Exhibit 10.3

 

Confidential treatment has been requested for portions of this exhibit pursuant
to Rule 24b-2 of the Securities Exchange Act of 1934, as amended. The copy filed
herewith omits the information subject to the confidentiality request. Omissions
are designated as [**]. A complete version of this exhibit has been filed
separately with the Securities and Exchange Commission.

 

Execution Version

 

BIG STONE SOUTH – ELLENDALE PROJECT

 

PROJECT OWNERSHIP AGREEMENT

 

Dated as of June 12, 2015 

 

 

  Confidential

 

 

TABLE OF CONTENTS

 

          Page             ARTICLE 1 DEFINITIONS, SCHEDULES AND EXHIBITS   2  
1.1 Definitions   2   1.2 Certain Conflicts Between Project Agreements   22  
1.3 Schedules and Exhibits   22           ARTICLE 2 TERM     22   2.1 Term    
22             ARTICLE 3 PROJECT OWNERSHIP, INTERESTS AND GOVERNANCE   22   3.1
Nature of Ownership and Ownership Percentages   22     3.1.1 Nature of Ownership
Interest   22     3.1.2 Property Interests Created Prior to the Effective Date  
23     3.1.3 Ownership Percentage   23     3.1.4 [RESERVED]   24     3.1.5
Waiver of Right to Partition   24     3.1.6 Discretely Owned Substation Assets  
25   3.2 Management Committee   25     3.2.1 Establishment   25     3.2.2 Powers
  25     3.2.3 Composition, Attendance, Meetings, Etc   28     3.2.4 Voting   32
            ARTICLE 4 CONSTRUCTION; OPERATION AND MAINTENANCE; AND CAPITAL
IMPROVEMENTS   32   4.1 Construction   32     4.1.1 [RESERVED]   32     4.1.2
Replacement Construction Management Agreement   32   4.2 Operation and
Maintenance   33     4.2.1 [RESERVED]   33     4.2.2 Replacement Operation and
Maintenance Agreement   33     4.2.3 Voting with Respect to Operation and
Maintenance Agreement   34   4.3 Business with Affiliates   34     4.3.1
Affiliate Contracts   34     4.3.2 Disqualified Affiliate Matters   35   4.4
Principles Applicable to Upgrades and Other Modifications   36     4.4.1 General
Principles   36     4.4.2 [RESERVED]   38     4.4.3 Principles Applicable to
Generator Interconnection Requests   38             ARTICLE 5 PAYMENT PROCEDURES
  39   5.1 Payment/Invoices   39     5.1.1 General   39     5.1.2 Main Escrow
Account   39

 

 - i -Confidential

 

 

              5.1.3 Manner of Payment   40     5.1.4 No Counterclaim; No Set-Off
  40           ARTICLE 6 BUDGETS, ACCOUNTING   40   6.1 Construction Phase   40
    6.1.1 Project Budgets   40     6.1.2 CM Costs   40   6.2 Operating Phase  
41     6.2.1 Capital and Annual Operating Expense Budgets   41     6.2.2
Operating Expenses and Capital Expenses   41     6.2.3 Budget Deadlock   41  
6.3 Interest   42   6.4 Disputed Contributions   42   6.5 Inspection and Audit
Rights   42   6.6 NERC Compliance Policy   43   6.7 Records   43          
ARTICLE 7 TAXES AND ASSESSMENTS   43   7.1 Management of Tax Matters   43    
7.1.1 Personal Taxes   43     7.1.2 Sales, Consumer and Use Taxes   44   7.2
Payment of Taxes   44   7.3 Sharing of Taxes and Related Payments   44   7.4 Tax
Credits or Other Tax Benefits   44   7.5 Non-creation of Taxable Entity   45    
      ARTICLE 8 INSURANCE AND CASUALTY DAMAGE   45   8.1 Insurance   45   8.2
Casualty   45   8.3 Insurance Proceeds   45   8.4 Destruction Event   46    
8.4.1 Damage or Destruction of Substantially All of the Project   46     8.4.2
Payment of Restoration Costs   48           ARTICLE 9 CONDEMNATION   48   9.1
Condemnation of the Project   48   9.2 [RESERVED]   48   9.3 [RESERVED]   48  
9.4 Notice of Condemnation   48   9.5 Condemnation Awards   49           ARTICLE
10 TRANSFERS   49   10.1 General Transfer Rule   49   10.2 Permitted Transfers  
49     10.2.1 Transfer to Affiliate(s)   49     10.2.2 Collateral Assignment  
49     10.2.3 Transfer to Another Owner   49

  

 - ii -Confidential

 

                10.2.4   Transfer to a Third Party 49     10.2.5   Management
Committee Approval 50     10.2.6   Change of Control 50     10.2.7   Freeze 50  
  10.2.8   Exercise of a Collateral Assignment 50   10.3 Rules and Conditions to
Transfer 50     10.3.1   For Permitted Transfers 50   10.4 First Negotiation 52
    10.4.1   ROFN Offeree Owner’s Option 52     10.4.2   Right of Offering Owner
to Sell to Third Party 55             ARTICLE 11 FINANCING; FINANCING
INSTRUMENTS 56   11.1 Pledge of Separate Property 56   11.2 Financing
Instruments 56   11.3 Financing Party Cure Rights 57         ARTICLE 12
REPRESENTATIONS, WARRANTIES AND COVENANTS 57   12.1 Representations and
Warranties 57     12.1.1   Organization and Good Standing 57     12.1.2   Power
and Authority 57     12.1.3   Authorization 57     12.1.4   No Violation 57    
12.1.5   Approvals and Consents 58     12.1.6   Binding Effect 58     12.1.7  
Joint Use 58   12.2 Covenants 58     12.2.1   Compliance with Project Agreements
58     12.2.2   [RESERVED] 58     12.2.3   Governmental Approvals 58     12.2.4
  Project Real Property 59     12.2.5   Availability of Personnel and Resources
59     12.2.6   Risk of Loss and Damage 59     12.2.7   [RESERVED] 59     12.2.8
  [RESERVED] 59     12.2.9   Deposit by Assignee if No Longer Creditworthy 59  
          ARTICLE 13 MAXIMUM CM COSTS 60   13.1 Meeting to Consider Proposed
Increase in the Maximum CM Cost Amount 60   13.2 Failure to Approve 60   13.3
Approval 60   13.4 Initial Round of the Cost Offering 61     13.4.1   Election
Notice 61     13.4.2   Allocation Between Owners 61     13.4.3   Effect of Full
Subscription by Owners 61     13.4.4   Effect of Partial Subscription 61        
   

 - iii -Confidential

 

                        ARTICLE 14 DEFAULTS RELATED TO CONSTRUCTION ACTIVITIES  
62   14.1 Definitions for Defaults Related to Construction Activities   62    
14.1.1 Definition of Construction Period Payment Default   62   14.2 Provisions
Governing Construction Period Payment Defaults   62     14.2.1 [RESERVED]   62  
  14.2.2 Suspension of Defaulting CPP Owner Voting Rights Upon Construction
Period Payment Default   62     14.2.3 Non-Defaulting CPP Owner Advance
Following Construction Period Payment Default   62     14.2.4 Requirements for
and Effect of Cure of Construction Period Payment Default   63     14.2.5
Automatic Freeze of Defaulting CPP Owner’s Interest if Curable Construction
Period Payment Default Not Cured or Uncurable Construction Period Payment
Default Occurs; Provisions Applicable to Automatic Freeze   65   14.3 [RESERVED]
  66   14.4 [RESERVED]   66   14.5 [RESERVED]   66   14.6 [RESERVED]   66   14.7
[RESERVED]   66   14.8 Additional Cure Period for Financing Instrument   66    
      ARTICLE 15 DEFAULTS RELATED TO OPERATIONS ACTIVITIES; GENERAL DEFINITIONS;
COVENANT DEFAULTS; INJUNCTIVE RELIEF, SPECIFIC PERFORMANCE, AND SET-OFF RIGHTS  
67   15.1 General Provisions Related to Defaults   67     15.1.1 [RESERVED]   67
    15.1.2 [RESERVED]   67     15.1.3 Covenant Default   67   15.2 Provisions
Governing Operations Payment Defaults   68     15.2.1 Requirements for Cure of
Operations Payment Default   68     15.2.2 Remedies Applicable to Operations
Payment Default   69   15.3 [RESERVED]   69   15.4 [RESERVED]   69   15.5
Provisions Applicable to Certain Defaults   69     15.5.1 Available Damages   69
    15.5.2 No Consequential Damages   69     15.5.3 Remedies Not Exclusive   70
    15.5.4 Interest on Overdue Obligations   70   15.6 Common Provisions
Applicable to All Defaults   70     15.6.1 Injunctive Relief and Specific
Performance   70     15.6.2 Right of Set-Off   70            

 - iv -Confidential

 

            15.7 Additional Cure Period for Financing Instrument   70          
ARTICLE 16 THIRD PARTY CLAIMS; SHARED LIABILITY; EFFECT OF INSURANCE; AND
CONTRIBUTION 71   16.1 Third Party Claims   71     16.1.1 Indemnification   71  
  16.1.2 Notice of Third Party Claims   72     16.1.3 Defense of Third Party
Claims   72     16.1.4 Prejudicial Actions   73   16.2 Exceptions and
Clarifications   73     16.2.1 Shared Liability   73     16.2.2 Effect of
Insurance   74     16.2.3 Right of Contribution   74     16.2.4 Project Costs  
75             ARTICLE 17 CONFIDENTIALITY 76   17.1 Confidentiality of
Information   76   17.2 Information Not Deemed Confidential Information   76  
17.3 Requirement to Disclose Confidential Information   77   17.4 Compliance
with FERC Standards of Conduct   77   17.5 Restrictions on Access to Critical
Energy Infrastructure Information   77   17.6 Property of Owner   77   17.7 No
Accuracy Warranty   78   17.8 Breach of Confidentiality Provisions   78   17.9
Public Disclosure   78   17.10 Public Disclosure Laws   78           ARTICLE 18
DISPUTE RESOLUTION FOR EXCLUDED MATTERS 78   18.1 Excluded Matters   78   18.2
Appointment of Arbitrator   78   18.3 Arbitration Process   79   18.4 Effect of
Arbitrator’s Decision   79     18.4.1 Percentage Calculation Dispute   79   18.5
Fees of Arbitrator   79   18.6 Confidentiality   79           ARTICLE 19
TERMINATION 79   19.1 Termination   79     19.1.1 Termination of the Project  
79     19.1.2 Termination of this Agreement   80   19.2 Retirement and
Retirement Costs   80   19.3 Effect of Project Termination   80     19.3.1
Wind-up Plan   80     19.3.2 Allocations and Distributions Upon Termination of
Project   81            

 - v -Confidential

 

ARTICLE 20 MISCELLANEOUS 82   20.1 Survival 82   20.2 Forward Contracts; Single
Agreement 82   20.3 Force Majeure 82        

 - vi -Confidential

 

 

SCHEDULES AND EXHIBITS           SCHEDULE 1 Generally Applicable Provisions    
SCHEDULE 3.2.3.1.8 Authorized Owner Representatives as of the Effective Date    
      EXHIBIT A Development Period Assets     EXHIBIT B Ownership Percentages  
  EXHIBIT C Discretely Owned Substation Assets and Discretely Owned Substation
Owners EXHIBIT D [RESERVED]       EXHIBIT E-1 Form of Assignment, Assumption,
Partial Novation and Joinder Agreement EXHIBIT E-2 Form of Assignment,
Assumption, Novation and Joinder Agreement EXHIBIT F Insurance Plan      
EXHIBIT G NERC Compliance Policy     EXHIBIT I-1 [RESERVED]       EXHIBIT J Form
of Transmission Easement Agreement and Memorandum of Project Ownership
Agreement. EXHIBIT K [RESERVED]       EXHIBIT L [RESERVED]       EXHIBIT M
[RESERVED]       EXHIBIT N-1A [RESERVED]     EXHIBIT N-2 [RESERVED]      
EXHIBIT O [RESERVED]       EXHIBIT P Methodology for Recalculating Interests for
Capital Improvements          

 

 - i -Confidential

 

  

 

PROJECT OWNERSHIP AGREEMENT

 

THIS PROJECT OWNERSHIP AGREEMENT is entered into and effective as of June 12,
2015 (the “Effective Date”) by and between Montana-Dakota Utilities Co., a
division of MDU Resources Group, Inc., a Delaware corporation (“MDU”), and Otter
Tail Power Company, a corporation organized and existing under the laws of the
State of Minnesota (“OTP”).  MDU and OTP shall be referred to herein:  (i)
individually as an “Owner” and collectively as the “Owners,” and (ii)
individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

A.           The Owners have determined that the Project and the Discretely
Owned Substation Assets are necessary to: (i) enhance service reliability for
electric customers in North Dakota, South Dakota and the MISO territories; (ii)
strengthen the transmission network to meet additional demands for electric
power; and (iii) enhance transmission system capacity to support the
installation of renewable energy resources;

 

B.           The Owners have further determined that because the Project is both
local and regional in nature, it is most efficient and effective for the Owners
to enter into this Agreement to provide for the construction and operation of
the Project in a collaborative manner;

 

C.           The Owners have entered into the Project Development Agreement
pursuant to which they have or are currently undertaking Development Work;

 

D.           Contemporaneously herewith, the Owners have entered into: (i) the
Construction Management Agreement; (ii) the Project Transmission Capacity
Exchange Agreement; (iii) Operation and Maintenance Agreement; and (iv) such
other agreements as the Owners have deemed necessary;

 

E.           In accordance with Section 9.1.2 of the Project Development
Agreement, the Parties should enter into the Project Agreements; and

 

F.           Each Owner desires to enter into this Agreement and the other
Project Agreements to facilitate the completion of the Project.

 

AGREEMENT

 

In consideration of the foregoing Recitals, the mutual covenants set forth in
this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Owner agrees as follows:

 

ARTICLE 1

DEFINITIONS, SCHEDULES AND EXHIBITS

 

1.1 Definitions.  In addition to the other terms defined herein, the following
terms, whether in the singular or in the plural, when used herein, in Schedule 1
(Generally Applicable Provisions), in the exhibits attached hereto or in notices
given under this Agreement and initially capitalized, have the meanings
specified below:

 

 

  Confidential

 

 

“Abandoning Owner” has the meaning given in Section 8.4.1.1.

 

“Advance” has the meaning given in Section 14.2.3.

 

“Advancing Owners” has the meaning given in Section 14.2.4.3.

 

“Affiliate Contracts” has the meaning given in Section 4.3.1.2.

 

“Affiliate” means any Person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, an
Owner.

 

“Agreement” means this Project Ownership Agreement, as it may be supplemented or
amended.

 

“Alternate” has the meaning given in Section 3.2.3.1.2.

 

“Applicable Energy Regulations” means the rules, Orders, regulations, practices,
procedures and protocols established in compliance with Applicable Law by
applicable Transmission Providers (such as the Midwest Independent Transmission
System Operator, Inc.), electric reliability organizations (such as the North
American Electric Reliability Corporation and the Midwest Reliability
Organization) and comparable Persons that are applicable to the Services, the
Maintenance Services, the Control Center Services, the Construction Work, the
Discretely Owned Substation Assets, the Project or the performance of the
obligations of the Parties hereunder.

 

“Applicable Law” means: (i) any and all laws (including all statutory enactments
and common law), ordinances, constitutions, regulations, treaties, rules, codes,
standards, Governmental Approvals, requirements and Orders that (a) have been
adopted, enacted, implemented, promulgated, ordered, issued, entered or deemed
applicable by or under the authority of any Governmental Body having
jurisdiction over a specified Person (or the Properties of such Person) and (b)
are applicable to the Services, the Construction Work, the Discretely Owned
Substation Assets, the Maintenance Services, the Control Center Services, the
Project or the performance of the obligations of the Parties (each in its
respective capacities) under this Agreement; and (ii) Applicable Energy
Regulations.

 

“Applicable Maintenance Activity(s)” means the Maintenance Activity(s) for which
a Maintenance Provider or a Control Center Authority is responsible under the
Operation and Maintenance Agreement, as more particularly set forth in Appendix
A thereto.

 

“Arbitrator” has the meaning given in Section 18.2 of this Agreement or Article
I of Schedule 1, as applicable.

 

“Authorized Owner Representatives” has the meaning given in Section 3.2.3.1.2.

 

“Big Stone South Substation” means the substation owned by OTP and described on
Exhibit C, which substation is not part of the Project.

 

“Bona Fide Third Party Transaction” has the meaning given in Section 10.4.1.8.

 

 - 3 -Confidential

 

 

“Books and Records” has the meaning given in Section 6.5.

 

“BSSE Design Criteria Guidelines” means the requirements established in Appendix
C of the Operation and Maintenance Agreement, as such requirements are amended
by the Management Committee.

 

“Budget Deadlock” has the meaning given in Section 6.2.3.

 

“Budgets” means one or more of the Project Budget and Final Budget.

 

“Business Day” means any day other than a Saturday, Sunday or federal holiday.

 

“Capital Expenses” means expenses incurred in connection with Capital
Improvements.

 

“Capital Improvements” means capital additions or modifications to the Project
that are undertaken after the applicable In-Service Date  and will be funded by
the Owners according to Ownership Percentages pursuant to Section 4.4.1(x) in
accordance with a Final Budget. Capital Improvements include Modifications that
are required by Applicable Law, but exclude (i) work undertaken pursuant to the
Construction Management Agreement or the Construction Agreements in accordance
with the Project Plan, (ii) Upgrades, and (iii) Non-Project Modifications.

 

“Casualty” means damage or destruction to Property.

 

“CEII” has the meaning given in Section 17.5.

 

“Chair” means the Owner Representative who is acting as the chair of the
Management Committee, which Owner Representative may change from time to time in
accordance with Section 3.2.3.5.

 

“Change in Law” means any change in, or enactment of, any Applicable Law or
official published policy regarding the interpretation or enforcement of any
Applicable Law by a Governmental Body that takes effect after the Effective
Date  and affects or relates to the performance of the obligations of the Owners
(individually or collectively) under this Agreement, including the imposition of
any new Governmental Approval requirements; provided, however, a change in
Applicable Law affecting only a tax payable or any other cost of performance
hereunder will not constitute a Change in Law.

 

“Change of Control” means for any Person, (i) a change in any Person or Persons
that directly or indirectly possess the power either to (a) vote fifty percent
(50%) or more of the securities or interests having ordinary voting power for
the election of directors (or other comparable controlling body) of such Person
or (b) direct or cause the direction of management or policies of such Person,
whether through the ownership of voting securities or interests, by contract or
otherwise, or (ii) the creation of a Person or Persons that directly or
indirectly possess the power either to (a) vote fifty percent (50%) or more of
the securities or interests having ordinary voting power for the election of
directors (or other comparable controlling body) of such Person or (b) direct or
cause the direction of management or policies of such Person, whether through
the ownership of voting securities or interests, by contract or otherwise, in
each case where no such Person or Persons existed before, or (iii) if such
Person is a cooperative or a joint

 

 - 4 -Confidential

 

 

action agency, the merger or consolidation of such Person with or into another
Person in accordance with Applicable Law.

 

“CM Costs” has the meaning given in Section 5.4.1 of the Construction Management
Agreement.

 

“CM Subcontract” means each contract, agreement or other arrangement with the
Construction Manager or a CM Subcontractor on the one hand, and any CM
Subcontractor on the other hand, establishing the terms of performance of any
part of the Construction Management Services.

 

“CM Subcontractor” means each and every supplier, subcontractor, vendor,
consultant or contractor of any tier performing any part of the Construction
Management Services or Real Property Management Services, directly or
indirectly, for the Construction Manager.  Reference to an Owner as a “CM
Subcontractor” excludes any reference to the owner’s Affiliates and to such
Owner in any other capacity.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral Assignment” has the meaning given in Section 10.2.2.

