchased from the BSP I Owners in order to develop and
operate BSP II in an efficient manner; and
     WHEREAS, BSP I is currently being operated by Otter Tail, and the BSP II
Owners are contemporaneously with the execution of this Agreement entering into
the Operation & Maintenance Services Agreement (as such term is defined below)
with Otter Tail for the operation by Otter Tail of BSP II and the Parties desire
to have the same Operator (as such term is defined below) for both Plants so as
to maximize efficiencies and cost savings.
     NOW, THEREFORE, in consideration of the agreements and covenants set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and intending to be legally bound by this
Agreement, the Parties covenant and agree as follows:
AGREEMENTS
ARTICLE I
RULES OF CONSTRUCTION AND INTERPRETATION, DEFINED TERMS
     1.01 Rules of Construction. The capitalized terms listed in this Article
shall have the meanings set forth herein whenever the terms appear in this
Agreement, whether in the singular or the plural or in the present or past
tense. Other terms used in this Agreement but not listed in this Article shall
have meanings as commonly used in the English language and, where applicable, in
Prudent Utility Practice. Words not otherwise defined herein that have
well-known and generally accepted technical or trade meanings are used herein in
accordance with such recognized meanings. In addition, the following rules of
interpretation shall apply:

  (a)   The masculine shall include the feminine and neuter.     (b)  
References to “Articles,” “Sections,” “Schedules,” or “Exhibits” shall be to
articles, sections, schedules or exhibits of this Agreement. Any references to
“Schedules” or “Exhibits” shall be deemed to mean, as applicable, as the same
may be amended from time to time, in accordance with the provisions of this
Agreement.     (c)   This Agreement was negotiated and prepared by each of the
Parties with the advice and participation of its own counsel. The Parties have
agreed to the wording of this Agreement and none of the provisions hereof shall
be construed against one Party on the ground that such Party is the author of
this Agreement or any part hereof.     (d)   The Parties shall act reasonably
and in accordance with the principles of good faith and fair dealing in the
performance of this Agreement.

     1.02 Termination of 2002 Joint Facilities Agreement. Upon execution of this
Agreement by all Parties, that certain Big Stone I and Big Stone II 2002 Joint
Facilities

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 3 Big Stone II Power Plant   June 30,
2005  

Agreement among Otter Tail, Montana-Dakota, and NorthWestern dated October 3,
2002 and all other agreements entered into by Otter Tail, Montana-Dakota, and
NorthWestern in connection therewith shall be terminated without further action
and without liability to any Party thereto as a result of such termination.
     1.03 Failure of BSP II Owner to Participate in the BSP II Financial
Closing. If a BSP II Owner shall fail to participate in the BSP II Financial
Closing (as such term is defined below), then it shall automatically cease to be
a Party hereunder and shall have no further liabilities or obligations under the
Joint Facilities Agreements, except for those liabilities or obligations arising
on or before the date such Person shall cease to be a BSP II Owner. If a Third
Party (as such term is defined below) replaces a BSP II Owner, such Third Party
must agree to become a Party hereto by executing the appropriate joinder
agreement to effect the same.
     1.04 Defined Terms. In addition to definitions of other terms appearing
elsewhere in this Agreement, the following terms, when used herein, have the
meanings specified:
     Additional Joint Facilities: Shall have the meaning given to such term in
Section 6.01.
     Affiliate(s): Shall mean, with respect to any Person,

  (a)   any Person that directly or indirectly, controls or is controlled by or
is under common control with such Person; or     (b)   any Person that
beneficially owns or holds fifty percent (50%) or more of any class of voting
securities of such Person or owns or holds fifty percent (50%) or more of an
ownership interest (on a fully diluted basis) in such Person.

For the purposes of this definition, “control,” “controlled by,” and “under
common control with,” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of voting securities or by contract or otherwise.
Notwithstanding the foregoing provisions of this definition, each Operator and
Owner (except with regard to Otter Tail) shall not be deemed to be Affiliates of
each other and any Person that is otherwise an Affiliate of Operator shall not
be deemed to be an Affiliate of Operator for purposes of this Agreement to the
extent such Person is acting in its capacity as an Owner or as a Representative
of an Owner.
     Agreement: Shall mean this Agreement, as amended from time to time.
     Annual Fixed Charge: Shall have the meaning given to such given to such
term in Section 9.05(b).
     Blanket Easement Agreement: Shall mean that certain Blanket Easement
Agreement by and among the BSP I Owners and the BSP II Owners, substantially in
the form attached hereto as Schedule 10.02(A).
     BSP I: Shall have the meaning given to such term in the recitals to this
Agreement.

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 4 Big Stone II Power Plant   June 30,
2005  

     BSP I Joint Facilities: Shall mean those Joint Facilities owned by BSP I
Owners and used by both BSP I and BSP II pursuant to the terms of this
Agreement.
     BSP I Owners: Shall have the meaning given to such term in the recitals to
this Agreement.
     BSP I Ownership Agreement: Shall mean the Big Stone Plant Agreement for
Sharing Ownership of Generating Plant by and among Otter Tail Power Company,
Montana-Dakota and NorthWestern dated January 7, 1970 and all supplements and
amendments thereto.
     BSP I Plant Site: Shall mean the real property on which BSP I is located
and any and all easements, leases, licenses, option rights, rights-of-way and
other rights used in connection with the BSP I Plant; provided, however, that
for purposes of Section 10.06 of this Agreement, it shall only mean the real
property located at the BSP I Plant.
     BSP II: Shall have the meaning given to such term in the recitals to this
Agreement.
     BSP II Cooling Tower Blowdown Pond: Shall have the meaning given to such
term in Section 4.07.
     BSP II Financial Closing: Shall mean the date on which the BSP II Owners
shall have delivered and consummated their respective Financing necessary to
fund their share of the cost of the BSP II Plant, including, but not limited to,
the execution of all documentation required to consummate said Financing.
     BSP II Joint Facilities: Shall mean those Joint Facilities owned by BSP II
Owners and used by both BSP I and BSP II pursuant to the terms of this
Agreement.
     BSP II Legal Counsel: Shall mean Leonard, Street and Deinard Professional
Association, a professional association under the laws of Minnesota, for
purposes of Section 10.09 hereof.
     BSP II Owners: Shall have the meaning given to such term in the recitals to
this Agreement.
     BSP II Participation Agreement: Shall mean the Big Stone II Participation
Agreement entered into by and among CMMPA, GRE, Heartland, Montana-Dakota, Otter
Tail, SMMPA, and WMMPA.
     BSP II Plant Site: Shall mean the real property on which BSP II is to be
located, including the real property that may be acquired pursuant to the Option
to Purchase Contract and any and all easements, leases, licenses, option rights,
rights-of-way and any other real property rights used in connection with the BSP
II Plant.
     Business Day: Shall mean any day other than Saturday, Sunday or any weekday
that is a legal holiday in the State of South Dakota.
     Capacity: Shall mean an electrical rating expressed in megawatts (MW).

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 5 Big Stone II Power Plant   June 30,
2005  

     Change: Shall have the meaning given to such term in Section 2.06(a).
     CMMPA: Shall have the meaning given to such term in the preamble to this
Agreement.
     Coal and Ash Joint Facilities: Shall have the meaning given to such term in
Section 5.01.
     Commercial Operation: Shall mean that the BSP II Plant is operating and
producing Capacity and Energy on a continuous basis, and is delivering such
Energy to the BSP II Owners in accordance with Prudent Utility Practice and
applicable Law.
     Coordination Committee(s): Shall mean the BSP I or BSP II coordination
committees established and maintained pursuant to the respective Participation
Agreement.
     Designated Easement Agreement: Shall mean the instrument that amends or
restates the Blanket Easement Agreement pursuant to the terms of
Section 10.02(b).
     Designated Easement Area: Shall mean the real property designated by the
Owners pursuant to Section 10.02(b).
     Designated Representative: Shall have the meaning given to such term in
Section 9.02.
     Dispute: Shall have the meaning given to such term in Section 14.01.
     Effective Date: Shall have the meaning given to such term in the preamble
to this Agreement.
     Election Period: Shall have the meaning given to such term in
Section 3.02(a)(ii).
     Electrical Substation: Shall have the meaning given to such term in
Section 7.02.
     Energy: Shall mean energy having characteristics commonly known as three
phase alternating current, with a nominal frequency of sixty (60) Hertz, a
nominal voltage equivalent to that of Otter Tail’s or its successor’s
transmission system, and measured in kilowatt-hours (kWh) or megawatt-hours
(MWh).
     Engineering and Operating Committee(s) or E&O Committee(s): Shall mean the
BSP I or BSP II engineering and operating committees established and maintained
pursuant to the Participation Agreements.
     Environmental Law: Shall mean any Law relating to the environment and/or
human health or safety, or governing, regulating or pertaining to the
generation, treatment, storage, handling, transportation, use, release or
disposal of any Hazardous Substance, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. § 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. §
6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.,
the Clean Water Act of 1977, 33 U.S.C. § 1251 et seq., the Clean Air Act, 42
U.S.C. § 7401 et seq., and the Toxic Substances Control Act, 33 U.S.C. § 2601 et
seq., all as amended from time to time.

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 6 Big Stone II Power Plant   June 30,
2005  

     FERC: Shall mean the Federal Energy Regulatory Commission or any
Governmental Authority which preceded or hereafter may succeed the Federal
Energy Regulatory Commission.
     FERC Accounts: Shall mean the uniform system of accounts established by
FERC for public utilities and licensees subject to the provisions of the Federal
Power Act, as in effect from time to time.
     Financing: Shall mean the financing undertaken by each of the BSP II Owners
to purchase an ownership interest in BSP II.
     Force Majeure Event: Shall mean a cause or event beyond the reasonable
control of, and without the fault or negligence of the Party claiming force
majeure, including, without limitation, an emergency, acts of God, floods,
earthquakes, hurricanes, or tornadoes; sabotage; vandalism beyond that which
could reasonably be prevented by a Party; terrorism; war; riots; fire;
explosion; blockades; insurrection; strike; slow down or labor disruptions (even
if such difficulties could be resolved by conceding to the demands of a labor
group); and action or failure to take action by any Governmental Authority after
the Effective Date (including the adoption or change in any rule or regulation
or environmental constraints lawfully imposed by such Governmental Authority),
but only if such requirements, actions, or failures to act prevent or delay
performance; and inability, despite due diligence, to obtain any licenses,
permits, or approvals required by any Governmental Authority; provided, however,
that the following shall not be Force Majeure Events:

  (a)   the refusal of the Rural Utilities Service of the United States
Department of Agriculture to approve GRE’s participation in BSP II;     (b)  
the refusal of the Minnesota Public Utilities Commission to approve Otter Tail’s
integrated resource plan with respect to BSP II; or     (c)   any Owner’s
failure to perform any obligation under this Agreement due to its inability to
obtain an authorization or approval from a Governmental Authority where such
Governmental Authority issuing the authorization or approval is also the Owner.

     Governmental Authority: Shall mean any federal, state, local or municipal
governmental body; any governmental, quasi-governmental, regulatory or
administrative agency, commission, body or other authority exercising or
entitled to exercise any administrative, executive, judicial, legislative,
policy, regulatory or taxing authority or power; or any court or governmental
tribunal; any independent system operator, regional transmission organization,
reliability organization, or other regulatory body; in each case having
jurisdiction over a Party, BSP I, BSP II, the BSP I Plant Site, the BSP II Plant
Site, or the transmission system to which either Plant is interconnected.
     GRE: Shall have the meaning given to such term in the preamble to this
Agreement.
     Group(s): Shall mean either the BSP I Owners, as a group, or the BSP II
Owners, as a group, or both, as the case may be, when acting collectively with
regard to BSP I or BSP II.

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 7 Big Stone II Power Plant   June 30,
2005  

     Hazardous Substance: Shall mean any pollutant, contaminant, substance,
chemical or material known to cause cancer or reproductive toxicity, or listed
or identified in, or governed or regulated by, any Environmental Law, and also
expressly includes urea formaldehyde, polychlorinated biphenyls, dioxin, radon,
lead-based paint, asbestos, asbestos-containing materials, nuclear fuel or
waste, radioactive materials, explosives, and petroleum products, including but
not limited to crude oil or any fraction thereof, natural gas, natural gas
liquids, gasoline and synthetic gas, and coal ash and any other waste material,
substance, pollutant or contaminant the presence of which on, in, about or under
a site could subject the owner or operator thereof to any damages, penalties,
fines or liabilities under any applicable Environmental Law.
     Heartland: Shall have the meaning given to such term in the preamble to
this Agreement.
     Indemnified Parties: Shall have the meaning given to such term in
Section 10.04.
     Insurance: Shall have the meaning given to such term in Section 9.05(a).
     Joint Facilities: Shall mean the facilities designated as Joint Facilities
in this Agreement and any improvements thereto.
     Joint Facilities Agreements: Shall mean this Agreement and the Property
Agreements.
     Joint Facilities Fee: Shall have the meaning given to such term in
Section 9.03.
     Joint Scrubber: Shall have the meaning given to such term in Section 8.05.
     Law(s): Shall mean any and all federal, state, and local statutes, laws,
judicial decisions, regulations, ordinances, rules, judgments, orders, decrees,
codes, plans, injunctions, permits, governmental agreements and governmental
restrictions of any Governmental Authority, whether now or hereafter in effect.
     Losses: Subject in all respects to Section 12.01 of this Agreement, shall
mean any and all costs, expenses, liabilities, damages, injuries or other
financial losses of any kind or nature, including fines, penalties, claims,
awards, judgments, demands, insurance deductibles, court costs and reasonable
attorneys’ fees, incurred by such Person.
     Materials and Supplies: Shall mean materials and supplies obtained for use
in the operation, maintenance or repair of the Plants (exclusive of fuel), the
cost of which is charged to the applicable FERC Accounts.
     MISO: Shall mean the Midwest Independent Transmission System Operator, Inc.
or any other applicable regional transmission organization.
     Montana-Dakota: Shall have the meaning given to such term in the preamble
to this Agreement.
     Net Investment: Shall have the meaning given to such term in Section
9.05(b).

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 8 Big Stone II Power Plant   June 30,
2005  

     Non-Transferring Group: Shall have the meaning given to such term in
Section 3.02(a).
     NorthWestern: Shall have the meaning given to that term in the preamble to
this Agreement.
     O&M Costs: Shall have the meaning given to that term in Section 9.05(a).
     Operation & Maintenance Services Agreement or O&M Agreement: Shall mean
that certain Operation & Maintenance Services Agreement entered into by and
among the BSP II Owners and Otter Tail, as Operator.
     Operator: Shall mean the operator of each of or both, as the case may be,
of the BSP I and BSP II Plants.
     Option to Purchase Contract: Shall mean that certain Option to Purchase
Contract by and among the BSP I Owners and Otter Tail, as administrative agent
on behalf of itself and the other BSP II Owners, substantially in the form
attached hereto as Schedule 10.01(A).
     Otter Tail: Shall have the meaning given to such term in the preamble to
this Agreement.
     Owner(s): Shall mean those Persons that from time to time own an Ownership
Share in one or both Plants, including, as of the Effective Date, those Parties
named in the preamble to this Agreement.
     Owners’ Insurance: Shall have the meaning given to such term in
Section 11.02.
     Ownership Share: Shall mean the ownership interest of a particular Owner in
a Plant.
     Participation Agreement(s): Shall mean the BSP II Participation Agreement
and the BSP I Ownership Agreement.
     Party or Parties: Shall have the meaning given to those terms in the
preamble to this Agreement.
     Person: Shall mean an individual, a partnership, a corporation, a limited
liability company, an association, a joint-stock company, a business trust,
consumers powers district, cooperative, unincorporated association, government
or any subdivision thereof, or an organized group of individuals (whether
incorporated or not), or a receiver, trustee or other liquidating agent of any
of the foregoing in his capacity as such.
     Plant(s): Shall mean BSP I or BSP II or both, as the case may be.
     Plant Property: Shall mean property comprising the Plant and all other
property (real, personal or fixtures, tangible or intangible), as well as
property owned by the Owners for use exclusively in the construction, operation,
maintenance or repair of the Plants.
     Property Agreements: Shall mean the Option to Purchase Contract, memorandum
thereof, and the Blanket Easement Agreement.

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 9 Big Stone II Power Plant   June 30,
2005  

     Property Taxes: Shall have the meaning given to that term in Section
9.05(a).
     Prudent Utility Practice: Shall mean any of the practices, methods or acts
(i) required by applicable Laws, the National Electric Safety Code, MISO, the
North American Electric Reliability Council, or the successors of any of them,
whether or not a Party is a member thereof, or (ii) otherwise engaged in or
approved by a significant portion of the utility electric generation industry
during the relevant time period or any of the practices, methods and acts that
in the exercise of reasonable judgment in light of the facts known at the time
the decision was made, could have been expected to accomplish the desired result
at a reasonable cost consistent with good business practices, reliability,
safety and expedition. Prudent Utility Practice is not intended to be limited to
the optimum practice, method or act to the exclusion of all others, but rather
to be acceptable practices, methods or acts generally accepted in the upper
Midwest region.
     Representative: Shall mean, with respect to a Party, any principal,
shareholder, director, officer, employee or agent of such Party or its
Affiliates, but only to the extent, in each case, such individual is engaged in
the fulfillment of an obligation under this Agreement and is fulfilling such
obligation in his or her capacity as a principal, shareholder, director,
officer, employee or agent of such Party or its Affiliate.
     SMMPA: Shall have the meaning given to such term in the preamble to this
Agreement.
     Term: Shall have the meaning given to such term in Section 16.01.
     Third Party(ies): Shall mean any Person other than an Owner or an Affiliate
of an Owner.
     Transfer, Transferred or Transferring: Shall mean any actual, attempted,
proposed or purported sale, assignment, conveyance, transfer, gift, exchange,
mortgage, pledge, encumbrance (including, but not limited to, liens of any
kind), hypothecation, grant of a security interest in or other disposition,
whether voluntary or involuntary.
     Transferring Group: Shall have the meaning given to such term in
Section 3.02(a).
     Use Factor: Shall have the meaning given to such term in Section 9.05(a).
     Water Resources Joint Facilities: Shall have meaning given to such term in
Section 4.01.
     Willful Action: Shall mean any act or omission of a Party (including an
Owner acting as Operator), done or not done, at the direction of its directors,
a corporate officer or other employee having management responsibilities in
respect of the matter involved, which:

  (a)   is knowingly or intentionally done or not done with conscious
indifference to the consequences, or with the expectation that injury or damage
to other Owners or any other Person would, or would be reasonably likely to,
result therefrom; or     (b)   is determined by final judgment or decree of a
court having jurisdiction, to be a material default under this Agreement, and
occurs or continues beyond the time

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 10 Big Stone II Power Plant   June 30,
2005  

      specified in such judgment or decree for curing such default, or if no
time to cure is specified therein, occurs or continues beyond a reasonable time
to cure such default.

     WMMPA: Shall have the meaning given to such term in the preamble to this
Agreement.
ARTICLE II
JOINT FACILITIES: IDENTIFICATION, OWNERSHIP, ADEQUACY, AND
CHANGES
     2.01 Identification and Common Use of Joint Facilities. The Joint
Facilities shall consist of the BSP I Joint Facilities and the BSP II Joint
Facilities described in this Agreement and the Schedules and Exhibits attached
hereto, including, without limitation, those Joint Facilities specifically
described in Article IV, Article V and Article VI of this Agreement. As
contemplated by this Agreement, the Option to Purchase Contract (if exercised),
and the Blanket Easement Agreement, each Group shall have the right to use and
have access to the Joint Facilities.
     2.02 Ownership of Joint Facilities. Each Group shall own, lease, or
otherwise provide its respective Joint Facilities hereunder. No instruments by
which title or other property interest in any Joint Facilities is acquired by
the Owners, or by which the title or other property interest of the Owners in
any Joint Facilities is evidenced, shall contain any provisions inconsistent
with the provisions or intent of this Agreement.
     2.03 Waiver of Partition Rights. No Owner or Group shall resort to any
action at law or in equity to partition any Joint Facility (either by partition
in kind or by the sale of the subject property and division of the proceeds),
and each Owner and Group hereby expressly waives the benefit of all Laws that
may now or hereafter authorize such partition for a term that is coterminous
with the Term or for such lesser period as may be required or permitted by
applicable Law.
     2.04 Right of Possession. No Owner or Group shall lease or otherwise grant
to another Person the right of possession as to any of the Joint Facilities,
except as provided under this Agreement.
     2.05 Adequacy of Property. While the real property described in the
Property Agreements is intended to include land, easements and other rights
adequate for the investigation, design, construction and operation of BSP II and
the continuing operation of BSP I, the Groups acknowledge that it is anticipated
that either Group may require additional real property in connection therewith.
Accordingly, at any time during the Term, if the Groups reasonably determine
additional real property or new Joint Facilities or modifications to existing
Joint Facilities are necessary or desirable, the Groups agree to negotiate in
good faith for the rights to acquire and to acquire any additional real property
which may be necessary for the construction and operation of such new Joint
Facilities or such modifications to Joint Facilities, including, but not limited
to, real property and rights to use real property owned by the other Group.

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 11 Big Stone II Power Plant   June 30,
2005  

     2.06 Changes to Joint Facilities.

  (a)   A Group shall not make any modification, addition to, or alteration of,
any of that Group’s Joint Facilities exceeding (*) (a “Change”) without the
prior written consent of the other Group, except in an emergency (as determined
in good faith by such Group’s E&O Committee) and consistent with Prudent Utility
Practice. For purposes of this Section 2.06(a), the cost of a Change shall be
measured on a project work order basis, including, when applicable, the
aggregate cost as detailed on a series of related project work orders. One
hundred eighty (180) days prior to the planned commencement of work on such
Change, the Group desiring to make such a Change shall first give written notice
to the other Group, which written notice shall describe in detail the desired
Change. Upon receipt of written notice of a desired Change, the other Group
shall have ninety (90) days to object in writing that such Change is: (1) likely
to prevent or substantially impair the Joint Facility from being useful in the
normal operation of the other Group’s Plant, or (2) that the other Group is
likely to suffer materially increased expenses for use of the Joint Facility due
to the Change and, in either case, that the Change is not necessary to allow the
Joint Facility to be used in accordance with Prudent Utility Practice. Any
objection shall describe in detail the reasons the objecting Group believes the
Change will prevent or substantially impair the useful operation of the Joint
Facility or materially increase the expense of using the Joint Facility. If an
objection is made, the Groups shall negotiate in good faith to arrive at a
mutually acceptable Change, an acceptable alternate Joint Facility Fee, or
another mutually acceptable resolution. Specifically, the Groups shall promptly
make all reasonable efforts to resolve the dispute about the Change by amicable
negotiations involving senior management representatives of the Groups. Each
Group agrees to provide the other Group frank, candid and timely disclosure of
relevant facts, information and documents to facilitate the negotiations. If
investigation or testing by Third Party experts would be of benefit to the
Groups in resolving the dispute, the Groups shall cooperate with each other to
facilitate such investigation or testing, as well as the allocation of any costs
and expenses of Third Party experts.

  (i)   If the Groups fail to resolve the dispute within thirty (30) days after
the delivery of the objecting Group’s written notice, either Group’s sole remedy
shall be to refer the dispute to arbitration pursuant to the arbitration rules
of the American Arbitration Association then in effect, by delivering to the
other Group a written notice containing the following:

  (1)   a statement of the issue or issues in dispute; and     (2)   a statement
that the dispute is being referred to arbitration.

      Any arbitration shall be conducted in Minneapolis, Minnesota, unless the
Groups shall mutually agree upon an alternate location.

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 12 Big Stone II Power Plant   June 30,
2005  

  (ii)   A dispute submitted to arbitration shall be conducted by three
arbitrators, selected from a panel of arbitrators provided by the American
Arbitration Association as follows:

  (1)   each Group shall select one arbitrator; and     (2)   the two
arbitrators selected by each Group shall select the third arbitrator.

      All three (3) arbitrators shall be impartial and independent of the Groups
and shall have experience and skill in the resolution of commercial disputes in
the electric utilities industry. Nothing in this Section 2.06(a) shall preclude
the Groups from agreeing to settle a dispute under Section 2.06(a) in another
manner or to alter the arbitration provisions, including, without limitation,
the number of arbitrators.     (iii)   To the extent possible, all disputes
between the Groups pursuant to this Section 2.06(a) will be consolidated and
dealt with in a single arbitration proceeding. No arbitration initiated by the
Groups shall include, by consolidation, joinder or otherwise, any other Person
unless such Person is required in order for complete relief to be accorded in
the arbitration.     (iv)   This agreement under Section 2.06(a) to arbitrate
under certain circumstances shall be specifically enforceable in any court
having jurisdiction thereof. Any decision rendered by the arbitrators pursuant
to any arbitration shall be final and binding upon the Groups and judgment may
be entered in accordance with applicable Law in any court of competent
jurisdiction.     (v)   The arbitrators shall determine whether the Change
should not occur, either because (a) the Change will prevent or substantially
impair the useful operation of the Joint Facility or (b) because the Change will
materially increase the expense of using the Joint Facility and is not necessary
to allow the Joint Facility to be used in accordance with Prudent Utility
Practice. If the arbitrators determine that either (a) or (b) above applies to
the Change, the Change shall not occur. The arbitrators shall have jurisdiction
and authority to interpret, apply, or determine compliance with the provisions
of this Agreement insofar as shall be necessary to the determination of issues
properly before the arbitrators, including the right to order specific
performance against either Group. The arbitrators shall not have jurisdiction or
authority to alter the provisions of this Agreement. The arbitrators shall
apportion between the Groups, all costs, expenses and charges, including
reasonable attorneys’ fees and expenses, incurred by the Groups in the conduct
of the arbitration.

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 13 Big Stone II Power Plant   June 30,
2005  

  (vi)   During the continuation of any dispute arising under this
Section 2.06(a), the Groups shall continue to perform their respective
obligations under this Agreement, including prompt and timely payment of all
amounts due hereunder.

  (b)   If a Group desires that a capital improvement be made to one or more of
the other Group’s Joint Facilities, which the other Group chooses not to make,
the Group refusing to make such capital improvement must provide written
justification for its refusal in response to a written request (including
justification) for such capital improvement. If the Group seeking the capital
improvement contends that the justification provided by the Group that opposes
the capital improvement is not reasonable, the sole remedy of the Group seeking
the capital improvement shall be to pursue dispute resolution as provided in
Section 2.06(a) to seek a determination of whether the justification made by the
Group that refused to make the capital improvement is reasonable. If the
arbitrators’ final determination in such dispute resolution is that the
justification for refusal is unreasonable, the refusing Group must make the
capital improvement and the cost of the capital improvement shall be split
equally between the Groups and only those costs borne by the Group that owns the
Joint Facility shall be applied to the Joint Facilities Fee formula or its
depreciated book value for purposes of Section 3.03. The Group that desired the
capital improvement shall be required to purchase such improved Joint Facility,
pursuant to Section 3.03, in the event the other Group is the first of the two
Groups to decommission its Plant. If the arbitrators’ final determination is
that the justification for refusal is reasonable, the refusing Group need not
make the capital improvement, in which case the Group that requested the capital
improvement may not again request the same or a similar capital improvement to
the same Joint Facility for a period of two (2) years from the date of the
arbitrators’ final determination.     (c)   Without the prior written consent of
the BSP I Owners, which consent shall not be unreasonably withheld, the BSP II
Owners may not, during the construction of BSP II, modify, add to, remove, or
alter any BSP I Joint Facility. The BSP II Owners shall provide reasonable
written notice to the BSP I Owners prior to making such modification, addition,
removal or alteration, and, upon written consent, the BSP II Owners will ensure
that such change does not prevent or impair the normal operation of BSP I or
increase the BSP I Owners’ expenses for normal operation of the BSP I Joint
Facility or of BSP I. In the event such a change prevents or impairs the normal
operation of BSP I or increases the BSP I Owners’ expenses for normal operation
of the BSP I Joint Facility or of BSP I, the BSP II Owners will be responsible
for all reasonable costs causally related to such impairment or expense
increases. If the BSP I Owners and the BSP II Owners cannot arrive at a mutually
acceptable resolution regarding responsibility for such reasonable costs, the
sole remedy for either Group shall be to pursue dispute resolution as provided
in Section 2.06(a).

     2.07 Construction of New Joint Facilities. Except for specific Joint
Facilities to be constructed pursuant to this Agreement, each Group may
construct new facilities on its own

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 14 Big Stone II Power Plant   June 30,
2005  

Plant site without the prior consent of the other Group and without making any
such new facility available to the other Group as a Joint Facility. Except as
provided in Section 2.06(c), a Group may not construct a facility that, to any
extent, is located on or requires the use of the other Group’s Plant site
without the prior written consent of the other Group, which prior written
consent may be denied in the sole discretion of the other Group. The Groups may,
however, choose to cooperate with each other in the construction of new Joint
Facilities.
ARTICLE III
TRANSFER OF OWNERSHIP INTERESTS IN AND OF JOINT FACILITIES
     3.01 Transfers of Ownership Interests in Joint Facilities. A Party’s or a
Group’s ownership interest in a Joint Facility may only be Transferred as
permitted under the Participation Agreement applicable to that Party or Group.
     3.02 Right of First Refusal for Joint Facilities. Beginning on the
Effective Date, a Group may not Transfer (including, without limitation, by
sale) ownership (whether partial or all) of a Joint Facility, except as provided
in Section 3.01, unless it first complies in all respects with the right of
first refusal process contained in this Section 3.02.

  (a)   If a Group (the “Transferring Group”) desires to Transfer ownership of a
Joint Facility pursuant to a bona fide written offer from a Third Party, it
shall first offer such Joint Facility to the other Group (the “Non-Transferring
Group”) according to the following procedure:

  (i)   The Transferring Group shall notify the Non-Transferring Group of its
intention to Transfer ownership of such Joint Facility and furnish the
Non-Transferring Group with a copy of the bona fide written offer signed by the
proposed Third Party transferee setting forth, in reasonable detail, the price,
terms and conditions (including, without limitation, source and terms of
financing) of the proposed Transfer. To be a bona fide written offer, such offer
must be for all cash.     (ii)   The Non-Transferring Group shall have ninety
(90) days (the “Election Period”) in which to elect in writing to the
Transferring Group to purchase the Joint Facility on all of the same terms and
conditions as are set forth in the Third Party’s bona fide written offer to the
Transferring Group. In this case, the sale and purchase shall be consummated
within one hundred eighty (180) days after the end of the Election Period.    
(iii)   If, by the end of the Election Period, the Non-Transferring Group has
not elected to purchase the Joint Facility, then the Transferring Group shall be
entitled, for a period of one hundred eighty (180) days after the end of the
Election Period, to sell the Joint Facility to the proposed Third Party, in all
respects pursuant to the terms of its bona fide written offer. If the Transfer
of the Joint Facility to the Third Party is not completed within said one
hundred eighty (180) day period, the Joint Facility shall again become subject
to the right of first refusal contained in this Section 3.02.

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 15 Big Stone II Power Plant   June 30,
2005  

     3.03 Decommissioning.

  (a)   If a Group decides to decommission any of its Joint Facilities, either
separate from, or in conjunction with, the decommissioning of its entire Plant,
it shall first offer in writing to sell any such Joint Facilities to the other
Group for (*).     (b)   The non-decommissioning Group must accept such offer in
writing no later than ninety (90) days from the date of receipt of the written
offer to sell. If such offer is not accepted, the offer shall be deemed
rejected. For purposes of this Section 3.03, the costs of decommissioning shall
include, without limitation, the removal of all improvements to real estate and
all personal property, including all materials, supplies, equipment, and waste
associated with such Joint Facility, and any reclamation required by applicable
Law in connection with such decommissioning. The right of first refusal
provisions contained in Section 3.02 shall not apply to any Transfer
contemplated in this Section 3.03.

     3.04 Covenants Run With Land. The provisions of this Agreement, including,
without limitation, the right of first refusal provisions contained in
Section 3.02, shall constitute covenants running with the land as to the
interests in real property which are made subject hereto and shall bind each
Owner and its successors and assigns.
ARTICLE IV
WATER RESOURCES JOINT FACILITIES
     4.01 Water Resources Joint Facilities. For purposes of this Agreement, the
“Water Resources Joint Facilities” are those water resources and related
facilities used to transport, store and treat water necessary in the operation
of BSP I and BSP II. Water Resources Joint Facilities shall consist of the
facilities described in this Article IV and the Water Resources Joint Facilities
set forth in Schedule 4.01 attached hereto.
     4.02 Water Restrictions Caused By Drought or Other Conditions.

  (a)   The Groups acknowledge that the Water Resources Joint Facilities to be
constructed and owned by the BSP II Owners shall be designed to provide a
benefit to the BSP I Owners by increasing the water available to operate BSP I
and, thereby, increasing the ability of BSP I to operate during drought
conditions. If at any time during the Term, either BSP I or BSP II would be
required to materially reduce the Energy output of its Plant due to lack of
adequate water caused by drought or other causes, the Groups shall meet and
negotiate in good faith to find a resolution that minimizes the impact on both
Plants and maximizes the collective electrical output of both Plants, including,
without limitation, entering into power purchase agreements that would allow
both Groups to minimize the reduction of each Plant’s electrical output.     (b)
  If the Groups cannot reach a mutually satisfactory resolution, each Plant’s
electrical output shall be reduced proportionally, based upon the relative
amounts of water used by BSP I and BSP II prior to such condition (i.e., the
Plant with the

 

--------------------------------------------------------------------------------

 

      Joint Facilities Agreement   Page 16 Big Stone II Power Plant   June 30,
2005  

      greater water consumption shall reduce its electrical output to a greater
extent than the Plant with the lesser water consumption), with each Plant’s
reduction being in such amount as is required so that, following such
reductions, the combined water use of both Plants does not exceed the amount of
water projected to be available for at least the next six (6) months. For
purposes of determining the relative water use of the Plants as described in
this Section 4.02(b), each Plant’s water consumption shall be calculated based
upon assumed operation at levels equal to the Plant’s accredited Capacity.
However, in the event that BSP II has not yet been accredited for Capacity, said
calculation shall be based upon assumed operation at levels equal to the
nameplate Capacity of each Plant. The Groups shall share the available water
accordingly until such time as sufficient water adequate to operate both Plants
at full Capacity shall be available.

     4.03 New Brine Concentrator. The BSP II Owners shall construct, pay for,
and own a new brine concentrator which will be a BSP II Joint Facility. The
existing BSP I brine concentrator, sludge pond, water and product lines, and
brine concentrator control room will be BSP I Joint Facilities. The following
provisions shall apply regarding the brine concentrators:

  (a)   Size. The new BSP II brine concentrator shall be designed and
constructed to have brine processing capacity at least equal to the existing BSP
I brine concentrator.     (b)   Water and Product Lines. If the BSP II Owners
determine that the existing BSP I brine concentrator water supply and product
lines do not have sufficient capacity to support the new brine concentrator,
then the BSP II Owners shall construct, pay for, and own new water supply and
product lines to supply both the new and existing brine concentrators. The new
water supply and product lines shall be BSP II Joint Facilities.     (c)  
Sludge Pond. If the BSP II Owners determine that the existing BSP I brine
concentrator sludge pond does not have sufficient capacity to support the new
BSP II brine concentrator, then the BSP II Owners shall construct, pay for, and
own a new sludge pond. The new sludge pond shall be a BSP II Joint Facility.    
(d)   Disposal of Brine Concentrator Waste. The costs for disposal of brine
concentrator waste, whether from the existing BSP I brine concentrator or the
new BSP II brine concentrator, shall be shared equally between the Groups.    
(e)   New Brine Concentrator Electrical Substation. The BSP II Owners shall
construct, pay for, and own a new electrical substation to provide electric
service to the new BSP II brine concentrator. The new BSP II brine concentrator
electrical substation shall be a BSP II Joint Facility.     (f)   Property
Rights. If the Groups jointly determine it is necessary, the BSP I Owners shall
execute and deliver any easements or rights-of-way, or sell any property (at the
price set forth in Section 10.01), to the extent that are reasonably necessary
to enable the BSP II Owners to construct the new BSP II brine

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 17
Big Stone II Power Plant
  June 30, 2005  

      concentrator, new water and product lines, and new BSP II brine
concentrator electrical substation.     (g)   Fees and Maintenance. The BSP II
Owners shall not charge the BSP I owners a fee for the use of the new BSP II
brine concentrator, the new water and product lines, or the new BSP II brine
concentrator substation. The Groups shall share the ongoing maintenance costs of
the existing BSP I brine concentrator and the new BSP II brine concentrator
equally.

     4.04 Lake Water Intake and Pipeline Structure. The lake water intake and
pipeline structure, and its various components set forth on Schedule 4.04, and
including, without limitation, the water intake building and all associated
pumping and operational equipment located on the shore of Big Stone Lake and the
forty-eight (48) inch concrete pipeline from the Long Lake building on the shore
of Big Stone Lake to the existing discharge structure, which consists of the
concrete weir located in the brine concentrator make-up pond and existing on the
Effective Date shall be BSP I Joint Facilities. The BSP II Owners shall pay a
fee for the use of the lake water intake and pipeline structure as calculated
pursuant to Section 9.05.
     4.05 Cooling Water Pond. The three hundred forty (340) acre cooling water
pond immediately adjacent to BSP I, used by BSP I, existing as of the Effective
Date, and identified on Schedule 4.05, shall be a BSP I Joint Facility. Any
makeup water necessary for the operation of the BSP II cooling towers will come
from the cooling water pond. Any makeup water necessary for the cooling water
pond will come from the BSP I storage ponds, described in Section 4.06 hereof.
There will be no fee charged for the use of the cooling water pond and the
Groups shall share the ongoing cost of maintenance of the cooling water pond
equally.
     4.06 Water Storage Ponds. The approximately one hundred (100) surface acres
holding pond closest to Highway 109 and the approximately two hundred
(200) surface acre evaporation ponds used by BSP I and existing as of the
Effective Date, and identified on Schedule 4.05, shall be BSP I Joint
Facilities. As of the date of Commercial Operation, the holding pond and the
evaporation pond will be used as water storage ponds for both Plants, but shall
remain BSP I Joint Facilities. The BSP II Owners shall construct an additional
water storage pond, to be located Southwest of the Plant site, that will be a
BSP II Joint Facility. Collectively, the storage ponds will supply makeup water
to the cooling water pond. The BSP II Owners shall construct, pay for, and own
any pumps and a pipeline necessary to connect the storage ponds to the cooling
pond. These pumps and pipeline shall be BSP II Joint Facilities. There will be
no Joint Facilities Fees or other fees charged for the use of the storage ponds.
BSP II Owners shall be solely responsible for the ongoing cost of maintenance of
any pumps and pipeline necessary to connect the storage ponds to the cooling
pond.
     4.07 BSP II Cooling Tower Blowdown Pond. The BSP II Owners shall construct,
pay for, and own a new cooling tower blowdown pond on the western edge of the
BSP II Plant Site, identified on Schedule 4.07 (“BSP II Cooling Tower Blowdown
Pond”). The BSP II Cooling Tower Blowdown Pond shall be maintained at the sole
cost of the BSP II Owners and will not be a Joint Facility. Notwithstanding the
foregoing sentence, the BSP II Cooling Tower Blowdown Pond shall be used to
provide water supply to both the existing BSP I brine concentrator and new BSP
II brine concentrator. The BSP II Owners shall construct, pay for,

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 18
Big Stone II Power Plant
  June 30, 2005  

and own any pumps or pipeline necessary to connect the BSP II Cooling Water
Blowdown Pond to the existing and new brine concentrators. No fee shall be
charged for the BSP I Owners use of the BSP II Cooling Water Blowdown Pond to
provide water supply to the existing brine concentrator. BSP II Owners shall be
solely responsible for the ongoing cost of maintenance of any pumps and pipeline
necessary to connect the BSP II Cooling Water Blowdown Pond to the existing BSP
I brine concentrator and the new BSP II brine concentrator.
     4.08 Demineralizer Trains. The BSP II Owners shall purchase and erect a new
demineralizer train at BSP I to supplement the existing system of vessels,
piping, valves, and controls for preparing the main boiler supply water on the
ground floor of the BSP I main building, between column lines C6 to L and column
lines 8 to 9, with all three demineralizer trains operated out of the same
location. The two existing demineralizer trains shall be BSP I Joint Facilities
and the new demineralizer train shall be a BSP II Joint Facility. There will be
no fee charged for the use of the existing or new demineralizer trains and the
BSP I Owners and BSP II Owners shall split the ongoing cost of maintenance of
the three demineralizer trains between the two Plants in proportion to the
demineralized water use of the Plants, measured (and not calculated) in gallons
during the previous calendar year.
     4.09 Cold Lime Softener. The BSP II Owners intend to purchase from the BSP
I Owners the existing BSP I cold lime softener at depreciated book value and
associated real estate identified on Schedule 4.05. If the BSP II Owners
exercise their option to purchase the real estate described in the Option to
Purchase Contract, they shall purchase the cold lime softener from the BSP I
Owners on the date the Option to Purchase Contract is exercised. If this
purchase occurs, the cold lime softener shall not be a BSP II Joint Facility.
The BSP II Owners shall construct, pay for, and own a new pipeline and any
additional facilities necessary to connect the cold lime softener discharge to
the BSP II Plant’s circulating water system. The new facilities referred to in
the preceding sentence shall not be Joint Facilities. The BSP II Owners shall be
solely responsible for the ongoing costs of maintenance for the cold lime
softener, if purchased from the BSP I Owners.
ARTICLE V
COAL AND ASH JOINT FACILITIES
     5.01 Coal And Ash Joint Facilities. For purposes of this Agreement, the
“Coal and Ash Joint Facilities” are those facilities used to receive and store
coal and ash necessary in the operation of, or produced from the operation of,
BSP I and BSP II. Coal and Ash Joint Facilities shall consist of the facilities
described in this Article V and in the “Coal and Ash Joint Facilities” set forth
in Schedule 5.01 attached hereto.
     5.02 Coal Dead Storage Area. The coal dead storage pile area used by BSP I
and existing as of the Effective Date shall be a BSP I Joint Facility.
Contemporaneously herewith, the Owners have entered into the Option to Purchase
Contract, which, among other things, contemplates the purchase by the BSP II
Owners of a portion of the existing coal dead storage area. If the BSP II Owners
purchase a portion of the existing coal dead storage area, the portion purchased
shall be a BSP II Joint Facility. The existing coal dead storage area is
adequate for the storage and stockpiling of coal in sufficient quantities for
both BSP I and BSP II and both Groups may use the coal dead storage area to
store any amount of coal as may be needed for the

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 19
Big Stone II Power Plant
  June 30, 2005  

operation of BSP I and BSP II. There will be no Joint Facilities Fees or other
fee charged for the use of the coal dead storage areas (other than costs related
to the initial development by BSP II of its share of the site (which costs shall
be borne exclusively by BSP II)), and the Groups shall share the ongoing cost of
maintenance of the coal dead storage areas equally.
     5.03 BSP II Live Coal Storage. The BSP II Owners shall construct, pay for,
and own a new conveyor from the head of the #2 conveyor (located in the coal
dead storage area) to the new BSP II coal storage silos. The new conveyor shall
have a retractable plow suitable for use to provide stack-out to dead storage. A
description of the new conveyor system and the stack-out chute is set forth on
Schedule 5.03 attached hereto. The new conveyor shall be maintained at the sole
cost of the BSP II Owners and will not be a Joint Facility. The new stack-out
chute will be a BSP II Joint Facility. There will be no fee charged for the use
of the new stack-out chute and the ongoing cost of maintenance of the new
stack-out chute shall be shared equally between the Groups.
     5.04 Coal Measuring Procedure. All coal that enters or leaves the coal dead
storage pile area shall be measured and accounted for pursuant to procedures to
be developed by the Operator. Such procedures shall provide for the accurate and
complete measurement of the coal inventory of each Group and the use of such
coal and, as appropriate, shall reflect the quality of coal and any shrinkage.
     5.05 New Coal Yard Shop. The BSP II Owners shall construct, pay for, and
own a new coal yard shop for storage and maintenance of mobile equipment used in
connection with coal and ash handling. The new coal yard shop shall be located
on land that the BSP II Owners anticipate purchasing from the BSP I Owners
pursuant to the Option to Purchase Contract. The new coal yard shop shall be a
BSP II Joint Facility. Although a Joint Facility, no Joint Facilities Fee or
other fee shall be charged to the BSP I Owners for use of the new coal yard
shop, and the BSP II Owners shall be solely responsible for the cost of
maintenance of the new coal yard shop.
     5.06 Mobile Equipment. The BSP I mobile equipment, consisting of the types
of mobile equipment listed on Schedule 5.06 hereto, shall be BSP I Joint
Facilities. Ninety (90) days before the date of the first coal delivery to BSP
II, the BSP II Owners shall purchase one-half of such mobile equipment from the
BSP I Owners at its depreciated book value. Any new mobile equipment that the
Groups agree is required for joint use by BSP I and BSP II shall be purchased
with one-half of the cost borne by the BSP I Owners and one-half borne by the
BSP II Owners, so that, to the extent possible, ownership of the mobile
equipment is divided equally between the Groups. With respect to the types of
mobile equipment required to have certificates of title under applicable Law,
the BSP I Owners and BSP II Owners shall each endeavor to purchase individual
units of such mobile equipment in order that the value, measured by the purchase
price, shall approximate, as much as possible, half of the value of such mobile
equipment required to have certificates of title. All new mobile equipment
purchased by the BSP I Owners that is intended to be used jointly by the Groups
shall be BSP I Joint Facilities. All new mobile equipment purchased by the BSP
II Owners that is intended to be used jointly by the Groups shall be BSP II
Joint Facilities. Each Group shall split the cost of maintaining all mobile
equipment in proportion to the coal consumption at the two Plants; provided,
however, that each Group shall pay all costs associated with owning and
operating its own motor vehicles. The

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 20
Big Stone II Power Plant
  June 30, 2005  

E&O Committees shall, to the extent necessary, develop policies and procedures
to implement the mobile equipment ownership arrangement of this Section 5.06.
     5.07 Coal Receiving System, Rail Spur and Coal Unloading Facilities. The
coal receiving system, rail spur and fuel unloading facilities used for BSP I
and existing on the Effective Date shall be BSP I Joint Facilities. The coal
receiving system, rail spur and fuel unloading facilities consist of such
facilities as are necessary for transporting, loading and unloading coal and
other materials, including but not limited to BSP I’s rail spur, rail car rotary
dumper, positioner and #1 and #2 conveyors all as described more fully in
Schedule 5.07 attached hereto. The BSP II Owners shall pay a fee for the use of
the coal receiving system, rail spur and fuel unloading facilities as calculated
pursuant to Section 9.05.
     5.08 Rail Cars. BSP I currently leases rail cars under a fifteen (15) year
lease, which lease terminates in 2011, and thereafter shall lease or purchase,
as it deems appropriate, its rail cars. BSP II shall purchase or lease rail
cars, as it deems appropriate. The BSP I rail cars shall be BSP I Joint
Facilities and the BSP II rail cars shall be BSP II Joint Facilities. Each
Group’s rail cars shall be used principally for the benefit of the Group that
owns or leases the rail cars, but the Operator may use any of the rail cars for
both Plants if it determines such use is efficient. For rail cars of one Plant
being used by the other, a usage fee for rail cars shall be determined by the
Operator at the end of each calendar year based on the actual usage of the rail
cars by BSP I and BSP II and the actual costs associated with the same. Each
Plant will bear its own costs for leasing, operating or maintaining its rail
cars.
     5.09 Ash Disposal Area. The existing BSP I ash disposal site shall be a Big
Stone I Joint Facility. Both Groups shall pay for ongoing capital improvements
made to the ash disposal site after the date BSP II first achieves Commercial
Operation, including but not limited to any reclamation costs and any
environmental remediation costs, in proportion to each Plant’s total volume of
ash deposited in the site. Other than as specifically included herein, the BSP
II Owners shall not pay for any volume of the existing ash disposal site
consumed as a result of BSP II Plant ash being deposited. Instead, a calculation
will be made of the volume of the existing site consumed by the ash from the BSP
II Plant, and when and if it becomes necessary to construct a new ash disposal
site, the BSP II Owners shall pay for all costs associated with creation of a
new site with a capacity equal to the volume of ash that was disposed by BSP II
into the existing ash disposal site. Nothing herein shall prevent the Groups
from agreeing to the creation of a new site larger in capacity than that
required by the previous sentence, and in such event, the costs of creating such
ash disposal site shall be as the Groups may agree. All costs of maintaining a
new site shall be shared between the Groups in proportion to the volume of ash
deposited by each Plant on an ongoing basis. Each Group will pay its costs
associated with delivering its respective ash to the existing ash disposal site
and any new ash disposal site.
     5.10 Relocation of Ash Silo. The existing BSP I ash silo, a thirty-five
(35) feet by sixty-four (64) feet and three (3) inches steel fly ash bin
manufactured by the United Conveyor Corporation, shall be relocated by the BSP
II Owners, at their sole expense, to a location at the BSP II Plant Site agreed
to by the Groups. The relocated BSP I ash silo shall continue to be owned by BSP
I Owners and shall not be a Joint Facility. The BSP I Owners shall not be
charged for the use of the BSP II property on which ash silo will be relocated.
BSP I Owners shall be responsible for all costs of maintaining the BSP I Ash
Silo.