 

“Commission” or “Commissioning” (or any derivation thereof) means the process of
verifying the safety, reliability and performance (including testing) of the
Project in accordance with the applicable Construction Agreements and Good
Utility Practice.

 

“Complete Taking” has the meaning given in Section 9.1.

 

“Condemnation Action” means a taking by any Governmental Body (or other Person
with power of eminent domain) by exercise of any right of eminent domain or by
appropriation and an acquisition by any Governmental Body (or other Person with
power of eminent domain) through a negotiated purchase in lieu thereof.

 

“Condemnation Awards” has the meaning given in Section 9.5.

 

“Confidential Information” has the meaning given in Section 17.1.

 

“Consequential Damages” has the meaning given in Section 15.5.2.1.

 

“Construction Agreements” means all contracts, agreements or arrangements
establishing the terms of performance of any part of the Construction Work,
including CM Subcontracts, Subcontracts and Development Period Contracts, but
specifically excluding (i) this Agreement, (ii) the Construction Management
Agreement, (iii) the Real Property Agreements and (iv) construction contracts
arising from the Substation Work.

 

“Construction Management Agreement” means that certain Construction Management
Agreement, by and between the Owners and the Construction Manager, effective as
of the Effective Date.

 

 - 5 -Confidential

 

  

“Construction Management Services” has the meaning given in Section 2.2.1 of the
Construction Management Agreement.

 

“Construction Manager” means OTP, solely in its capacity as the Construction
Manager under the Construction Management Agreement and permitted successors and
assigns.  Reference to the Construction Manager excludes any reference to the
Construction Manager in any other capacity.

 

“Construction Period Payment Default” has the meaning given in Section 14.1.1.1.

 

“Construction Work Schedule” has the meaning given in Section 3.2.2.2(xiv).

 

“Construction Work” means all activities that are necessary, desirable or
incidental to placing the Project in service, and achieving Final Completion of
the Project in accordance with Good Utility Practice and the Project Plan, other
than:  (i) the Services and (ii) the obligations of the Owners (individually or
collectively through the Management Committee) under the Construction Management
Agreement.

 

“Consumables” means items such as compressed chemicals, oils, lubricants,
cleaning supplies, gaskets, valve packing, light bulbs, and comparable items
which, by normal industry practices, are considered consumables and are replaced
on a regular basis, required for cleaning or preparing the Project to be placed
in service.

 

“Contractor Procured Materials” means all Equipment and Materials that are
procured for the Project and not designated as Owner Procured Materials.

 

“Contractor” means any Person with whom the Owners enter into a Construction
Agreement.  Reference to an Owner as a “Contractor” excludes any reference to
such Owner in any other capacity.

 

“Control Center Authority” means a Person designated as a “Control Center
Authority” in the Operation and Maintenance Agreement, which Person, when acting
under the Operation and Maintenance Agreement in such capacity, will have
day-to-day operational control over the Project, including a Person that
executes a joinder in a form acceptable to such Person and the Management
Committee to become a Control Center Authority under the Operation and
Maintenance Agreement.  Reference to a Control Center Authority excludes any
reference to a Control Center Authority in any other capacity.

 

“Control Center Services” means the services to be provided by a Control Center
Authority as set forth in the Operation and Maintenance Agreement.

 

“Cost Offering Effective Date” has the meaning given in Section 13.4.3(i).

 

“Cost Offering Initial Round Subscription Date” has the meaning given in Section
13.4.1.

 

“Cost Offering” has the meaning given in Section 13.3.

 

 - 6 -Confidential

 

 

“Covenant Default” has the meaning given in Section 15.1.3.

 

“CPP Default Accrued Interest” has the meaning given in Section 14.2.4.5.

 

“CPP Default Cure Period” has the meaning given in Section 14.2.4.1.

 

“CPP Default Late Fee” has the meaning given in Section 14.2.4.4.

 

“CPP Default OPCs” has the meaning given in Section 14.2.4.3.

 

“Creditworthiness Failure Notice” has the meaning given in Section 12.2.9.

 

“Creditworthiness Loss Triggered Advance” has the meaning given in Section
12.2.9.

 

“Creditworthy” means, as of the date of a proposed Transfer, a credit rating
(determined without regard to any Third Party credit enhancement) obtained
during the twelve (12) Month period immediately preceding such date, of at or
above the Minimum Rating.  For purposes of this definition, “Minimum Rating”
means at least two ratings of S&P BBB-, Moody’s Baa3, Fitch BBB-, or better, or
the equivalent for another nationally recognized rating agency of similar
standing to S&P or Moody’s or Fitch (provided that at least one of such ratings
must be from S&P or Moody’s) on: (i) the long term unsecured obligations of a
transferee or its guarantor;  or (ii) in the absence of a rating under clause
(i), the most recent long-term fixed rate Debt instrument issued by or on behalf
of a tax-exempt transferee or its guarantor during the twelve (12) Month period
preceding the date of a proposed Transfer.  A rating of BBB- (S&P or Fitch) or
Baa3 (Moody’s) or equivalent for another agency where the rating agency has
publicly announced that such rating is currently on review for a possible
downgrade, cannot be used to qualify as Creditworthy.

 

“Curable Construction Period Payment Default” has the meaning given in Section
14.2.4.

 

“Damages” means any loss, charge, deficiency, tax, fine, interest, assessment,
judgment, award, demand, liability, penalty or costs and expenses, including
amounts paid in settlement, reasonable attorneys and other professional fees and
reasonable costs of investigation.

 

“Debt” means for any Person, without duplication:

 

(i)           indebtedness of such Person for borrowed money;

 

(ii)          obligations of such Person evidenced by bonds, debentures, notes,
mortgages or other similar instruments;

 

(iii)         obligations of such Person to pay (a) amounts due under financing
leases, or (b) the deferred purchase price of Property or services (other than
accounts payable in the ordinary course of business), or (c) amounts due under
capitalized or operating leases;

 

(iv)         obligations of such Person under direct or indirect guarantees in
respect of, and obligations (contingent or otherwise) of such Person to purchase
or otherwise acquire, or

 

 - 7 -Confidential

 

 

otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of another Person;

 

(v)          obligations of such Person under interest rate or currency
protection agreements or other hedging instruments;

 

(vi)         obligations of such Person to purchase securities (or other
Property) that arise out of, or in connection with, the sale of the same or
substantially similar securities (or Property); or

 

(vii)        deferred obligations of such Person to reimburse any bank or other
Person in respect of amounts paid or advanced under a letter of credit or other
instrument.

 

“Default” means the occurrence of any Construction Period Payment Default,
Operations Payment Default, or Covenant Default.  The existence or non-existence
of a Default may be disputed in good faith by either Owner.

 

“Defaulting Owner” means an Owner that is in Default, including a Defaulting CPP
Owner.

 

“Defaulting Owner Advance Amounts” has the meaning given in Section 14.2.4.6.1.

 

“Defaulting CPP Owner” has the meaning given in Section 14.2.2.

 

“Deficiency Amount” has the meaning given in Section 14.2.3.

 

“Destruction Event” has the meaning given in Section 8.4.1.1.

 

“Destruction Windup Plan” has the meaning given in Section 8.4.1.1.

 

“Development Period Assets” has the meaning given in Section 3.1.2.

 

“Development Period Contracts” has the meaning given in Section 3.1.2.

 

“Development Work” means the matters, actions and activities undertaken by the
Parties to the Project Development Agreement in furtherance of the development
of the Project.

 

“Disclosing Party” has the meaning given in Section 17.3.

 

“Discretely Owned Substation Assets” means the Big Stone South Substation and
the Ellendale 345 kV Substation, all as identified in Exhibit C.  Discretely
Owned Substation Assets will not constitute part of the Project.

 

“Discretely Owned Substation Costs” means the costs incurred by a Discretely
Owned Substation Owner for the engineering, procurement, construction or
commissioning of upgrades to the Discretely Owned Substation Assets that are
necessary in connection with the Project.

 

“Discretely Owned Substation Owner” means an Owner that owns a Discretely Owned
Substation Asset as provided in Section 3.1.1.2.

 

 - 8 -Confidential

 

  

“Dispute” has the meaning given in Section 3.1 of Schedule 1.

 

“Disqualified Affiliate Matters” has the meaning given in Section 4.3.2.

 

“Distributable Cash” has the meaning given in Section 19.3.1.2.

 

“E&O Committee” has the meaning given in Section 3.2.3.7.3.

 

“Effective Date” has the meaning given in the first paragraph of this Agreement.

 

“Ellendale 345 kV Substation” means the substation owned by MDU and described as
the Ellendale 345 kV Substation on Exhibit C.

 

“Emergency” means any circumstance or condition that will or could imminently be
expected to materially harm the safe and reliable operation of all or a portion
of the Project, the Transmission Grid or otherwise endanger public safety,
Property or the environment.

 

“Equipment” means any product that:  (i) is to be incorporated into the Project;
(ii) is an assembly of operational or non-operational parts, whether motorized
or manually operated; and (iii) requires service connections such as wiring.

 

“Escrow Agreement” means that certain Escrow Agreement, by and between the
Owners and the Escrow Agent, effective as of the Effective Date.

 

“Escrow Agent” means U.S. Bank National Association or such other bank as
determined by the Management Committee for establishment and maintenance of the
Project Accounts.

 

“Excluded Matter” means Percentage Calculation Disputes as provided in Section
18.1.

 

“Fair Market Value” means the value that would be obtained for the Ownership
Percentage of an Owner in an arms-length transaction between an informed and
willing buyer and an informed and willing seller, taking into account the then
applicable facts and circumstances.

 

“FERC” means the Federal Energy Regulatory Commission, a regulatory Governmental
Body of the United States, or any successor thereto.

 

“FERC Standards of Conduct” has the meaning given in Section 17.4.

 

“Final Budget” has the meaning given in Section 6.2.1.

 

“Final Completion” with respect to the Project means the determination by the
Management Committee that “Final Completion” thereof has been achieved in
accordance with Section 11.4 of the Construction Management Agreement.

 

“Final Completion Date” means the date determined in accordance with Section
11.4 of the Construction Management Agreement as the date on which Final
Completion of the Project occurs.

 

“Final Offered Terms” has the meaning given in Section 10.4.1.4.

 

 - 9 -Confidential

 

 

“Final Order” means an Order as to which:  (i) no request for stay is pending
before the issuing Governmental Body, no such stay is in effect, and, if any
deadline for filing any such request is designated by Applicable Law, such
deadline has passed; (ii) no petition for rehearing or reconsideration of such
action is pending before the issuing Governmental Body, and if any deadline for
filing any such petition is designated by Applicable Law, such deadline has
passed; (iii) the issuing Governmental Body does not have the action under
reconsideration on its own motion; and (iv) no appeal to a court, or request for
stay by a court, of the issuing Governmental Body’s action is pending or in
effect, and, if any deadline for filing any such appeal or request is designated
by Applicable Law, such deadline has passed.

 

“Financing” means: (i) Debt on terms acceptable to an Owner, the proceeds of
which are intended to be used, in whole or in part, to finance the costs of
construction of the Project (including Capital Improvements that become part of
the Project), (ii) Debt as to which the Liens (including Permitted Owner Liens)
of one or more Financing Parties have previously been perfected and which Liens
will attach to or encumber that Owner’s Ownership Percentage, (iii) Debt
heretofore or hereafter secured under a mortgage, deed of trust or security
agreement or instrument which grants a Lien on substantially all of the tangible
property of either Owner, or (iv) any refinancing, renewal, or continuation, in
whole or in part, of any of the foregoing.

 

“Financing Instrument” means a mortgage, deed of trust or security agreement or
instrument, and any amendment or supplement thereto entered into at any time,
pursuant to which a Lien of one or more Financing Parties has been granted prior
to, at or after the Effective Date, and will attach to, cover and encumber an
Owner’s Ownership Percentage or any other interest of such Owner in the Project
to secure Debt of such Owner.

 

“Financing Parties” means any and all lenders, bondholders, underwriters and
financing institutions, including credit enhancers and institutional investors,
providing or facilitating a Financing and any trustee(s) or agent(s) acting on
any of their behalf, and any successors, assigns or other transferees of any of
the foregoing.

 

“Fiscal Year” means the period of January 1 through December 31, unless
otherwise determined by the Management Committee.

 

“Force Majeure” means the occurrence of an event or series of events that is
beyond the reasonable control of the Person affected that hinders the
performance under contract of such Person and does not result from the fault,
negligence, intentional misconduct or willful misconduct of the affected Person
or such Person’s failure to comply with Applicable Law or Good Utility Practice;
and such event or series of events could not have been avoided by the affected
Person through the exercise of reasonable diligence, including the expenditure
of reasonable monies and/or taking reasonable precautionary measures, including
(to the extent that such events satisfy the foregoing criteria), the following:

 

  (i) acts of God or the public enemy;      

  (ii) expropriation or confiscation of the Project, or the Discretely Owned
Substation Assets;      

  (iii) war, terrorism, rebellion, sabotage, civil unrest or riot;

 

 - 10 -Confidential

 

 

  (iv) fires, explosions, hurricanes, floods, tornadoes, microbursts, other
abnormally severe weather events or other natural catastrophes;      

  (v) actions or inaction of a Governmental Body affecting performance required
in connection with the Construction Work. the Discretely Owned Substation Assets
or the obligations of the Parties under this Agreement;      

  (vi) a Change in Law;      

  (vii) as to the Construction Manager, delays in the delivery of Owner Procured
Materials;      

  (viii) conditions at, on or affecting the Project Real Property that could not
have been reasonably anticipated, including the existence of Hazardous
Substances or archeological materials;      

  (ix) operating conditions on the Transmission Grid that restrict outages,
testing, commissioning or access; and      

  (x) strikes and other labor disturbances.

 

Under no circumstance will an event of Force Majeure excuse a Person’s
obligations to make payments when due under this Agreement, unless such Force
Majeure event results in a failure of the Federal Reserve wire system or other
failure of the banking system that deprives a Person of access to otherwise
available funds.

 

“Formula” shall mean, in the case of an Owner, the total CM Costs paid by the
Owner divided by the total CM Costs paid by both Owners.

 

“Freeze” has the meaning given in Section 14.2.5.

 

“Good Utility Practice” means any of the practices, methods or acts engaged in
or approved by a significant portion of the electric utility industry in the
region during the relevant time period, or any of the practices, methods and
acts which, 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 in a manner that: (i) is consistent with
Applicable Law; (ii) makes due consideration for reliability, safety and
protection of the Project and the Transmission Grid; and (iii) is consistent
with manufacturer’s recommendations and warranties.  Good 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 a range of acceptable practices,
methods or acts generally accepted in the region.

 

“Governmental Approval(s)” means all waivers, franchises, variances, permits,
authorizations, certificates, licenses and Orders of or from any Governmental
Body having jurisdiction over either Owner, the Construction Manager, CM
Subcontractors, Contractor, Subcontractor, Maintenance Provider, Control Center
Authority, the Services, the Maintenance Services, the Control Center Services,
the Construction Work or any portion of the Project, or the Discretely Owned
Substation Assets, as may be in effect from time to time.

 

 - 11 -Confidential

 

  

“Governmental Body” means any: (i) nation, state, county, city, town, village,
district or other jurisdiction of any nature; (ii) federal, state, local,
municipal, tribal, foreign or other government; or (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, board, commission, department, instrumentality, office or other entity,
and any court), in any such case exercising, or entitled to exercise,
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature over this Agreement, any part of the Project,
the performance of the Services, the Construction Work, the Project Real
Property, the Construction Manager or either of the Owners. For purposes of this
definition, a Person that establishes Applicable Energy Regulations will be
deemed to be a Governmental Body; provided, however, an Owner will never be
deemed to be a Governmental Body except when an Owner is a Transmission Provider
establishing Applicable Energy Regulations in its capacity as a Person entitled
to exercise functional control over a portion of the Transmission Grid in
accordance with Applicable Law established by other Governmental Bodies that
have jurisdiction over such Owner.

 

“Hazardous Substances” means petroleum hydrocarbons, including crude oil or any
fraction thereof, asbestos, radon, polychlorinated biphenyls (PCBs), methane and
all other substances which now are or in the future may be defined by Applicable
Law as “hazardous substances,” “hazardous wastes,” “extremely hazardous wastes,”
“toxic substances,” “infectious wastes,” “biohazardous wastes,” “medical
wastes,” “radioactive wastes” or which are otherwise listed, defined or
regulated in any manner pursuant to any Applicable Law that pertains to the
protection of human health and safety or the environment.

 

“Incremental Cost Offering CP Percentage” has the meaning given in Section
13.4.3(ii).

 

“Indemnified Persons” has the meaning given in Section 16.1.1.

 

“Indemnifying Owner” has the meaning given in Section 16.1.1.

 

“Individually Enforceable Obligations” has the meaning given in Section
15.1.3.2.

 

“Inflation Factor” means the percentage obtained by determining the change in
the unadjusted, non-seasonal Consumer Price Index/All Urban Consumers
(1982-84=100), published in the National Income and Product Account by the U. S.
Department of Commerce, Bureau of Labor Statistics during the period in
question. To the extent available on a timely basis the percentage change will
be calculated using the final adjusted value for the applicable date of
determination.  If such final adjusted value is unavailable on a timely basis,
then the preliminary value for the date of determination will be used and
subsequently adjusted when the final adjusted value for such date is
published.  If such final adjusted value is subsequently determined to be
incorrect, then it will be adjusted when the corrected final adjusted value for
such date is published.

 

“In-Service Date” means the date on which the Project is placed in service and
the Maintenance Provider and the Control Center Authority begin performance of
the Maintenance Services and Control Center Services, respectively.

 

 - 12 -Confidential

 

 

“Insurance Plan” means the plan for the Project insurance set forth in Exhibit
F, as it may be changed by the Management Committee from time to time.

 

“Insurance Proceeds” has the meaning given in Section 8.3.

 

“Interconnection Agreement” means an agreement providing for the terms and
conditions pursuant to which the Project, or any portion thereof, is
interconnected with the Transmission Grid.

 

“Interconnection Coordinator” has the meaning given in Section 4.4.1(ii).

 

“Late Payment Rate” means the lesser of (i) the Prime Rate plus two percent (2%)
per annum or (ii) the highest per annum interest rate allowed by Applicable Law.

 

“Lien Waiver” means a waiver of Liens in substantially the form approved by the
Management Committee from time to time.

 

“Lien” means any lien (including a mechanic’s lien, a materialmen’s lien and a
supplier’s lien), security interest, option, easement, restriction on
transferability, defect of title or other claim, demand, charge or encumbrance
of any nature whatsoever, including any restriction on the use, voting,
Transfer, receipt of income or other exercise of any attributes of ownership.

 

“Main Escrow Account” means an account established by the Owners pursuant to the
Escrow Agreement for the purpose of receiving funds for the payment or
reimbursement of Project Costs.

 

“Maintenance Activity(s)” means a maintenance activity that is specified in
Appendix A to the Operation and Maintenance Agreement.

 

“Maintenance Costs” means the costs incurred by a Maintenance Provider in the
performance of the Maintenance Services

 

“Maintenance Provider” means, with respect to the Project, the Person designated
as the “Maintenance Provider” for the Project in the Operation and Maintenance
Agreement.  Reference to a Maintenance Provider excludes any reference to a
Maintenance Provider in any other capacity.

 

“Maintenance Services” means the services set forth in Article 3 of the
Operation and Maintenance Agreement and the other provisions thereof as
applicable to a Maintenance Provider with respect to the Applicable Maintenance
Activities set forth in Appendix A of the Operation and Maintenance Agreement.