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 21
Big Stone II Power Plant
  June 30, 2005  

ARTICLE VI
ADDITIONAL JOINT FACILITIES
     6.01 Plant Joint Facilities. The “Additional Joint Facilities” are those
facilities described in this Article VI and in those Additional Joint Facilities
set forth in Schedule 6.01 attached hereto.
     6.02 Warehouse. The existing BSP I fifty-eight (58) feet by two hundred and
ten (210) feet coal yard shop building adjacent to the existing BSP I cooling
pond and north of the existing BSP I pollution control equipment currently being
used by BSP I as of the Effective Date will be a BSP I Joint Facility and will
become a warehouse for both BSP I and BSP II for storage of Materials and
Supplies. Although a Joint Facility, there will be no Joint Facilities Fee or
other fee charged for the use of the warehouse and the Groups shall share the
ongoing cost of maintenance of the warehouse equally. The BSP II Owners shall
construct and pay for all costs associated with converting the existing BSP I
coal yard shop into a warehouse, including, without limitation, any upgrades or
modifications to the existing computerized tracking system for parts and
inventory required to permit tracking of parts and inventory so that if either
Plant uses Materials and Supplies owned by the other Plant and which are stored
in the warehouse, an accounting of such use shall be possible. Reimbursement for
any Materials and Supplies of one Plant used by the other Plant will be at
original cost plus twenty percent (20%).
     6.03 Office and Locker Room. The BSP II Owners shall construct, pay for and
own additional office and locker room space as needed. Any new office or locker
room space constructed by the BSP II Owners will be a BSP II Joint Facility. BSP
I Owners shall be allowed to use any office and locker room space built by the
BSP II Owners and needed in connection with the operation of BSP I at no charge.
The existing office and locker room will be BSP I Joint Facilities. BSP II
Owners shall be allowed to use any existing office and locker room space needed
in connection with the operation of BSP II at no charge. The Groups shall share
the ongoing cost of maintenance of the office and locker rooms equally.
     6.04 Roads and Parking. The BSP II Owners shall construct, pay for and own
additional roads and parking as needed. The existing roads and parking will be
BSP I Joint Facilities. Any new roads and parking constructed by the BSP II
Owners will be BSP II Joint Facilities. The Groups shall share the ongoing cost
of maintenance of the roads and parking equally.
     6.05 Control Room. Except for the distributed control systems and all other
systems necessary for the operation and control of BSP I, the control room used
for the operation and control of BSP I and existing on the Effective Date shall
be a BSP I Joint Facility. The BSP II Owners shall construct, pay for and own
all distributed control systems and all other systems necessary for the
operation and control of BSP II and located in the control room. Any new
distributed control systems and all other systems necessary for the operation
and control of BSP II and located in the control room and paid for by the BSP II
Owners shall not be Joint Facilities. Except for the distributed control systems
and all other systems necessary for the operation and control of each Plant
which will be separately owned by each Plant, BSP I Owners and BSP II Owners
shall share the ongoing cost of maintenance of the control room equally between
the two Plants. BSP I Owners and BSP II Owners shall cooperate to direct the
Operator on the most

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 22
Big Stone II Power Plant
  June 30, 2005  

effective use of the control room to operate both Plants. Nothing herein shall
prevent the Owners from establishing a common distributed control system.
     6.06 Common Fire System. The existing fire system, consisting of the
electric and diesel fire pumps in the circulating water inlet building and all
associated supply piping, valves, hydrants, and hydrant buildings at the BSP I
Plant Site and currently used for BSP I and existing on the Effective Date will
be a BSP I Joint Facility. The BSP II Owners shall construct and pay for
additions and upgrades to the fire system which the Groups agree are needed for
the construction and operation of BSP II. Any new additions to the fire system
constructed and paid for by the BSP II Owners shall be BSP II Joint Facilities.
There will be no Joint Facilities Fees or other fee charged for the use of the
existing fire system or any additions or upgrades and the BSP I Owners and BSP
II Owners shall share the ongoing cost of maintenance of the common fire system
in proportion to the nameplate Capacity of the two Plants.
ARTICLE VII
ELECTRICAL SUBSTATION
     7.01 MISO Interconnection Request. The BSP II Owners have submitted an
interconnection request to the MISO and pursuant to MISO’s FERC-filed tariff
addressing such interconnection requests, the BSP II Owners anticipate entering
into an interconnection agreement with MISO and affected transmission owners.
The BSP II Owners shall provide a copy of all interconnection studies done by or
with MISO regarding BSP II to the BSP I Owners.
     7.02 Transmission Owners’ Additions and Upgrades. To the extent any
additions or upgrades to the BSP I electrical substation (the “Electrical
Substation”) are required due to the construction of BSP II, and such additions
or upgrades are deemed to be on the transmission owners’ side of the point of
interconnection (as defined in the MISO interconnection agreement or pursuant to
the BSP II Participation Agreement), then the costs of such additions or
upgrades shall be as directed in the MISO interconnection agreement. The BSP II
Owners shall reimburse the BSP I Owners for any such costs, but only to the
extent any such additions or upgrades are required to be made pursuant to the
MISO interconnection agreement.
     7.03 Generation Owners’ Additions and Upgrades. Any additions or upgrades
required to be made to the Electrical Substation that are deemed to be on the
generators’ side of the point of interconnection (as defined in the MISO
interconnection agreement) shall be made by, owned, maintained, and paid for by
the BSP II Owners and shall be BSP II Joint Facilities. Those components of the
Electrical Substation that do not require additions or upgrades shall continue
to be owned by the BSP I Owners and shall be BSP I Joint Facilities. Before
making any such additions or upgrades, the BSP II Owners shall provide
information regarding the same to the BSP I Owners. This information shall
include, but not be limited to, a one-line diagram showing the proposed
additions and upgrades to the Electrical Substation. All such additions or
upgrades (including, without limitation, the one-line diagram) must be approved
by the BSP I Owners, which approval shall not be unreasonably withheld, before
the BSP II Owners make any such additions or upgrades.
     7.04 Direct Cost Reimbursements Before Commercial Operation. Prior to the
first date of Commercial Operation, no additions or upgrades shall have or cause
a material adverse

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 23
Big Stone II Power Plant
  June 30, 2005  

impact on BSP I’s reliability or available Capacity or Energy delivery. If there
is such a material adverse impact prior to the first date of Commercial
Operation caused by such additions or upgrades, then the BSP II Owners shall
reimburse the BSP I Owners for lost Capacity or Energy as follows:

  (a)   if the BSP I Owners’ costs to replace lost Capacity or Energy exceed the
BSP I Owners’ costs to produce such Capacity or Energy, then, the Groups shall
mutually agree to either:

  (i)   require that the BSP II Owners shall acquire such Capacity or Energy for
the BSP I Owners and the BSP I Owners shall pay to the BSP II Owners whatever it
would have cost the BSP I Owners to produce such Capacity or Energy at the BSP I
Plant; or     (ii)   direct the BSP I Owners to acquire such Capacity or Energy
and charge the BSP II Owners the difference between whatever it would have cost
the BSP I Owners to produce such Capacity or Energy and what the BSP II Owners
were required to pay for such Capacity or Energy at the BSP I Plant;

provided, however, that if the market price of such Capacity or Energy is less
than what it would have cost the BSP I Owners to produce such Capacity or
Energy, then the BSP II Owners shall have no obligations under this
Section 7.04.
     7.05 No Cost Reimbursement After Commercial Operation. After the first date
of Commercial Operation, each Group shall be responsible for maintaining its own
Electrical Substation Joint Facilities and shall be responsible, under
applicable Law, for obtaining its own replacement Capacity and Energy in the
event of an outage or any other service interruption that is related to the
Electrical Substation. Nothing herein shall affect, alter or modify any rights
or obligations created by that certain Settlement Agreement entered into on or
around March 24, 2005 by and among MISO, Otter Tail, Montana-Dakota, Minnkota
Power Cooperative, Inc. as agent for Northern Municipal Power Agency, and
NorthWestern.
ARTICLE VIII
CONSUMABLES, PRODUCT SALES AND EMISSIONS
     8.01 Electricity Consumed by the Joint Facilities. The electricity
necessary for the operation of the lake water intake and pipeline structure
addressed in Section 4.04 hereof and the coal receiving system, rail spur and
coal unloading facilities addressed in Section 5.07 hereof shall be provided by
the BSP I Owners and the BSP II Owners in proportion to the respective water
usage (on a calculated basis) and coal consumption, respectively, of the Plants
for the previous calendar year. For all Joint Facilities, other than the lake
water intake and pipeline structure and the coal receiving system, rail spur and
fuel unloading facilities, the cost of electricity shall be recovered through
the particular arrangement for ongoing cost of maintenance for such Joint
Facility.

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 24
Big Stone II Power Plant
  June 30, 2005  

     8.02 Fuel Oil Sales to BSP II. The BSP I Owners own a five hundred thousand
(500,000) gallon fuel oil storage tank, forty-eight (48) feet in diameter and
forty (40) feet tall, constructed of carbon steel and designated V60-B, located
closest to the existing cooling pond on the BSP I Plant site. The fuel oil
storage tank has sufficient capacity to meet the ongoing fuel oil needs of both
Plants. The fuel oil storage tank will not be a Joint Facility, but the BSP II
Operator shall purchase all of the fuel oil necessary for the operation of BSP
II from the BSP I Owners. All fuel oil stored in the fuel oil storage tank shall
be No. 2 fuel oil. The purchase price for the fuel oil shall be the BSP I cost
of the fuel oil, plus a fee of twenty percent (20%). The BSP II Owners shall
construct, pay for, own, and maintain at their expense any new pipeline or other
facilities necessary to transport the fuel oil to the BSP II Plant and these
facilities will not be Joint Facilities. The BSP I Owners shall keep reasonable
fuel oil supplies on hand to meet the fuel oil needs of BSP II.
     8.03 Brine Concentrator Product Water and Steam Sales. Nothing in this
Agreement shall alter any existing agreements between the BSP I Owners and
Northern Lights Ethanol, LLC for the sale of steam or brine concentrator product
water from any BSP I Joint Facilities, nor require the BSP I Owners to
compensate the BSP II Owners for the use of a new BSP II brine concentrator
contemplated by Section 4.03 hereof in connection with any existing agreement
between the BSP I Owners and Northern Lights Ethanol, LLC.
     8.04 Permits.

  (a)   As of the Effective Date, it is contemplated that the Operator, on
behalf of BSP I and BSP II, shall apply for and obtain a single air emission
permit pursuant to Title V of the Clean Air Act with an aggregate limit of SO2
and NOx emissions for both Plants. However, the BSP II Owners shall not be
precluded from applying for and obtaining a single air emission permit pursuant
to Title V of the Clean Air Act with limits of SO2 and NOx emissions not
determined on an aggregate basis. (*) If additional costs are incurred to reduce
BSP I’s NOx emissions below the aggregate limit, and such reductions are
necessary to comply with the single air emission permit, then the BSP II Owners
shall pay all such costs up (*) and the Groups shall negotiate in good faith for
the allocation between the two Groups of such costs in excess of (*). After the
initial single air emission permit described in this Section 8.04 has been
issued, each Group shall be responsible for the respective costs for future
renewals of any future permits on a basis proportional to the respective
generating capacity of each of the Plants, and shall be responsible for all
costs of compliance, including, without limitation, upgrades of all kinds, with
respect to its own Plant.     (b)   The Operator, on behalf of BSP I, shall
apply for an amendment of the existing water appropriations permit for purposes
of supplying water for BSP II and shall apply for an amendment of the existing
BSP I solid waste disposal permit to accommodate BSP II’s solid waste disposal
needs. The Groups shall cooperate to obtain any other permits that may be
required by applicable Law with respect to the Plants.

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 25
Big Stone II Power Plant
  June 30, 2005  

     8.05 Joint Scrubber. Notwithstanding the BSP II Owners’ obligation to pay
the costs associated with amending or obtaining the initial single air emission
permit pursuant to Section 8.04, the BSP I Owners agree it is the intent that a
single wet scrubber (“Joint Scrubber”) (*).

  (a)   (*)     (b)   (*)     (c)   (*)

ARTICLE IX
OPERATION OF JOINT FACILITIES, USAGE FEE AND
PAYMENT, SINGLE OPERATOR
     9.01 Operation of the Joint Facilities. Except as otherwise provided for in
this Agreement, the single Operator contemplated by Section 9.06 shall be
responsible for operating the BSP I Joint Facilities and the BSP II Joint
Facilities pursuant to separate agreements with each Group for the operation of
each Plant and, so long as there is a single Operator, each Group’s Operator
shall fairly allocate its time between BSP I and BSP II.
     9.02 Designated Representatives. Each Group shall appoint an individual
representative to serve as its official representative (a “Designated
Representative”) to communicate the decisions of each Group to the other Group
with respect to matters related to each Group’s respective Plant, Joint
Facilities, and all other matters contemplated hereunder. Each Group shall be
entitled to rely on a communication with respect to a Plant matter, whether
written or oral, from a Designated Representative, unless it receives written
notice signed by all Owners of a Group (with the exception of the former
Designated Representative), as may be required under the applicable
Participation Agreement, that the Designated Representative of a Group is no
longer the Group’s Designated Representative and naming the Group’s new
Designated Representative.
     9.03 Joint Facilities Charges. The BSP II Owners shall pay to the BSP I
Owners or, in relevant instances, the BSP I Owners shall pay the BSP II Owners,
a monthly amount determined by the application of Joint Facilities Fee formula
in Section 9.05 hereof (each, a “Joint Facilities Fee”). All cost allocations
contemplated in this Agreement and all payments of any Joint Facilities Fees
hereunder shall not commence until the date on which BSP II receives its first
shipment of coal, except that the BSP II Owners shall reimburse the BSP I Owners
for all costs incurred for filling any of BSP II’s water facilities that occur
prior to the aforementioned first shipment.
     9.04 Netting of Payment. There shall be a monthly netting of amounts due
between BSP I Owners and BSP II Owners of the Joint Facilities Fees, so that one
payment will be made by one Group to the other Group each month. The Operator
shall prepare the monthly net invoice.
     9.05 Joint Facilities Fee Formulas. The Joint Facilities Fee formula in
this Section

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 26
Big Stone II Power Plant
  June 30, 2005  

9.05 shall apply only to lake water intake and pipeline structure Joint
Facilities addressed in Section 4.04 and the coal receiving system, rail spur
and fuel unloading facilities addressed in Section 5.07. Schedule 9.05 sets
forth the Joint Facilities (*). The payment of Joint Facilities Fees will
commence on the date BSP II receives its first shipment of coal, except that the
BSP II Owners’ reimbursement of the BSP I Owners for costs incurred for filling
any of BSP II’s water facilities shall occur upon invoice by BSP I of the BSP II
Owners therefor.

  (a)   With respect to the lake water intake and pipeline structure addressed
in Section 4.04 and the coal receiving system, rail spur and fuel unloading
facilities addressed in Section 5.07 existing as of the date of Commercial
Operation and until such time that a component of such Joint Facility is
replaced, the Joint Facilities Fee shall be calculated annually based upon the
following formula:         (*)         Terms within the above formula and the
formula in Section 9.05(b) are defined as follows:              O&M Costs: Shall
mean the annual direct assigned operating and maintenance costs (including,
without limitation, any services provided by Third Parties) of the applicable
Joint Facility in this Section 9.05.              Insurance: Shall mean an
annual allocation of the cost of insurance premiums covering the applicable
Joint Facility in this Section 9.05. For purposes of this formula, allocation of
any premium shall be based upon a ratio of the amount of capital invested in the
Joint Facilities relative to total capital invested in all property covered by
the relevant insurance policy.              Property Taxes: Shall mean an annual
allocation of the property taxes assessed on the applicable Joint Facility in
this Section 9.05. For purposes of this formula, allocation of any taxes shall
be based upon a ratio of the amount of capital invested in the Joint Facilities
relative to total capital invested in all property included in separately
assessed property tax that includes that Joint Facility. In instances where the
BSP I Owners have separately booked their proportional share of cost, the total
property taxes on BSP I shall be determined by calculating the full cost from
Otter Tail’s proportion of cost.              Use Factor: Shall mean the (*) of
a Joint Facility (*) the Joint Facility. With respect to the (*) shall be (*).
With respect to the (*).     (b)   With respect to the lake water intake and
pipeline structure addressed in Section 4.04 and the coal receiving system, rail
spur and fuel unloading facilities addressed in Section 5.07 at and after a
replacement of a component of such Joint Facility listed in Schedules 4.04 and
5.07, the Joint Facilities Fee shall be calculated annually based upon the
following formula:         (*)

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 27
Big Stone II Power Plant
  June 30, 2005  

The additional terms within the above Formula shall be defined as follows:
Net Investment: Shall mean the (*) of the (*) of the Joint Facility.
     Annual Fixed Charge: For the Joint Facilities identified herein, the Annual
Fixed Charge shall be (*).
     9.06 Single Operator.

  (a)   The Groups shall endeavor to use the same Operator for both Plants. As
of the Effective Date, Otter Tail is the Operator of the BSP I Plant pursuant to
the BSP I Ownership Agreement. Also, as of the Effective Date, the BSP II Owners
intend to enter into the Operation & Maintenance Services Agreement for the
operation of BSP II.     (b)   (*)     (c)   (*)     (d)   (*)     (e)   (*)

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 28
Big Stone II Power Plant
  June 30, 2005  

     9.07 Joint Ownership of Joint Facilities. The Groups may jointly own Joint
Facilities, provided that all Owners unanimously agree to such joint ownership
in writing prior to the transfer of title or acquisition of a jointly-owned
Joint Facility.
ARTICLE X
ACQUISITION OF PROPERTY AND ACCESS; INDEMNIFICATION
     10.01 Option to Purchase Contract. Contemporaneously with the execution of
this Agreement, the BSP I Owners and Otter Tail, as administrative agent for
itself and the other BSP II Owners, shall enter into the Option to Purchase
Contract, substantially in the form attached hereto as Schedule 10.01(A). The
BSP I Owners and Otter Tail, as administrative agent for itself and the other
BSP II Owners, shall also, contemporaneously with the execution of this
Agreement, execute and deliver a memorandum of the Option to Purchase Contract,
substantially in the form attached hereto as Schedule 10.01(B). Otter Tail and
the other BSP II Owners shall have the option to purchase none, some or all of
the property that is the subject of the Option to Purchase Contract, based (in
the BSP II Owners’ sole discretion) on the results of the environmental due
diligence conducted pursuant to Section 10.09 below. Otter Tail, in its capacity
as administrative agent for itself and the other BSP II Owners for purposes of
the Option to Purchase Contract, shall, with respect thereto, only act or not
act, as directed by the BSP II E&O Committee.
     10.02 Easement Agreement.

  (a)   Contemporaneously with the execution of this Agreement, the BSP I Owners
and the BSP II Owners shall enter into the Blanket Easement Agreement,
substantially in the form attached hereto as Schedule 10.02(A).     (b)  
Following completion of the environmental due diligence conducted pursuant to
Section 10.09 below and the design of the BSP II Plant and the BSP II Joint
Facilities, the BSP I Owners and the BSP II Owners (operating through their
respective E&O Committees) shall negotiate in good faith to determine the
specific location of the areas within the BSP I Plant Site and the BSP II Plant
Site that are necessary to be encumbered by the easements granted under the
terms of the Blanket Easement Agreement in order to ensure the operation of BSP
I and BSP II in a manner that is efficient, economical and in accord with
Prudent Utility Practice (collectively, the “Designated Easement Areas”). Upon
such determination, the BSP I Owners and the BSP II Owners shall enter into an
instrument that either amends or restates the Blanket Easement Agreement (the
“Designated Easement Agreement”) in order to specifically delineate the
Designated Easement Areas and to subject such Designated Easement Areas to the
respective easements granted in the Blanket Easement Agreement and in order to
release such other areas of the BSP I Plant Site and the BSP II Plant Site from
the terms and conditions of the Blanket Easement Agreement. Based (in the BSP II
Owners’ sole discretion) on the results of the environmental due diligence

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 29
Big Stone II Power Plant
  June 30, 2005  

conducted pursuant to Section 10.09 below, the BSP II Owners shall not be
required to designate any particular portion of the property subject to the
Blanket Easement Agreement as a Designated Easement Area. Such areas not
designated as Designated Easement Areas in the Designated Easement Agreement
shall be released from the Blanket Easement Agreement.

  (c)   Prior to the BSP II Financial Closing (as contemplated under the BSP II
Participation Agreement), the BSP I Owners shall obtain releases from the liens
of any mortgages or deeds of trust (if any) that could affect the BSP II Owners’
rights to use the Designated Easement Areas under the terms and conditions of
the Blanket Easement Agreement and the Designated Easement Agreement. The BSP II
Owners agree that a release substantially in the form attached hereto as
Schedule 10.02(C) shall be sufficient for the purposes of releasing the
Designated Easement Areas from the mortgage indentures that encumber
Montana-Dakota’s ownership interest in the Designated Easement Areas. With
respect to NorthWestern’s mortgage indenture, the Trustee for such mortgage
indenture shall provide a certificate evidencing an absence of default under
such mortgage indenture from the grant of the easements in the Blanket Easement
Agreement.     (d)   As means of explanation, it is the intent of the parties
that the indemnifications contained in Sections 10.04 and 10.06 shall apply to
all property that is the subject of the Blanket Easement Agreement, except that
the indemnifications contained in Section 10.06(i) shall not apply to any
property that is subject to the Blanket Easement Agreement unless either (i) fee
title to such property is conveyed to the BSP II Owners pursuant to the Option
to Purchase Contract; or (ii) such property is designated as a Designated
Easement Area.

     10.03 Pre-Construction and Construction of the BSP II Plant. Pursuant to
the Blanket Easement Agreement, the BSP I Owners are granting the BSP II Owners
and their invitees a temporary, nonexclusive easement over and across the BSP I
Plant Site to access the BSP II Plant Site for purposes of investigating,
accumulating data, testing and designing BSP II and associated facilities,
including BSP II Joint Facilities, BSP II exclusive facilities, utility lines,
and access roads. The BSP II Owners agree that they will use their best efforts
to avoid causing any damage to, or interference with any improvements or
facilities on or under the BSP I Plant Site and will minimize any disruption or
inconvenience to the operation of BSP I and associated facilities. During the
preparation for construction and construction phases of BSP II, the BSP I
Owners, on the basis of the determinations of their Engineering and Operating
Committee, pursuant to the Blanket Easement Agreement, are granting a temporary,
nonexclusive easement in writing to the BSP II Owners, their contractors,
subcontractors, architects, employees and invitees designating specific BSP I
Plant Site areas for purposes of BSP II lay down areas, construction material
storage, work areas, contractor parking, temporary offices and temporary
roadways, to the extent such locations and use do not prevent or impair the
normal operation of BSP I or increase the BSP I Owners’ expenses for normal
operation of BSP I and associated facilities. Should such use ultimately prevent
or impair the normal operation of BSP I and associated facilities or increase
the BSP I Owners’ expenses for normal operation of BSP I and associated
facilities, the BSP II Owners shall pay the BSP I Owners for all reasonable
expenses resulting from such use. Once BSP II construction is completed, the BSP
II Owners

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 30
Big Stone II Power Plant
  June 30, 2005  

shall remove all equipment and material from the BSP I Plant Site and restore
the BSP I Plant Site to the condition existing prior to BSP II activities
pursuant to this Section 10.03, normal wear and tear alone excepted.
     10.04 Liability and Indemnification. During any and all activities
conducted pursuant to Section 10.03 and for a period of two (2) calendar years
after the first date of Commercial Operation, the BSP II Owners, to the fullest
extent permitted by Law, shall indemnify and hold harmless the BSP I Owners
collectively, each BSP I Owner individually, their directors, officers,
employees and invitees from and against all liabilities, obligations, claims,
damages, penalties, causes of action, judgments, costs and expenses (including,
without limitation, reasonable attorney fees and expenses) arising out of or
resulting from the activities under Section 10.03, provided such liabilities,
obligations, claims, damages, penalties, causes of action, judgments, costs and
expenses are attributable to bodily injury, sickness, disease, or death, or to
injury to or destruction of BSP I, the BSP I Plant Site, or BSP I associated
facilities, including loss of use thereof, to the extent caused in whole or in
part by negligent, tortious, or willful acts or omissions of the BSP II Owners,
their contractors, subcontractors, architects, employees, or invitees. With
respect to the loss of use, the exclusive remedy available to the BSP I Owners
shall be that the BSP II Owners shall reimburse the BSP I Owners for lost
Capacity and Energy as follows:

  (a)   if the BSP I Owners’ costs to replace lost Capacity or Energy exceed the
BSP I Owners’ costs to produce such Capacity or Energy, then the Groups shall
mutually agree to either:

  (i)   require that the BSP II Owners shall acquire such Capacity or Energy for
the BSP I Owners and the BSP I Owners shall pay to the BSP II Owners whatever it
would have cost the BSP I Owners to produce such Capacity or Energy at the BSP I
Plant; or     (ii)   direct the BSP I Owners to acquire such Capacity or Energy
and charge the BSP II Owners the difference between whatever it would have cost
the BSP I Owners to produce such Capacity or Energy and what the BSP II Owners
were required to pay for such Capacity or Energy at the BSP I Plant;

provided, however, that if the market price of such Capacity or Energy is less
than what it would have cost the BSP I Owners to produce such Capacity or
Energy, then the BSP II Owners shall have no obligations under this
Section 10.04.
     The BSP II Owners further shall indemnify and hold harmless the BSP I
Owners individually, their Affiliates, directors, officers, employees, agents,
contractors, subcontractors, licensees, invitees, and the respective heirs,
legal representatives, successors and assigns of all such Person (hereinafter
collectively referred to as “Indemnified Parties”) from and against any workers
compensation claims, and any mechanic’s or supplier’s claim for lien in
connection with work done or materials furnished for BSP II and associated
facilities. The BSP II Owners waive all claims against the Indemnified Parties
for damage to BSP II materials or property placed

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 31
Big Stone II Power Plant
  June 30, 2005  

upon the BSP I Plant Site from any cause except Willful Action arising at any
time during the course of activities under Section 10.03.
     10.05 Compliance with Laws. The BSP II Owners covenant that during the
activities conducted pursuant to Section 10.03 and their use of the temporary
easement rights, the BSP II Owners will, at their own expense, comply with all
Laws affecting the activities conducted pursuant to Section 10.03 and will
indemnify and hold harmless the BSP I Owners, each BSP I Owner individually,
their directors, officers, employees and invitees, BSP I and BSP I Plant
Property from the consequences of any violation of any Laws, and against any
tax, fee or other charge or penalty imposed or levied on account of any failure
to comply with any such Law, and from any liens or other encumbrances that might
arise from the activities pursuant to Section 10.03.
     10.06 Environmental Indemnification. The BSP II Owners shall indemnify,
defend, and hold harmless the Indemnified Parties from and against any and all
Losses, including reasonable attorneys’ fees and consultants’ fees, arising from
or relating to: (i) the presence of any Hazardous Substance in, upon, under or
over the property purchased pursuant to Section 10.01 or the Designated Easement
Areas (upon designation thereof pursuant to the terms of Section 10.02(b)) prior
to or following the date of this Agreement (the “Existing Contamination”), and
the migration of such Existing Contamination from such property before or after
the date of this Agreement, whether or not the BSP I Owners, a BSP I Owner,
individually, their Affiliates, directors, officers, employees, agents,
contractors, subcontractors, licensees, invitees or anyone else acting for or on
behalf of the BSP I Owners placed, located, deposited or released such Existing
Contamination, or is otherwise responsible or liable therefor; whether or not
the Existing Contamination violated or violates an applicable Environmental Law;
whether or not the Existing Contamination is known or unknown, suspected or
unsuspected as of the date of this Agreement or thereafter; and whether such
liabilities arise in equity or under an Environmental Law; and (ii) the presence
of any Hazardous Substance in, upon, under or over the BSP I Plant Site or the
Designated Easement Areas (upon designation thereof pursuant to the terms of
Section 10.02(b)) following the date of this Agreement arising from acts or
omissions of the BSP II Owners, their Affiliates, directors, officers,
employees, agents, contractors, subcontractors, licensees, or invitees from and
after the date of this Agreement (the “Future Contamination”) and the migration
of such Future Contamination from the BSP II Plant Site and the Designated
Easement Areas after the date of this Agreement.
     10.07 Cross-Indemnification. Each Group shall indemnify, defend, and hold
harmless the other Group for any Losses arising out of or related to:

  (a)   Willful Actions under this Agreement;     (b)   a Group’s material
breach of this Agreement; and     (c)   a Group’s failure to make a Joint
Facility available for use by the other Group.

     10.08 Availability of Insurance Proceeds. The BSP II Owners may choose to
maintain insurance against all loss or damage from such hazards and risks for
which it provides indemnification pursuant to this Article X and additionally
shall require its contractors and

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 32
Big Stone II Power Plant
  June 30, 2005  

subcontractors to maintain similar insurance. The provisions of this Article X
shall not be construed to relieve any insurer, if any, of its obligation to pay
any insurance proceeds in accordance with the terms and conditions of policies
of Owners’ Insurance or otherwise.
     10.09 Environmental Due Diligence. The BSP II Owners shall cause the BSP II
Legal Counsel to retain a consultant to conduct, on behalf of the BSP II Owners,
a Phase I environmental site assessment and any Phase II environmental site
assessment or other environmental investigation the steering committee of the
BSP II Owners deems necessary or desirable, prior to transfer of any real
property or granting easements to the BSP II Owners from BSP I Owners hereunder.
The costs of such environmental due diligence shall be paid for by the BSP II
Owners. If Hazardous Substances or other environmental conditions are discovered
during such environmental due diligence that the BSP II Owners choose not to
assume, the BSP II Owner’s sole options shall be to (a) not purchase the
objectionable real property from the BSP I Owners under Section 10.01,
(b) accept replacement property or easement areas selected pursuant to
Section 2.05, or (c) accept remediated property or easement areas as provided in
this Section 10.09. Should the environmental due diligence result in
environmental remediation requirements by a Governmental Authority, the BSP I
Owners, in their sole discretion, may decide to remove the affected real
property from the Option to Purchase Contract or Blanket Easement Agreement and
propose other property pursuant to Section 2.05 or add the costs of
environmental remediation to the purchase price per acre of the affected
property to be purchased under the Option to Purchase Contract or to be obtained
under the Blanket Easement Agreement. The BSP II Owners may then, in their sole
discretion, accept or reject the purchase of, or easements for use upon, such
affected property at their option. Any real property sold by the BSP I Owners or
easement granted by them shall be “as is, where is” with all faults, including
the presence of Hazardous Substances and other environmental conditions. The BSP
I Owners shall cooperate fully with such activities, consistent with the
cooperation required of the Groups and Parties under Section 18.11 below, and
the BSP I Owners hereby grant to the BSP II Owners, the BSP II Legal Counsel,
and their consultants, the right to enter the BSP I Plant Site and the BSP II
Plant Site and all improvements located thereon, for purposes of conducting such
activities.
ARTICLE XI
CASUALTY LOSS AND INSURANCE
     11.01 Repair or Replacement. The BSP I Owners and BSP II Owners shall
maintain their respective Joint Facilities in good repair according to Prudent
Utility Practice. If, for any reason, a Joint Facility shall be damaged or
destroyed, the BSP I Owners or the BSP II Owners as owners of the particular
Joint Facility shall, as expeditiously as is possible, cause the damaged or
destroyed Joint Facility to be repaired or replaced so as to restore the Joint
Facility to substantially the same general character and use as existed
immediately prior to such damage or destruction and shall bear all costs
associated therewith. If the damage to, or destruction of a Joint Facility, is
determined to be the fault of a contractor, subcontractor or other Person acting
on behalf of the Group that does not own that Joint Facility, that Group shall
be responsible for and reimburse the other Group for the cost of repair or
reconstruction of the damaged or destroyed Joint Facility.

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 33
Big Stone II Power Plant
  June 30, 2005  

     11.02 Insurance. As soon as reasonably practicable after the Effective
Date, the E&O Committees shall jointly develop a plan for purchasing an
insurance policy or policies on a joint or several basis as may be agreed upon,
which may include, without limitation, those types of insurance policies listed
on Schedule 11.02 and any other insurance policies the E&O Committees deem
necessary with respect to the Joint Facilities and the operation of the same
(such policies, collectively, “Owners’ Insurance”). When developing the plan
pursuant to this Section 11.02, the E&O Committees shall endeavor, if possible,
to recommend the purchase of a single policy and shall also decide whether to
purchase a joint loss endorsement with respect to the Owners’ Insurance;
provided, however, that each Group shall maintain insurance against loss or
damage from such hazards and risks for which it provides indemnification
pursuant to this Agreement with reasonable limits, deductibles, self-insured
retentions, and such endorsements that are reasonable under the circumstances.
The BSP II Group shall require its contractors and subcontractors to maintain
similar insurance. Each Group shall also provide the other Group with reasonable
proof of the same upon reasonable request from the other Group.
ARTICLE XII
LIABILITY
     12.01 Remedies and Limitation of Damages. Subject to the express
limitations contained in this Agreement, a Group or Party may avail itself of
any remedies available to it, either in law or at equity, including, without
limitation, specific performance, injunctive relief, and damages for breach of
contract; provided, however, except as otherwise specifically provided for in
this Agreement, including, but not limited to Section 7.04 and Section 10.04, in
no event shall a Group or Party be liable to any Person entitled to damages or
indemnification under this Agreement for loss of profits, loss of business,
indirect, incidental, consequential (with the sole exception of consequential
damages caused by the refusal of one Group to allow the other Group access to
and use of a Joint Facility as required hereunder), special, punitive, or
exemplary damages of any kind. If a Group does not allow the other Group to use
a Joint Facility for any period of time, no matter how short, except for
scheduled or unscheduled down time of the Joint Facility that affects the Groups
equally, the other Group may seek a court order requiring immediate specific
performance or, alternatively, the retention of a Third Party to operate the
Joint Facilities at the other Group’s sole cost and expense.
     12.02 Release of Liability and Associated Covenant. With the sole
exceptions of Losses for which a Group has obtained a judgment resulting from a
Group’s Willful Action, a Group’s material breach of this Agreement, a Group’s
failure to make a Joint Facility available for use by the other Group, and
matters covered by the indemnification obligations under this Agreement (whether
covered by insurance or not), each Group intends to and hereby does release the
other Group from any liability associated with any Losses with respect to and
under the terms of this Agreement. In furtherance thereof, except as provided
for in this Agreement, no Group shall initiate, pursue or otherwise attempt to
engage in mediation, arbitration or litigation with respect to any claims other
than for those relating to a Group’s Willful Action, a Group’s material breach
of this Agreement, a Group’s failure to make a Joint Facility available for use
by the other Group, or matters covered by the indemnification obligations under
this Agreement.

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 34
Big Stone II Power Plant
  June 30, 2005  

ARTICLE XIII
FORCE MAJEURE
     The performance of any obligation required hereunder shall be excused for
the duration of any Force Majeure Event suffered by the Group whose performance
is hindered in respect thereof, and the time for performance of any obligation
that has been delayed due to the occurrence of a Force Majeure Event shall be
similarly extended. The Group experiencing the delay or hindrance shall use
commercially reasonable efforts to notify the other Group in writing of the
occurrence of such Force Majeure Event and the anticipated period of delay as
soon as practicable after the commencement of the Force Majeure Event. Each
Group suffering a Force Majeure Event shall take, or cause to be taken, such
action as may be necessary to overcome or otherwise to mitigate, in all material
respects, the effects of any Force Majeure Event suffered by it and to resume
performance hereunder as soon as practicable under the circumstances.
Notwithstanding anything in this Agreement to the contrary, the occurrence of a
Force Majeure Event shall not excuse or relieve a Group or any Owner from any
payments obligations under this Agreement.
ARTICLE XIV
DISPUTE RESOLUTION
     14.01 Joint Meeting of Committees. With the sole exception of disputes that
may arise under Section 2.06 hereunder, disputes arising under this Agreement
(each, “Dispute”) shall first be addressed by a joint meeting of the Engineering
and Operating Committees. Any Group may request in writing that a Dispute be
brought to a joint meeting of the Engineering and Operating Committees by
delivering a written request of a Dispute to the other Group. The Engineering
and Operating Committees shall meet, negotiate, and attempt in good faith to
resolve the Dispute quickly, informally and inexpensively. In the event the
Engineering and Operating Committees cannot resolve the Dispute within ten
(10) days after commencement of negotiations, any Group may request that the
Dispute be presented to a joint meeting of the Coordination Committees of BSP I
and BSP II. No later than ten (10) days after referral from the Engineering and
Operating Committees, the Coordination Committees shall meet, negotiate and
attempt in good faith to resolve the Dispute quickly, informally and
inexpensively. In the event the Coordination Committees cannot resolve the
Dispute within ten (10) days after commencement of negotiations, either Group
may seek all available legal remedies to resolve the Dispute, whether at law or
in equity subject, in all respects, to the terms, limitations and conditions of
this Agreement.
     14.02 Continued Performance. Pending the outcome of a Dispute being
resolved in accordance with this Article XIV or Section 2.06, the Groups shall
continue to perform their respective obligations under this Agreement to the
extent such obligations and the continued performance thereof are not the
subject of such Dispute.
ARTICLE XV
RELATIONSHIP OF PARTIES
     15.01 Nature of Obligations. Nothing herein, including, without limitation,
the use of the defined term “Group,” shall be construed to create an
association, joint venture, trust or

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 35
Big Stone II Power Plant
  June 30, 2005  

partnership, or to impose a trust or partnership covenant, obligation or
liability on or with regard to any one or more of the Parties. No Party or Group
shall be under the control of, or shall be deemed to control, any other Party or
Group. No Party shall be the agent of or have a right or power to bind any other
Party without its express written consent, except as provided in this Agreement,
the Operation & Maintenance Services Agreement and the Participation Agreements.
ARTICLE XVI
TERM AND TERMINATION
     16.01 Term. This Agreement shall become effective on the Effective Date
and, unless earlier terminated pursuant to the terms hereof, shall continue in
effect until either the BSP I Plant or the BSP II Plant shall have been
decommissioned (the “Term”); provided, however, that the Owners of the Plant
that has been decommissioned must have fully complied with the requirements of
Section 3.03 hereof. Additionally, this Agreement shall automatically terminate
if there are no longer any Joint Facilities in existence.
     16.02 Automatic Termination. This Agreement shall automatically terminate
and be of no further force and effect, except as otherwise provided herein, and
no Party shall have any further obligation to another Party hereunder, if the
BSP II Financial Closing, as contemplated under the BSP II Participation
Agreement, does not occur on or before (*).
ARTICLE XVII
REPRESENTATIONS, WARRANTIES
     Each Owner represents and warrants as follows:

  (a)   It is, as applicable, an agency, cooperative corporation, consumers
power district, municipal corporation and political subdivision, or corporation
duly organized, validly existing and in good standing under the laws of the
state of its formation and authorized to conduct business in South Dakota;    
(b)   It has the power and authority to enter into and perform this Agreement
and is not prohibited for any reason from entering into this Agreement or
discharging and performing all covenants and obligations on its part to be
performed under and pursuant to this Agreement;     (c)   It has taken all
action required by applicable Law in order to approve, execute and deliver this
Agreement;     (d)   The execution and delivery of this Agreement, the
consummation of the transactions contemplated herein and the fulfillment of and
compliance by such Owner with the provisions of this Agreement will not conflict
with or constitute a breach of or a default under or require any consent,
license or approval that has not been obtained pursuant to any of the terms,
conditions or provisions of any law, rule or regulation, any order, judgment,
writ, injunction, decree, determination, award or other instrument or legal
requirement of any court or

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 36
Big Stone II Power Plant
  June 30, 2005  

      other agency of government, the documents of its formation or any
contractual limitation, restriction or outstanding trust indenture, deed of
trust, mortgage, loan agreement, lease, other evidence of indebtedness or any
other agreement or instrument to which it is a party or by which it or any of
its property is bound and will not result in a breach of or a default under any
of the foregoing;     (e)   It has taken all such action as may be necessary or
advisable and proper to authorize this Agreement, the execution and delivery
hereof, and the consummation of transactions contemplated hereby;     (f)  
There are no bankruptcy, insolvency, reorganization or receiverships pending or
being contemplated by it, or to its knowledge threatened against it;     (g)  
To its knowledge, there are no actions, proceedings, judgments, rulings or
orders issued by, or pending before any court or other governmental body that
would materially adversely affect its ability to perform its obligations under
this Agreement; and     (h)   This Agreement is a legal, valid and binding
obligation of such Owner enforceable in accordance with its terms, except as
limited by laws of general applicability limiting the enforcement of creditors’
rights or by the exercise of judicial discretion in accordance with general
principles of equity.

ARTICLE XVIII
MISCELLANEOUS
     18.01 Publicity Policy. In recognition of the requirements and desire of
the Parties to disclose information regarding their ownership and involvement
with the Plants and its activities, a Party may:

  (a)   disclose information regarding BSP I or BSP II as may be required by any
applicable Law;     (b)   provide information regarding BSP I or BSP II to its
Affiliates, employees, investors, agents, consultants, advisors, contractors,
accountants and counsel; and     (c)   after execution of the BSP II
Participation Agreement, publicize to any Third Party (including, but not
limited to, through press releases and other media) information about the
general activities of BSP I or BSP II and any otherwise publicly available
information; provided, however, that the Parties shall seek to avoid publicizing
to Third Parties:

  (i)   financial information about BSP I or BSP II, including the economics of
the Plants;     (ii)   information regarding other Parties;

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 37
June 30, 2005      

  (iii)   information a Party specifically identifies as commercially sensitive
(such as information about ongoing business negotiations); and     (iv)  
information respecting the positions of BSP I or BSP II on federal or state
policy matters (unless consistent with the policy goals or a policy initiative
of BSP I or BSP II as generally understood by the Parties).

If a Party desires to release information described in
Sections 18.01(c)(i)-(iv), then that Party shall describe the intended release
of information to the Engineering and Operating Committees of BSP I and BSP II
and the Engineering and Operating Committees of BSP I and BSP II shall respond
promptly to the Party with any concerns about such release.
     18.02 Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the Parties hereto, except as
such assignment is otherwise explicitly not permitted herein.
     18.03 Notices. Notices required by this Agreement from a Party hereto shall
be addressed to the other Parties, at the addresses noted in Exhibit A, and may
be updated from time to time by written notice to all Parties. Any notice,
request, consent, or other communication required or authorized under this
Agreement to be given by one Party to another Party shall be in writing. It
shall either be hand delivered or mailed, postage prepaid, to the representative
of said Party. If mailed, the notice, request, consent or other communication
shall be simultaneously sent by facsimile or other electronic means. Any such
notice, request, consent, or other communication shall be deemed to have been
received by the close of the Business Day on which it was hand delivered or
transmitted electronically (unless hand delivered or transmitted after the close
of business, in which case it shall be deemed received at the close of the next
Business Day). Real-time or routine communications concerning the operation of
the Joint Facilities shall be exempt from this Section 18.03.
     18.04 Amendments. No amendments or modifications of this Agreement,
including the Exhibits and Schedules hereto, shall be valid unless evidenced in
writing and signed by a Group’s Designated Representative.
     18.05 Waiver. Failure to enforce any right or obligation by any Owner or
Group with respect to any matter arising in connection with this Agreement shall
not constitute a waiver as to that matter or any other matter. Any waiver by any
Owner or Group of its rights with respect to a breach of this Agreement or with
respect to any other matters arising in connection with this Agreement must be
in writing. Such waiver shall not be deemed a waiver with respect to any
subsequent default or other matter.
     18.06 Severability. If any of the terms of this Agreement are determined to
be invalid, illegal or void by a court of competent jurisdiction, all other
terms of the Agreement shall remain in effect; provided that the Groups shall
enter into good faith negotiations concerning the terms affected by such
decision for the purpose of achieving conformity with requirements of any
applicable Law and the intent of the Parties hereto.

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 38
June 30, 2005      

     18.07 Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of South Dakota without regard to its
conflict of laws provisions.
     18.08 Consent to Jurisdiction. Each of the Owners hereby irrevocably
consents and agrees that any legal action or proceedings with respect to this
Agreement may be brought in any of the courts of the United States of America
for the District of South Dakota having subject-matter jurisdiction and, by
execution and delivery of this Agreement and such other documents executed in
connection herewith, each Owner hereby:

  (a)   accepts the non-exclusive jurisdiction of the aforesaid courts;     (b)
  irrevocably agrees to be bound by any final judgment (after any and all
appeals) of any such court with respect to such documents;     (c)   irrevocably
waives, to the fullest extent permitted by Law, any objection which it may now
or hereafter have to the laying of venue of any suit, action or proceedings with
respect to such documents brought in any such court, and further irrevocably
waives, to the fullest extent permitted by Law, any claim that any such suit,
action or proceedings brought in any such court has been brought in any
inconvenient forum;     (d)   agrees that service of process in any such action
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to such Owner at its
address set forth on Exhibit A hereto, or at such other address of which the
other Owners shall have been notified; and     (e)   agrees that nothing herein
shall affect the right to effect service of process in any other manner
permitted by law or limit the right to bring any suit, action or proceeding in
any other jurisdiction.

     18.09 Waiver of Trial by Jury. EACH OF THE OWNERS HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR PARTIES ENTERING INTO THIS AGREEMENT.
     18.10 No Third-Party Beneficiaries. This Agreement is intended solely for
the benefit of the Parties hereto and nothing contained herein shall be
construed to create any duty to, or standard of care with reference to, or any
liability to, or any benefit for, any Third Party.
     18.11 Cooperation. The Parties hereto acknowledge that they are entering
into a long-term arrangement in which the cooperation of all of them will be
required. If, during the Term, changes in the operations, facilities or methods
of any Group or Party, including, without

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 39
June 30, 2005      

limitation, regarding real property matters, will materially benefit a Group or
Party without detriment to the other Group or Parties, the Groups and Parties
commit to each other to make reasonable good faith efforts to cooperate and
assist each other in making such change.
     18.12 Consents and Delivery of Documents. Each Party shall cooperate in
good faith with the other Parties in its efforts to fulfill its obligations
under this Agreement. To that end, (a) except as expressly provided elsewhere in
this Agreement, no Party shall unreasonably deny, condition, or withhold or
otherwise delay its approval or consent upon the reasonable request for such
approval or consent by the other Part(ies); and (b) each Party shall, upon
written notice from any Party, take all actions and sign, execute and deliver
all agreements, deeds, documents and other instruments, and shall use its
reasonable efforts to cause each of its Affiliates, its partners and their
respective Representatives to take all actions and sign, execute and deliver all
agreements, deeds, documents and other instruments reasonably required of it or
them to carry out and give full effect to this Agreement and the rights and
obligations of the Parties hereunder.
     18.13 Captions. All indexes, titles, subject headings, section titles, and
similar items are provided for the purpose of reference and convenience and are
not intended to affect the meaning of the content or the scope of this
Agreement.
     18.14 Entire Agreement. This Agreement supersedes all other prior and
contemporaneous understandings or agreements, both written and oral, among the
Parties relating to the subject matter of this Agreement.
     18.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which together shall
constitute but one and the same instrument, and may be executed by facsimile
signature, which shall be considered as an original.
     18.16 No Waiver. No waiver by a Group of its rights with respect to a
material breach of this Agreement shall be deemed a waiver of its rights
hereunder with respect to any subsequent default. No delay in asserting or
enforcing any right hereunder shall be deemed a waiver of such right.
     18.17 Cumulative Rights. Subject in all respects to the provisions of this
Agreement, the rights and remedies provided in this Agreement shall be in
addition to any other legal or equitable relief that may be otherwise available.
     18.18 Certain Limitations. Notwithstanding anything to the contrary
contained in this Agreement, nothing contained herein and no action to be taken
hereunder or pursuant hereto, in each case relating to or affecting an option,
an easement, or another interest in the BSP I Plant Site, shall, individually or
in the aggregate, materially impair the use of the BSP I Plant Site by any of
the BSP I Owners for the purpose for which such BSP I Owner holds its interest
in BSP I and/or the BSP I Plant Site.
[The next page is the signature page.]

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 40
June 30, 2005      

     IN WITNESS WHEREOF, the Parties hereto have caused their names to be
hereunto subscribed by their officers, intending thereby that this Agreement
shall be effective as of the Effective Date.

                  CENTRAL MINNESOTA MUNICIPAL       GREAT RIVER ENERGY POWER
AGENCY            
 
                By /s/ Paul I. Leland       By /s/ David Saggau
 
                Paul Leland       David Saggau Its President       Its President
and Chief Executive Officer
 
                HEARTLAND CONSUMERS POWER       MONTANA-DAKOTA UTILITIES CO., a
DISTRICT       Division of MDU Resources Group, Inc.
 