 

“Management Committee Powers” has the meaning given in Section 3.2.2.2.

 

“Management Committee” means the Management Committee established pursuant to
this Agreement.

 

 - 13 -Confidential

 

 

“Materials” means any products, supplies or materials that are to be
incorporated into the Project, whether or not substantially shaped, cut, worked,
mixed, finished, refined or otherwise fabricated or processed.  The term
“Materials” is intended to include any item that is to be incorporated into the
Project that is not an item of Equipment or a Consumable.

 

“Maximum CM Cost Amount” means Three Hundred and Sixty Million Dollars
($360,000,000).

 

“Maximum Cost Offering Amount” has the meaning given in Section 13.4.1.

 

“MDU” has the meaning given in the first paragraph of this Agreement.

 

“Minimum Rating” has the meaning given in the definition of Creditworthy.

 

“Modifications” means any capital additions or modifications to the Project that
are undertaken after the In-Service Date, including (i) Capital Improvements,
(ii) Upgrades, and (iii) Non-Project Modifications.

 

“Month” means a calendar month.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“NERC” means the North American Electric Reliability Corporation, a reliability
organization responsible for the oversight of the regional reliability councils
established to ensure the reliability and stability of the bulk electric supply
system in North America including the Transmission Grid.

 

“NERC Compliance Policy” means the NERC Requirements as set forth in Exhibit G.

 

“New Maximum CM Cost Amount” has the meaning given in Section 13.4.3(i).

  

“Non-Defaulting CPP Owner” has the meaning given in Section 14.2.3.

 

“Non-Defaulting Owner” means an Owner that is not in Default, including a
Non-Defaulting CPP Owner.

 

“Non-Exclusive Defaults” has the meaning given in Section 15.5.1.

 

“Non-Performing Owner” has the meaning given in Section 15.1.3.1(i).

 

“Non-Prevailing Party” means (i) the objecting Owner if the Arbitrator’s
determination confirms the Percentage Calculation, or (ii) the non-objecting
Owner if the Arbitrator’s determination confirms the Percentages set forth in
the applicable Notice.

 

“Non-Pro Rata Upgrade” has the meaning given in Section 4.4.1(ix)(ii).

 

“Non-Project Modification” means a Modification that is not approved by the
Management Committee for inclusion in a Final Budget and that is  undertaken by
one but not both of the Owners as permitted by this Agreement.  A Non-Project
Modification will not constitute

 

 - 14 -Confidential

 

 

part of the Project and is not governed by the Project Agreements, except as
provided in Section 4.4.

 

“Notice” means a Recalculation Notice or an Objection Notice under Section
3.1.3.3.1.

 

“Objecting Owner(s)” has the meaning given in Sections 3.1.3.3.1.

 

“Objection Notice” has the meaning given in Section 3.1.3.3.1.

 

“Offered Percentage” has the meaning given in Section 10.4.

 

“Offered Terms” has the meaning given in Section 10.4.

 

“Offering Owner” has the meaning given in Section 10.4.

 

“Operating Expenses” means all expenses of operating and maintaining the
Project, without duplication, including all amounts payable under the Project
Agreements (other than the Construction Management Agreement); expenses of
obtaining and maintaining Governmental Approvals; expenses of performance of
obligations under the Project Agreements (other than the Construction Management
Agreement); Maintenance Costs and Control Center Costs, as defined in the
Operations and Maintenance Agreement; expenses associated with Project Real
Property and other assets of the Project; insurance premiums, deductibles, and
self-insured retentions as provided in Appendix F to the Operation and
Maintenance Agreement; Taxes; utilities; licenses; impositions; general,
administrative, and management expenses; consulting and professional fees; and
all other fees, costs and expenses, in each case necessary for the operation and
maintenance of the Project and the conduct of the business of the Owners as
tenants-in-common. The following do not constitute Operating Expenses: (i)
expenses of any Financing sought or obtained by an Owner; (ii) amounts paid by
either Owner to a Transmission Grid operator or a regional transmission
organization; (iii) expenses of either Owner that are not related to the
Project; (iv) expenses of either Owner that are related to the Project but are
not due and owing to such Owner pursuant to a written contract among the Owner
in its capacity as a provider of goods or services to the other Owner and such
Owner in its capacity as an Owner; (v) expenses of either Owner that are related
to the Project but have not been approved by the Management Committee or
approved pursuant to a dispute resolution process; (vi) expenses for which an
individual Owner, the Construction Manager, a Maintenance Provider or a Control
Center Authority is solely responsible under a Project Agreement (other than in
respect of its Ownership Percentage); (vii) CM Costs; or (viii) expenses
incurred by a Party in connection with improvements to a Discretely Owned
Substation Asset as required by Section 3.1.6.

 

“Operating Standard” means the requirements, as applicable, for the operation
and management of the Project, in all material respects, in accordance with:

 

  (i) (a) requirements of Governmental Approvals and Applicable Law; (b) Good
Utility Practice; (c) additional requirements adopted by the Management
Committee; and (d) the requirements of applicable insurance policies then in
effect; and      

  (ii) the warranties, operating manuals and procedures for the Project and
applicable portions thereof.

 

 - 15 -Confidential

 

 

“OP Default OPCs” has the meaning given in Section 15.2.1.3.

 

“Operating Year” means the twelve (12) Month calendar year; provided, however,
the first Operating Year will begin on the In-Service Date of the Project and
end on December 31 of that year.

 

“Operation and Maintenance Agreement” means that certain Operation and
Maintenance Agreement, by and between the Owners and the Maintenance Provider
and Control Center Authority, effective as of the Effective Date.

 

“Operations Payment Default” means the failure of an Owner to pay, when due, any
Operating Expenses or Capital Expenses required to be paid by it under this
Agreement, if payment is not received within fifteen (15) days after the date
such payment was due.

 

“Order” means any judgment, award, decision, directive, consent decree,
injunction (whether temporary, preliminary or permanent), ruling, writ or order
adopted, enacted, implemented, promulgated, issued, entered or deemed applicable
by or under the authority of any Governmental Body or Arbitrator (but as to an
Arbitrator, with respect to injunctive and other equitable relief, only to the
extent permitted by this Agreement) that is binding on any Person or its
Property under Applicable Law.

 

“Original Base MVA” means the Base MVA as originally determined pursuant to
Paragraph 1(a)(i) of Exhibit P (Methodology For Recalculating Interests For
Upgrades) promptly after the Substantial Completion Date, without regard to any
adjustments of such Base MVA as so originally determined.

 

“Original Maximum CM Cost Amount” means the Maximum CM Cost Amount immediately
preceding the applicable Proposed Increase in the Maximum CM Cost Amount.

 

“OTP” has the meaning given in the first paragraph of this Agreement.

 

“Owner” means each Person set forth in the preamble that is a party to this
Agreement; provided, however, the term “Owner”: (i) excludes any Person whose
Ownership Percentage becomes zero in accordance with the terms of this Agreement
from and after the effective date when its Ownership Percentage became zero;
provided, further, that any such Person whose Ownership Percentage becomes zero
is not released from its obligations under (a) this Agreement or the Project
Transmission Capacity Exchange Agreement to the extent the same arose, accrued
or first became performable prior to the effective date when its Ownership
Percentage became zero; and (ii) includes a Person that later executes a
Transfer Agreement as transferee in accordance with the provisions of this
Agreement from and after the effective date set forth in such Transfer
Agreement.  Reference to an “Owner” means an owner of an Ownership Percentage
under this Agreement and excludes reference to any other capacity of such
Person, including serving as a Construction Manager, Contractor, Subcontractor,
Maintenance Provider or Control Center Authority.

 

“Owner Claiming Contribution” has the meaning given in Section 16.2.3.2.

 

 - 16 -Confidential

 

 

“Owner Procured Materials” means the items of Equipment and Materials proposed
in the procurement plan other than such items that the Management Committee,
after consultation with the Construction Manager, directs the Construction
Manager not to procure.

 

“Owner Representative” has the meaning given in Section 3.2.3.1.

 

“Owner Subject To Contribution” has the meaning given in Section 16.2.3.2.

 

“Ownership Percentage(s)” has the meaning given in Section 3.1.3.1.1.

 

“Party” or “Parties” has the meaning set forth in the preamble.

 

“Percentage Calculation Dispute” has the meaning given in Section 18.1.

 

“Percentage Calculation” has the meaning given in Section 3.1.3.3.1.

 

“Percentages” means the Ownership Percentages.

 

“Performing Owner” has the meaning given in Section 15.1.3.1.

 

“Permitted Owner Lien” means a Lien against the Ownership Percentage of either
Owner that such Owner grants, or has granted, to a Financing Party.

 

“Permitted Purpose” has the meaning given in Section 17.1.

 

“Permitted Transfer” has the meaning given in Section 10.2.

 

“Person” means any individual, corporation, partnership, limited liability
company, association, joint stock company, trust, unincorporated organization,
joint venture, Governmental Body or other entity with legal constitution under
Applicable Law.

 

“Personal Taxes” has the meaning given in Section 7.1.1.

 

“Prime Rate” means the per annum (365 or 366 days, as appropriate) prime rate as
published on the last banking day of the applicable Month in the “Money Rates”
table of The Wall Street Journal; provided, however, if more than one such prime
rate is published, the mean will be used for purposes of this Agreement, until
the Management Committee specifies a different reference publication or
equivalent bank rate.

 

“Pro Rata Upgrade” has the meaning given in Section 4.4.1(ix)(i).

 

“Proceeding” means any suit, litigation, arbitration, hearing, audit,
investigation or other action (whether civil, criminal, administrative or
investigative) commenced, brought, conducted, heard by or before, or otherwise
involving, any Governmental Body or Arbitrator.

 

“Procured Materials” means Owner Procured Materials and Contractor Procured
Materials, in the aggregate.

 

 - 17 -Confidential

 

 

“Project” means, (i) as more particularly identified in Appendix A to the
Construction Management Agreement, a 345 kV transmission line from the Ellendale
345 kV Substation to the Big Stone South Substation and consisting of all the
equipment and materials, installations and facilities, including associated site
improvements, appurtenances and structures procured, installed or constructed
between the deadend towers within the Ellendale 345 kV Substation and the Big
Stone South Substation; (ii) Capital Improvements, including those required by
interconnection requests; (iii) Upgrades; (iv) Project Real Property and all
Property interests that arise in connection with the Project Real Property ; and
(v) all other Property related to or associated with the Project Real Property
in which the Owners have joint right, title or interest, including the
Governmental Approvals, the Project Agreements, the Procured Materials, the
Construction Agreements and the Real Property Agreements.  The Project does not,
however, include Discretely Owned Substation Assets or Non-Project
Modifications.

 

“Project Account” means the Main Escrow Account and any sub-accounts thereof
established by or at the direction of the Management Committee under the Escrow
Agreement.

 

“Project Agreements” means this Agreement, the Construction Management
Agreement, the Project Transmission Capacity Exchange Agreement, the Operation
and Maintenance Agreement, the Transmission Easement Agreements and any other
contract or agreement designated as a “Project Agreement” by the Management
Committee, which in no event may include (i) the Construction Agreements, (ii)
Real Property Agreements, or (iii) any contract or agreement that relates to the
Discretely Owned Substation Assets or Non-Project Modifications, except in the
case of agreements between the Owners with respect to such assets.

 

“Project Budget” means the Project Budget forecasting the cost to complete the
Project as provided in Section 5.1.1 of the Construction Management Agreement.

 

“Project Capacity” means the then current maximum power that can be transmitted
over the Project, without consideration of constraints imposed by the balance of
the Transmission Grid or the Discretely Owned Substation Assets.

 

“Project Change Request” means a submittal by the Construction Manager to the
Management Committee, as provided in Section 5.3.2 of the Construction
Management Agreement.

 

“Project Costs” means the CM Costs, Operating Expenses, Capital Expenses,
Construction Work costs and any other amounts related to the Project incurred at
the direction of the Management Committee; provided, however, (i) costs incurred
in connection with Discretely Owned Substation Assets do not constitute Project
Costs and (ii) costs incurred by an Owner, Construction Manager, Maintenance
Provider or Control Center Authority in negotiation of the commercial terms of:
(A) the Project Agreements; (B) the Construction Agreements; or (C) any contract
regarding the operation or maintenance of the Project does not constitute a
Project Cost unless the counterparty is a Third Party.

 

“Project Design Book” means the compilation, in electronic format, of documents,
drawings, GPS coordinates, route maps, access routes and associated contact
information, and information that reflects the final specifications and design
of the Project, including “as built”

 

 - 18 -Confidential

 

 

design, engineering and construction documents, required to be delivered by any
Contractor in accordance with the provisions of the applicable Construction
Agreement.

 

“Project Development Agreement” means that certain Project Development Agreement
between the Parties, dated effective as of June 27, 2012, establishing the terms
and conditions pursuant to which Development Work was undertaken prior to the
Effective Date.

 

“Project Plan” has the meaning given in Section 3.2.2.2(xiv), a copy of which as
of the Effective Date is attached as Appendix A to the Construction Management
Agreement, which may be revised from time to time pursuant to Section 4.1.2 of
the Construction Management Agreement.

 

“Project Real Property” means the fee interests, licenses, rights-of-way,
easements, access and egress rights and other real property interests on which
the Project is to be located, including any licenses, rights-of-way, easements
and other real property interests necessary for access to and egress from the
Project.

 

“Project Transmission Capacity Exchange Agreement” means that certain Project
Transmission Capacity Exchange Agreement by and between the Owners, effective as
of the Effective Date.

 

“Property” means any kind of property or asset, whether real, personal, mixed,
tangible or intangible.

 

“Proposed Budget” means a five-year budget describing Capital Expenses and other
Operating Expenses that the Maintenance Provider recommends.

 

“Proposed Increase in the Maximum CM Cost Amount” means a Project Change Request
provided by the Construction Manager to the Management Committee that estimates
an amount of an increase in the Maximum CM Cost Amount, which, based on
estimates and information then known to the Construction Manager, reasonably
would be necessary to achieve Final Completion.

 

“Real Property Agreements” means contracts, agreements, instruments or
arrangements providing for the acquisition of Project Real Property.

 

“Real Property Management Services” means the services furnished by the
Construction Manager to the Owners to acquire the Project Real Property.

 

“Rebuild Election Notice” has the meaning given in Section 8.4.1.1.

 

“Rebuilding Owner” has the meaning given in Section 8.4.1.1.

 

“Recalculation Notice” has the meaning given in Section 3.1.3.3.1.

 

“Representatives” has the meaning given in Section 17.1.

 

 - 19 -Confidential

 

 

“Responsible Entities” means the Maintenance Provider and the Control Center
Authority with assigned responsibility for maintenance or operation of the
Project as set forth in the Operation and Maintenance Agreement.

 

“ROFN Closing” has the meaning given in Section 10.4.1.7.

 

“ROFN Election Notice” has the meaning given in Section 10.4.1.5.

 

“ROFN Offeree Owner” has the meaning given in Section 10.4.

 

“ROFN Option Period” has the meaning given in Section 10.4.1.

 

“ROFN Trigger Notice” has the meaning given in Section 10.4.

 

“ROFN” has the meaning given in Section 10.4.

 

“S&P” means Standard & Poor’s Ratings Group, a division of McGraw-Hill Inc.

 

“Sales Taxes” has the meaning given in Section 7.1.2.

 

“Scope of Work” has the meaning given in Section 3.2.2.2(xiv).

 

“Senior Executive(s)” means an officer of an Owner who is authorized to settle
the applicable dispute and who is not an Authorized Owner Representative.

 

“Services” means the Maintenance Services, the Construction Management Services,
the Real Property Management Services and the Control Center Services.

 

“Shared Liability Claim” has the meaning given in Section 16.2.1.

 

“Shared Liability” has the meaning given in Section 16.2.1.

 

“Subcontract” means each contract, agreement or arrangement between any
Contractor or Subcontractor, on the one hand, and any Subcontractor, on the
other hand, establishing the terms of performance of any part of the
Construction Work.

 

“Subcontractor” means each and every supplier, subcontractor, vendor, consultant
or contractor of any tier performing any part of the Construction Work including
providing any studies, reports, plans, evaluations or Procured Materials, in
connection with the Construction Work, directly or indirectly for or to any
Contractor.  Reference to an Owner as a “Subcontractor” excludes any reference
to such Owner in any other capacity.

 

“Substantial Completion” means the achievement of the following conditions as to
the Project:  (i) completion of Construction Work to the extent required for the
safe, reliable and continuous operation of the Project consistent with Good
Utility Practice and Applicable Law; (ii) completion of Commissioning of the
Project; (iii) vendor and construction documentation (including start-up
procedures and copies of applicable portions of the Project Design Book) and any
special tools necessary to support continuous, safe and reliable operation of
the Project have been delivered to the Maintenance Provider; (iv) the Project
has been energized and placed in

 

 - 20 -Confidential

 

 

service (unless otherwise specified by the Management Committee); and (v) unless
waived by the Construction Manager as to any Lien or indemnity agreement (such
waiver only to be effective as to establishing the existence of Substantial
Completion and for no other purpose), the Construction Manager has received from
each Contractor under a Construction Agreement and Subcontractor under a
Subcontract, in each case, with a contract value equal to or greater than One
Hundred Thousand Dollars ($100,000), duly executed Lien Waivers.

 

“Substantial Completion Date” means the date that Substantial Completion has
occurred.

 

“Substation Work” means all activities that are necessary, desirable or
incidental to complete the obligations of each Owner to construct its respective
Discretely Owned Substation Assets.

 

“Taxes” has the meaning given in Section 7.1.1.

 

“Third Party Claim Damages” has the meaning given in Section 16.1.1.

 

“Third Party Claim” has the meaning given in Section 16.1.1.

 

“Third Party” means any Person that is neither a party nor an Affiliate of a
party to this Agreement.

 

“Transfer Agreement” has the meaning given in Section 10.3.1.3.

 

“Transfer Effective Date” has the meaning given in Section 12.2.9.

 

“Transfer” has the meaning given in Section 10.1.

 

“Transmission Easement Agreements” means those certain transmission easement
agreements as set forth in the Form Transmission Easement Agreement and
Memorandum of the Project Ownership Agreement and as shown in Exhibit J, dated
as of the Effective Date, by and between a Discretely Owned Substation Owner and
the other Owner.

 

“Transmission Grid” means the electric transmission system to which the Project
will be directly interconnected and of which it will become a part.

 

“Transmission Information” has the meaning given in Section 17.4.

 

“Transmission Provider” means any Person, including an Owner, who exercises
functional control over the operation of a portion of the Transmission Grid as
necessary to effectuate transmission transactions that it administers and
provides transmission service under a tariff, rate schedule or other agreement.

 

“Uncurable Construction Period Payment Default” has the meaning given in Section
14.2.4.

 

 - 21 -Confidential

 

 

“Uniform System of Accounts” means the FERC’s “Uniform System of Accounts
Prescribed for Public Utilities and Licensees (Class A and Class B),” in effect
as of the Effective Date, as such Uniform System of Accounts may be modified
from time to time.

 

“Upgrade” means a Modification undertaken after the In-Service Date that
increases the Project Capacity, whether such Upgrade is a Pro-Rata Upgrade or a
Non-Pro Rata Upgrade.

 

“Wind-up Plan” has the meaning given in Section 19.3.1.

 

1.2 Certain Conflicts Between Project Agreements. As between the Owners:  (i) in
the event of any conflict between this Agreement and the Construction Management
Agreement with respect to the authority, rights and obligations of the
Construction Manager, the Construction Management Agreement will control; and
(ii) in the event of any conflict between this Agreement and the Operation and
Maintenance Agreement with respect to the authority, rights and obligations of
the Maintenance Provider or Control Center Authority, the Operation and
Maintenance Agreement will control.    

1.3 Schedules and Exhibits.  This Agreement consists of this document itself and
the Schedules and Exhibits that are specifically made a part hereof and
incorporated herein by reference.

 

ARTICLE 2 

TERM

 

2.1

Term.   The term of this Agreement will commence at the Effective Date and will
continue until this Agreement has been terminated pursuant to Section 19.1.2.

 

ARTICLE 3

PROJECT OWNERSHIP, INTERESTS AND GOVERNANCE

 

3.1 Nature of Ownership and Ownership Percentages.

 

  3.1.1 Nature of Ownership Interest.

 

  3.1.1.1 Project  Held as Tenancy-in-Common.  The Project will be owned by the
Owners as tenants-in-common in undivided ownership interests.  Such ownership
interests will be (i) in accordance with the Ownership Percentages described in
Section 3.1.3.1.1, as adjusted pursuant to this Agreement.      

  3.1.1.2 Discretely Owned Substation Assets.  The Discretely Owned Substation
Assets are owned individually by the Owners as follows:  the Big Stone South
Substation is owned by OTP and the Ellendale 345 kV Substation owned by
MDU.  The Discretely Owned Substation Assets are not part of the Project and the
costs associated with the same are not used to determine the Ownership
Percentages.      

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  3.1.1.3 Transmission Revenues.  Transmission-related revenues arising from an
Owner’s Ownership Percentage in the Project and its ownership of the Discretely
Owned Substation Assets are the individual Property of the Owner.      

  3.1.2 Property Interests Created Prior to the Effective Date.  The Owners
acknowledge and agree that all Property interests created under the Project
Development Agreement (the “Development Period Assets”), including (i) those
Property interests set forth on Exhibit A and (ii) the contracts entered into
prior to the Effective Date under the Project Development Agreement that remain,
in whole or in part, executory as of the Effective Date, each of which is set
forth in Exhibit A (the “Development Period Contracts”), have been or are hereby
transferred to and are to be utilized by, in and as part of the Project, in the
name of the Owners, free and clear of any and all Liens other than Permitted
Owner Liens.

 

  3.1.3 Ownership Percentage.

 

  3.1.3.1 Exhibit B.      

  3.1.3.1.1 Ownership Percentage.  Exhibit B sets forth the Ownership Percentage
of each Owner (the “Ownership Percentage(s)”) as of the Effective Date.  The
Ownership Percentages of the Owners may be increased or decreased after the
Final Completion Date, and Exhibit B revised, for (i) Non-Pro Rata Upgrades in
accordance with the formula set forth in Exhibit P, or (ii) termination of the
Project and completion of the Wind-up Plan, and from time to time after the
Effective Date as a result of the occurrences set forth in Articles
10 (Transfers) or 13 (Maximum CM Costs) or 14 (Defaults Related to Construction
Activities) or 19 (Termination) in accordance with the Formula. Any change in
the Ownership Percentage(s) shall become effective on the later of (A) the date
on which the revised Schedule 2 to the Project Transmission Capacity Exchange
Agreement is accepted for filing by the FERC, or (B) the date specified by the
Owners as the effective date of the change.      

  3.1.3.2 [RESERVED].      

  3.1.3.3 Calculation Upon Project Termination or Upon a Recalculation Notice.  
   

  3.1.3.3.1 Recalculation of Percentages.  (i) As soon as practicable after
termination of the Project and completion of the Wind-up Plan, or (ii) within
sixty (60) days after receipt by an Owner of a revised Exhibit B as a result of
the occurrences set forth in Section 4.4.1(ix) (Non-Pro Rata Upgrade),
or Articles 10 (Transfers), 13 (Maximum CM Costs), 14 (Defaults Related to
Construction Activities) or 19 (Termination), an Owner

 

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    provides notice to the Management Committee and the other Owner that the
Owner Percentages as shown on the most recent Exhibit B is incorrect (which
notice must include such Owner’s “Percentage Calculation,” which is defined
below), (each under clauses (i) and (ii) a “Recalculation Notice”), the
Management Committee and a Senior Executive of the Owner that sent a
Recalculation Notice will meet in good faith during the twenty (20) day period
following the Management Committee’s receipt of the Recalculation Notice to
determine whether the Ownership Percentages set forth on the most recent Exhibit
B are correct.  If, at the end of such period, the Management Committee and such
Senior Executive do not agree on whether the Ownership Percentages set forth on
the most recent Exhibit B are correct, then the Owner objecting to the
calculation of the Owner Percentages (such Owner for purposes of this Section
3.1.3.3 and Article 18, an “Objecting Owner”) shall deliver a notice to the
Management Committee and the other Owner specifying its objections thereto in
reasonable detail (an “Objection Notice”).      

  3.1.3.3.2 Dispute Resolution Concerning Percentage Calculation.  If, following
termination of the Project and completion of the Wind-up Plan, or as a result of
the occurrences set forth in Section 4.4.1(ix) (Non-Pro Rata Upgrade), or
Articles 10 (Transfers), 13 (Maximum CM Costs), 14 (Defaults Related to
Construction Activities) or 19 (Termination), a dispute exists as to the
Ownership Percentage to be set forth in a revised Exhibit B, the Owners will
resolve the dispute in accordance with Article 18 (Dispute Resolution for
Excluded Matters).      

  3.1.3.3.3 No Effect on Prior Decisions.  If any Ownership Percentages are
changed pursuant to Section 3.1.3 or Article 18, actions requiring a vote of and
actions by the Management Committee that were taken based on the vote levels
established by such Ownership Percentages reflected in Exhibit B prior to any
such change will remain in full force and effect and will not be subject to
challenge as a result of any such change; provided, however, the foregoing will
not apply to Management Committee actions that apply to and affect the proper
allocation of CM Costs or Distributable Cash or pro rata allocations related
thereto, between the Owners, and any such change(s) to Exhibit B will be
retroactively effective and adjusted.

  3.1.4 [RESERVED].      

  3.1.5 Waiver of Right to Partition.  The Owners recognize that the physical
partition of the Project or any part thereof would be impractical and
inconsistent with the

 

 - 24 -Confidential

 

  

  purposes for which this Agreement is made.  Each of the Owners agrees that it
will not take any action at any time by a Proceeding or otherwise exercise any
right available under Applicable Law to partition the Project or any part
thereof in any way, whether by partition in kind or by sale and division of the
proceeds thereof.  Each of the Owners further irrevocably waives the right of
partition and the benefit of all Applicable Law (including statutory and common
law) that may now or hereafter authorize such partition of the Project or any
part thereof.  If any such right of partition accrues, after the Effective Date,
each Owner will from time to time upon the written request of the other Owner
execute and deliver such further instruments as may be necessary to confirm the
foregoing waiver and release of its right to partition. By way of clarification,
the Owners acknowledge and agree that the waiver of the right to partition the
Project contained in this Section 3.1.5 only applies to the Project.  The
provisions of this Section 3.1.5 will be binding upon and inure to the benefit
of the Owners, their respective successors and assigns, including Financing
Parties and their respective successors and assigns, and will run with the
Project.  Each Owner agrees to insert a similar covenant in any contract with
any Person (other than another Owner) that acquires all or any portion of its
Ownership Percentage, which covenant will be enforceable by either Owner or by
the Management Committee.  This waivers specified in this Section 3.1.5 will be
summarized in the Transmission Easement Agreement(s) in substantially the form
attached hereto as Exhibit J, which will be recorded in all relevant
jurisdictions.    

  3.1.6 Discretely Owned Substation Assets.

   

  3.1.6.1 Creation of Transmission Easement and Survival of Rights.  Each
Discretely Owned Substation Owner will grant the other Owner an irrevocable,
non-fee or royalty bearing (i) non-exclusive limited right to connect its
Ownership Percentage of the Project to the Discretely Owned Substation Assets
and (ii) non-exclusive easement for the transmission of energy and data through
the Discretely Owned Substation Assets. The non-exclusive rights to connect to
and easements granted through the Discretely Owned Substation Assets shall be a
limited to an initial term of ninety-nine (99) years from the Effective Date.  
   

  3.1.6.2 Discretely Owned Substation Owner Obligations.  Each Discretely Owned
Substation Owner agrees to construct the Discretely Owned Substation Assets
prior to Substantial Completion and to pay for the Discretely Owned Substation
Costs thereof.      

3.2 Management Committee.

 

  3.2.1 Establishment.  The Owners hereby establish the Management Committee
which will consist of the representatives appointed by the Owners in accordance
with Section 3.2.3.1.

 

  3.2.2 Powers.

 

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  3.2.2.1 No Unilateral Owner Action.  Except as provided in Section 3.2.4.1.1,
Section 4.3.1.2, and Section 14.2.2, no Owner will have any right to
unilaterally exercise control or management powers over the Project or any
portion thereof or otherwise enter into any legally binding commitment of any
kind or nature with respect to the Project that is legally binding on any other
Owner solely by virtue of being a party to this Agreement, in each case other
than the Discretely Owned Substation Assets; provided, however, this Section
3.2.2.1 will not prevent an Owner from entering into a legally binding
commitment of any kind or nature with respect to the Project, or a Discretely
Owned Substation Asset that binds only such Owner.      

  3.2.2.2 Management Committee Powers.  The Owners hereby grant the Management
Committee all authority, right and power to exercise the Management Committee
Powers in accordance with the terms of this Agreement.  Subject to Section
3.2.2.3, all decisions in respect of constructing, equipping, designing,
operating, maintaining and administering the Project will be made by the Owners,
acting through the Management Committee (the “Management Committee Powers”),
including:      

  (i) oversight, management and administration (including enforcement and
termination) of and compliance with, all Project Agreements, all Construction
Agreements, all Real Property Agreements and all other contracts that relate to
the Project to which the Owners are parties or by which they are bound;      

  (ii) exercising all rights and fulfilling all duties and responsibilities
granted to, and taking all action required of, the Management Committee as set
forth in or contemplated by any Project Agreement;      

  (iii) compliance with Applicable Law, the establishment of Operating Standards
and the taking of such other action as the Management Committee deems necessary
or that may be required under Applicable Law or Operating Standards with respect
to the development, construction, acquisition and completion of the Project for
commercial service; the procurement, replacement, modification or renewal of all
or any part thereof; the making of Capital Improvements thereto; the operation
and maintenance thereof; and the retirement or salvaging of all or any part
thereof;      

  (iv) applications for the issuance, modification, extension or renewal or
surrender of, and compliance with, all Governmental Approvals relating to the
Project or any portion thereof;      

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  (v) except as delegated to the Construction Manager or a Maintenance Provider,
the adjustment of losses and settlement of any losses covered by insurance
obtained under the Project Agreements and obtaining and maintaining insurance
and performing risk management activities relating to the Project, all as set
forth in the Insurance Plan;      

  (vi) except as delegated to the Construction Manager or a Maintenance
Provider, the pursuit, defense and settlement of claims and causes of action of
any kind relating to the Project;      

  (vii) the establishment of such committees and subcommittees as it believes
appropriate in accordance with Section 3.2.3.7;      

  (viii) the approval of all Budgets and any amendments or modifications
thereto;      

  (ix) acting upon any matter relating to the Project brought before the
Management Committee by an Owner;      

  (x) the establishment of accounting, inventory, auditing and other operating
procedures as it deems appropriate and which are consistent with the
requirements of this Agreement;      

  (xi) the sale, replacement or other disposition of Property of the Project
(other than pursuant to the Wind-up Plan), except that a Maintenance Provider
may sell, replace or otherwise dispose of Property in the ordinary course of
business in accordance with Good Utility Practice and the applicable provisions
of the Operating and Maintenance Agreement;      

  (xii) the use of the composite fiber optic overhead ground wire that is to be
incorporated into the Project for any purpose other than electric utility
communications by the Owners in connection with the Project;      

  (xiii) subject to compliance with all Governmental Approvals, the use of any
part of the Project for any purpose other than electric utility purposes by the
Owners;      

  (xiv) approval of (i) any significant changes to the Substantial Completion
Date or Final Completion Date or the definition of the Project, (ii) the
schedule for the execution of the Construction Work (the “Construction Work
Schedule”), and (iii) the scope of work for the Project (the “Scope of Work”).
The Scope of Work together with the Construction Work Schedule are collectively,
the “Project Plan”;      

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  (xv) obtaining and monitoring information on the progress of the construction
of the Discretely Owned Substation Assets; and      

  (xvi) performing such other duties as set forth in the Project Agreements.

  

3.2.2.3Individual Owner Responsibility; Right to Amend this Agreement; and
Individually Enforceable Obligations. Notwithstanding anything to the contrary
contained in this Section 3.2.2 or elsewhere in this Agreement, each Owner
acting in its individual capacity and not the Management Committee or any other
Owner, will have the exclusive (i) obligation to obtain, maintain and comply
with all Governmental Approvals required for it to be an Owner or a party to the
Project Agreements, (ii) responsibility to comply with its obligations under the
Project Agreements, (iii) right to agree to amend the Project Agreements and
(iv) right and responsibility to enforce the Individually Enforceable
Obligations.

 

3.2.3Composition, Attendance, Meetings, Etc.

 

3.2.3.1Authorized Owner Representatives. The Management Committee will be
composed of a representative from each Owner (“Owner Representative”). By way of
clarification, if an Owner Transfers all of its Ownership Percentage, it will no
longer be an Owner and will not be entitled to appoint an Owner Representative
or an Alternate. Also by way of clarification, if an Owner transfers less than
all of its Ownership Percentage, then the transferring Owner and transferee
Owner collectively will only be entitled to appoint an Owner Representative and
an Alternate.

 

3.2.3.1.1Basis for Voting. Except as provided in Section 3.2.4.1, each Owner
Representative will be entitled to vote a percentage of the total votes of the
Management Committee that reflects the Ownership Percentage held by the Owner or
Owners that designated the Owner Representative to the Management Committee.

 

3.2.3.1.2Alternates. Each Owner will also designate an alternate for its or
their Owner Representative (an “Alternate” and together with the respective
Owner Representative, the “Authorized Owner Representatives”). Notwithstanding
anything to the contrary in this Agreement, an Alternate may exercise the powers
of the Owner Representative, of an Owner or Affiliated Owners, as the case may
be, at a meeting only if such Owner Representative is not in attendance at the
meeting.

 

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3.2.3.1.3Removal and Replacement. Each Owner may remove and replace its or their
Authorized Owner Representative at any time with or without cause and without
the approval of the other Owner upon prior notice to the other Owner.

 

3.2.3.1.4Contact Information. Each Owner will promptly give notice to the other
Owner of any change in the name, business address, business telephone or
business facsimile number of any of its Authorized Owner Representatives.

 

3.2.3.1.5Agent of Appointing Owner. Each Authorized Owner Representative will be
the agent of the Owner that designated such Authorized Owner Representative.
Accordingly, (i) the vote or other act of an Authorized Owner Representative in
respect of any matter will be deemed to be the vote or act of the Owner that
designated such Authorized Owner Representative and may be conclusively relied
upon by the Management Committee and the other Owner and (ii) no Authorized
Owner Representative will owe (or be deemed to owe) any duty (fiduciary or
otherwise) to an Owner other than the Owner that designated such Authorized
Owner Representative.

 

3.2.3.1.6[RESERVED].

 

3.2.3.1.7Expenses. Each Owner or Affiliated Owners will be responsible for the
expenses of its or their Authorized Owner Representatives.

 

3.2.3.1.8Authorized Owner Representatives as of the Effective Date. Schedule
3.2.3.1.8 identifies the duly appointed Authorized Owner Representatives of each
Owner and their contact information as of the Effective Date.

 

3.2.3.2Attendance. Each Owner will use reasonable efforts to cause one of its
Authorized Owner Representatives to attend each meeting of the Management
Committee and no Owner will withhold the presence of its Authorized Owner
Representatives to prevent, delay or forestall decisions on matters under
consideration by the Management Committee. A reasonable number of
representatives or agents (as to third party representatives or agents, after
execution of an appropriate non-disclosure agreement) of the Owners may attend
meetings. Meetings may be conducted in person, by telephone or by other means
acceptable to the Management Committee. Attendees who are not an Authorized
Owner Representative will be identified at the commencement of each meeting,
will have no power to vote on any matters, but may participate in discussions in
accordance with the Management Committee’s approval.

 

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3.2.3.3Meetings.

 

3.2.3.3.1Frequency. The Management Committee will meet (i) at least once each
Month until the Substantial Completion Date of the Project, unless otherwise
determined by the Management Committee; (ii) at least annually thereafter unless
otherwise determined by the Management Committee; and (iii) at any other time
that a meeting is requested by an Owner.

 

3.2.3.3.2Notice of Meetings. The Chair will give notice to each Authorized Owner
Representative stating the place (or means if by telephone conference or other
means), date and hour of each meeting of the Management Committee, together with
an agenda for the meeting, not fewer than five (5) days before the date of the
meeting (or as far in advance as is practicable under the circumstances if the
meeting is called on shorter notice due to an Emergency or other exigent
circumstance as determined in the discretion of the Chair). Other Owner
Representatives may add items to the agenda by giving notice to each Authorized
Owner Representative not fewer than two (2) days before the date of the meeting.
Notices required under this Section 3.2.3.3.2 may be waived by all Authorized
Owner Representatives either at the meeting or by written consent.

 

3.2.3.3.3[RESERVED].

 

3.2.3.3.4Waiver of Notice. Attendance of an Authorized Owner Representative at a
meeting of the Management Committee will constitute a waiver of notification of
the meeting by such Authorized Owner Representative, except where such
Authorized Owner Representative attends for the express purpose of objecting to
(i) the transaction of any business on the ground that the meeting is not called
or convened in accordance with the requirements of this Agreement or (ii) the
consideration of matters required to be included in the notification of the
meeting but not so included, and any such objection is expressly made at the
meeting.

 

3.2.3.4Rules; By-laws. From time to time after the Effective Date, the
Management Committee may adopt rules of order or by-laws, amend such rules of
order or by-laws or adopt policy statements and directives, in each case that
are consistent with this Agreement and as it considers necessary or appropriate
for the conduct of its business and the exercise of the powers of the Management
Committee.

 

3.2.3.5Chair. Promptly after the Effective Date, the Management Committee will
select an Owner Representative to act as Chair. Thereafter, unless

 

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 otherwise agreed by the Management Committee or as provided in any by-laws
adopted pursuant to Section 3.2.3.4, the Chair shall rotate between the Owner
Representatives each calendar year. If an Owner removes its Owner Representative
who is serving as Chair, the Management Committee will select a new Chair from
among the Owner Representatives. The Chair, or his or her designee, will call
and preside over all meetings of the Management Committee at which he or she is
present. The Chair will have no powers or duties other than those specifically
conferred by this Agreement or in any by-laws adopted by the Management
Committee pursuant to Section 3.2.3.4, and will have no voting or veto power in
addition to the right to vote as an Owner Representative.

 

3.2.3.6[RESERVED].

 

3.2.3.7Committees.

 

3.2.3.7.1Consensus Committees. The Management Committee may, from time to time,
appoint one or more committees of one or more individuals who may, but need not,
be Authorized Owner Representatives, who will serve at the Management
Committee’s pleasure, have such duties as the Management Committee determines
and make recommendations to the Management Committee with respect to the matters
requested of them by the Management Committee. Each committee appointed pursuant
to this Section 3.2.3.7.1 will operate by consensus (i.e., unanimous agreement),
and not by vote, and will promptly report any inability to reach consensus on an
issue to the Management Committee and seek direction from the Management
Committee with respect to such issue. Such committee will also follow such rules
of order, policy statements and instructions for the conduct of its business as
directed by the Management Committee.

 

3.2.3.7.2[RESERVED].