                By /s/ Michael McDowell       By /s/ Bruce T. Imsdahl
 
                Michael McDowell       Bruce T. Imsdahl Its General Manager    
  Its President and Chief Executive Officer
 
                NORTHWESTERN CORPORATION       OTTER TAIL CORPORATION dba Otter
Tail dba NorthWestern Energy       Power Company
 
                By /s/ Michael J. Hanson       By /s/ Charles S. MacFarlane
 
                Michael J. Hanson       Charles S. MacFarlane Its President and
Chief Executive Officer       Its President
 
                SOUTHERN MINNESOTA MUNICIPAL       WESTERN MINNESOTA MUNICIPAL
POWER AGENCY       POWER AGENCY
 
                By /s/ Raymond A. Hayward       By /s/ Donald E. Habicht
 
                Raymond A. Hayward       Donald E. Habicht Its Executive
Director and CEO       Its President

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 41
June 30, 2005      

EXHIBIT A
PARTY
CENTRAL MINNESOTA MUNICIPAL POWER AGENCY
459 South Grove Street
Blue Earth, MN 56013
Attn: Donald E. Kom, Executive Director
Telephone: (507) 526-2193
Facsimile: (507) 526-2527
E-mail: donk@utplus.com
GREAT RIVER ENERGY
17845 East Highway 10
Elk River, MN 55330
Attn: David Saggau, President and Chief Executive Officer
Telephone: (763) 241-2286
Facsimile: (763) 241-2366
E-mail: dsaggau@grenergy.com
HEARTLAND CONSUMERS POWER DISTRICT
203 West Center Street
Madison, SD 57042
Attn: Michael McDowell, General Manager
Telephone: (605) 256-6536
Facsimile: (605) 256-2990
E-mail: mmcdow@hcpd.com
MISSOURI RIVER ENERGY SERVICES
3724 West Avera Drive
P.O. Box 88920
Sioux Falls, SD 57109-8920
Attn: Mr. Ray Wahle
Telephone: (605) 338-4042
Facsimile: (605) 978-9360
E-mail: rwahle@mrenergy.com
MONTANA-DAKOTA UTILITIES CO., a Division of MDU
Resources, Inc.
400 North Fourth Street
Bismarck, ND 58501
Attn: Andrea L. Stomberg, Vice President – Electric Supply
Telephone: (701) 222-7752
Facsimile: (701) 222-7606
E-mail: andrea.stomberg@mdu.com
NORTHWESTERN CORPORATION
dba NorthWestern Energy
600 Market Street West
Huron, SD 57350
Attn: Dennis Wagner
Telephone: (605) 353-7503
Facsimile: (605) 353-7519
E-mail: dennis.wagner@northwestern.com

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 42
June 30, 2005      

OTTER TAIL CORPORATION dba Otter Tail Power Company
215 South Cascade St.
P.O. Box 496
Fergus Falls, MN 56538-0496
Attn: Charles MacFarlane
Telephone: (218) 739-8353
Facsimile: (218) 739-8218
E-mail: cmacfarlane@otpoc.com
SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY
500 First Avenue SW
Rochester, MN 55902-3303
Attention: Mr. Peter J. Reinarts, P.E.
Manager – Generation, Operations and Marketing
Telephone: (507) 292-6452
Facsimile: (507) 292-6414
E-mail: pj.reinarts@smmpa.org
and
SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY
500 First Avenue SW
Rochester, MN 55902-3303
Attention: Mr. David P. Geschwind, P.E.
Chief Operating Officer
Telephone: (507) 292-6460
Facsimile: (507) 292-6414
E-mail: dp.geschwind@smmpa.org
WESTERN MINNESOTA MUNICIPAL POWER AGENCY
25 N.W. 2nd Street, Suite 102
Ortonville, MN 56278-1411
Attention: Mr. Don Habicht
Telephone: (320) 839-2549
Facsimile: (320) 839-2540
Email: david.fhmab@midconetwork.com

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 43
June 30, 2005      

SCHEDULE 4.01
Water Resources Joint Facilities

                      BSP I or BSP II           Construction/ Description  
Joint Facility   Fee or No Fee   Maintenance Costs   Other Costs
New brine concentrator
  BSP II   (*)   (*)   BSP II
New water supply and product lines
  BSP II   (*)   (*)   BSP II
New sludge pond
  BSP II   (*)   (*)   BSP II
New brine concentrator electrical substation
  BSP II   (*)   (*)   BSP II
Existing brine concentrator
  BSP I   (*)   (*)    
Existing sludge pond
  BSP I   (*)   (*)    
Existing water and product lines
  BSP I   (*)   (*)    
Existing brine concentrator control room
  BSP I   (*)   (*)    
Existing lake water intake and pipeline structure
  BSP I   (*)   (*)    
Existing cooling water pond
  BSP I   (*)   (*)    
New pumps and pipelines needed to connect storage ponds to the cooling pond
  BSP II   (*)   (*)   BSP II
Existing storage ponds
  BSP I   (*)   (*)    
BSP II Cooling Tower Blowdown Pond (and necessary pumps and pipelines)
  Not a Joint Facility   (*)   (*)   BSP II
New demineralizer train
  BSP II   (*)   (*)   BSP II
Existing demineralizer trains
  BSP I   (*)   (*)    
Existing cold lime softener
  Not a Joint Facility   (*)   (*)   BSP II (if Option to Purchase Contract
exercised)

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 44
June 30, 2005      

SCHEDULE 4.04
Lake Water Intake and Pipeline Structure

          Otter Tail         Number   Quantity   Description
31356
  1 Lot   Lighting
31284
  1 Lot   Heating & Ventilation
31373
  2,650 SF   Roof
31402
  1 Lot   Structure
31403
  1 Lot   Make-up Pipe Discharge Structure
31477
  7,243 LF   Pond Make-up Pipeline
32595
  1 Each   Air Compressor
32596
  200 LF   Pipe
32597
  2 Each   Pump A & B
32599
  1 Each   Pump
32600
  2 Each   Pump Motors
32601
  1 Each   Pump Motor
32602
  2 Each   30" Butterfly Valve
32603
  1 Each   16" Butterfly Valve
32604
  3 Each   Flow Meters
32605
  15,600 LF   Wire
32642
  1 Each   Traveling Crane
32726
  1 Lot   Switchgear
32727
  1 Lot   MCC
33123
  1 Each   Heater

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 45
June 30, 2005      

SCHEDULE 4.05
BSP I Cooling Pond
[MAP OF EXISTING BSP I PLANT.]

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 46
June 30, 2005      

SCHEDULE 4.07
BSP II Cooling Tower Blowdown Pond
[MAP OF BSP II PLANT SITE]

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 47
June 30, 2005      

SCHEDULE 5.01
Coal and Ash Joint Facilities

                      BSP I or BSP II           Construction/ Description  
Joint Facility   Fee or No Fee   Maintenance Costs   Other Costs
Existing rotary dumper, #1 and #2 conveyors
  BSP I   (*)   (*)    
1/2 Existing coal dead storage area
  BSP I   (*)   (*)    
1/2 Existing coal dead storage area
  BSP II   (*)   (*)   BSP II will purchase 1/2 from BSP I
New concrete storage silos and conveyor
  Not Joint Facilities   (*)   (*)   BSP II
New stack-out chute
  BSP II   (*)   (*)   BSP II
New coal yard shop for storage and maintenance of mobile equipment
  BSP II   (*)   (*)   BSP II
New coal transfer house
  Not a Joint Facility   (*)   (*)   BSP II
Existing mobile yard equipment
  BSP I   (*)   (*)   BSP II will purchase 1/2 from BSP I
New mobile yard equipment
  BSP II   (*)   (*)   50-50 BSP I and BSP II
Existing rail spur and coal unloading facilities
  BSP I   (*)   (*)    
Existing rail cars
  BSP I   (*)   (*)    
BSP II rail cars
  BSP II   (*)   (*)    
BSP I ash disposal area
  BSP I Joint Facility   (*)   (*)    
BSP I ash silo
  Not a Joint Facility   (*)   (*)   BSP II will pay cost of relocation

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 48
June 30, 2005      

SCHEDULE 5.03
New Conveyor System and Stack-Out Chute
     Coal will be received at BSP I and off-loaded into the BSP I rotary dumper.
The coal travels on #1 and #2 conveyor belts to the head end of #2 belt. After
reaching the end of #2 conveyor, it will then be deposited on #3 conveyor
(feeding the existing BSP I live storage building), or is transferred to the
first new BSP II conveyor belt. From there, the coal will be transported to the
top of the coal stack-out transfer point. The coal stack-out is a large
cylindrical structure that the coal falls through and exits the cylindrical
structure along various locations over the vertical height of the structure. As
the coal exits the stack-out, it falls to the ground and begins to pile around
the structure. At the transfer point in the stack-out, it will enter the coal
stack-out chute, or the second BSP II conveyor belt. If the coal is directed to
the stack-out, it becomes part of the dead storage pile. If the coal is directed
to the second BSP II conveyor belt, it will enter the BSP II exterior coal
silos. Once the coal is in the BSP I live storage building or the BSP II
exterior coal silos, it is unit specific and cannot (under normal operational
circumstances) travel to different units, i.e., coal from the existing live
storage building will only travel to BSP I and coal from the BSP II exterior
silos will only travel to BSP II. Coal can also be reclaimed from the dead
storage pile. In this case, coal will be pushed into the rotary car dumper
building and fed up #2 conveyor. In the event that there is a problem with the
coal conveying system at either Plant, each Plant will have an emergency
conveying system that starts near the stack-out chute. Each of these emergency
conveyors will end at the respective “transfer/crusher” buildings for each
Plant.

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 49
June 30, 2005      

SCHEDULE 5.06
Mobile Equipment

     
Technicians – ’91 GMC Sierra
   
Maintenance – 2000 Chevrolet 3500
   
Maintenance – ’92 Dodge Ram 250
   
Operators – 2004 Chevrolet 2500 HD 4x4
   
2002 GMC Safari
   
Yard Operators – ’95 Dodge 4x4
   
Maintenance – ’95 Ford F250
   
Project Director – ’96 Dodge Intrepid
   
Maintenance – ’98 Dodge Ram 1500
   
Electricians – 2001 Dodge Ram 4x4
   
Plant Manager – ’01 Dodge Intrepid
   
Cat Forklift – Warehouse
   
Cat Forklift
   
Terex Crane Hydraulic 94107 Vickers
   
Bobcat Hyd P6881
   
John Deere Lawn Tractor
   
Predator Portable Welder
   
Marklift
   
Gator 1
   
Gator 2
   
966F Cat Loader
   
International 400 Dozer
   
Michigan 380 Dozer
   
International Dump Truck
   
S24B Terex Scraper
   
TS24B Terex Scraper
   
Push Lawnmower
   
2 wheel hand cart
   
Battery charger on wheels
   
2 Automobile creepers
   
Rail cart
   
Floor jack
   
Engine hoist
   
15 Mobile tool boxes
   
8 Four-wheel carts
   

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 50
June 30, 2005      

SCHEDULE 5.07
Coal Receiving System, Rail Spur and Coal Unloading Facilities

          Otter Tail         Number   Quantity   Description
31277
  1 Each   Relay room – 3-ton Lennox
31280
  1 Lot   Car Dumper Cab – 1-ton Lennox
33103
  1 Lot   Dumper dust collector house
50013
  32 CY   Dumper dust collector floor
31645
  1 Lot   Positioner – carriage guide rails
31646
  1 Each   Positioner – truck lock system
31647
  1 Each   Positioner – rope haulage system
31648
  1 Each   Positioner – carriage and arm
31652
  1 Each   Dumper and positioner – motor control center
31654
  1 Each   Dumper and positioner – operators cab
31658
  4 Each   Rotary Cary dumper – vibratory feeders
31659
  4 Each   Rotary Cary dumper – chutes
31684
  1 Each   Conveyor No. 1 – drive motor, F-32
31685
  1 Each   Conveyor No. 1 – reducer
31686
  1 Each   Conveyor No. 1 – high speed coupling
31687
  1 Each   Conveyor No. 1 – low speed coupling
31689
  1 Each   Conveyor No. 1 – headshaft w/pulleys & pillow blocks
31690
  1 Each   Conveyor No. 1 – snubshaft w/pulleys & pillow blocks
31691
  1 Each   Conveyor No. 1 – bendshaft w/pulleys & takeup shaft
31692
  45 Each   Idlers
31693
  2 Each   Conveyor No. 1 – belt cleaners
31694
  1 Each   Conveyor No. 1 – discharge hood w/dust curtain, M-15
31695
  1 Each   Conveyor No. 1 – discharge chute to conveyor #2
31696
  1 Each   Conveyor No. 1 – electrical controls
31697
  1 Each   Conveyor No. 1 – steel structure supports
31698
  2 Each   Conveyor No. 2 – drive motors
31699
  2 Each   Conveyor No. 2 – reducers, m-15
31701
  2 Each   Conveyor No. 2 – low speed couplings
31703
  1 Each   Conveyor No. 2 – headshaft
31704
  1 Each   Conveyor No. 2 – hold back unit
31705
  1 Each   Conveyor No. 2 – drive snub shaft
31706
  2 Each   Conveyor No. 2 – takeup bend shaft
31707
  1 Each   Conveyor No. 2 – auto gravity takeup
31708
  2 Each   Conveyor No. 2 – tail snubshafts, m-15
31709
  213 Each   Conveyor No. 2 – idlers
31710
  1 Each   Conveyor No. 2 – creep drive motor
31711
  1 Each   Conveyor No. 2 – creep drive reducer
31712
  1 Each   Conveyor No. 2 – creep high speed coupling

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 51
June 30, 2005      

          Otter Tail         Number   Quantity   Description
31713
  1 Each   Conveyor No. 2 – creep clutch coupling
31714
  1 Each   Conveyor No. 2 – electrical switches
31715
  1 Each   Conveyor No. 2 – steel structure supports
31716
  1 Each   Conveyor No. 2 – stairs & walkways – tail end
31717
  2 Each   Conveyor No. 2 – walk through conveyor galleries
31718
  1 Each   Conveyor No. 2 – support bent – 36 ft.
31719
  1 Each   Conveyor No. 2 – discharge hood
31720
  1 Each   Conveyor No. 2 – discharge chute to conv. No. 3
31721
  1 Each   Conveyor No. 2 – hinged chute to ground
31722
  1 Each   Conveyor No. 2 – instrumentation, M-15
31959
  1 Each   Conveyor No. 1 dust collector – Ray Jet collector
31960
  1 Each   Conveyor No. 1 dust collector – screw drive damper
31961
  1 Lot   Conveyor No. 1 dust collector – C.E. Controls
31962
  1 Lot   Conveyor No. 1 dust collector – fans & motors
31963
  1 Lot   Conveyor No. 1 dust collector – CO2 system
31964
  1 Lot   Conveyor No. 1 Dust Collector – Electrical
31965
  1 Lot   Conveyor No. 1 Dust Collector – Ductwork
31966
  4 Each   Car Dumper – Ray Jet Collectors
31967
  4 Each   Car Dumper – screw drive dampers
31968
  1 Lot   Car Dumper – C.E. Controls
31969
  4 Each   Car Dumper – Fans and motors
31970
  1 Lot   Car Dumper – CO2 System
31971
  1 Lot   Car Dumper – Electrical
31972
  1 Lot   Car Dumper – Ductwork
31988
  71 Ton   Rotary car dumper hopper
31991
  1 Each   Galigher coal sampler
32008
  43818 SF   Car Dumper – forms
32009
  3,151 SF   Fuel System Forms – Train Positioner Building
32010
  19,104 SF   Fuel System Forms – Conveyor No. 2
32016
  420 Ton   Car Dumper – rebar
32017
  69 Ton   Train Positioner building – rebar
32018
  95 Ton   Fuel System Rebar, Conveyor No. 2
32024
  25873 Lbs   Car Dumper – Embeds
32025
  9013 Lbs   Train Positioner Building – embeds
32026
  8,322 lbs   Fuel System Embeds – Conveyor No. 2
32032
  5154 Cy   Car Dumper – concrete
32033
  1800 Cy   Train Positioner – concrete
32034
  1,662 CY   Fuel System Concrete, Conveyor No. 2
32038
  59 ton   Car Dumper – Steel
32047
  45500 Cy   Car Dumper – excavation
32048
  2000 Cy   Train Positioner – excavation

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 52
June 30, 2005      

          Otter Tail         Number   Quantity   Description
32049
  24,900 CY   Fuel System Excavation – Conveyor No. 2
32055
  35700 Cy   Car Dumper – backfill
32056
  1600 Cy   Train Positioner – backfill
32057
  25,000 CY   Fuel System Backfill – Conveyor No. 2
32059
  1 Lot   Car Dumper – Drains
32069
  59 Ton   Car Dumper – Structural Steel
32070
  81 Ton   Train Positioner building – Structural Steel
32071
  20 Ton   Car Dumper – Misc. Iron and Steel
32072
  9 ton   Train Positioner Building – Misc. Iron and Steel
32073
  14000 SF   Car Dumper – exterior siding
32074
  6 each   Car Dumper – doors
32075
  300 SF   Car Dumper – Windows
32076
  14900 SF   Train Positioner – exterior siding
32077
  3 Each   Train Positioner – doors
32078
  900 SF   Train Positioner – Blockwall insulation
32083
  8900 SF   Conveyor No. 2 – Exterior Siding
32084
  1 Each   Conveyor No. 2 – Doors
32088
  668,000 CY   Plant Access Railroad – Earthwork C-L, FSC-26
32089
  25,182 LF   Plant Access Railroad – Trackage C-3, FSC-42, 44 & 63
32090
  1 Lot   Track Detection Equipment, FSC-64
32091
  1 Each   Track Switch Heater
36989
  1 Lot   Mtce. Platform under electrical cable junction
37016
  1 Each   Car Dumper – Dust collection hood
37025
  1 Lot   Car Dumper – Dust collector
37536
  1 Lot   Tachometer Loss Circuit for Train Positioner Haulage Controller
48822
  2 Each   Rail Flange Lubricators
52299
  1 Each   Motor, 30 HP, 1800 RPPM. #1 & #2 Conveyor Area
52300
  1 Each   Foundation for Blower and Motor. # 1 & #2 Conveyor Area
52301
  1 Each   Rotary Airlock, with 1 HP gearmotor drive. #1 & #2 Conveyor Area
52302
  1 Lot   Piping with Hangers and Accessories. #1 & #2 Conveyor Area
52303
  1 Each   Cyclone dust collector, Fuller/Draco 1DC12 Mark V. #1 & #2 Conveyor
Area
52304
  2 Each   Trickle Valve, 7". #1 & #2 Conveyor Area
52305
  1 Each   Relay room AC
52306
  18 Each   Dumper Dust Collector Building – Translucent corrugated panels
65122
  1 Each   Wheel clamp system for dumper
67313
  1 Each   Dumper positioner brake
67314
  1 Each   Positioner SCR Drive
67315
  1 Each   Positioner arm SCR drives
67316
  3 Each   Dumper car clamp assemblies
67317
  2 Each   Dumper variable speed drives
67318
  1 Each   Dumper car clamp hydraulic unit

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 53
June 30, 2005      

          Otter Tail         Number   Quantity   Description
67319
  2 Each   Dumper hydraulic pumps
67320
  1 Each   Dumper hydraulic building
67321
  4 Each   Dumper trunnion wheels
67322
  1 Each   Dumper control computer
67323
  1 Each   Dumper PLC
67324
  2 Each   Dumper Gearboxes
67325
  2 Each   Dumper drive motors
67326
  1 Each   Dumper Drive Brakes
67327
  1 Each   Dumper stairway to pit
67328
  1 Lot   Dumper Exit bridge section
67329
  1 Each   Dumper platen and girders
67330
  1 Each   Dumper entrance door
70747
  1 Each   Positioner drive isolation transformer
32710
  1 Each   Car Dumper – Motor control center
32723
  1 Each   Car Dumper dust collection – motor control center

 

--------------------------------------------------------------------------------

 

Joint Facilities Agreement
Big Stone II Power Plant
  Page 54
June 30, 2005      

SCHEDULE 6.01
Additional Joint Facilities

                      BSP I or BSP II           Construction/ Description  
Joint Facility   Fee or No Fee   Maintenance Costs   Other Costs
Existing coal yard shop (warehouse)
  BSP I   (*)   (*)   The cost of converting the coal yard shop into a warehouse
shall be allocated solely to BSP II.
New office and locker room
  BSP II   (*)   (*)   BSP II
New roads and parking
  BSP II   (*)   (*)   BSP II
Existing roads and parking
  BSP I   (*)   (*)    
Existing control room
  BSP I   (*)   (*)    
Distributed control system and all other systems necessary located in the
control room
  BSP II   (*)   (*)   BSP II
Existing fire system
  BSP I   (*)   (*)    
Additions/upgrades to fire system
  BSP II   (*)   (*)   BSP II

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 55
Big Stone II Power Plant
  June 30, 2005
 

SCHEDULE 9.05
Joint Facilities Fee Formula
Joint Facilities Components Existing as of the date of Commercial Operation:
This Schedule 9.05 provides the (*) of Joint Facilities existing as of the date
of Commercial Operation. The sum of the (*) listed herein, when (*) by the (*),
as that term is defined in Section 9.05(b), (*) the (*) used in the calculation
of the Joint Facilities Fee existing as of the date of Commercial Operation
pursuant to Section 9.05(a).
Replaced Joint Facilities Components: At and after the replacement of a
component of a Joint Facility existing as of the date of Commercial Operation,
the (*) and the (*) of such Joint Facility, as listed in this Schedule 9.05,
will be replaced by the (*) (as that term is defined in Section 9.05(b)) amount
of that Joint Facility component. Accordingly, pursuant to Section 9.05(b),
after the replacement of a component of a Joint Facility, the calculation of the
Joint Facilities Fee shall include the (*) existing as of the date of Commercial
Operation and the (*) in replaced Joint Facility components (*) by the (*).