 

3.2.3.7.3E&O Committee. The Management Committee hereby establishes an
Engineering and Operating Committee (the “E&O Committee”) and delegates to it
the authority to undertake the obligations and exercise the rights accorded to
it in the Operation and Maintenance Agreement or as otherwise determined by the
Management Committee. Each Owner Representative may appoint one individual to
serve on the E&O Committee, which individual may, but need not, be such Owner
Representative or his or her Alternate. The individual appointed to serve on the
E&O Committee may, from time to time, appoint a designee to attend an E&O
Committee meeting in his stead,

 

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 and such designee will be deemed to be the member at such meeting. The E&O
Committee will take action only with the affirmative vote of all members of the
E&O Committee. If any member of the E&O Committee does not vote in favor of an
action, any member of the E&O Committee may submit the proposed action to the
Chair of the Management Committee and the Chair will present the proposed action
to the Management Committee. The Management Committee decision will become the
decision of the E&O Committee and the E&O Committee will implement such
decision.

 

3.2.4Voting.

 

3.2.4.1Basis for Voting and Required Voting Levels.

 

3.2.4.1.1Basis for Voting. Each Authorized Owner Representative is entitled to
vote at meetings of the Management Committee, by written consent of the
Management Committee in accordance with Section 3.2.4.3, or by any other means
adopted by the Management Committee. Except as specifically allowed by this
Agreement, particularly with respect to a Default by an Owner, all decisions of
the Management Committee shall be by unanimous (consensus) vote. Except with
respect to voting rights provided for under Section 19.1.2, Authorized Owner
Representatives will not be entitled to vote if the Owner that appointed him or
her is a Defaulting Owner and the Default is material and not subject to a good
faith dispute.

 

3.2.4.2[RESERVED].

 

3.2.4.3Action by Written Consent. Any action which may be taken by the
Management Committee under this Agreement may be taken without a meeting if a
written consent setting forth the action taken is executed by Authorized Owner
Representatives representing all of the Ownership Percentages.

 

Article 4
CONSTRUCTION; OPERATION AND MAINTENANCE; AND CAPITAL IMPROVEMENTS

 

4.1Construction.

 

4.1.1[RESERVED].

 

4.1.2Replacement Construction Management Agreement.

 

4.1.2.1Approval and Execution of Replacement Construction Management Agreement.
If the Construction Management Agreement terminates in

 

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 accordance with its terms (except if a Wind-up Plan has been adopted) or would
terminate but for the operation of Section 4.1.2.2, then, unless the Management
Committee approves an Owner’s request to assume all rights and obligations of
the Construction Manager under the Construction Management Agreement as provided
in Section 4.1.2.2, and subject to Section 4.1.2.4, the Management Committee
will manage the construction of the Project or will recommend a replacement of
the Construction Manager and a replacement of the Construction Management
Agreement for approval by the Owners.

 

4.1.2.2Owner Option to Request Assumption of All Rights and Obligations of
Construction Manager under Construction Management Agreement. If the
Construction Management Agreement would otherwise terminate due to the
resignation or removal of the Construction Manager in accordance with the terms
of the Construction Management Agreement, either Owner (or, if an Owner is
removed or resigns as Construction Manager, the other Owner) may ask the
Management Committee, instead of permitting the Construction Management
Agreement to terminate, to approve the assumption by such Owner of all rights
and obligations of the Construction Manager under the Construction Management
Agreement. The Management Committee may approve any such request.

 

4.1.2.3[RESERVED].

 

4.1.2.4Effect of Dispute and Resolution of Dispute. No Owner may refuse to pay
any CM Cost pending resolution of any Dispute or delay relating to development
of a replacement of the Construction Management Agreement.

 

4.1.2.5Conflict Between Agreements. In the event of any conflict between this
Agreement and the replacement of the Construction Management Agreement with
respect to the authority, rights and obligations of the replacement Construction
Manager, the replacement of the Construction Management Agreement will control,
except for Owner rights and obligations with respect to Discretely Owned
Substation Assets.

 

4.1.3Voting with Respect to Construction Management Agreement Matters. The
Construction Management Agreement sets forth certain matters requiring action by
the Management Committee.

 

4.2Operation and Maintenance.

 

4.2.1[RESERVED].

 

4.2.2Replacement Operation and Maintenance Agreement.

 

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4.2.2.1Approval and Execution of Replacement Operation and Maintenance
Agreement. If the Operation and Maintenance Agreement terminates in accordance
with its terms with respect to a Maintenance Provider (except if a Wind-up Plan
has been adopted) or would terminate but for the operation of Section 4.2.2.2,
then, unless the Management Committee approves an Owner’s request to assume all
rights and obligations of such Maintenance Provider under the Operation and
Maintenance Agreement as provided in Section 4.2.2.2, and subject to Section
4.2.2.4, the Management Committee will manage the operation and maintenance of
the Project or will recommend a replacement of the Maintenance Provider Manager
and a replacement of the Operating and Maintenance Agreement for approval by the
Owners.

 

4.2.2.2Owner Option to Request Assumption of All Rights and Obligations of
Maintenance Provider Under Operation and Maintenance Agreement. If an Operation
and Maintenance Agreement would otherwise terminate due to the resignation or
removal of the Maintenance Provider in accordance with the terms of the
Operation and Maintenance Agreement, either Owner may ask the Management
Committee, instead of permitting the Operation and Maintenance Agreement to
terminate, to approve the assumption by such Owner of all rights and obligations
of the Maintenance Provider under the Operation and Maintenance Agreement. The
Management Committee may approve any such request.

 

4.2.2.3[RESERVED].

 

4.2.2.4Effect of Dispute and Resolution of Dispute. No Owner may refuse to pay
any Operating Expenses or Capital Expenses pending resolution of any Dispute or
delay relating to development of a replacement of the Operation and Maintenance
Agreement.

 

4.2.2.5Conflict Between Agreements. In the event of any conflict between this
Agreement and the replacement of the Operation and Maintenance Agreement with
respect to the authority, rights and obligations of the replacement Maintenance
Provider, the replacement of the Operation and Maintenance Agreement will
control.

 

4.2.3Voting with Respect to Operation and Maintenance Agreement. The Operation
and Maintenance Agreement sets forth certain matters requiring action by the
Management Committee.

 

4.3          Business with Affiliates.

 

4.3.1Affiliate Contracts.

 

4.3.1.1Construction Management Agreement; Operation and Maintenance Agreement.
The Owners acknowledge that the Construction

 

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 Management Agreement and the Operation and Maintenance Agreement are between
the Owners in their capacity as Owners and, as applicable, the Construction
Manager in its capacity as Construction Manager, the Maintenance Provider in its
capacity as Maintenance Provider, and the Control Center Authority in its
capacity as Control Center Authority, and, as such constitute Affiliate
Contracts. Each Owner hereby irrevocably waives any right to object to the terms
of the Construction Management Agreement or the Operation and Maintenance
Agreement on the grounds of lack of arm’s-length negotiations or the presence of
terms not at least as favorable to the Owners as those available in the market
from unaffiliated Third Parties.

 

4.3.1.2Affiliate Contracts. After the Effective Date, the Owners and their
Affiliates will not be precluded from providing goods or services to the Project
or entering into Construction Agreements, a replacement of the Construction
Management Agreement, a replacement of the Operation and Maintenance Agreement
or other contracts or arrangements where an Owner or an Affiliate thereof is a
party thereto in a capacity other than as an Owner or may benefit therefrom in a
capacity other than as an Owner (together with the Construction Management
Agreement and the Operation and Maintenance Agreement, “Affiliate Contracts”);
provided, however, that except as provided in the Construction Management
Agreement, all Affiliate Contracts will be (i) negotiated and administered in
good faith on an arm’s-length basis and (ii) approved by the Management
Committee, except no such approval is needed for the Construction Management
Agreement or the Operation and Maintenance Agreement. Upon execution of any
Affiliate Contract so approved by the Management Committee, each Owner will be
deemed to have irrevocably waived any right to object to the terms of such
Affiliate Contract on the grounds of the lack of arm’s-length negotiations or
the presence of terms not at least as favorable to the Owners as those available
in the market from unaffiliated Third Parties.

 

4.3.2Disqualified Affiliate Matters. If an Owner or any of its Affiliates is (or
is proposed to be) a party to an Affiliate Contract, then (i) such Owner or
Affiliate entering into the Affiliate Contract in a capacity other than an Owner
shall be responsible for Damages as provided in the Affiliate Contract
notwithstanding the limitation on Damages contained in this Agreement or any
other Project Agreement (but excluding for this purpose the Construction
Management Agreement and the Operations and Maintenance Agreement), and (ii)
such Owner’s Authorized Owner Representatives on the Management Committee shall
be entitled to participate in but shall be disqualified from voting on decisions
or actions involving a Disqualified Affiliate Matter. The disqualified
Authorized Owner Representatives must receive notice of the intent to vote on
the Disqualified Affiliate Matter and the Owner whose Authorized Owner
Representative is disqualified must have had an opportunity to be heard on the
matter by the Management Committee prior to any vote by the Management Committee
on such Disqualified Affiliate Matter.

 

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 “Disqualified Affiliate Matters” consist of actions by the Management Committee
in approving, entering into, amending, interpreting or exercising any option
under an Affiliate Contract, waiving any material provision thereof, or in
response to a breach of or default (or alleged breach or default) under the
subject Affiliate Contract (such as a waiver of the breach or default, notice of
breach or event of default, or notice of termination for breach in accordance
with the terms of the Affiliate Contract) or in enforcement or exercise of any
rights or remedies in respect to such breach or default (or alleged breach or
default); provided, however, as specified in Section 3.1 of Schedule 1, the
existence of a breach or default under the Construction Management Agreement and
the Operation and Maintenance Agreement is subject to the dispute resolution
provisions of Schedule 1.

 

4.4Principles Applicable to Upgrades and Other Modifications. The Owners
recognize that the Transmission Grid is dynamically evolving and, during the
term of this Agreement, requests for Modifications may occur. The Owners further
recognize that Applicable Energy Regulations applicable to such requests will
continue to evolve as the transmission needs of the region and the country are
addressed by Governmental Bodies. Accordingly, the Owners, at the Effective
Date, wish to set forth certain agreed upon principles to guide the actions of
the Owners and the decision making of the Management Committee as Modifications
are proposed and considered. The Owners agree that the Management Committee has
the authority to delete, amend or replace the principles set forth in Sections
4.4.1(iv) and Sections 4.4.3(i) and (ii) below.

 

4.4.1General Principles. The following are general principles applicable to all
Modifications, however arising, including Third Party interconnection requests
for generation, transmission to transmission or transmission to load:

 

(i)The Owners will work cooperatively to resolve seams issues arising as a
result of a Modification.

 

(ii)Interconnection requests are to be directed to the Owner specified in
Appendix A to the Operation and Maintenance Agreement (“Interconnection
Coordinator”). The Interconnection Coordinator, on behalf of the Owners, will
lead the negotiation of the terms of any interconnection or other related
agreement that affects the Project. The Management Committee may change the
Interconnection Coordinator from time to time.

 

(iii)Modifications required by an interconnection request will be treated as a
Capital Improvement unless otherwise agreed by the Management Committee.

 

(iv)Subject to BSSE Design Criteria Guidelines, the then-current technical
interconnection guidelines required by the Control Center Authority at the point
of interconnection will be applicable to all interconnection requests. The
then-current financial interconnection guidelines of the Interconnection
Coordinator relating to the financing of or payment for

 

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 such an interconnection request, if any, will be the starting basis of the
negotiations with the party requesting interconnection; provided, however,
except as otherwise required by Applicable Energy Regulations, the Management
Committee will coordinate with the Owners to determine the extent and payment
method(s) that will govern the financial obligations of the Owners applicable to
such interconnection requests.

 

(v)Issues arising between the Owners related to interconnection requests will be
resolved by the Management Committee subject to the dispute resolution
provisions set forth in Section 3 of Schedule 1 to this Agreement.
Notwithstanding the foregoing, the Owners recognize that the Management
Committee does not have authority to (a) modify or require a Transmission
Provider to modify or violate the terms of any provision contained in such
Transmission Provider’s open access tariff or (b) change a Control Center
Authority’s technical interconnection guidelines that are applicable to an
interconnection request, subject to BSSE Design Criteria Guidelines.

 

(vi)In agreements between Third Parties and the Owners, the Interconnection
Coordinator will use its commercially reasonable efforts to severally (and not
jointly) bind each Owner only to the extent its interests appear in this
Agreement.

 

(vii)No Owner may unilaterally reduce the Project Capacity of the Project below
the Original Base MVA. Without limiting an Owner’s right to take actions in
respect of its non-Project related operations that may affect Project Capacity
or the Original Base MVA, no Owner nor the Management Committee may take any
action that would impair any other Owner’s capacity, rights or benefits
attributable to the Project and the Discretely Owned Substation Assets as
provided in this Agreement.

 

(viii)[RESERVED].

 

(ix)At any time the Project is subject to an Upgrade, and if the Owners
participate in the financing of the Upgrade (i) in accordance with their then
current respective Ownership Percentages, then the Ownership Percentages of the
Owners will not be adjusted to reflect the additional capital investment made by
the Owners (a “Pro Rata Upgrade”) or (ii) in percentages that differ from their
then current respective Ownership Percentages (a “Non-Pro Rata Upgrade”), then
the Ownership Percentages of the Owners will be recalculated in accordance with
Exhibit P upon substantial completion of the Upgrade.

 

(x)A Capital Improvement will be part of the Project, will be included in a
Final Budget and will be owned and paid for by the Owners according to their
Ownership Percentages, unless otherwise agreed by the Management Committee. A
dispute over whether a Modification is required by Applicable Law (and therefore
treated as a Capital Improvement) will be

 

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resolved subject to the dispute resolution process under Section 3 of Schedule
1.

 

(xi)A Modification that is not required by Applicable Law may be proposed to the
Management Committee by an Owner for the purpose of increasing capacity,
maintaining or improving Project reliability in accordance with the BSSE Design
Criteria Guidelines or for any other purpose that is consistent with Good
Utility Practice. Any such proposed Modification will be treated as either a
Capital Improvement pursuant to subparagraph (xii), or as a Non-Project
Modification or an Upgrade pursuant to subparagraphs (xiii) through (xv).

 

(xii)If the Management Committee approves any proposal made pursuant to
subparagraph (xi), the Modification will constitute a Capital Improvement or a
Pro Rata Upgrade as applicable, will be part of the Project, will be included in
the Final Budget and will be owned and paid for by the Owners according to their
Ownership Percentages, unless otherwise agreed by the Management Committee.

 

(xiii)If the Management Committee does not approve a proposal made pursuant to
subparagraph (xi), the proposing Owner may proceed with the Modification, as
long as it does not impair any other Owner’s rights or benefits attributable to
the Project and the Discretely Owned Substation Assets. Any such Modification
will constitute a Non-Project Modification if it does not increase the Project
Capacity of any part of the Project, or a Non-Pro Rata Upgrade if it increases
the Project Capacity of the Project.

 

(xiv)If a Modification is a Non-Project Modification, (i) it will not constitute
a part of the Project, will be paid for and maintained entirely by the proposing
Owner, and will not be subject to this Agreement or any other Project Agreement,
except as provided in this Section 4.4 and except that the proposing Owner shall
be obligated to indemnify the other Owner as provided in Article 16, and (ii)
prior to proceeding with the Non-Project Modification, the Owners must enter
into a written agreement specifying the scope of the Non-Project Modification
and the obligations of the proposing Owner relating thereto, upon terms
reasonably acceptable to both Owners.

 

(xv)If the Modification is a Non-Pro Rata Upgrade, it will be part of the
Project, and the Ownership Percentages of the Owners will be recalculated in
accordance with Exhibit P.

 

4.4.2[RESERVED].

 

 4.4.3Principles Applicable to Generator Interconnection Requests. The following
are principles applicable to generator interconnection requests:

 

(i)The Interconnection Coordinator, on behalf of the Owners, will arrange for

 

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 the construction of Modifications required as a result of the generator
interconnection request on terms and conditions acceptable to the Management
Committee.

 

(ii)With respect to Capital Improvements to the Project required to accommodate
a generator interconnection request, the Interconnection Coordinator will
recommend to the Management Committee for determination: (i) the party or
parties responsible for construction of the Capital Improvements; (ii) the cost
of constructing the Capital Improvements that will be financed by the Owners;
and (iii) the timing of any payments by or to the interconnection customer.

 

Article 5
PAYMENT PROCEDURES

 

5.1Payment/Invoices.

 

5.1.1General. Each Owner will pay to the Main Escrow Account within the time
frame set forth in the Construction Management Agreement its Ownership
Percentage of all Project Costs, except (i) for Operating Expenses or (ii) as
otherwise provided in Sections 5.1.1.1 and 5.1.1.3.

 

5.1.1.1Full Subscription by Owners of Cost Offering. If a Cost Offering is fully
subscribed by the Owners, then commencing with the first dollar after which CM
Costs exceed the Original Maximum CM Cost Amount, all Owners that subscribed to
the Cost Offering will pay their Incremental Cost Offering CP Percentage of all
CM Costs in lieu of the non-subscribing and subscribing Owners paying their
Ownership Percentage of CM Costs.

 

5.1.1.2[RESERVED].

 

5.1.1.3Freeze. If a Freeze occurs, then effective from such date until all CM
Costs have been paid in full, the Owner who has assumed the Defaulting Owner’s
Future Payment Obligations will pay the Defaulting Owner’s Incremental Freeze CP
Percentage of all CM Costs, and the Defaulting Owner with respect to which the
Freeze occurred will not pay its Ownership Percentage of CM Costs.

 

5.1.2Main Escrow Account. The Management Committee may from time to time
determine if payments for Project Costs that are not CM Costs or Operating
Expenses are required from the Owners for deposit into the Main Escrow Account.
Such payments will not be required from an Owner more than thirty (30) days
prior to the date on which funds are required to be paid by the Management
Committee. The Owners will make full payment to the Main Escrow Account in the
amount and by the date determined by the Management Committee.

 

 - 39 -Confidential

 

 

5.1.3Manner of Payment. All payments under this Agreement will be made by
electronic funds transfer or wire transfer in immediately available funds for
receipt by the due date (i) in the case of payments by an Owner either to the
applicable Project Account or to such other Person as the Management Committee
may designate to the Owners and (ii) in the case of payments to an Owner, to the
bank account or Person designated by such Owner. Each Owner may change its
account for receiving a payment or delivery by giving notice to the other Owner
at least five (5) Business Days prior to the scheduled date for the payment or
delivery to which such change applies.

 

5.1.4No Counterclaim; No Set-Off. Subject to any good faith disputes regarding
payment addressed pursuant to Section 6.4, each Owner will make, to the
applicable Project Account, all payments required under this Article 5 as and
when due, without demand, counterclaim, setoff, deduction or defense, and each
Owner waives, to the extent permitted by Applicable Law, all rights now or
hereafter conferred by statute or otherwise with respect to any such demand,
counterclaim, setoff, deduction or defense.

 

Article 6
BUDGETS, ACCOUNTING

 

6.1Construction Phase.

 

6.1.1Project Budgets. The Owners have agreed that the anticipated CM Costs,
excluding Operating Expenses, as of the Effective Date to be incurred through
Final Completion is $331,000,000 (the “Project Budget”). All adjustments to the
Project Budget must be approved from time to time by the Management Committee.

 

6.1.2CM Costs.

 

6.1.2.1Obligation to Pay CM Costs. Until all CM Costs have been paid, all
invoices for such CM Costs submitted by the Contractors or other Persons for
payment will be reviewed and approved in accordance with the terms of the
Construction Management Agreement. The Owners will pay such costs in accordance
with the Construction Management Agreement.

 

6.1.2.2Payment of CM Costs. The Owners will pay their Ownership Percentage of CM
Costs to the extent they are: (i) identified and included in the Project Budget,
as adjusted; (ii) authorized to be paid pursuant to the terms of the
Construction Management Agreement; (iii) approved as CM Costs by the Management
Committee; or (iv) required to be expended in response to an Emergency or are
otherwise due and owing under any Project Agreement or other legal obligation
respecting the Project.

 

 - 40 -Confidential

 

 

6.2Operating Phase.

 

6.2.1Capital and Annual Operating Expense Budgets. The E&O Committee will
prepare, in cooperation with the Maintenance Provider and Control Center
Authority, and deliver to the Management Committee not later than July 1 of each
Operating Year, a consolidated Proposed Budget, including both a proposed budget
for Capital Expenses and a proposed budget for Operating Expenses, broken down
by Applicable Maintenance Activities (if any), for the subsequent five (5)
Operating Years. The Management Committee will review and vote on the Proposed
Budget and the proposed Capital Expenses and Operating Expenses. If the
Management Committee does not vote to approve a consolidated Proposed Budget,
the E&O Committee will work with the Maintenance Provider and Control Center
Authority to promptly re-submit a revised consolidated Proposed Budget to the
Management Committee for its approval. Once the Management Committee approves a
consolidated Proposed Budget, it will become the final budget (the “Final
Budget”), which may only be amended by the further action of the Management
Committee.

 

6.2.2Operating Expenses and Capital Expenses.

 

6.2.2.1Obligation to Pay Operating Expenses and Capital Expenses. The Owners
will pay, in accordance with Section 5.1, all invoices for Operating Expenses
and Capital Expenses submitted by the Maintenance Provider, Control Center
Authority or other Persons for payment in accordance with the terms of the
Operation and Maintenance Agreement. Each Owner will pay its Ownership
Percentage of all Operating Expenses and Capital Expenses, regardless of whether
such Operating Expenses and Capital Expenses are within the approved Final
Budget.

 

6.2.2.2Payment of Operating Expenses and Capital Expenses. For purposes of this
Agreement, Operating Expenses and Capital Expenses will be paid to the extent
they are: (i) Operating Expenses or Capital Expenses identified and included in
the Final Budget; (ii) Operating Expenses or Capital Expenses authorized to be
paid pursuant to the terms of the Operation and Maintenance Agreement; (iii)
additional expenses approved as Operating Expenses or Capital Expenses by the
Management Committee; or (iv) required to be expended in response to an
Emergency or that are otherwise due and owing under any Project Agreement or
other legal obligation respecting the Project.

 

6.2.3Budget Deadlock. If by December 1 prior to any Operating Year after the
Effective Date, the Management Committee does not vote to approve a Final Budget
for the next Operating Year (a “Budget Deadlock”), then for the forthcoming
Operating Year, until the Management Committee votes to approve such Budget, the
unapproved budget proposed will not be implemented, but the Final Budget for
such Operating Year previously approved by the Management

 

 - 41 -Confidential

 

 

 Committee as part of the five (5) year rolling Final Budget process will remain
in full force and effect until the Management Committee votes to approve a new
Final Budget. If the applicable Operating Year is not covered by a Final Budget,
then to the extent necessary, until a new Final Budget is approved, the
Operating Expenses within the Final Budget currently in effect as adjusted by
changes in the Inflation Factor from the commencement of the then-current
Operating Year will continue in effect, plus the cost of Capital Improvements
that are required for the Project to be maintained so as to meet the
requirements of Applicable Law.

 

6.3Interest. Upon establishment of the Project Accounts and from time to time
thereafter, the Management Committee will direct the Escrow Agent how to invest
the funds in the Project Accounts established and maintained by it. All interest
accrued on the amounts in any Project Account will accrue to the benefit of the
Owners collectively and will be used as an offset against Project Costs.

 

6.4Disputed Contributions. If an Owner in good faith disputes whether an
appropriate call for any payment or contribution (or any portion of a payment or
contribution) has been made by the Management Committee, the Construction
Manager, the Maintenance Provider or the Control Center Authority pursuant to
the Project Budget or Final Budget then in effect or otherwise in accordance
with this Agreement, such Owner may, after making such payment or contribution,
as its exclusive remedy promptly notify the Management Committee of such
dispute, including the amount in dispute, and invoke the provisions of Section 3
of Schedule 1. If, upon resolution of the Dispute, it is determined that the
disputed amount was not due, the Management Committee, Construction Manager,
Maintenance Provider or Control Center Authority, as the case may be, will
correct the original invoice and refund (without interest) any disputed amounts
paid by an Owner pursuant to such invoice.

 

6.5Inspection and Audit Rights. The Construction Management Agreement and the
Operation and Maintenance Agreement include provisions requiring the
Construction Manager, the Maintenance Provider and Control Center Authority to
keep, in conformity with all requirements of Applicable Law and the requirements
of Section 6.7, proper books, records, accounts, ledgers, time cards, estimates,
invoices, schedules, correspondence and other documents (whether in physical or
electronic form) related to the Project (collectively, the “Books and Records”).
The Management Committee may select and engage a public accounting firm to
conduct a review of agreed accounting procedures and render its independent
opinion with respect to the accuracy and appropriateness of the financial
information and accounting practices relating to the Project in respect of any
Fiscal Year (or partial year). Any costs and expenses related to the independent
financial review, including payment for the time of the Construction Manager,
Maintenance Provider(s) or Control Center Authority, will be Project Costs. The
independent financial review, together with the accounting firm’s opinion, will
be delivered promptly to each Owner no later than one hundred twenty (120) days
following completion of such audit. During ordinary business hours and upon
reasonable notice to the Management Committee, each Owner, or its designee, may
inspect, copy and audit (directly or through certified public accountants of its
choice), at its expense (including payment for the time of the Construction
Manager, Maintenance Provider(s), Control Center Authority or other

 

 - 42 -Confidential

 

 

 custodian of the Books and Records), the Books and Records. The Owners that
desire to audit the Books and Records may coordinate their efforts and use
common firms or personnel in order to ease the administrative burden on the
Construction Manager, Maintenance Provider(s), Control Center Authority or other
custodian of the Books and Records. The Books and Records of the Management
Committee and the Owners are subject to the confidentiality requirements of this
Agreement and are considered Confidential Information governed by Article 17.

 

6.6NERC Compliance Policy. Each Owner in its capacity as an Owner, and in its
capacity as a Responsible Entity (if any) as set forth in the Operation and
Maintenance Agreement, acknowledges the importance of: (i) compliance with NERC
reliability standards applicable to the Project and the Responsible Entities and
(ii) diligent implementation of procedures designed to meet such standards. The
Owners, in their capacities as Owners and as the Responsible Entities, agree to
comply with the provisions of Exhibit G. The Owners also agree that, for
purposes of the Operations and Maintenance Agreement, (A) any expenditures
necessary to comply with the NERC Compliance Requirements shall be deemed to be
excluded from the limit on Capital Expenses or Operating Expenses as contained
in Section 7.3 thereof and the limit on the Management Committee’s obligation to
approve cost overruns as contained in Section 7.5 thereof, and (B) the limit on
damages as contained in Section 14.2.1.1 thereof shall not apply to damages
arising from the Maintenance Provider’s or Control Center Authority’s obligation
to comply with the NERC Compliance Policy. Upon the request of a Responsible
Entity, each Owner shall provide the applicable Responsible Entity with
information in its possession that such Responsible Entity may reasonably
require to fulfill its obligations under this Section 6.6. If any Responsible
Entity is not also an Owner, the Owners agree that any Operation and Maintenance
Agreement with such Responsible Entity shall require the Responsible Entity to
comply with the NERC Compliance Policy.

 

6.7Records. The Management Committee will record or cause to be recorded
accounting information in accordance with the Uniform System of Accounts, as
modified by the requirements or permitted practices of Governmental Bodies
applicable to one or more of the Owners. In the event of any changes in FERC’s
accounting procedures that might result in charges different from those
contemplated by this Agreement, the Owners will agree upon the appropriate
changes to this Agreement to achieve the original intent of the Owners, unless
otherwise agreed by the Owners.

 

Article 7
TAXES AND ASSESSMENTS

 

7.1Management of Tax Matters.

 

7.1.1Personal Taxes. Except for Personal Taxes, the Management Committee will
have the authority and responsibility for administering, coordinating, filing
returns, paying, seeking official tax rulings or determinations, and other
related functions pertaining to taxes, payments in lieu of taxes, assessments,
impositions, charges, and related costs arising out of the development,
construction, ownership, operation, maintenance, alteration, repair, rebuilding,
use or retirement of the

 

 - 43 -Confidential

 

 

 Project or any part thereof (collectively “Taxes”) that are or may be imposed
by any Governmental Body; provided, however, unless specifically authorized in
writing by an Owner, such authority will not extend to any act or action
affecting any exemption from Taxes or special tax treatment arising out of the
Project to which an Owner may be entitled on a basis that is different from the
other Owner. As used herein, the term “ Personal Taxes” means real property
taxes, tangible personal property taxes, income taxes, franchise taxes, license
fees, payments in lieu of taxes, Sales Taxes or excise taxes assessed against
each Owner, relating to the Project or any assets of an Owner other than the
Project, or relating to the Discretely Owned Substation Assets, the payment of
which is and will remain the responsibility of each Owner so assessed. Each
Owner may contest the validity or amount of any Personal Taxes, in each case,
provided that the contested Personal Taxes will not remain unpaid for such
length of time as will permit any part or all of the Project to be sold or
foreclosed or any interest of either Owner therein to be subject to a Lien for
the nonpayment of the same.

 

7.1.2Sales, Consumer and Use Taxes. Except as otherwise directed by the
Management Committee, the Construction Manager will be responsible for securing
any refund of any such sales and use taxes to which each Owner may be entitled
in accordance with Applicable Law arising from the procurement of Equipment,
Materials and Services for construction of the Project (“Sales Taxes”), which
refunds may be retained by each such Owner as its individually owned Property.

 

7.2Payment of Taxes. The Management Committee will take all necessary actions to
pay and discharge all Taxes that are imposed by any Governmental Body before the
same become delinquent, except (i) Personal Taxes and (ii) those subject to a
good faith contest by an appropriate Proceeding approved by the Management
Committee.

 

7.3Sharing of Taxes and Related Payments. All Taxes other than Personal Taxes
will be Operating Expenses, which will be shared and paid by the Owners in
proportion to their respective Ownership Percentage; provided, however, to the
extent that the aggregate amount of the Taxes are reduced because one or more
Owners are entitled to specific tax benefits resulting from its status apart
from the Project, such Owners will be entitled to the entire benefit, to the
extent of actual realization, of any exemptions from and reductions of such
Taxes connected with or arising out of the development, construction, ownership,
operation, maintenance, alteration, repair, rebuilding, use or retirement of the
Project or any part thereof.

 

7.4Tax Credits or Other Tax Benefits. If one Owner is entitled to Tax credits or
other Tax benefits from a Governmental Body that are unrelated to its status as
an Owner, the Owner that is entitled to such credits or benefits will be
entitled to seek such credits or benefits and to retain any proceeds arising
from such credits or benefits. Except as otherwise provided in Section 7.1.2, if
either Owner is entitled to Tax credits or other Tax benefits from a
Governmental Body that are related to their status as an Owner, then each such
Owner will be entitled to seek such credits or benefits individually in an
amount equal to the proportion

 

 - 44 -Confidential

 

 

 that its Ownership Percentage bears to the Ownership Percentage of the other
Owner and to retain any proceeds resulting therefrom.

 

7.5Non-creation of Taxable Entity. Notwithstanding any other provision of this
Agreement, the Owners do not intend to create hereby at law any joint venture,
partnership, association taxable as a corporation, trust, limited liability
company or other entity for the conduct of any business for profit. The Owners
agree to elect under Section 761(a) of the Code, to exclude the transactions
created by this Agreement from the application of Subchapter K, Chapter 1 of the
Code, and the Owners agree to revise the terms of this Agreement to the extent
and in a manner necessary to permit such election.

 

Article 8
INSURANCE AND CASUALTY DAMAGE

 

8.1Insurance. The Management Committee will maintain, or include provisions in
the Construction Management Agreement and the Operation and Maintenance
Agreement, as applicable, requiring the Construction Manager, Maintenance
Provider or Control Center Authority to maintain insurance of the types, in the
amounts and with the deductibles specified in an insurance plan approved by the
Management Committee (as it may be amended from time to time by the Management
Committee, the “Insurance Plan”); provided that if, prior to the time of any
such vote, an Owner informs the Management Committee that such amendment would
violate the terms of an Owner’s Financing Instrument, then such amendment will
require the approval of such Owner. The initial insurance plan is attached
hereto as Exhibit F. Prior to the Final Completion Date of the Project, premiums
payable under the Insurance Plan will constitute a CM Cost, and on and after
such date, an Operating Expense.

 

8.2Casualty. Promptly after any material Casualty to the Project, the Management
Committee will determine a course of action with respect to the affected
portions of the Project in accordance with Good Utility Practice. If a Casualty
to the Project occurs, the Management Committee will diligently pursue available
rights to compensation in respect of such Casualty that it determines are in the
best interest of all of the Owners.

 

8.3Insurance Proceeds. All insurance proceeds paid pursuant to the Insurance
Plan in respect of the Project (herein sometimes referred to as the “Insurance
Proceeds”) will be (i) deposited in a Project Account specified by the
Management Committee, except as otherwise agreed by all of the Owners, for use
as directed by the Management Committee in accordance with this Article 8,
provided that if an Owner informs the Management Committee prior to its receipt
of Insurance Proceeds that one of such Owner’s Financing Parties requires that
its Ownership Percentage of the Insurance Proceeds be paid to such Financing
Party, then such Insurance Proceeds will be so paid; provided, however, within
ten (10) Business Days after such payment, such notifying Owner must either (a)
deposit its Ownership Percentage of the Insurance Proceeds into a Project
Account specified by the Management Committee or (b) deliver to the other Owner
a letter of credit in such amount and otherwise in form and substance reasonably
acceptable to and for the benefit of the other Owner. In the case of repair of
the Project pursuant to this Article 8, all Insurance Proceeds paid pursuant to
the Insurance Plan will first be applied to restoration of the

 

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 affected portions of the Project, with any excess being deposited in a Project
Account specified by the Management Committee for the benefit of the Owners in
accordance with their Ownership Percentages.

 

8.4Destruction Event.

 

8.4.1Damage or Destruction of Substantially All of the Project.

 

8.4.1.1Wind-up Plan. If all or substantially all of the Project is destroyed
during the term of this Agreement (a “Destruction Event”) and the Insurance
Proceeds covering the insured portion of the Project are sufficient and
available to cover the full cost of restoration of the Project (excluding the
amount of any deductible or self-insured retention as specified in the
applicable insurance policy), the Management Committee will undertake to rebuild
the Project (other than the Discretely Owned Substation Assets, which will be
the responsibility of the Discretely Owned Substation Owners), unless the
Management Committee determines not to rebuild the Project. If the Insurance
Proceeds covering the insured portion of the Project are not sufficient and
available to cover the full cost of restoration of the Project (excluding the
amount of any deductible or self-insured retention as specified in the
applicable insurance policy), the Management Committee will institute any
process it deems appropriate to determine whether the Owners are willing to
cover such cost pro rata based on their Ownership Percentages. If, as a result
of such process, all Owners are willing to cover such cost pro rata based on
their Ownership Percentages, the Management Committee will rebuild the Project.
If, as a result of such process, all Owners are not willing to cover such cost
pro rata based on their Ownership Percentage, then the Management Committee will
give notice to each Owner that the Management Committee will not rebuild the
Project. For a period of thirty (30) days following the date of such notice,
either Owner(s) desiring to rebuild the Project (the “Rebuilding Owner”) will
have the right to purchase all but not fewer than all of the rights and assets
that constitute the Project and assume all but not fewer than all of the
obligations and liabilities related to the Project from the other Owner who is
not willing to rebuild the Project (the “Abandoning Owner”) for the Fair Market
Value (determined pursuant to the procedures set forth in Section 8.4.1.2) of
the Abandoning Owner’s Ownership Percentage in such rights, assets, obligations
and liabilities. Unless such right is irrevocably exercised by the Owner(s)
providing notice of such election within the aforementioned thirty (30) day
period (the “Rebuild Election Notice”), such election will be deemed irrevocably
waived. If no Owner has exercised such right within the aforementioned thirty
(30) day period, then the Management Committee will adopt and implement a plan
for winding up the Project, which plan will include the following (the
“Destruction Windup Plan”):

 

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8.4.1.1.1Termination Costs are Operating Expenses. Termination of all Project
Agreements, Construction Agreements, Real Property Agreements and all other
contracts that relate to the Project in accordance with the terms thereof, and
any cancellation costs, termination costs and damages payable thereunder will
constitute Operating Expenses.

 

8.4.1.1.2Required Steps To Implement the Destruction Windup Plan. The (i) timely
disposition of the assets of the Project (other than the Discretely Owned
Substation Assets) by sale, auction, division of assets, or otherwise; (ii)
deposit of any proceeds of the disposition in the Project Account(s) specified
by the Management Committee (which proceeds will be for the benefit of the
Owners based on their Ownership Percentage); (iii) undertaking of other
necessary steps for the winding up of the Project (other than the Discretely
Owned Substation Assets); (iv) taking of all action required by Good Utility
Practice to provide for the retirement from service of any part of the Project
(other than the Discretely Owned Substation Assets) that is not sold or disposed
of, including any remediation, restoration or other actions required by
Applicable Law or necessary or desirable for the protection of the Owners from
liability; and (v) periodic reporting to the Owners on the status of the
Destruction Windup Plan. If the proceeds from winding up of the Project are
insufficient to cover the winding up costs, including the costs of remediation,
restoration or other actions required by Applicable Law or contract, or
necessary or desirable for the protection of the Owners from liability, each
Owner will pay its Ownership Percentage of the net winding up costs.

 

8.4.1.2Determination of Fair Market Value. To determine the Fair Market Value,
the Rebuilding Owner will designate one (1) qualified appraiser in the Rebuild
Election Notice and, within fifteen (15) days from the date of the Rebuild
Election Notice, the Abandoning Owner will designate a second qualified
appraiser. A qualified appraiser must have at least five (5) years’ experience
in the appraisal of properties similar to the Project. Each of the two (2)
appraisers will be directed to determine the Fair Market Value of the Project
within thirty (30) days of its appointment and to notify the Rebuilding Owner,
the Abandoning Owner and the Management Committee of its determination in
writing. If the lower of the two (2) determinations is not less than ninety-five
percent (95%) of the higher of the two (2) determinations, then the Fair Market
Value will be the average of the two (2) determinations. If the lower of the two
(2) determinations is less than ninety-five percent (95%) of the higher of the
two (2) determinations, then the two (2) appraisers will, within fifteen (15)
days thereafter, meet to determine if a consensus can be reached on the Fair
Market Value. If the two (2)

 

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 appraisers are unable to reach a consensus, they will, within fifteen (15) days
of meeting, appoint a third appraiser with similar qualifications (who must not
have performed any work for any of the Rebuilding Owner or the Abandoning Owner
within the five (5) year period prior to its appointment) and will each furnish
to such appraiser a written report of its respective determination. Within
thirty (30) days of its appointment, the third appraiser will determine the Fair
Market Value equal to or between the original appraisers and will notify the
Rebuilding Owner, the Abandoning Owner and the Management Committee of its
determination in writing, which determination will be final and binding upon the
Rebuilding Owner and the Abandoning Owner. The Rebuilding Owner and the
Abandoning Owner will bear the cost of the appraiser appointed by each of them,
and the Rebuilding Owner and the Abandoning Owner will each pay one-half (1/2)
of the cost of the third appraiser. The closing of the Transfer of the Ownership
Percentages of the Abandoning Owner will occur within twenty (20) days following
the final determination by the appraisers of the Fair Market Value.