                  Otter                 Tail                 Number   Quantity  
Description   Original Cost   Adjusted Cost Lake Pumping Related Equipment      
 
31356
  1 Lot   Lighting   (*)   (*)
31284
  1 Lot   Heating & ventilation   (*)   (*)
31373
  2,650 SF   Roof   (*)   (*)
31402
  1 Lot   Structure   (*)   (*)
31403
  1 Lot   Make-up pipe discharge structure   (*)   (*)
31477
  7,243 LF   Pond make-up pipeline   (*)   (*)
32595
  1 Each   Air compressor   (*)   (*)
32596
  200 LF   Pipe   (*)   (*)
32597
  2 Each   Pump A & B   (*)   (*)
32599
  1 Each   Pump   (*)   (*)
32600
  2 Each   Pump motors   (*)   (*)
32601
  1 Each   Pump motor   (*)   (*)
32602
  2 Each   30" Butterfly valve   (*)   (*)
32603
  1 Each   16" Butterfly valve   (*)   (*)
32604
  3 Each   Flow meters   (*)   (*)
32605
  15,600 LF   Wire   (*)   (*)
32642
  1 Each   Traveling crane   (*)   (*)
32726
  1 Lot   Switchgear   (*)   (*)
32727
  1 Lot   MCC   (*)   (*)
33123
  1 Each   Heater   (*)   (*) Dumper, Rail, and Conveyor #1& #2 Related
Equipment        
31277
  1 Each   Relay room — 3-ton Lennox   (*)   (*)

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 56
Big Stone II Power Plant
  June 30, 2005
 

                  Otter                 Tail                 Number   Quantity  
Description   Original Cost   Adjusted Cost
31280
  1 Lot   Car Dumper Cab — 1-ton Lennox   (*)   (*)
33103
  1 Lot   Dumper dust collector house   (*)   (*)
50013
  32 CY   Dumper dust collector floor   (*)   (*)
31645
  1 Lot   Positioner — carriage guide rails   (*)   (*)
31646
  1 Each   Positioner — truck lock system   (*)   (*)
31647
  1 Each   Positioner — rope haulage system   (*)   (*)
31648
  1 Each   Positioner — carriage and arm   (*)   (*)
31652
  1 Each   Dumper and positioner — motor control center   (*)   (*)
31654
  1 Each   Dumper and positioner — operators cab   (*)   (*)
31658
  4 Each   Rotary Cary dumper — vibratory feeders   (*)   (*)
31659
  4 Each   Rotary Cary dumper — chutes   (*)   (*)
31684
  1 Each   Conv. No. 1 — drive motor, F-32   (*)   (*)
31685
  1 Each   Conv. No. 1 — reducer   (*)   (*)
31686
  1 Each   Conv. No. 1 — high speed coupling   (*)   (*)
31687
  1 Each   Conv. No. 1 — low speed coupling   (*)   (*)
31689
  1 Each   Conv. No. 1 — headshaft w/pulleys & pillow blocks   (*)   (*)
31690
  1 Each   Conv. No. 1 — snubshaft w/pulleys & pillow blocks   (*)   (*)
31691
  1 Each   Conv. No. 1 — bendshaft w/pulleys & takeup shaft   (*)   (*)
31692
  45 Each   Idlers   (*)   (*)
31693
  2 Each   Conv. No. 1 — belt cleaners   (*)   (*)
31694
  1 Each   Conv. No. 1 — discharge hood w/dust curtain, M-15   (*)   (*)
31695
  1 Each   Conv. No. 1 — discharge chute to conveyor #2   (*)   (*)
31696
  1 Each   Conv. No. 1 — electrical controls   (*)   (*)
31697
  1 Each   Conv. No. 1 — steel structure supports   (*)   (*)
31698
  2 Each   Conv. No. 2 — drive motors   (*)   (*)
31699
  2 Each   Conv. No. 2 — reducers, m-15   (*)   (*)
31701
  2 Each   Conv. No. 2 — low speed couplings   (*)   (*)
31703
  1 Each   Conv. No. 2 — headshaft   (*)   (*)
31704
  1 Each   Conv. No. 2 — hold back unit   (*)   (*)
31705
  1 Each   Conv. No. 2 — drive snub shaft   (*)   (*)
31706
  2 Each   Conv. No. 2 — takeup bend shaft   (*)   (*)

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 57
Big Stone II Power Plant
  June 30, 2005
 

                  Otter                 Tail                 Number   Quantity  
Description   Original Cost   Adjusted Cost
31707
  1 Each   Conv. No. 2 — auto gravity takeup   (*)   (*)
31708
  2 Each   Conv. No. 2 — tail snub shafts, m-15   (*)   (*)
31709
  213 Each   Conv. No. 2 — idlers   (*)   (*)
31710
  1 Each   Conv. No. 2 — creep drive motor   (*)   (*)
31711
  1 Each   Conv. No. 2 — creep drive reducer   (*)   (*)
31712
  1 Each   Conv. No. 2 — creep high speed coupling   (*)   (*)
31713
  1 Each   Conv. No. 2 — creep clutch coupling   (*)   (*)
31714
  1 Each   Conv. No. 2 — electrical switches   (*)   (*)
31715
  1 Each   Conv. No. 2 — steel structure supports   (*)   (*)
31716
  1 Each   Conv. No. 2 — stairs & walkways — tail end   (*)   (*)
31717
  2 Each   Conv. No. 2 — walk through conveyor galleries   (*)   (*)
31718
  1 Each   Conv. No. 2 — support bent — 36 ft.   (*)   (*)
31719
  1 Each   Conv. No. 2 — discharge hood   (*)   (*)
31720
  1 Each   Conv. No. 2 — discharge chute to Conv. No. 3   (*)   (*)
31721
  1 Each   Conv. No. 2 — hinged chute to ground   (*)   (*)
31722
  1 Each   Conv. No. 2 — instrumentation, M-15   (*)   (*)
31959
  1 Each   Conv. No. 1 Dust Collector — Ray Jet collector   (*)   (*)
31960
  1 Each   Conv. No. 1 Dust Collector — screw drive damper   (*)   (*)
31961
  1 Lot   Conv. No. 1 Dust Collector — C.E. Controls   (*)   (*)
31962
  1 Lot   Conv. No. 1 Dust Collector — fans & motors   (*)   (*)
31963
  1 Lot   Conv. No. 1 Dust Collector — CO2 system   (*)   (*)
31964
  1 Lot   Conv. No. 1 Dust Collector — electrical   (*)   (*)
31965
  1 Lot   Conv. No. 1 Dust Collector — ductwork   (*)   (*)
31966
  4 Each   Car Dumper — Ray Jet collectors   (*)   (*)

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 58
Big Stone II Power Plant
  June 30, 2005
 

                  Otter                 Tail                 Number   Quantity  
Description   Original Cost   Adjusted Cost
31967
  4 Each   Car Dumper — screw drive dampers   (*)   (*)
31968
  1 Lot   Car Dumper — C.E. controls   (*)   (*)
31969
  4 Each   Car Dumper — fans and motors   (*)   (*)
31970
  1 Lot   Car Dumper — CO2 system   (*)   (*)
31971
  1 Lot   Car Dumper — electrical   (*)   (*)
31972
  1 Lot   Car Dumper — ductwork   (*)   (*)
31988
  71 Ton   Rotary car dumper hopper   (*)   (*)
31991
  1 Each   Galigher coal sampler   (*)   (*)
32008
  43,818 SF   Car Dumper — forms   (*)   (*)
32009
  3,151 SF   Fuel System Forms — train positioner bldg.   (*)   (*)
32010
  19,104 SF   Fuel System Forms — Conv. No. 2   (*)   (*)
32016
  420 Ton   Car Dumper — rebar   (*)   (*)
32017
  69 Ton   Train Positioner building — rebar   (*)   (*)
32018
  95 Ton   Fuel System Rebar, Conv. No. 2   (*)   (*)
32024
  25,873 Lbs   Car Dumper — embeds   (*)   (*)
32025
  9,013 Lbs   Train Positioner Building — embeds   (*)   (*)
32026
  8,322 Lbs   Fuel System Embeds — Conv. No. 2   (*)   (*)
32032
  5154 CY   Car Dumper — concrete   (*)   (*)
32033
  1800 CY   Train Positioner — concrete   (*)   (*)
32034
  1,662 CY   Fuel System Concrete, Conv. No. 2   (*)   (*)
32038
  59 Ton   Car Dumper — steel   (*)   (*)
32047
  45,500 CY   Car Dumper — excavation   (*)   (*)
32048
  2,000 CY   Train Positioner — excavation   (*)   (*)
32049
  24,900 CY   Fuel System Excavation — Conv. No. 2   (*)   (*)
32055
  35,700 CY   Car Dumper — backfill   (*)   (*)
32056
  1,600 CY   Train Positioner — backfill   (*)   (*)
32057
  25,000 CY   Fuel System Backfill — Conv. No. 2   (*)   (*)
32059
  1 Lot   Car Dumper — drains   (*)   (*)
32069
  59 Ton   Car Dumper — structural steel   (*)   (*)
32070
  81 Ton   Train Positioner building - structural
steel   (*)   (*)
32071
  20 Ton   Car Dumper — misc. iron and steel   (*)   (*)

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 59
Big Stone II Power Plant
  June 30, 2005
 

                  Otter                 Tail                 Number   Quantity  
Description   Original Cost   Adjusted Cost
32072
  9 Ton   Train Positioner Building — misc. iron and steel   (*)   (*)
32073
  14,000 SF   Car Dumper — exterior siding   (*)   (*)
32074
  6 Each   Car Dumper — doors   (*)   (*)
32075
  300 SF   Car Dumper — windows   (*)   (*)
32076
  14,900 SF   Train Positioner — exterior siding   (*)   (*)
32077
  3 Each   Train Positioner — doors   (*)   (*)
32078
  900 SF   Train Positioner — blockwall insulation   (*)   (*)
32083
  8,900 SF   Conveyor No. 2 — exterior siding   (*)   (*)
32084
  1 Each   Conveyor No. 2 — doors   (*)   (*)
32088
  668,000 CY   Plant Access Railroad — earthwork C-L, FSC-26   (*)   (*)
32089
  25,182 LF   Plant Access Railroad — trackage C-3, FSC-42, 44 & 63   (*)   (*)
32090
  1 Lot   Track Detection Equipment, FSC-64   (*)   (*)
32091
  1 Each   Track switch heater   (*)   (*)
36989
  1 Lot   Mtce. platform under electrical cable junction   (*)   (*)
37016
  1 Each   Car Dumper — dust collection hood   (*)   (*)
37025
  1 Lot   Car Dumper — dust collector   (*)   (*)
37536
  1 Lot   Tachometer loss circuit for train
positioner haulage controller   (*)   (*)
48822
  2 Each   Rail flange lubricators   (*)   (*)
52299
  1 Each   Motor, 30 HP, 1800 RPPM. #1 & #2 conveyor area   (*)   (*)
52300
  1 Each   Foundation for blower and motor. #1 & #2 Conveyor Area   (*)   (*)
52301
  1 Each   Rotary Airlock, with 1 HP gear motor drive. #1 & #2 conveyor area  
(*)   (*)
52302
  1 Lot   Piping with hangers and accessories. #1 & #2 conveyor area   (*)   (*)
52303
  1 Each   Cyclone dust collector, Fuller/Draco 1DC12 Mark V. #1 & #2 conveyor
area   (*)   (*)
52304
  2 Each   Trickle valve, 7" #1 & #2 conveyor area   (*)   (*)
52305
  1 Each   Relay room AC   (*)   (*)

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 60
Big Stone II Power Plant
  June 30, 2005
 

                  Otter                 Tail                 Number   Quantity  
Description   Original Cost   Adjusted Cost
52306
  18 Each   Dumper dust collector building - translucent corrugated panels   (*)
  (*)
65122
  1 Each   Wheel clamp system for dumper   (*)   (*)
67313
  1 Each   Dumper positioner brake   (*)   (*)
67314
  1 Each   Positioner SCR drive   (*)   (*)
67315
  1 Each   Positioner arm SCR drives   (*)   (*)
67316
  3 Each   Dumper car clamp assemblies   (*)   (*)
67317
  2 Each   Dumper variable speed drives   (*)   (*)
67318
  1 Each   Dumper car clamp hydraulic unit   (*)   (*)
67319
  2 Each   Dumper hydraulic pumps   (*)   (*)
67320
  1 Each   Dumper hydraulic building   (*)   (*)
67321
  4 Each   Dumper trunnion wheels   (*)   (*)
67322
  1 Each   Dumper control computer   (*)   (*)
67323
  1 Each   Dumper PLC   (*)   (*)
67324
  2 Each   Dumper gearboxes   (*)   (*)
67325
  2 Each   Dumper drive motors   (*)   (*)
67326
  1 Each   Dumper drive brakes   (*)   (*)
67327
  1 Each   Dumper stairway to pit   (*)   (*)
67328
  1 Lot   Dumper exit bridge section   (*)   (*)
67329
  1 Each   Dumper plate and girders   (*)   (*)
67330
  1 Each   Dumper entrance door   (*)   (*)
70747
  1 Each   Positioner drive isolation transformer   (*)   (*)
32710
  1 Each   Car Dumper — motor control center   (*)   (*)
32723
  1 Each   Car Dumper dust collection — motor control center   (*)   (*)
 
           TOTAL:   (*)   (*)

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 61
Big Stone II Power Plant
  June 30, 2005
 

SCHEDULE 10.01(A)
Option to Purchase Contract
OPTION TO PURCHASE CONTRACT
     THIS OPTION TO PURCHASE CONTRACT (this “Option Contract”) is made this 30th
day of June, 2005, by and between Montana-Dakota Utilities Co., a Division of
MDU Resources Group, Inc., a Delaware corporation f/k/a Montana-Dakota Utilities
Co., of Bismarck, North Dakota (“Montana-Dakota”), Northwestern Corporation, a
Delaware corporation doing business as NorthWestern Energy, of Sioux Falls,
South Dakota (“NorthWestern”) and Otter Tail Corporation, a Minnesota
corporation, of Fergus Falls, Minnesota (“Otter Tail,” and together with
Montana-Dakota and NorthWestern, “Sellers”), and Otter Tail, in its capacity as
administrative agent for itself and the other Persons who are, from time to
time, the BSP II Owners described in the JFA described below (in such capacity,
“Buyer”). Sellers and Buyer are sometimes referred to as the “Parties” and
Sellers (collectively) and Buyer are each a “Party.”
     WHEREAS, Sellers are the owners, as tenants in common, of those certain
tracts of real property located in Grant County, South Dakota legally described
on Exhibit A attached hereto (the “BSP II Plant Site” and, together with such
improvements and appurtenances thereto, the “Optioned Premises”); and
     WHEREAS, Sellers have entered into that certain Big Stone I and Big Stone
II 2005 Joint Facilities Agreement of even date hereof (the “JFA”) with the BSP
II Owners described therein (the “BSP II Owners”) for the purpose of planning
the development of the BSP II Plant Site and the cooperative use of certain
joint facilities located on the BSP I Plant Site and the BSP II Plant Site; and
     WHEREAS, in connection with the purposes of the JFA, Sellers have agreed to
grant Buyer, as administrative agent for the BSP II Owners, an option to
purchase the Optioned Premises, pursuant to the terms and conditions set forth
herein.
     NOW, THEREFORE, in consideration of the mutual covenants set forth below
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:

1.   Grant of Option. Sellers give and grant to Buyer the exclusive option (the
“Option”) to purchase the Optioned Premises and do hereby agree to hold the
Optioned Premises for sale to Buyer (or to the BSP II Owners as Buyer may
direct), until the (*), at 5:00 p.m., local Big Stone City, South Dakota time
(the “Option Period”). Buyer shall have the option to purchase none, some or all
of the Optioned Premises based (in Buyer’s sole discretion) on the results of
the environmental due diligence conducted pursuant to Section 10.09 of the JFA.

2.   Purchase Price. The purchase price of the Optioned Premises shall be (*)
per acre, which shall be payable in full at Closing. The acreage of the Optioned
Premises shall be conclusively determined by the official plats of the tracts
constituting the Optioned Premises.

3.   Real Estate Taxes. Real estate taxes and installments of special
assessments, if any, shall be prorated as of the Date of Closing (as defined
below) in accordance with customary

 

--------------------------------------------------------------------------------

 

     
Option to Purchase Contract
  Page 62
Big Stone II Power Plant
  June 30, 2005
 

    local commercial practice. Sellers and Buyer shall take such appropriate
steps as are necessary to cause the Optioned Premises to be taxed and assessed
separately and distinctly from the fee parcels that constitute the BSP I Plant
Site (as defined in the JFA) after the Date of Closing.

4.   Exercise of Option. In the event that Buyer desires to exercise the Option,
Buyer shall deliver written notice of its exercise of the Option to Sellers in
accordance with the notice provisions of the JFA prior to the date and time of
expiration of the Option Period, and such notice shall be sufficient to exercise
the Option.

5.   Review of Title; Clearance of Title Objections. Buyer has, at its expense,
reviewed the state of the title to the Optioned Premises and agrees to take
title to the Optioned Premises subject to all easements, liens and encumbrances
of record as of the date hereof except for the easements, liens and encumbrances
described in Exhibit B (such non-accepted encumbrances being referred to herein
as the “Non-Permitted Encumbrances”). Nothing in this Option Contract shall be
deemed to excuse Buyer from having to accept title to the Optioned Premises
subject to existing and future environmental conditions described under
Article X of the JFA. Buyer shall have the right to contract for the issuance of
an owner’s title insurance policy and such endorsements thereto as may be
desired by Buyer at Buyer’s expense, it being understood and agreed that the
terms of such policy and endorsements are strictly between Buyer and the title
company and shall not constitute a basis for title objections or a basis for
termination of this Option Contract if unavailable.

6.   Closing. The “Date of Closing” shall be the date Sellers deliver a warranty
deed transferring the Optioned Premises to Buyer (the “Closing”). The Date of
Closing shall be within ninety (90) days following receipt by Sellers of the
notice of election to exercise this Option, or such other date as may be agreed
to by Buyer and Sellers; provided that either Party may extend the Date of
Closing for up to an additional thirty (30) days by notice to the other Party
stating the reason for such extension, which reason shall be commercially
reasonable. At the Closing, Sellers shall execute and deliver to Buyer (A) a
warranty deed in favor of Buyer (or the designated BSP II Owners), conveying the
Optioned Premises subject to all easements, liens and encumbrances of record as
of the date hereof, except for the Non-Permitted Encumbrances; (B) such
additional documents as may be necessary to place the warranty deed of record;
and (C) such additional customary documents as may be reasonably required by
Buyer’s title company in order to issue an owner’s title insurance policy with
the following so-called “standard exceptions” deleted: (i) any facts, rights,
interests, or claims which are not shown by the public records but which could
be ascertained by an inspection of said land or by making inquiry of persons in
possession thereof; (ii) discrepancies, conflicts in boundary lines, shortage in
area, encroachments, or any other facts which a correct survey would disclose,
and which are not shown by the public records; (iii) any lien, or right to a
lien for services, labor or material heretofore or hereafter furnished, imposed
by the law and not shown by

--------------------------------------------------------------------------------

 

 

     
Option to Purchase Contract
  Page 63
Big Stone II Power Plant
  June 30, 2005
 

    the public records; (iv) bankruptcies, defects, liens, encumbrances, adverse
claims or other matters, if any, created, first appearing in the public records
or attaching prior to the date the Buyer acquires of record fee title estate to
the Optioned Premises.

7.   Assignment of Option. It is specifically understood and agreed that Buyer
may assign its rights under this Option Contract at any time and that any such
assignee shall also have the right of assignment; provided that Buyer may only
assign its rights under this Option Contract (and any assignee may only further
assign its rights under this Option Contract) to a Person who is then a BSP II
Owner or in connection with a pledge or the granting of a security interest in,
or assigning as collateral, all or any portion of Buyer’s interest in either BSP
II or the JFA in connection with Buyer’s financing of the Project.

8.   Right of Entry; Inspection of Optioned Premises. Sellers hereby grant to
Buyer, and its agents or designees, the right to enter upon the Optioned
Premises at any time during the Option Period as more specifically provided for
in the JFA for the purposes of surveying and inspecting the Optioned Premises.
Acceptance of the warranty deed for the Optioned Premises shall constitute
Buyer’s acknowledgment that the Optioned Premises have been conveyed on an
“As-Is, Where-Is” basis, but subject to warranties of title as set forth in a
Warranty Deed to be delivered pursuant to Section 6. In the event that Buyer’s
inspection reveals an environmental hazard, Hazardous Substance or other
undesirable condition with respect to the Optioned Premises, Buyer may, at any
time prior to Closing (i) accept responsibility for such conditions and proceed
to Closing, as provided for in the JFA, (ii) exclude that portion of the
Optioned Premises with the environmental hazard, Hazardous Substance or
undesirable condition from the terms of the Option (in which case, Sellers shall
convey the remaining portion of the Optioned Premises to Buyer upon exercise of
the Option), or (iii) elect to terminate this Option Contract at which time the
Parties shall have no further responsibilities to each other with respect to
this Option Contract.

9.   Definitions. Any capitalized term that is not defined in this Option
Contract shall have the definition set forth in the JFA.

10.   Successors and Assigns. This Option Contract shall inure to the benefit of
and bind the respective successors and assigns of the Parties hereto, and
references hereby to “Sellers” and “Buyer” shall be deemed to include their
respective successors and assigns. Buyer acknowledges and represents to Sellers
that it is acting solely as agent for the BSP II Owners.

11.   Time Is of the Essence. Time is of the essence to this Option Contract.

12.   Recording of Memorandum. The Parties agree that this Option Contract shall
not be recorded. The Parties shall enter into a Memorandum of Option Contract
and the Memorandum will be recorded in the Office of the Register of Deeds of
Grant County, South Dakota as soon as reasonably possible following execution of
this Option Contract.

--------------------------------------------------------------------------------

 

 

     
Option to Purchase Contract
  Page 64
Big Stone II Power Plant
  June 30, 2005
 

13.   Sellers’ Representations. Sellers covenant, represent and warrant to Buyer
that:

  (a)   Sellers have the full power, authority and legal right under all
applicable Laws and their respective organizational documents to grant the
Option to Buyer and complete the transaction contemplated hereby. The Persons
who have executed this Option Contract on behalf of Sellers have the appropriate
authority as the owners of the entire interest of Optioned Premises to bind
Sellers to the terms of this Option Contract     (b)   The execution, delivery
and performance of this Option Contract by Sellers will not result in any breach
of any instrument, agreement, contract or other document to which Sellers are a
party or by which their properties are bound.     (c)   As of the date hereof,
there are no liens or encumbrances against the Optioned Premises other than
easements, liens and encumbrances of record. Seller has not permitted or
suffered any easements, liens or encumbrances against the Optioned Premises
since May 10, 2005.     (d)   From the date hereof until the Date of Closing,
Sellers shall not grant, permit or suffer any easements, liens or encumbrances
to attach to the Optioned Premises without the prior written consent of Buyer,
other than such easements, liens or encumbrances as shall be released prior to
Closing.

14.   Remedies for Breach. In the event of a material breach of the covenants,
terms, conditions, representations, and warranties set forth in this Option
Contract, either Party may seek specific performance to enforce the provisions
hereof, and/or may seek damages resulting from such breach and/or any other
remedy available to such Party under law or equity. The prevailing Party shall
be entitled to reasonable attorneys’ fees incurred in enforcing this Option
Contract. The remedies set forth herein are cumulative and are in addition to
any remedies set forth in the JFA.

15.   Governing Law. This Option Contract shall be governed by the law of the
state of South Dakota.

16.   Counterparts. To facilitate execution, this Option Contract may be
executed in as many separate counterparts as may be convenient or required. It
shall not be necessary that the signature of each Party, or that the signature
of all Persons required to bind any Party, appear on each counterpart. All
counterparts shall collectively constitute a single instrument.

 

--------------------------------------------------------------------------------

 

     
Option to Purchase Contract
  Page 65
Big Stone II Power Plant
  June 30, 2005
 

     IN WITNESS WHEREOF, the Parties have executed this Option Contract as of
the day and year first above written.

              SELLERS:
 
        Montana-Dakota:   MONTANA-DAKOTA UTILITIES CO., a Division of MDU
Resources Group, Inc., a Delaware corporation formerly known as Montana-Dakota
Utilities Co.
 
       
 
  By:    
 
       
 
  Name:   Bruce T. Imsdahl
 
  Its:   President and Chief Executive Officer
 
        NorthWestern:   NORTHWESTERN CORPORATION, a Delaware corporation doing
business as NorthWestern Energy
 
       
 
  By:    
 
       
 
  Name:   Michael J. Hanson
 
  Its:   President and Chief Executive Officer
 
        Otter Tail:   OTTER TAIL CORPORATION, a Minnesota corporation
 
       
 
  By:    
 
       
 
  Name:   Charles S. MacFarlane
 
  Its:   President
 
            BUYER:
 
            OTTER TAIL CORPORATION, a Minnesota corporation, as administrative
agent for itself and the other Persons who are, from time to time, the BSP II
Owners described in the JFA
 
       
 
  By:    
 
       
 
  Name:   Charles S. MacFarlane
 
  Its:   President

--------------------------------------------------------------------------------

 

 

     
Option to Purchase Contract
  Page 66
Big Stone II Power Plant
  June 30, 2005
 

EXHIBIT A
Legal Description of Optioned Premises
Tract A in the E 1/2 of Section 11, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
[cooling tower blowdown pond]
Tract B in the SE 1/4 of Section 11, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
[cooling tower]
Tract C in the E 1/2 of Section 11 and W 1/2 of Section 12, Township 121 North —
Range 47 West of the 5th P.M., Grant County, South Dakota
[coal silos]
Tract D in the E 1/2 of Section 11 and the W 1/2 of Section 12 — Township 121
North — Range 47 West of the 5th P.M., Grant County, South Dakota
[dead coal storage]
Tract E in the NE 1/4 of Section 11, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
[new yard shop]
Tract F in the NW 1/4 of Section 12, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
[BSP II cooling water makeup]
Tract G in the W 1/2 of Section 12, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
[BSP II coal transfer house]
Tract H in the SW 1/4 of Section 12, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
[cold lime softener]
Tract I in the SW 1/4 of Section 12 and SE 1/4 of Section 11, Township 121 North
— Range 47 West of the 5th P.M., Grant County, South Dakota
[BSP II’s power block]
Tract M in the SE 1/4 of Section 12, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
[brine concentrator addition]

--------------------------------------------------------------------------------

 

 

     
Option to Purchase Contract
  Page 67
Big Stone II Power Plant
  June 30, 2005
 

Tract O in the SE 1/4 of Section 11, , Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
[scrubber waste storage]

--------------------------------------------------------------------------------

 

 

EXHIBIT B
Non-Permitted Encumbrances
Big Stone Plant Agreement for Sharing Ownership of Generating Plant dated as of
January 7, 1970, as amended by:
Supplemental Agreement No. 1 to Big Stone Plant Agreement for Sharing Ownership
of Generating Plant dated as of July 1, 1983
Supplemental Agreement No. 2 to Big Stone Plant Agreement for Sharing Ownership
of Generating Plant dated as of March 1, 1985
Supplemental Agreement No. 3 to Big Stone Plant Agreement for Sharing Ownership
of Generating Plant dated March 31, 1986
Supplemental Agreement No. 4 to Big Stone Plant Agreement for Sharing Ownership
of Generating Plant dated April 24, 2003, recorded July 7, 2003 in Misc. Record
227, Page 998.
Easement Agreement dated February 1, 1974 in favor of Grant County, South
Dakota, recorded February 6, 1974 in Misc. Record 159, page 169.
Memorandum of Option to Lease Land dated October 3, 2002, recorded October 10,
2002 in Misc. Record 227, Page 480
All mortgage indentures affecting the Optioned Premises.
All matters placed of record after May 10, 2005.