 

8.4.2          Payment of Restoration Costs. If the Management Committee does
not determine to terminate the operations of the Project pursuant to Section
8.4.1, the Management Committee will direct the E&O Committee to promptly
prepare a revised Final Budget and present it to the Management Committee for
action. Upon approval, the Management Committee will proceed to cause the repair
of the Project in accordance with the approved Final Budget. Each Owner will pay
its Ownership Percentage of the net restoration cost in accordance with the
Final Budget and invoice procedures established by the Management Committee.

 

Article 9
CONDEMNATION

 

9.1Condemnation of the Project. If, at any time during the term of this
Agreement, title to the whole or a portion of the Project as will render its
continued operation by the Owners infeasible is taken in any Condemnation Action
(or conveyed in lieu of any such Condemnation Action), other than for a
temporary use or occupancy that is for one (1) year or less in the aggregate
(“Complete Taking”), then the Management Committee will decide with reasonable
promptness in the circumstances, but in all events within ninety (90) days after
such Complete Taking, whether to rebuild the Project. If the Management
Committee elects not to rebuild, it will adopt and implement a windup plan
substantially the same as the Destruction Windup Plan.

 

9.2[RESERVED].

 

9.3[RESERVED].

 

9.4Notice of Condemnation. If an Owner receives notice of any proposed or
pending Condemnation Action affecting all or a portion of the Project or the
Discretely Owned

 

 - 48 -Confidential

 

 

 Substation Assets, such Owner receiving such notice will promptly notify the
other Owner and the Management Committee.

 

9.5Condemnation Awards. All sums, amounts or other compensation for any portion
of the Project as a result of, or in connection with, any Condemnation Action,
whether or not such award includes compensation for other Property
(“Condemnation Awards”) will be deposited in a Project Account specified by the
Management Committee, except as otherwise agreed by all of the Owners, for use
as directed by the Management Committee in accordance with this Article 9. If an
Owner receives a Condemnation Award or a settlement payment from any
Condemnation Action, such Owner will deliver such Condemnation Award as directed
by the Management Committee. In the case of rebuilding of the Project pursuant
to this Article 9, all net Condemnation Awards will first be applied to
rebuilding of the affected part of the Project, with any excess being deposited
in a Project Account specified by the Management Committee for the benefit of
the Owners in accordance with their Ownership Percentages.

 

Article 10
TRANSFERS

 

10.1General Transfer Rule. Except for Permitted Transfers, no Owner may directly
or indirectly (including by operation of law) sell, assign, transfer, pledge,
lease, mortgage or otherwise encumber (individually and collectively, a
“Transfer”) all or any part of its Ownership interest in the Project. Any
Transfer that is made in violation of this Agreement will be void ab initio.

 

10.2Permitted Transfers. The circumstances set forth in Sections 10.2.1 through
10.2.10 will each be deemed a “Permitted Transfer.” For purposes of this Section
10.2, an Owner is a Non-Defaulting Owner even if such Owner has an existing
Covenant Default, if such Covenant Default could not reasonably be expected to
have a material adverse effect on the Project.

 

10.2.1Transfer to Affiliate(s). A Transfer by a Non-Defaulting Owner to one or
more of its Affiliates, provided that such Affiliate(s) are Creditworthy (after
taking into account any guarantee or other credit enhancement);

 

10.2.2Collateral Assignment. A Transfer by collateral assignment, mortgage,
hypothecation, pledge or other Lien, including pursuant to a Financing
Instrument, in favor of any of such Owner’s Financing Parties (each, a
“Collateral Assignment”);

 

10.2.3Transfer to Another Owner. A Transfer between the two (2) Owners shall be
permitted hereunder;

 

10.2.4Transfer to a Third Party. If the transferring Owner has first complied
with Section 10.4 (First Negotiation), then a Transfer by a Non-Defaulting Owner
to any Third Party that is Creditworthy and (i) is, or has an Affiliate that is,
a transmission owner or operator or any entity that has undertaken an obligation
by statute, franchise, regulatory requirement or contract for load to provide
electric

 

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 energy for end use customers, in each case if the Transfer occurs prior to the
Substantial Completion Date of the Project or (ii) the Transfer occurs on or
after the Substantial Completion Date of the Project;

 

10.2.5Management Committee Approval. A Transfer by an Owner that has been
approved by the Management Committee;

 

10.2.6Change of Control. A Transfer by a Change of Control if such Change of
Control, directly or indirectly, results in a Third Party becoming an Owner
where: (i) a Transfer to such Third Party would constitute a Permitted Transfer
under another provision of Section 10.2, or (ii) the Change of Control results
in the Third Party’s control or ownership of all or substantially all of the
Owner’s electric utility assets;

 

10.2.7Freeze. A Transfer that occurs as the result of a Freeze pursuant to a
process instituted by the Management Committee in accordance with Section
14.2.5;

 

10.2.8Exercise of a Collateral Assignment. A Transfer as a result of or upon
exercise of a Collateral Assignment.

 

10.3Rules and Conditions to Transfer.

 

10.3.1For Permitted Transfers. An Owner may only engage in a Permitted Transfer
specified in Section 10.2.1, and Sections 10.2.3 through 10.2.8 if the rules of
and conditions to Transfer set forth in Sections 10.3.1.1 through 10.3.1.7 are
satisfied or, if waiver is permitted therein, waived. An Owner may engage in a
Permitted Transfer specified in Section 10.2.2 without satisfying the rules of
and conditions to Transfer set forth in Sections 10.3.1.1 through 10.3.1.7.

 

10.3.1.1Transfer of Associated Rights and Obligations. The Transfer of an
Ownership Percentage must include a corresponding and equivalent Transfer of all
associated rights, obligations and interests of the transferring Owner in and to
the Project with respect to the Ownership Percentage transferred, including the
equivalent Transfer of the Owner’s rights and obligations under the Project
Transmission Capacity Exchange Agreement and the Transmission Easement
Agreements; provided, however, in the event of a Transfer as a result of or in
connection with the exercise of a Collateral Assignment, all monetary
obligations of the transferring Owner that accrued prior to the date of Transfer
will not be included in such Transfer and will remain the obligation of the
transferring Owner.

 

10.3.1.2Partial Transfers. An Owner may not Transfer less than one hundred
percent (100%) of its Ownership Percentage unless the Transfer is a Permitted
Transfer pursuant to Section 10.2.1 (Transfer to Affiliate(s)), 10.2.4 (Transfer
to a Third Party), 10.2.5 (Management Committee Approval) or 10.2.7 (Freeze). In
connection with any such Transfer to a Third Party, the Third Party transferee
will not be entitled to appoint an Owner Representative or an Alternate to the
Management Committee,

 

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 as provided in Section 3.2.3; however, there shall be no limitation on the
right of the transferring Owner to agree to any voting provisions with the Third
Party transferee as the transferring Owner deems to be appropriate.

 

10.3.1.3Delivery of Transfer Documents. The transferee or transferor of the
Ownership Percentage must deliver to the Management Committee an assignment,
assumption, partial novation and joinder agreement substantially in the form
attached hereto as Exhibit E-1, or assignment, assumption, novation and joinder
agreement substantially in the form attached hereto as Exhibit E-2, as
applicable (each, a “Transfer Agreement”) executed by the transferee and
transferor (which the Owners that are not the transferor or transferee agree to
promptly execute), in each case terms of which may be waived by the Management
Committee;

 

10.3.1.4Transfer Will Not Result in Default. The Transfer will not result in (i)
a default that is immediate under this Agreement or any other Project Agreement
or (ii) a violation of Applicable Law, in each case unless satisfaction of this
condition is waived by the Management Committee;

 

10.3.1.5Transfer Will Not Cause Certain Events. The Transfer will not cause the
Project or either Owner (other than the Owners that are the transferor or
transferee) to be subject to any Applicable Law to which it was not previously
subject which could reasonably be expected to adversely affect (i) the ability
of the Project to proceed in accordance with the Project Budget, according to
the BSSE Design Criteria Guidelines, or achieve the Substantial Completion date
or (ii) any Governmental Approvals previously obtained or to be obtained by the
Project or either Owner or (iii) operations resulting from additional regulation
related to the transferee’s status, in each case unless satisfaction of this
condition is waived by the Management Committee;

 

10.3.1.6Delivery of Opinion of Counsel. Unless waived by the Management
Committee, the transferee delivers an opinion of counsel in form and substance
and from a law firm or in-house counsel reasonably satisfactory to the
Management Committee with respect to the transferee’s (i) organization and good
standing in its jurisdiction of organization, (ii) legal authority to conduct
its business in each jurisdiction in which the Project is or will be located,
(iii) authorization to enter into this Agreement and the other Project
Agreements and to perform its obligations hereunder and thereunder and (iv)
compliance with its organizational and other governing instruments and documents
and its financing contracts, commitments and arrangements in connection with its
assumption, to the extent required by Section 10.3.1.1, of the transferor’s
rights, obligations and interests under this Agreement and the other Project
Agreements, and in each case subject

 

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 to qualifications of legal opinions of the kind and nature used in comparable
transactions; and

 

10.3.1.7Delivery of Final Orders for Governmental Approvals. The transferee and
the transferring Owner deliver to the Management Committee Final Orders for all
Governmental Approvals required for the Transfer and assumption of the related
rights, obligations, liabilities and interests under this Agreement and the
other Project Agreements, unless receipt of a Final Order is waived by the
Management Committee.

 

10.4First Negotiation. If an Owner (the “Offering Owner”) desires to engage in a
Permitted Transfer pursuant to Section 10.2.4 (Transfer to a Third Party), then
it will give the other Owner who is a Non-Defaulting Owner (the “ROFN Offeree
Owner”) written notice of (i) the Ownership Percentage it desires to Transfer
(the “Offered Percentage”), (ii) the terms on which the Offering Owner desires
to Transfer the Offered Percentage, including the aggregate purchase price and
payment terms for the Offered Percentage (collectively, the “Offered Terms”) and
(iii) with respect to the proposed transferee, (a) the name, address and
description of the proposed transferee, (b) any terms of Transfer agreed upon by
the Offering Owner and the proposed transferee, even if such terms are not
binding on either party and (c) with respect to the Third Party proposed
transferee, evidence that the Third Party satisfies the conditions in Section
10.2.4 (the “ROFN Trigger Notice”). Upon receipt of the ROFN Trigger Notice, the
ROFN Owner will have the following right of first negotiation with regard to the
Offered Percentage (the “ROFN”):

 

10.4.1ROFN Offeree Owner’s Option. For a period of sixty (60) days beginning
with the receipt of the ROFN Trigger Notice by the ROFN Offeree Owner (the “ROFN
Option Period”), the ROFN Offeree Owner will have the right to negotiate with
the Offering Owner for the purchase of all but not less than all of the Offered
Percentage. If a ROFN Offeree Owner desires to negotiate with the Offering Owner
for such purchase, it will give written notice to the Offering Owner within five
(5) Business Days after its receipt of the ROFN Trigger Notice. Within ten (10)
Business Days after such notice to the Offering Owner, the Parties shall
schedule an initial meeting between the ROFN Offeree Owner and Offering Owner.

 

10.4.1.1[RESERVED].

 

10.4.1.2Good Faith Negotiation. During the ROFN Option Period, the Offering
Owner must negotiate in good faith with the ROFN Offeree Owner to sell the
Offered Percentage; provided, however, the Offering Owner’s unwillingness to
accept economic terms that are not as beneficial to it as the Offered Terms will
not be deemed to mean that the Offering Owner did not negotiate in good faith.

 

10.4.1.3Exclusivity. During the ROFN Option Period, the Offering Owner must
negotiate exclusively with the ROFN Offeree Owner to sell the Offered Percentage
and may not, directly or indirectly, through any

 

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 shareholder, representative or otherwise, discuss, solicit, entertain or
negotiate with any Third Party for the sale or disposition of some or all of the
Offered Percentage. During the five (5) Business Days after the last day of the
ROFN Option Period and, if the ROFN Offeree Owner elects to purchase one hundred
percent (100%) of the Offered Percentage, then until the later of (i) the date
that is thirty-five (35) days after the end of the ROFN Option Period and (ii)
the date the Offering Owner files with the applicable Governmental Bodies any
documentation necessary for it to obtain any Governmental Approvals required for
it to sell the Offered Percentage, the Offering Owner will not, directly or
indirectly, through any shareholder, representative or otherwise, discuss,
solicit, entertain or negotiate with any Third Party for the sale or disposition
of some or all of the Offered Percentage.

 

10.4.1.4Notice of Final Offered Terms. On the last day of the ROFN Option
Period, the Offering Owner must provide written notice to the ROFN Offeree Owner
of any changes to the Offered Terms and any other terms and conditions for the
sale of the Offered Percentage that the Offering Owner has agreed to (the “Final
Offered Terms”).

 

10.4.1.5ROFN Election Notice. The ROFN Offeree Owner will have the right to
elect to purchase the Offered Percentage on the Final Offered Terms by
delivering to the Offering Owner within five (5) Business Days after the last
day of the ROFN Option Period, written notice specifying the ROFN Offeree
Owner’s election to purchase (the “ROFN Election Notice”).

 

10.4.1.6[RESERVED].

 

10.4.1.7ROFN Purchase Price. The purchase price for the Offered Percentage set
forth in the Final Offered Terms will be paid by the ROFN Offeree Owner at the
closing (the “ROFN Closing”).

 

10.4.1.7.1Extension. If the Offering Owner has not received its necessary
Governmental Approvals by the last day of the ROFN Closing date, then the
Offering Owner may, but will not be obligated to, extend the ROFN Closing date
upon the request of the ROFN Offeree Owner, for an additional number of days
determined by the Offering Owner, which additional extension may be conditioned
upon the ROFN Offeree Owner agreeing to certain terms and conditions.

 

10.4.1.8ROFN Closing. If the ROFN Trigger Notice (i) stated that the Offering
Owner has a proposed Third Party transferee, (ii) attached a term sheet or
letter of intent signed by the Offering Owner and such proposed Third Party
transferee which included the material terms and conditions of the proposed
Transfer and (iii) included evidence that the proposed

 

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 Third Party transferee satisfies the conditions in Section 10.2.4
(collectively, a “Bona Fide Third Party Transaction”), then the ROFN Closing
will occur as set forth in Section 10.4.1.9.4 below, unless extended pursuant to
Section 10.4.1.8.1.

 

10.4.1.8.1Automatic Extension if Bona Fide Third Party Transaction. If the ROFN
Offeree Owner needs one or more Governmental Approvals to purchase the Offered
Percentage or the Offering Owner needs one or more Governmental Approvals to
sell the Offered Percentage, then the ROFN Closing will be extended for the
lesser of (i) an additional two hundred seventy (270) days or (ii) the number of
days the ROFN Offeree Owner and/or the Offering Owner needs to obtain its/their
required Governmental Approvals to sell and purchase the Offered Percentage.
Unless otherwise agreed, if either the ROFN Offeree Owner or the Offering Owner
has not received Orders granting its required Governmental Approvals to sell or
purchase the Offered Percentage within three hundred and sixty-five days (365)
after the end of the ROFN Option Period, then commencing on the date that is
three hundred and sixty-six days (366) after the end of the ROFN Option Period
and ending on the date that is three hundred and ninety-five days (395) after
the end of the ROFN Option Period (a) the ROFN Offeree Owner may terminate its
election to purchase the Offered Percentage or (b) the Offering Owner may
terminate its offer to sell the Offered Percentage to the ROFN Offeree Owner and
the proposed Third Party transferee.

 

10.4.1.9Common ROFN Closing Provisions. The following provisions will apply to
the ROFN Closing:

 

10.4.1.9.1Efforts to Obtain Governmental Approvals. If the ROFN Offeree Owner or
the Offering Owner needs any Governmental Approvals to purchase or sell the
Offered Percentage, each of the Offering Owner and the ROFN Offeree Owner agree
to (i) use its commercially reasonable and good faith efforts to cooperate with
each other in seeking all such Governmental Approvals, (ii) use its commercially
reasonable and good faith efforts to expeditiously seek and obtain all such
Governmental Approvals and (iii) keep each other reasonably informed about the
status of its efforts to obtain such Governmental Approvals.

 

10.4.1.9.2Effect of Conditions Imposed in Governmental Approvals. If the
Offering Owner receives one or more Orders granting its required Governmental
Approvals to sell the Offered Percentage, but one or more of such Orders imposes
material unsatisfactory conditions on the Offering Owner (as determined

 

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  in the sole discretion of the Offering Owner), then the Offering Owner may
terminate its offer to sell the Offered Percentage within thirty (30) days after
its receipt of any such Order. If the ROFN Offeree Owner receives one or more
Orders granting its required Governmental Approvals to purchase the Offered
Percentage, but one or more of such Orders imposes material unsatisfactory
conditions on such ROFN Offeree Owner (as determined in the sole discretion of
such ROFN Offeree Owner), then such ROFN Offeree Owner may terminate its
election to purchase its desired portion of the Offered Percentage within thirty
(30) days after its receipt of any such Order.

 

10.4.1.9.3ROFN Closing Date. The ROFN Closing may occur earlier than
contemplated by the time periods specified herein if agreed by the Offering
Owner and the ROFN Offeree Owner.

 

10.4.1.9.4ROFN Closing Location and Documentation. The ROFN Closing will be held
at a location mutually agreed upon by the Offering Owner and the ROFN Offeree
Owner. The Offering Owner will deliver documentation representing the Offered
Percentage, duly endorsed for transfer, will represent and warrant that it has
good and marketable title and interest to such Offered Percentage and that such
Offered Percentage is free and clear from all Liens and interests of any Person
at the time of the ROFN Closing and will take all other actions necessary or
appropriate to Transfer the Offered Percentage as the ROFN Offeree Owner may
reasonably request

 

10.4.1.9.5Reallocation of Percentages. At the ROFN Closing, (i) the Ownership
Percentage of the ROFN Offeree Owner will be increased to equal the sum of (a)
its Ownership Percentage immediately prior to the ROFN Closing plus (b) the
Ownership Percentage purchased by it from the Offering Owner at the ROFN
Closing, (ii) the Ownership Percentage of the Offering Owner will be decreased
to equal the difference between (a) the Offering Owner’s Ownership Percentage
immediately prior to the ROFN Closing (after giving effect to Section 10.4.1.8)
minus (b) the Ownership Percentage sold by it to the ROFN Offeree Owner at the
ROFN Closing and (iii) the Parties will revise Exhibit B to reflect the same.

 

10.4.2Right of Offering Owner to Sell to Third Party. If (i) the ROFN Offeree
Owner is a defaulting owner or does not provide notice pursuant to Section
10.4.1 indicating that it desires to negotiate with the Offering Owner, (ii) the
ROFN Offeree Owner does not deliver the ROFN Election Notice to purchase one
hundred percent (100%) of the Offered Percentage in accordance with Section

 

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 10.4.1.5 or (iii) (a) the ROFN Offeree Owner has not received its necessary
Governmental Approvals on or prior to the last day of the applicable period in
Sections 10.4.1.7.1 or 10.4.1.8.1, or has terminated its election to purchase
pursuant to 10.4.1.9.2 and (b) the Offering Owner has not terminated its offer
to sell the Offered Percentage pursuant to 10.4.1.8.1(b) or 10.4.1.9.2, then the
Offering Owner will be free to engage in a Permitted Transfer pursuant Section
10.2.4 (Transfer to a Third Party) of all of the Offered Percentage as follows:

 

10.4.2.1Bona Fide Third Party Transaction. The closing for the sale of the
Offered Percentage to the Third Party must occur within one hundred and eighty
(180) days (i) after receipt of the ROFN Trigger Notice if Section 10.4.2(i) is
applicable, (ii) after the end of the ROFN Option Period if Section 10.4.2(ii)
is applicable or (iii) after the end of the last day of the applicable period if
Section 10.4.2(iii) is applicable, in each case on the terms and conditions of
and to the transferee identified in the Bona Fide Third Party Transaction. If
the Offering Owner does not sell all of its Offered Percentage on such terms and
to such transferee within such one hundred and eighty (180) day period, then any
subsequent offer of all or a portion of the Offering Owner’s Ownership
Percentage will again be subject to the ROFN; provided, however, if the sale is
not completed within such one hundred eighty (180) day period as a result of an
unavoidable delay resulting from Government Approvals, the one hundred eighty
(180) day period will be extended by up to an additional one hundred and eighty
(180) days as long as the sale is completed promptly upon receipt of such
required Government Approvals.