--------------------------------------------------------------------------------

 

 

     
Joint Facilities Agreement
  Page 69
Big Stone II Power Plant
  June 30, 2005
 

SCHEDULE 10.01(B)
Memorandum of Option to Purchase Contract
MEMORANDUM OF OPTION TO PURCHASE CONTRACT
This instrument memorializes the fact that Montana-Dakota Utilities Co., a
Division of MDU Resources Group, Inc., a Delaware corporation f/k/a
Montana-Dakota Utilities Co., of Bismarck, North Dakota (“Montana-Dakota”),
Northwestern Corporation, a Delaware corporation doing business as NorthWestern
Energy, of Sioux Falls, South Dakota (“NorthWestern”) and Otter Tail
Corporation, a Minnesota corporation, of Fergus Falls, Minnesota (“Otter Tail,”
and together with Montana-Dakota and NorthWestern, “Sellers”), and Otter Tail,
in its capacity as administrative agent for itself and the other Persons who
are, from time to time, the BSP II Owners described in the Option to Purchase
Contract described below (in such capacity, “Buyer”), have entered into that
certain Option to Purchase Contract dated June 30, 2005 (the “Option Contract”)
concerning the real property in Grant County, South Dakota described in
Exhibit A attached hereto (the “Optioned Premises”).
Under the terms of the Option Contract, which is in full force and effect, Buyer
has the exclusive option to purchase the Optioned Premises from Sellers for the
price specified therein. The Sellers shall also provide easements for access to
the Optioned Premises pursuant to the terms of the Option Contract. The Option
expires no later than (*) although the closing of the purchase of the Option
Contract may occur up to ninety (90) days after such date.
To facilitate execution, this Memorandum Agreement may be executed in as many
separate counterparts as may be convenient or required. It shall not be
necessary that the signature of each Party, or that the signature of all persons
required to bind any Party, appear on each counterpart. All counterparts shall
collectively constitute a single instrument.
[The remainder of this page is intentionally left blank.]

 

--------------------------------------------------------------------------------

 

Memorandum of Option to Purchase Contract   Page 70 Big Stone II Power Plant  
June 30, 2005      

     IN WITNESS WHEREOF, the Sellers and Buyer have caused this Memorandum of
Option to Purchase Contract to be executed effective as of June 30, 2005.

                  SELLERS:    
 
            Montana-Dakota:   MONTANA-DAKOTA UTILITIES CO., a Division of MDU
Resources Group, Inc., a Delaware corporation formerly known as Montana-Dakota
Utilities Co.
 
           
 
  By:         
 
                Name: Bruce T. Imsdahl     Its: President and Chief Executive
Officer

         
STATE OF South Dakota
       
 
  }   ss.
COUNTY OF Grant
       

On this the 30th day of June, 2005, before me, Dennis Mears, the undersigned
officer, personally appeared Bruce T. Imsdahl, who acknowledged himself to be
the President and Chief Executive Officer of MONTANA-DAKOTA UTILITIES CO., a
Division of MDU Resources Group, Inc., a Delaware corporation, and that he, as
such President and Chief Executive Officer being authorized so to do, executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation by himself as President and Chief Executive Officer.
In witness whereof I hereunto set my hand and official seal.

                          Notary Public         

 

--------------------------------------------------------------------------------

 

Memorandum of Option to Purchase Contract   Page 71 Big Stone II Power Plant  
June 30, 2005      

         

              NorthWestern:   NORTHWESTERN CORPORATION, a Delaware corporation
doing business as NorthWestern Energy
 
           
 
  By:                       Name: Michael J. Hanson     Its: President and Chief
Executive Officer

         
STATE OF SOUTH DAKOTA
       
 
  }   ss.
COUNTY OF MINNEHAHA
       

On this the 27th day of June, 2005, before me, Alan Dietrich, the undersigned
officer, personally appeared Michael J. Hanson, who acknowledged himself to be
the President and Chief Executive Officer of NORTHWESTERN CORPORATION, a
Delaware corporation, and that he, as such President and Chief Executive Officer
being authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of the corporation by himself as
President and Chief Executive Officer.
In witness whereof I hereunto set my hand and official seal.

                          Notary Public         

 

--------------------------------------------------------------------------------

 

Memorandum of Option to Purchase Contract   Page 72 Big Stone II Power Plant  
June 30, 2005      

         

              Otter Tail:   OTTER TAIL CORPORATION, a Minnesota corporation
 
           
 
  By:                       Name: Charles S. MacFarlane     Its: President

         
STATE OF MINNESOTA
       
 
  }   ss.
COUNTY OF HENNEPIN
       

On this the 22nd day of June, 2005, before me, Thomas A. Jensen, the undersigned
officer, personally appeared Charles S. MacFarlane, who acknowledged himself to
be the President of OTTER TAIL CORPORATION, a Minnesota corporation, and that
he, as such President being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as President.
In witness whereof I hereunto set my hand and official seal.

                          Notary Public         

 

--------------------------------------------------------------------------------

 

Memorandum of Option to Purchase Contract   Page 73 Big Stone II Power Plant  
June 30, 2005      

         

                  BUYER:
 
                OTTER TAIL CORPORATION, a Minnesota corporation, as
administrative agent for itself and the other Persons who are, from time to
time, the BSP II Owners described in the Option to Purchase Contract
 
           
 
  By:          
 
                Name: Charles S. MacFarlane     Its: President

         
STATE OF MINNESOTA
       
 
  }   ss.
COUNTY OF HENNEPIN
       

On this the 22nd day of June, 2005, before me, Thomas A. Jensen, the undersigned
officer, personally appeared Charles S. MacFarlane, who acknowledged himself to
be the President of OTTER TAIL CORPORATION, a Minnesota corporation, and that
he, as such President being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as President.
In witness whereof I hereunto set my hand and official seal.

                          Notary Public         

 

--------------------------------------------------------------------------------

 

Memorandum of Option to Purchase Contract   Page 74 Big Stone II Power Plant  
June 30, 2005      

         

This Instrument Drafted By:
Leonard, Street and Deinard P.A. (RLS)
150 South Fifth Street, Suite 2300
Minneapolis, MN 55402

 

--------------------------------------------------------------------------------

 

Memorandum of Option to Purchase Contract   Page 75 Big Stone II Power Plant  
June 30, 2005      

EXHIBIT A
TO
MEMORANDUM OF OPTION TO PURCHASE CONTRACT
Tract A in the E 1/2 of Section 11, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract B in the SE 1/4 of Section 11, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract C in the E 1/2 of Section 11 and W 1/2 of Section 12, Township 121 North —
Range 47 West of the 5th P.M., Grant County, South Dakota
Tract D in the E 1/2 of Section 11 and the W 1/2 of Section 12 — Township 121
North — Range 47 West of the 5th P.M., Grant County, South Dakota
Tract E in the NE 1/4 of Section 11, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract F in the NW 1/4 of Section 12, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract G in the W 1/2 of Section 12, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract H in the SW 1/4 of Section 12, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract I in the SW 1/4 of Section 12 and SE 1/4 of Section 11, Township 121 North
— Range 47 West of the 5th P.M., Grant County, South Dakota
Tract M in the SE 1/4 of Section 12, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract O in the SE 1/4 of Section 11, , Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 76
Big Stone II Power Plant
  June 30, 2005  

SCHEDULE 10.02(A)
Blanket Easement Agreement
(space above reserved for recording information)
BLANKET EASEMENT AGREEMENT
     THIS BLANKET EASEMENT AGREEMENT (this “Agreement”) is made and entered into
as of the 30th day of June, 2005, by and among Otter Tail Corporation, a
Minnesota corporation, doing business as Otter Tail Power Company (“Otter
Tail”), NorthWestern Corporation, a Delaware corporation, doing business as
NorthWestern Energy (“NorthWestern”), and Montana-Dakota Utilities Co., a
Division of MDU Resources Group, Inc., a Delaware corporation formerly known as
Montana-Dakota Utilities Co. (“Montana-Dakota”), and Central Minnesota Municipal
Power Agency, an agency incorporated under Minnesota law (“CMMPA”), Great River
Energy, a Minnesota cooperative (“GRE”), Heartland Consumers Power District, a
consumers power district formed and organized under the South Dakota Consumers
Power District Law, Chapter 49-35 of the South Dakota Codified Laws
(“Heartland”), Southern Minnesota Municipal Power Agency, a Minnesota municipal
corporation and political subdivision (“SMMPA”), and Western Minnesota Municipal
Power Agency, a Minnesota municipal corporation and political subdivision
(“WMMPA”). Otter Tail, NorthWestern, and Montana-Dakota, together with such
other Persons that from time to time may be Owners of BSP I (as such term is
defined below) are collectively referred to herein as the “BSP I Owners.” CMMPA,
GRE, Heartland, SMMPA, WMMPA, Montana-Dakota, and Otter Tail, together with such
other Persons that from time to time may become Owners of BSP II (as such term
is defined below), are collectively referred to herein as the “BSP II Owners.”
WITNESSETH
     A. The BSP I Owners, as tenants in common, own an undivided interest in one
hundred percent (100%) of the existing 450 MW coal-fired electric generating
plant located in Grant County, South Dakota, known as the Big Stone Plant (“BSP
I”) and in one hundred percent (100%) of the real property legally described on
Exhibit A (the “Project Premises”). The Project Premises are primarily held by
the BSP I Owners for the purpose of the operation of BSP I.
     B. The BSP II Owners plan to jointly develop, own and operate a new,
approximately 600 MW coal-fired electric generating plant to be known as the Big
Stone II Power Plant (“BSP II”) to be located on property adjacent to BSP I.

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 77
Big Stone II Power Plant
  June 30, 2005  

     C. The BSP I Owners and BSP II Owners have entered into a Big Stone I and
Big Stone II 2005 Joint Facilities Agreement dated of even date hereof (the
“Joint Facilities Agreement”) regarding the joint use of certain facilities by
the BSP I Owners and BSP II Owners in the operation of BSP I and BSP II; and
     D. In connection with the development of BSP II, the BSP I Owners and Otter
Tail, as agent for the BSP II Owners, have entered into that certain Option to
Purchase Contract dated of even date hereof (the “Option Contract”) which grants
an option to the BSP II Owners to purchase that portion of the Project Premises
legally described on Exhibit B (the “BSP II Plant Site”). BSP II and the BSP II
Joint Facilities are to be constructed upon the BSP II Plant Site. The remaining
portion of the Project Premises (upon which BSP I and the BSP I Joint Facilities
are constructed) is referred to herein as the “BSP I Plant Site.”
     E. Under the Joint Facilities Agreement, the BSP I and BSP II Owners will
develop and operate their respective Plant Sites and Joint Facilities in
conjunction with each other as integral parts of a single complex, but not a
planned or common interest development community, and to effectuate the common
use and operation of their respective Plant Sites and Joint Facilities, the BSP
I and BSP II Owners desire to enter into this Agreement;
     NOW, THEREFORE, in consideration of the premises, the BSP I and BSP II
Owners agree as follows:
ARTICLE I — DEFINITIONS
     The terms used herein, unless otherwise specifically defined herein, will
have the same meanings as set forth in the Joint Facilities Agreement.
ARTICLE II -EASEMENTS FOR CONSTRUCTION
     2.1 Pre-Construction and Construction Easements
     (A) The BSP I Owners hereby grant the BSP II Owners and their invitees a
temporary, nonexclusive easement over and across the Project Premises to access
the proposed BSP II Plant Site for purposes of investigating, accumulating data,
testing and designing BSP II and associated facilities including, but not
limited to, BSP II Joint Facilities, BSP II exclusive facilities, utility lines,
and access roads, subject to the terms and conditions of Section 10.03 of the
Joint Facilities Agreement.
     (B) The BSP I Owners hereby grant a temporary, nonexclusive easement to the
BSP II Owners, their contractors, subcontractors, architects, employees and
invitees across the area legally described in Exhibit C for the purposes of lay
down areas, construction and material storage, work areas, contractor parking,
temporary offices and temporary roadways in connection with the construction of
BSP II and the BSP II Joint Facilities (the “Construction Easement”), subject to
the terms and conditions of Section 10.03 of the Joint Facilities Agreement.

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 78
Big Stone II Power Plant
  June 30, 2005  

ARTICLE III — CONSTRUCTION INDEMNIFICATION REQUIREMENTS,
RESTRICTIONS; AND FACILITY EASEMENTS
     3.1 Indemnification Requirements
     The BSP II Owners covenant that during the activities conducted pursuant to
Article II and their use of the temporary easement rights thereunder, the BSP II
Owners shall indemnify the BSP I Owners as provided in Section 10.04 of the
Joint Facilities Agreement.
     3.2 Joint and Exclusive Facilities
     (A) Any BSP II Joint Facilities and exclusive facilities shall be
constructed as shown on the Site Plan attached as Exhibit D hereto.
     (B) Any BSP II utility lines that are placed underground shall be at depths
designated by BSP II consultants and subject to approval by the BSP I
Engineering and Operating Committee.
     3.3 Location of Facilities
     Any BSP II Joint Facilities and exclusive facilities shall only be located
as designated on the Site Plan. While it is acknowledged and agreed that the BSP
II Owners have no obligation to commence construction of any Joint Facility or
exclusive facility, the BSP II Owners agree that once construction of a Joint
Facility or exclusive facility has commenced, such activity will be completed
within a reasonable time.
     3.4 Liens
     If any mechanic’s lien is recorded against BSP I or the BSP I Plant Site as
a result of services performed or materials furnished for the use of the BSP II
Owners, the BSP II Owners agree to cause such lien to be discharged within
fifteen (15) days after the entry of a final judgment (after all appeals) for
the foreclosure of such mechanic’s lien. Notwithstanding the foregoing, upon
request of the BSP I Owners, the BSP II Owners agree to promptly cause such lien
to be released and discharged of record, either by paying the indebtedness which
gave rise to such mechanic’s lien or by posting bond or other security as
required by law to obtain such release and discharge. Nothing herein shall
prevent the BSP II Owners from contesting the validity thereof in any manner
they choose so long as such contest is pursued with reasonable diligence. If
such contest is determined adversely (allowing for appeal to the highest
appellate court), the BSP II Owners shall promptly pay in full the required
amount, together with interest, penalties, costs, or other charges necessary to
release such mechanic’s lien of record. The BSP II Owners agree to defend,
protect, indemnify and hold harmless the BSP I Owners, BSP I, and the BSP I
Plant Site from and against all claims and demands, including any action or
proceeding brought thereon, and all Losses arising out of or resulting from such
mechanic’s lien.

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 79
Big Stone II Power Plant
  June 30, 2005  

     3.5 Facility Easement
     As a condition to, and in conjunction with the process of, the exercise of
the Option, the BSP I Owners shall grant to the BSP II Owners a nonexclusive
easement (the “Facility Easement”) in designated specific areas for purposes of
the installation, operation and maintenance of (a) necessary utility lines
serving the BSP II Plant Site and (b) other facilities reasonably necessary for
the operation of BSP II and the BSP II Joint Facilities (including but not
limited to water lines, steam lines, pipe lines, conveyors, roadways and similar
facilities). Concurrently with their acquisition of the BSP II Plant Site, the
BSP I Owners shall grant the Facility Easement pursuant to a written agreement
to be recorded along with the Warranty Deed to the BSP II Plant Site. The Groups
shall negotiate, in good faith (through their respective Engineering and
Operating Committees) the specific terms and location of the Facility Easement.
The BSP II Owners shall pay the reasonable expenses of the BSP I Owners that
directly relate to the grant of the Facility Easement.
ARTICLE IV -POST-CONSTRUCTION EASEMENTS
     4.1 Post-Construction Easements
     Following the construction of BSP II, the BSP II Joint Facilities, and BSP
II exclusive facilities and during the term of the Joint Facilities Agreement,
the BSP I Owners and the BSP II Owners shall grant and convey to the other,
their employees and invitees, in common with others entitled to the same use, a
non-exclusive cross-easement over and across each Group’s Plant Site in order to
facilitate the operation and maintenance of each Group’s Joint Facilities and
exclusive facilities in accordance with the Joint Facilities Agreement. A Group
that benefits from any such cross-easement shall pay the reasonable expenses of
the other (i.e., the granting) Group directly related to the grant of such
cross-easement by such granting Group.
     4.2 Ingress, Egress and Parking
     During the term of the Joint Facilities Agreement, each Group hereby grants
and conveys to the other Group for its use and for the use of its employees and
invitees, in common with others entitled to use the same, a non-exclusive
easement for the passage and parking of vehicles over and across the parking and
driveway areas of each Group’s Plant Site, as the same may from time to time be
constructed and maintained for such use, and for the passage and accommodation
of pedestrians over and across the parking, roadways, driveways and sidewalk
areas of the Group’s Plant Site, as the same may from time to time be
constructed and maintained for such use. The easements established pursuant to
Section 4.1 and this Section 4.2 shall be appurtenant to and for the benefit of
each Group’s Plant Site and shall be binding on, enforceable against, and burden
each Group’s Plant Site for the Term of this Agreement. Such easement rights
shall be subject to the following reservations as well as the other applicable
provisions contained in this Agreement:

  1.   Each Group reserves the right to close-off any portion of its Plant Site
for such reasonable period of time as may be legally necessary, in the opinion
of such Group’s counsel, to prevent the acquisition of prescriptive rights by
anyone;

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 80
Big Stone II Power Plant
  June 30, 2005  

      provided, however, that prior to closing off any portion of its Plant
Site, such Group shall give written notice to the other Group of its intention
to do so, and shall attempt to coordinate such closing-off with the other Group
so that no unreasonable interference with the passage of pedestrians or vehicles
shall occur;     2.   Each Group reserves the right at any time and from time to
time to exclude or restrain any person who is not an invitee of either Group
from using its Plant Site; and     3.   Each Group reserves the right to
temporarily erect or place barriers in and around areas on its Plant Site which
are being constructed and/or repaired in order to ensure either safety of
persons or protection of property.

     4.3 Additional Instruments.
     Pursuant to the terms of the Joint Facilities Agreement, the Owners shall
enter into an instrument that designates more specific locations of the property
that will be subject to the terms of the easements granted herein. Upon such
designation, the Owners shall release all other portions of the Project Premises
from the terms and conditions of this Agreement. In addition, each Owner shall,
at the request of any other Owner, execute such additional instruments as may be
reasonably requested in order to memorialize the particular terms (e.g.,
location, conditions for use, etc.) of any easement granted pursuant to this
Article IV. All such instruments shall be in a form appropriate for recording.
ARTICLE V — OTHER CONSTRUCTION AND MAINTENANCE ACTIVITIES
     If, following initial construction of BSP II and the BSP II Joint
Facilities and other associated facilities, it becomes necessary for either
Group to construct, maintain or reconstruct any of its Joint Facilities,
exclusive facilities, or new facilities or improvements, or if the specified
easements provided to the BSP II Owners hereunder are found to be inaccurate or
not sufficient for its facilities during initial construction, the Engineering
and Operating Committees of each Group shall meet and amended easements shall,
in good faith, be negotiated that will enable the Group doing the construction,
maintenance or reconstruction to complete its needed work. In no event shall a
Group be required to grant an amended easement if it will materially impair the
operation of its Plant, Joint Facilities, exclusive facilities or improvements
on its respective Plant Site.
ARTICLE VI — ENVIRONMENTAL INDEMNIFICATION
     The BSP II Owners shall indemnify, defend, and hold harmless the BSP I
Owners for environmental conditions and operational activities hereunder as
provided in Section 10.06 of the Joint Facilities Agreement.

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 81
Big Stone II Power Plant
  June 30, 2005  

ARTICLE VII — TERM
     The term of this Agreement shall be perpetual; provided that this Agreement
shall automatically terminate and be of no further force and effect and no Owner
shall have any further obligation to another Owner hereunder, if the BSP II
Financial Closing, as contemplated under the BSP II Participation Agreement,
does not occur on or before (*). Upon the determination of the location of the
Facilities Easement, the designation of the Defined Easement Areas, and the
execution of the Designated Easement Agreement, all as contemplated by
Sections 3.5 and 4.3 of this Agreement and Section 10.02(b) of the Joint
Facilities Agreement, the parties shall release such other areas of the BSP I
Plant Site and the BSP II Plant Site from the terms and conditions of this
Agreement, whereupon this Agreement shall have no further force or effect with
respect to such released areas of the BSP I Plant Site and the BSP II Plant
Site.
ARTICLE VIII -MISCELLANEOUS
     8.1 Default
     (A) The failure by a Group to observe or perform any of the covenants,
conditions or obligations of this Agreement, within sixty (60) days after the
issuance of a notice by the other Group (the “Non-Defaulting Group”) specifying
the nature of the default claimed, shall constitute a material default (a
“Default”) and breach of this Agreement by the non-performing Group (the
“Defaulting Group”).
     (B) Notwithstanding Section 8.1(A), the intentional refusal by a member of
a Group to allow the other Group access to and use of a Joint Facility as
required under the Joint Facilities Agreement shall constitute an immediate
Default not requiring a cure period and, notwithstanding anything to the
contrary the Defaulting Group shall be liable to the Non-Defaulting Group for
all damages (including but not limited to loss of profits, lost of business, and
consequential damages) that the Non-Defaulting Group incurs as a result of such
Default following notice to the Defaulting Group of such Default.
     (C) Subject to the express limitations contained in Article XII of the
Joint Facilities Agreement and Section 8.1(B) of this Agreement, a
Non-Defaulting Group may avail itself of any remedies available to it, either in
law or at equity, including, without limitation, specific performance,
injunctive relief, and damages for breach of contract; provided, however, that
in no event shall any Group be liable to the other Group for loss of profits,
loss of business, indirect, incidental, consequential, special, punitive, or
exemplary damages of any kind.
     8.2 Estoppel Certificate
     Each Owner agrees that upon written request (which shall not be more
frequent than one (1) time during any calendar year) of any other Owner or
Operator, it will issue within thirty (30) days after receipt of such request to
such Owner, or its prospective mortgagee or successor, an estoppel certificate
stating to the best of the issuer’s knowledge as of such date:

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 82
Big Stone II Power Plant
  June 30, 2005  

  (A)   whether it knows of any default under this Agreement by the requesting
Owner, and if there are known defaults, specifying the nature thereof in
reasonable detail;     (B)   whether this Agreement has been assigned, modified
or amended in any way by it and if so, then stating the nature thereof in
reasonable detail; and     (C)   whether this Agreement is in full force and
effect.

     8.3 Limited Warranty of Title
     Each of the BSP I Owners represents and warrants to the BSP II Owners that:
(a) as of the date hereof, there are no liens or encumbrances against the
Project Premises other than easements, liens and encumbrances of record; and
that (b) such Owner has not permitted or suffered any easements, liens or
encumbrances to be placed of record against the Project Premises since May 10,
2005.
     8.4 Notices
     All notices, demands and requests required or permitted to be given under
this Agreement shall be given in the manner set forth in the Joint Facilities
Agreement.
     8.5 Ownership; Transfers.
     Each Owner shall be liable for the performance of all covenants,
obligations and undertakings that accrue while it has an Ownership Share in a
Plant Site. Any Owner may assign its rights under this Agreement at any time in
connection with a pledge or the granting of a security interest in, or assigning
as collateral, all or any portion of the Owner’s interest in the Project.
     8.6 Binding Effect
     The terms of this Agreement and all easements granted hereunder shall
constitute covenants running with the land and shall bind the Plant Sites
described herein and inure to the benefit of and be binding upon each Owner.
     8.7 Construction and Interpretation
     (A) This Agreement, the Exhibits hereto, and the Joint Facilities Agreement
contain all the representations and the entire agreement between the Owners with
respect to the subject matter hereof. Any prior negotiations, correspondence,
memoranda or agreements are superseded in total by this Agreement, the Exhibits
attached hereto and the Joint Facilities Agreement.
     (B) This Agreement has been fully negotiated at arms length between the
signatories hereto, and after advice by counsel and other Representatives chosen
by such Owners, and such Owners are fully informed with respect thereto; no such
Owner shall be deemed the scrivener of this Agreement; and, based on the
foregoing, the provisions of this Agreement and the Exhibits

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 83
Big Stone II Power Plant
  June 30, 2005  

hereto shall be construed as a whole according to their common meaning and not
strictly for or against any Owner.
     (C) Invalidation of any of the provisions contained in this Agreement, or
of the application thereof to any Person by judgment or court order, shall in no
way affect any of the other provisions hereof or the application thereof to any
other Person and the same shall remain in full force and effect.
     (D) This Agreement may be executed in several counterparts, each of which
shall be deemed an original. The signatures to this Agreement may be executed
and notarized on separate pages, and when attached to this Agreement shall
constitute one (1) complete document.
     8.8 Negation of Partnership
     None of the terms or provisions of this Agreement shall be deemed to create
a partnership between or among the Groups in their respective businesses or
otherwise. Each Group shall be considered a separate owner, and no Group shall
have the right to act as an agent for the other Group, unless expressly
authorized to do so herein or by separate written instrument signed by the
Owners in the Group to be charged.
     8.9 Mitigation of Damages
     In all situations arising out of this Agreement, each Group (and the
Operator, if any) shall attempt to avoid and mitigate the damages resulting from
the conduct of the other Group. Each Owner shall take all reasonable measures to
effectuate the provisions of this Agreement.
     8.10 Agreement Shall Continue Notwithstanding Breach
     It is expressly agreed that no breach of this Agreement shall (i) entitle
any Owner to cancel, rescind, or otherwise terminate this Agreement, or
(ii) defeat or render invalid the lien of any mortgage or trust deed made in
good faith and for value as to any part of the Project Premises. However, such
limitation shall not affect in any manner any other rights or remedies which any
Group or Owner may have hereunder by reason of any such breach.
     8.11 Grant Shall Not Interfere With Use of BSP I
     Notwithstanding anything to the contrary contained in this Agreement, no
grant by the BSP I Owners contained herein, nor the exercise of any right by any
BSP II Owner pursuant to, by reason of, or in connection with a grant hereunder
or pursuant hereto, nor any easement granted hereunder or pursuant hereto, shall
individually or in the aggregate, materially impair the use of the Project
Premises by any of the BSP I Owners for the purpose for which such BSP I Owner
holds its interest in BSP I and/or the Project Premises.
     8.12 Time
     Time is of the essence of this Agreement.

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 84
Big Stone II Power Plant
  June 30, 2005  

     8.13 No Waiver
     The failure of either Group to insist upon strict performance of any of the
terms, covenants or conditions hereof shall not be deemed a waiver of any rights
or remedies which that Group may have hereunder, at law or in equity, and shall
not be deemed a waiver of any subsequent breach or default in any of such terms,
covenants or conditions. No waiver by any Group of any default under this
Agreement shall be effective or binding on such Group unless made in writing by
such Group and no such waiver shall be implied from any omission by any Group to
take action in respect to such default. No express written waiver of any default
shall affect any other default or cover any other period of time other than any
default and/or period of time specified in such express waiver. One (1) or more
written waivers of any default under any provision of this Agreement shall not
be deemed to be a waiver of any subsequent default in the performance of the
same provision or any other term or provision contained in this Agreement.
     8.14 Governing Law
     This Agreement shall be governed by the laws of the state of South Dakota.
     8.15 Counterparts
     To facilitate execution, this Agreement may be executed in as many separate
counterparts as may be convenient or required. It shall not be necessary that
the signature of each Party, or that the signature of all persons required to
bind any Party, appear on each counterpart. All counterparts shall collectively
constitute a single instrument.
[Remainder of page intentionally left blank. Signature pages follow.]

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 85
Big Stone II Power Plant
  June 30, 2005

 
     IN WITNESS WHEREOF, the BSP I Owners and BSP II Owners have caused this
Blanket Easement Agreement to be executed effective as of the day and year first
above written.

              OTTER TAIL:
 
            OTTER TAIL CORPORATION, a Minnesota
corporation
 
       
 
  By:    
 
            Name: Charles S. MacFarlane     Its: President

         
STATE OF MINNESOTA
            }   ss.  
COUNTY OF HENNEPIN
     

On this the 22nd day of June, 2005, before me, Thomas A. Jensen, the undersigned
officer, personally appeared Charles S. MacFarlane, who acknowledged himself to
be the President of OTTER TAIL CORPORATION, a Minnesota corporation, and that
he, as such President being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as President.
In witness whereof I hereunto set my hand and official seal.

                          Notary Public         

 

--------------------------------------------------------------------------------

 

         

     
Blanket Easement Agreement
  Page 86
Big Stone II Power Plant
  June 30, 2005

 

              NORTHWESTERN:
 
            NORTHWESTERN CORPORATION, a Delaware
corporation doing business as NorthWestern
Energy
 
       
 
  By:    
 
            Name: Michael J. Hanson     Its: President and Chief Executive
Officer

         
STATE OF SOUTH DAKOTA
            }   ss.
COUNTY OF MINNEHAHA
       

On this the 27th day of June, 2005, before me, Alan Dietrich, the undersigned
officer, personally appeared Michael J. Hanson, who acknowledged himself to be
the President and Chief Executive Officer of NORTHWESTERN CORPORATION, a
Delaware corporation, and that he, as such President and Chief Executive Officer
being authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of the corporation by himself as
President and Chief Executive Officer.
In witness whereof I hereunto set my hand and official seal.

                          Notary Public         

 

--------------------------------------------------------------------------------

 

         

     
Blanket Easement Agreement
  Page 87
Big Stone II Power Plant
  June 30, 2005

 

              MONTANA-DAKOTA:
 
            MONTANA-DAKOTA UTILITIES CO., a Division of MDU Resources Group,
Inc., a Delaware corporation
 
       
 
  By:    
 
            Name: Bruce T. Imsdahl     Its: President and Chief Executive
Officer

         
STATE OF South Dakota
            }   ss.
COUNTY OF Grant
       

On this the 30th day of June, 2005, before me, Dennis Mears, the undersigned
officer, personally appeared Bruce T. Imsdahl, who acknowledged himself to be
the President and Chief Executive Officer of MONTANA-DAKOTA UTILITIES CO., a
Division of MDU Resources Group, Inc., a Delaware corporation, and that he, as
such President and Chief Executive Officer being authorized so to do, executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation by himself as President and Chief Executive Officer.
In witness whereof I hereunto set my hand and official seal.

                          Notary Public         

 

--------------------------------------------------------------------------------

 

         

     
Blanket Easement Agreement
  Page 88
Big Stone II Power Plant
  June 30, 2005

 

              CMMPA:
 
            CENTRAL MINNESOTA MUNICIPAL POWER AGENCY, an
agency incorporated under Minnesota law
 
       
 
  By:    
 
            Name: Paul Leland     Its: President

         
STATE OF MINNESOTA
            }   ss.
COUNTY OF FARIBAULT
       

On this the 24th day of June, 2005, before me, Thomas A. Jensen, the undersigned
officer, personally appeared Paul Leland, who acknowledged himself to be the
President of CENTRAL MINNESOTA MUNICIPAL POWER AGENCY, a municipal corporation
and political subdivision of the state of Minnesota, and that he, as such
President being authorized so to do, executed the foregoing instrument for the
purposes therein contained, by signing the name of the municipal corporation by
himself as President.
In witness whereof I hereunto set my hand and official seal.

                          Notary Public         

 

--------------------------------------------------------------------------------

 

         

     
Blanket Easement Agreement
  Page 89
Big Stone II Power Plant
  June 30, 2005

 

              GRE:
 
            GREAT RIVER ENERGY, a Minnesota cooperative
 
       
 
  By:    
 
            Name: David Saggau     Its: President and Chief Executive Officer

         
STATE OF MINNESOTA
            }   ss.
COUNTY OF HENNEPIN
       

On this the 22nd day of June, 2005, before me, Thomas A. Jensen, the undersigned
officer, personally appeared David Saggau, who acknowledged himself to be the
President and Chief Executive Officer of GREAT RIVER ENERGY, a Minnesota
cooperative, and that he, as such President and Chief Executive Officer being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing the name of the cooperative by himself as President and
Chief Executive Officer.
In witness whereof I hereunto set my hand and official seal.

                          Notary Public         

 

--------------------------------------------------------------------------------

 

         

     
Blanket Easement Agreement
  Page 90
Big Stone II Power Plant
  June 30, 2005

 

              HEARTLAND:
 
            HEARTLAND CONSUMERS POWER DISTRICT, a consumers power district
formed and organized under the South Dakota Consumers Power District Law,
Chapter 49-35 of the South Dakota Codified Laws
 
       
 
  By:    
 
            Name: Michael McDowell     Its: General Manager

         
STATE OF MINNESOTA
            }   ss.
COUNTY OF HENNEPIN
       

On this the 22nd day of June, 2005, before me, Thomas A. Jensen, the undersigned
officer, personally appeared Michael McDowell, who acknowledged himself to be
the General Manager of HEARTLAND CONSUMERS POWER DISTRICT, a consumers power
district formed and organized under the South Dakota Consumers Power District
Law, Chapter 49-35 of the South Dakota Codified Laws, and acknowledged that he
executed the same in the capacity therein stated and for the purposes therein
contained.
In witness whereof I hereunto set my hand and official seal.

                          Notary Public         

 

--------------------------------------------------------------------------------

 

         

     
Blanket Easement Agreement
  Page 91
Big Stone II Power Plant
  June 30, 2005

 

              SMMPA:
 
            SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY, a Minnesota municipal
corporation and political subdivision
 
       
 
  By:    
 
            Name: Raymond A. Hayward     Its: Executive Director and CEO

         
STATE OF MINNESOTA
            }   ss.
COUNTY OF OLMSTED
       

On this the 24thday of June, 2005, before me, Thomas A. Jensen, the undersigned
officer, personally appeared Raymond A. Hayward, who acknowledged himself to be
the Executive Director and CEO of SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY, a
municipal corporation and political subdivision of the state of Minnesota, and
that he, as such Executive Director and CEO being authorized so to do, executed
the foregoing instrument for the purposes therein contained, by signing the name
of the municipal corporation by himself as Executive Director and CEO.
In witness whereof I hereunto set my hand and official seal.

                          Notary Public         

 

--------------------------------------------------------------------------------

 

         

     
Blanket Easement Agreement
  Page 92
Big Stone II Power Plant
  June 30, 2005

 

              WMMPA:
 
            WESTERN MINNESOTA MUNICIPAL POWER AGENCY, a Minnesota municipal
corporation and political subdivision
 
       
 
  By:    
 
            Name: Donald E. Habicht     Its: President

         
STATE OF MINNESOTA
          }   ss.
COUNTY OF NOBLES
       

On this the 23rd day of June, 2005, before me, Thomas A. Jensen, the undersigned
officer, personally appeared Donald E. Habicht, who acknowledged himself to be
the President of WESTERN MINNESOTA MUNICIPAL POWER AGENCY, a Minnesota municipal
corporation and political subdivision, and that he, as such President being
authorized so to do, executed the foregoing instrument for the purposes therein
contained, by signing the name of the municipal corporation by himself as
President.
In witness whereof I hereunto set my hand and official seal.

                          Notary Public         

 

--------------------------------------------------------------------------------

 

         

     
Blanket Easement Agreement
  Page 93
Big Stone II Power Plant
  June 30, 2005

 
This document drafted by:
Leonard, Street and Deinard P.A. (RLS)
150 South Fifth Street, Suite 2300
Minneapolis, MN 55402
612.335.1500

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 94
Big Stone II Power Plant
  June 30, 2005

 
EXHIBIT A
Legal Description of Project Premises
In Section 11, Township 121 North, Range 45 West:
The East Half (E1/2), except the Northwest Quarter of the Northeast Quarter
(NW1/4NE1/4) thereof, and except Parcel B in the Southeast Quarter (SE1/4), of
Section 11, Township 121 North, Range 47 West of the 5th P.M., Grant County,
South Dakota.
In Section 12, Township 121 North, Range 45 West:
All of Section 12, except Parcel A in the Southwest Quarter (SW1/4), Township
121 North, Range 47 West of the 5th P.M., Grant County, South Dakota.
In Section 13, Township 121 North, Range 45 West*:
The North One-Half (N1/2) of Section 13, Township 121 North, Range 47 West of
the 5th P.M., Grant County, South Dakota, except that part lying South of
Whetstone Creek.
In Section 14, Township 121 North, Range 45 West*:
The East Half of the Northeast Quarter (E1/2 NE1/4) of Section 14, Township 121
North of Range 47 West of the Fifth P.M.
In Section 5, Township 121 North, Range 46 West:
Outlot 68-A, except the East 225 feet thereof; and Outlot B, Big Stone City,
Grant County, South Dakota.
In Section 7, Township 121 North, Range 46 West:
All of Section 7, Township 121 North, Range 46 West of the 5th P.M., Grant
County, South Dakota, except approximately 6 acres in the northeast corner of
the SE1/4 thereof deed to the Big Stone Cemetery Association by deed recorded in
Deed Record 126, Page 544, and except Lots H-4 and H-5 in SE1/4, and except Lots
H-2, H-3, and H-4 in N1/2NE/14, and except Lots H-2 and H-3 in S1/2NE1/4.
In Section 8, Township 121 North, Range 46 West:
The South 150 Feet of Government Lot 1, except Lots H-2 and H-3; and the North
150 Feet of the South 300 Feet of Government Lot 1, except the West 700 Feet and
except platted Lake Street right of way; and the North 150 Feet except Lots H-2
and H-3 of the Southwest Quarter of the Northwest Quarter (SW1/4 NW1/4); and all
of Outlot 67 in the Northeast Corner of SW1/4
 

*   Subject to revision upon receipt of title commitment for this property.

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 95
Big Stone II Power Plant
  June 30, 2005

 
NW1/4; all in Section 8, Township 121 North of Range 46 West of the Fifth P.M.,
now in the City of Big Stone, Grant County, South Dakota.
In Section 18, Township 121 North, Range 46 West:
Parcel 1: The Southeast Quarter of the Southwest Quarter (SE1/4SW1/4), except
Burlington Northern Santa Fe railroad right of way; and the West Half of the
Southeast Quarter (W1/2SE1/4) lying northerly of the present right-of-way of
Chicago, Milwaukee, St. Paul and Pacific Railway Company as now located; and
that part of Outlot 47 (which is also described as the NE1/4SE1/4, except Outlot
48), and including the abandoned right-of-way of the Chicago, Milwaukee, St.
Paul and Pacifica Railroad Company, all in Section 18, Township 121 North, Range
46 West of the 5th P.M., Grant County, South Dakota.
Parcel 2: The South Half of the Northwest Quarter (S1/2NW1/4), except the East
66 feet of the North 40 rods of the Southeast Quarter of the Northwest Quarter
(SE1/4NW1/4) for road purposes, and except the East 140 feet of the South 403
feet of the North 2351 feet of the Southeast Quarter of the Northwest Quarter
(SE1/4NW1/4) deeded to St. Charles Catholic Church of Big Stone City at Deed
Record 109, Page 359; and the North Half of the Southwest Quarter (N1/2SW1/4)
except railroad right-of-way, and except Hay-s Outlot located in the Northwest
Quarter of the Southwest Quarter (NW1/4SW1/4) and the Southwest Quarter of the
Northwest Quarter (SW1/4NW1/4), and except a metes and bounds tract of land
described as follows: commencing at the southwest corner of the Northwest
Quarter of the Southwest Quarter (NW1/4SW1/4), thence North 45 rods, thence East
16 rods, thence South 45 rods, thence West 16 rods to the place of beginning
(now known as Lots 1, 2, and 3, Replat of Lot C in NW1/4SW1/4 of 18-121-46), all
in Section 18, Township 121 North, Range 46 West of the 5th P.M., Grant County,
South Dakota.
Parcel 3: The North Half of the Northwest Quarter (N1/2NW1/4), except the East
66 feet of the Northeast Quarter of the Northwest Quarter (NE1/4NW1/4) deed for
road purposes at Deed Record 58, Page 561 in Section 18, Township 121 North,
Range 46 West of the 5th P.M., Grant County, South Dakota.
Parcel 4: The West 1613 feet of that part of the Northeast Quarter (NE1/4) lying
South of the highway (vacated portion and unvacated portion) known as the
Yellowstone Trail, passing in an easterly direction through said quarter
section, except the West 500 feet of the South 403 feet of the North 2351 feet
of the Southwest Quarter of the Northeast Quarter (SW1/4NE1/4) deeded to St.
Charles Catholic Church in Deed Record 109, Page 359, and excepting that part
previously deeded for cemetery purposes to St. Charles catholic Church of Big
Stone City, recorded in volume 6, Page 230, but including the abandoned
right-of-way of the Chicago, Milwaukee, St. Paul and Pacific Railroad Co., all
in Section 18, Township 121 North, Range 46 West of the 5th P.M., Grant County,
South Dakota.
Parcel 5: The Northeast Quarter (NE1/4) lying North of vacated and unvacated
portions of highway known as the Yellowstone Trail, except the Cheese Company
Outlot sold on Contract for Deed, in Section 18, Township 121 North, Range 46
West of the 5th P.M., Grant County, South Dakota.

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 96
Big Stone II Power Plant
  June 30, 2005

EXHIBIT B
Legal Description of BSP II Plant Site
Tract A in the E 1/2 of Section 11, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract B in the SE 1/4 of Section 11, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract C in the E 1/2 of Section 11 and W 1/2 of Section 12, Township 121 North —
Range 47 West of the 5th P.M., Grant County, South Dakota
Tract D in the E 1/2 of Section 11 and the W 1/2 of Section 12 — Township 121
North — Range 47 West of the 5th P.M., Grant County, South Dakota
Tract E in the NE 1/4 of Section 11, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract F in the NW 1/4 of Section 12, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract G in the W 1/2 of Section 12, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract H in the SW 1/4 of Section 12, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract I in the SW 1/4 of Section 12 and SE 1/4 of Section 11, Township 121 North
— Range 47 West of the 5th P.M., Grant County, South Dakota
Tract M in the SE 1/4 of Section 12, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota
Tract O in the SE 1/4 of Section 11, , Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 97
Big Stone II Power Plant
  June 30, 2005

 
EXHIBIT C
Construction Easement Area
Tracts J and L in the SW 1/4 of Section 12 — Township 121 North — Range 47 West
of the 5th P.M., Grant County, South Dakota
Tract N in the NW 1/4 of Section 13, Township 121 North — Range 47 West of the
5th P.M., Grant County, South Dakota

 

--------------------------------------------------------------------------------

 

     
Blanket Easement Agreement
  Page 98
Big Stone II Power Plant
  June 30, 2005

 
EXHIBIT D
Site Plan

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 99
Big Stone II Power Plant
  June 30, 2005

 
SCHEDULE 10.02(C)
Form of Release
PARTIAL RELEASE
[_-R-_]
INDENTURE DATED AS OF DECEMBER 15, 2003
By and Between
MDU RESOURCES GROUP, INC.
AND
THE BANK OF NEW YORK, TRUSTEE
     KNOW ALL MEN BY THESE PRESENTS THAT:
     WHEREAS, MDU Resources Group, Inc., a Delaware corporation, has heretofore
made, executed, acknowledged and delivered to The Bank of New York, of New York,
New York, as Trustee, an Indenture dated as of December 15, 2003 (hereinafter
called the “Indenture”); and
     WHEREAS, the easements, licenses and other rights and interests hereinafter
described, now or formerly owned by MDU Resources Group, Inc., are or may be
subject to the lien of the Indenture; and
     WHEREAS, said Indenture was filed and recorded as a real estate mortgage
and/or filed as chattel mortgage or security interest in the [office of the
Secretary of State of Delaware] [the office of the register of deeds of Grant
County, South Dakota], and said Indenture was filed in the office of the
Secretary of State of South Dakota], as follows:
[LIST RECORDING INFORMATION]
and
     WHEREAS, Section 1808 of said Indenture provides that MDU Resources Group,
Inc. may obtain the release of and the Trustee shall release from the lien of
the Indenture any part of the mortgaged properties upon compliance with the
requirements of the Indenture; and
     WHEREAS, it has been certified to the Trustee that no Event of Default has
occurred and is continuing; and
     WHEREAS, said MDU Resources Group, Inc. has requested the release of the
easements, licenses and other rights and interests hereinafter described from
the lien of said Indenture and has furnished to the Trustee the documents
necessary to authorize the Trustee to grant such release;
     NOW, THEREFORE, The Bank of New York, in consideration of the premises and
the recitals herein, does by these presents release and forever discharge from
the lien of the above-described Indenture the easements, licenses and other
rights and interests affecting property situated in the County of Grant, State
of South Dakota, described as follows:

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 100
Big Stone II Power Plant
  June 30, 2005

 
All of the easements, licenses and other rights and interests granted,
transferred, or conveyed by MDU Resources Group, Inc. to Otter Tail Power
Company, Montana-Dakota Utilities Co., a Division of MDU Resources Group, Inc.,
a Delaware corporation, Central Minnesota Municipal Power Agency, an agency
incorporated under Minnesota law, Great River Energy, a Minnesota cooperative,
Heartland Consumers Power District, a consumers power district formed and
organized under the South Dakota Consumers Power District Law, Chapter 49-35 of
the South Dakota Codified Laws, Southern Minnesota Municipal Power Agency, a
Minnesota municipal corporation and political subdivision, and Western Minnesota
Municipal Power Agency, a Minnesota municipal corporation and political
subdivision, as described in the Blanket Easement Agreement dated as of June 30,
2005 and recorded in the register of deeds of Grant County, South Dakota [insert
relevant recording information], as [amended and/or restated] in that certain
[Designated Easement Agreement] attached hereto as Exhibit A.
     PROVIDED, HOWEVER, that except as to the easements, licenses and other
rights and interests hereby specifically released, said Indenture shall remain
in full force and effect, and nothing herein contained shall operate to release
the lien thereof.
     The preambles and recitals contained in this instrument are made solely
upon the representations of said MDU Resources Group, Inc., and The Bank of New
York assumes no responsibilities therefor. This instrument is executed by The
Bank of New York without covenant or warranty on its part, express or implied,
and without recourse against it in any event.
     IN WITNESS, WHEREOF, on this ___day of ___, 20___, The Bank of New York has
caused this instrument to be executed by its proper officers thereunto duly
authorized and its corporate seal to be hereto duly affixed.

              THE BANK OF NEW YORK
 
       
 
  By:    
 
       
 
  Its:    
 
       
 
       
 
  AND    
 
  By:    
 
       
 
  Its:    
 
       

Executed by The Bank of New York in the Presence of:

           
 
         
 
  (SEAL)

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 101
Big Stone II Power Plant
  June 30, 2005

 

             
STATE OF NEW YORK
    )      
 
  ss)    
COUNTY OF NEW YORK
    )      

On this ___day of ___, 20___, before me, a Notary Public in and for said County,
personally appeared ___and ___, to me personally known to be respectively ___and
___of The Bank of New York, the corporation which executed the within instrument
and who, being each by me duly sworn, did say that they are respectively ___and
___of The Bank of New York, the corporation named in the foregoing instrument;
that the seal affixed to said instrument bearing the name of said corporation is
the corporate seal of said corporation; that said instrument was signed and
sealed on behalf of said corporation by authority of its Board of Directors and
said ___and ___acknowledged to me said instrument to be the free act and deed of
said corporation, and that said corporation executed the same.

     
 
   
 
  Notary Public, State of New York

My commission expires                     
THIS DOCUMENT WAS PREPARED BY:
[Drafter’s name, address and telephone]

 

--------------------------------------------------------------------------------

 

     
Joint Facilities Agreement
  Page 102
Big Stone II Power Plant
  June 30, 2005

 
SCHEDULE 11.02
Insurance Policies
Mandatory

  (i)   Builders Risk (including testing) during all periods of construction on
the entire Project on a completed value basis and covering the full insurable
replacement cost thereof (BSP II Owners only);     (ii)   Property Damage,
including Boiler and Machinery, covering the full insurable replacement cost
thereof. The E&O Committee may consider a limit no less than the maximum
foreseeable loss of each occurrence and in the annual aggregate as determined
from time to time by an independent consultant in lieu of full insurable
replacement cost;     (iii)   Commercial General and Automobile Liability in the
amount of $1,000,000 each occurrence and in the annual aggregate;     (iv)  
Umbrella and Excess Liability in the amount of $50,000,000 each occurrence and
in the annual aggregate through a combination thereof.

Optional
Pollution (BSP II Owners only)
Professional Liability
Business Interruption, Extra Expense and Delay in Start Up
Replacement Power
Earthquake and Flood Insurance

 
(*) Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.