 

Article 11
FINANCING; FINANCING INSTRUMENTS

 

11.1Pledge of Separate Property. No Owner or any Affiliate thereof will have the
right to create any Lien on the Ownership Percentage or any other Property of
any other Owner, or suffer to exist any such Lien that is created by an Owner or
its Affiliate or arises through such Owner or its Affiliates and any such Lien
will be null and void and the affected Owner may take such measures as are
necessary to remove such Lien at the expense of the Owner that created the Lien
or through which the Lien arose. The preceding sentence does not apply to or
limit the contractual rights of the Owners contained in this Agreement,
including the restrictions on Transfer contained in Article 10 and the rights
and remedies contained in Articles 14 and 15.

 

11.2Financing Instruments. Each Owner may grant or may continue to suffer to
exist (and may file or record as appropriate, or continue to maintain such
filing or recordation), a Lien or Liens to Financing Parties to secure Financing
against or with respect to, among other things, its Ownership Percentage. The
grant or existence of such a Lien or Liens by an Owner is permissible under this
Agreement; provided, however, that (i) no such Lien will confer on a Financing
Party any greater rights under this Agreement than those of the Owner that
granted such Lien to such Financing Party, except (a) where such Financing Party
is granted, directly or by implication, an exemption pursuant to the provisions
of this

 

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 Agreement related to Collateral Assignments or (b) as otherwise provided under
Applicable Law, and (ii) any judicial or non-judicial foreclosure sales under
any such Liens and any conveyances in lieu of foreclosure under any such Liens
will constitute a Transfer to which the terms and conditions of Section 10.2.8
(Exercise of a Collateral Assignment) and 10.3.1 (Rules and Conditions for
Permitted Transfers) are applicable. For purposes of clarification, (a) a
“Transfer as a result of or upon exercise of a Collateral Assignment” is a
transaction that is within the contemplation of clause (ii) of this Section 11.2
and (b) this Section 11.2 applies to all Financing Instruments.

 

11.3Financing Party Cure Rights. Any Financing Party has the right (but not the
obligation), after receipt of a notice pursuant to Article 14 or Article 15, to
cure any failure to pay by and on behalf of an Owner to which it has provided
Financing, on the same terms and conditions that such Owner may cure such
failure to pay.

 

Article 12
REPRESENTATIONS, WARRANTIES AND COVENANTS

 

12.1Representations and Warranties. Each Owner as of the Effective Date makes
the following representations and warranties to the other Owner, which
representations and warranties survive the execution and delivery of this
Agreement:

 

12.1.1Organization and Good Standing. Such Owner is, as set forth in the
preamble to this Agreement, a corporation or a similar Person organized,
existing and in good standing under the laws of the state of its formation and
authorized to conduct business in each state in which authorization may be
required to perform its obligations under this Agreement.

 

12.1.2Power and Authority. Such Owner has the power and authority to enter into
and perform this Agreement and is not prohibited 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.

 

12.1.3Authorization. Such Owner has taken all action required by Applicable Law
and its governing documents in order to approve, execute and deliver this
Agreement.

 

12.1.4No Violation. The execution and delivery of this Agreement by such Owner,
the performance by such Owner of its obligations hereunder and the consummation
by such Owner of the transactions contemplated herein do not and will not: (i)
contravene any Applicable Law in effect at the Effective Date or any Order in
effect at the Effective Date of any Governmental Body or Arbitrator having
jurisdiction over such Owner or its Property; (ii) result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any indenture, mortgage, deed of trust or other agreement in effect at the
Effective Date and to which such Owner is a party or by which it or its Property
is bound; or (iii) result in the creation or imposition of any Lien upon the
Ownership Percentage or any other Property of any other Owner, other than Liens
arising from the contractual rights of the Owners contained in this Agreement,
including the restrictions on Transfer

 

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 contained in Article 10 and the rights and remedies contained in Articles 14
and 15.

 

12.1.5Approvals and Consents. No approval, consent or authorization of any
Governmental Body or other Person is required for the execution and delivery by
such Owner of this Agreement or the performance by such Owner of its obligations
hereunder, except such approvals, consents or authorizations that have been
given or obtained by such Owner and are in full force and effect.

 

12.1.6Binding Effect. This Agreement has been executed and delivered by such
Owner. Assuming that the other Owner has all the requisite power and authority,
and has taken all necessary action to execute and deliver this Agreement, this
Agreement is the 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 creditor’s rights (e.g., bankruptcy, insolvency,
moratorium) or by the exercise of judicial discretion in accordance with general
principles of equity.

 

12.1.7Joint Use. Such Owner is acquiring its interest in the Project for the
purpose of joint or common use of the Project as provided in the Project
Agreements.

 

12.2Covenants.

 

12.2.1Compliance with Project Agreements. Each Owner will comply with the terms
and conditions of all of the Project Agreements to which it is a party.

 

12.2.2[RESERVED].

 

12.2.3Governmental Approvals.

 

12.2.3.1Efforts Required to Obtain and Maintain Governmental Approvals. Each
Owner will use commercially reasonable efforts to obtain and maintain any
Governmental Approvals required to (i) perform its obligations under this
Agreement and the other Project Agreements and (ii) develop, design, engineer,
permit, construct, test, commission and operate the Project and its Discretely
Owned Substation Assets.

 

12.2.3.2Efforts Required of Other Owners That Participate in Proceedings for
Governmental Approvals. If an Owner participates in any Proceedings relating to
Governmental Approvals being sought by (i) the other Owner pursuant to Section
12.2.3.1, such Owner will use commercially reasonable efforts to support the
issuance of such approval(s) that are consistent with this Agreement and the
other Project Agreements, and will oppose the efforts of any other Person to
adversely affect either Owner’s rights under this Agreement or the other Project
Agreements or (ii) another Owner in order for such other Owner to engage in a
Permitted Transfer, the Owner participating in any such Proceedings will bear
any internal and Third Party costs incurred by it unless such Third Party costs
are incurred in connection with a Third Party Claim, in

 

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 which case all Third Party costs incurred by it will be governed by Section
16.1.1.

 

12.2.3.3Right to Object to a Permitted Transfer. If an Owner is required to
obtain any Governmental Approvals in order to engage in a Permitted Transfer,
nothing in Section 12.2.3.2 or elsewhere in this Agreement will preclude the
other Owner from participating in any Proceeding relating to such Governmental
Approvals, including opposition to the Permitted Transfer on any grounds other
than an alleged violation of this Agreement.

 

12.2.4Project Real Property. Each Owner will cooperate in the acquisition of the
Project Real Property.

 

12.2.5Availability of Personnel and Resources. Each Owner will make available,
at reasonable times and locations, the personnel and resources necessary to
complete such Owner’s responsibilities under this Agreement and the other
Project Agreements to which it is a party.

 

12.2.6Risk of Loss and Damage. All risk, loss and damage arising out of the
ownership, construction, operation, maintenance or improvement of all or any
portions of the Project will be several and not joint, and will be incurred in
proportion to each Owner’s Ownership Percentage. If an Owner, by reason of joint
liability, is required to make any payment or incur any obligation that is not
its own but that of another Owner, the provisions of Section 16.2.3 will apply.

 

12.2.7[RESERVED].

 

12.2.8[RESERVED].

 

12.2.9Deposit by Assignee if No Longer Creditworthy. If a Person becomes an
Owner after the Effective Date as the result of a Permitted Transfer pursuant to
Section 10.2.1 (Transfer to Affiliate) or 10.2.4 (Transfer to a Third Party),
and it no longer qualifies as Creditworthy at any time during the twelve (12)
Months immediately following the effective date of the Transfer Agreement to
which it is a party (the “Transfer Effective Date”), such Owner must (i)
promptly notify the Management Committee (a “Creditworthiness Failure Notice”)
and (ii) if the date of such determination of loss of Creditworthy status occurs
prior to the Substantial Completion Date of the Project, pay to the Main Escrow
Account by wire transfer in immediately available funds an amount equal to one
hundred percent (100%) of such Owner’s estimated payment obligations for CM
Costs for the two (2) Months immediately following the Creditworthiness Failure
Notice (the “Creditworthiness Loss Triggered Advance”). The Creditworthiness
Loss Triggered Advance will be determined by the Management Committee based on
the most recent Project Budget and will be held in the Main Escrow Account as an
advance payment of such Owner’s payment obligations for CM Costs. The order of
application for a Creditworthiness Loss Triggered Advance will be the same as

 

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 for Defaulting Owner Advance Amounts under Section 14.2.4.7. The failure to
provide the notice required by this Section 12.2.9 or to pay the
Creditworthiness Loss Triggered Advance will be deemed to be an Advance Default
for all purposes of this Agreement.

 

Article 13
MAXIMUM CM COSTS

 

13.1Meeting to Consider Proposed Increase in the Maximum CM Cost Amount. The
Management Committee will promptly meet to consider a Proposed Increase in the
Maximum CM Cost Amount if requested by the Construction Manager under the
Construction Management Agreement. After discussion at such meeting regarding
the Proposed Increase in the Maximum CM Cost Amount, if an Authorized Owner
Representative requests that the meeting be adjourned for up to seven (7) days
to permit each Owner to further consider the Proposed Increase in the Maximum CM
Cost Amount prior to a Management Committee vote thereon, then the meeting will
be adjourned for up to seven (7) days to a date specified by the Chair. If no
such adjournment request is made, then at such meeting, or if an adjournment
request is made, then at the adjourned meeting, the Management Committee will
vote on the Proposed Increase in the Maximum CM Cost Amount.

 

13.2Failure to Approve. If the Management Committee meets to consider a Proposed
Increase in the Maximum CM Cost Amount pursuant to the request of the
Construction Manager under the Construction Management Agreement or otherwise,
but does not approve the Proposed Increase in the Maximum CM Cost Amount at the
meeting or the adjourned meeting referred to in Section 13.1, it will determine
whether there should be a revision in the size, character, design or capacity of
the Project. If the Management Committee does not approve such a revision, then
(i) either Owner may agree to assume the Proposed Increase in the Maximum CM
Cost Amount, provided that the revisions in the size, character, design or
capacity of the Project are consistent with the BSSE Design Criteria Guidelines
and Good Utility Practice or (ii) if neither Owner assumes the Proposed Increase
in the maximum CM Cost Amount, the Management Committee will adopt and implement
the Wind-up Plan.

 

13.3Approval. If the Management Committee approves a Proposed Increase in the
Maximum CM Cost Amount, then as soon as practicable thereafter, the Management
Committee will give a notice to the Owners of an offering to fund the Proposed
Increase in the Maximum CM Cost Amount (the “Cost Offering”) that states: (i)
the amount of the Cost Offering; (ii) each Owner’s right to elect to increase
its payment obligation for CM Costs in any amount up to the total Proposed
Increase in the Maximum CM Cost Amount; (iii) the offering process described in
Section 13.4 (including required response dates); and (iv) the mandatory
termination of the Project if the Cost Offering is not fully subscribed by the
Owners, unless the Management Committee determines pursuant to Section 13.1 and
13.2 to revise the CM Costs or the size, character, design or capacity of the
Project.

 

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13.4Initial Round of the Cost Offering.

 

13.4.1Election Notice. On or prior to the date specified in the Cost Offering
notice (the “Cost Offering Initial Round Subscription Date”), each Owner will
give written notice to the Chair indicating either that the Owner elects not to
increase its CM Cost payment obligation or that it elects to increase its CM
Cost payment obligation pursuant to the Cost Offering. In the latter case, the
Owner will include in its notice the maximum amount of the Cost Offering it
elects to accept (which may exceed such Owner’s pro rata share) (the “Maximum
Cost Offering Amount”).

 

13.4.2Allocation Between Owners. The Cost Offering amount will be allocated
between the electing Owners in proportion to their Ownership Percentages
(calculated without giving effect to the Owner(s) not electing to subscribe to
the Cost Offering) as follows: (i) first to all electing Owners in an amount
equal to the lesser of (a) their Maximum Cost Offering Amount or (b) their pro
rata share based on their Ownership Percentages and (ii) then to all electing
Owners whose Maximum Cost Offering Amount exceeded their pro rata share based on
their Ownership Percentages, in an amount up to their Maximum Cost Offering
Amount.

 

13.4.3Effect of Full Subscription by Owners. If the Cost Offering is fully
subscribed by the Owners, then:

 

(i)the Proposed Increase in the Maximum CM Cost Amount (the “New Maximum CM Cost
Amount”) will take effect immediately and automatically at such time as the CM
Costs exceed the Original Maximum CM Cost Amount (the “Cost Offering Effective
Date”); and

 

(ii)from and after the Cost Offering Effective Date, each Owner that subscribed
to the Cost Offering will be obligated to pay a percentage of all CM Costs equal
to the amount of the Cost Offering allocated to such Owner divided by the
aggregate amount of the Cost Offering (the “Incremental Cost Offering CP
Percentage”) and the Parties will revise Exhibit B to reflect the same and the
resulting change in the Percentages after application of the Formula.

 

13.4.4Effect of Partial Subscription. If the Cost Offering is not fully
subscribed, (i) the Cost Offering will be deemed to have failed and (ii) the
Management Committee will determine within thirty (30) days after expiration of
the Cost Offering whether there should be a revision in the CM Costs, or the
size, character, design or capacity of the Project or to take other action
(including offering an ownership interest in the Project to a Third Party). If
the Management Committee does not approve such a revision within such thirty
(30) day period or vote to take other action, the Management Committee will
adopt and implement the Wind-up Plan upon the expiration of such thirty (30) day
period.

 

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Article 14
DEFAULTS RELATED TO CONSTRUCTION ACTIVITIES

 

14.1Definitions for Defaults Related to Construction Activities.

 

14.1.1Definition of Construction Period Payment Default.

 

14.1.1.1General Definition of Construction Period Payment Default. A
“Construction Period Payment Default” is: the failure of an Owner, at any time
on or prior to the Final Completion Date of the Project, to pay any CM Costs
required to be paid by it under this Agreement or the Construction Management
Agreement, if payment is not received in the Main Escrow Account within fifteen
(15) days after the date such payment was due.

 

14.2Provisions Governing Construction Period Payment Defaults.

 

14.2.1[RESERVED].

 

14.2.2Suspension of Defaulting CPP Owner Voting Rights Upon Construction Period
Payment Default. At such time as an Owner becomes a Defaulting Owner as the
result of a Construction Period Payment Default (a “Defaulting CPP Owner”), it
will cease to be entitled to exercise any voting rights under this Agreement
except with respect to voting rights provided for under Section 19.1.2; in such
case the decisions of the Management Committee will be made by the Authorized
Owner Representative of the Non-Defaulting Owner. The suspended rights of the
Defaulting CPP Owner pursuant to the first sentence of this Section 14.2.2 will
immediately and automatically be reinstated on the first to occur of (a) the
Defaulting CPP Owner’s cure of all Construction Period Payment Defaults within
the applicable CPP Default Cure Period in accordance with Section 14.2.4, or (b)
the Substantial Completion Date of the Project, if the Defaulting CPP Owner
remains an Owner as of such date.

 

14.2.3Non-Defaulting CPP Owner Advance Following Construction Period Payment
Default. On or prior to the first (1st) Business Day of the Month immediately
succeeding the Month in which a Construction Period Payment Default occurs, the
Owner that is not the Defaulting CPP Owner (the “Non-Defaulting CPP Owner”), may
pay in its sole discretion, as an advance of CM Costs that will become due from
such Non-Defaulting CPP Owner in the future (an “Advance”), to the applicable
Project Account of all or any part of the amount owed by the Defaulting CPP
Owner based on the most recent invoice from the Construction Manager (in each
case excluding any amounts owed in respect of CPP Default Accrued Interest, CPP
Default OPCs, the CPP Default Late Fee or Defaulting Owner Advance Amounts
pursuant to Section 14.2.4) (the “Deficiency Amount”) and may make additional
Advances on or prior to the first (1st) Business Day of any Month following the
Month in which the initial Advance for such Construction Period Payment Default
occurs, of all or any part of Deficiency

 

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 Amounts of such Defaulting CPP Owner. The Deficiency Amount is the obligation
of the Defaulting CPP Owner and the Advances do not relieve the Defaulting CPP
Owner of its obligation to make all payments when due hereunder.

 

14.2.3.1Obligation Applies After Use of Defaulting CPP Owner Advance Amounts.
The Non-Defaulting CPP Owner shall not make any Advances under Section 14.2.3
until all Defaulting Owner Advance Amounts previously deposited into the Main
Escrow Account by the Defaulting CPP Owner have been applied to the Deficiency
Amount.

 

14.2.3.2[Reserved.]

 

14.2.3.3Effect of Uncured Default and Absence of Non-Defaulting Owner Advance.
If, during the continuance of a Construction Period Payment Default, there are
no Advances made by the other Owner, the Management Committee will immediately
meet to determine how to proceed and to determine the terms on which the
Non-Defaulting Owner would be willing to become an Advancing Owner to remit all
Deficiency Amounts, or whether there should be a revision to the size,
character, design or capacity of the Project, or whether to proceed under
Article 19 to terminate the Project and adopt and implement a Wind-up Plan. The
Parties may also by mutual agreement determine to bring in a Third Party as an
additional Owner to fund the shortfall created by the Construction Period
Payment Default.

 

14.2.4Requirements for and Effect of Cure of Construction Period Payment
Default. A Defaulting CPP Owner may cure a Construction Period Payment Default
(a “Curable Construction Period Payment Default”) only by satisfying, within the
period specified in Section 14.2.4.1, the requirements of Sections 14.2.4.2,
14.2.4.3, 14.2.4.4, 14.2.4.5, and 14.2.4.6.1. Unless satisfied in compliance
with the preceding sentence, a Defaulting CPP Owner may not cure a Construction
Period Payment Default (an “Uncurable Construction Period Payment Default”).

 

14.2.4.1Cure Period for Curable Construction Period Payment Default. Unless
extended in writing by the Non-Defaulting Owner, the Defaulting CPP Owner will
have a period of forty-five (45) days after the occurrence of a Curable
Construction Period Payment Default (the “CPP Default Cure Period”) within which
to take all actions required to cure the Curable Construction Period Payment
Default.

 

14.2.4.2Deficiency Amount for Curable Construction Period Payment Default. The
Defaulting CPP Owner must pay to the Main Escrow Account the total amount of all
CM Costs that the Defaulting CPP Owner has not paid when due under this
Agreement.

 

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  14.2.4.3 Out-of-Pocket Costs for Curable Construction Period Payment
Default.  The Defaulting CPP Owner must pay to the Main Escrow Account, for the
benefit of the Non-Defaulting CPP Owner that has made an Advance pursuant to
Section 14.2.3 (the “Advancing Owner”), all out-of-pocket costs incurred by such
Advancing Owner as a result of it making an Advance (the “CPP Default OPCs”).  
   

  14.2.4.4 Default Late Fee for Curable Construction Period Payment
Default.  The Defaulting CPP Owner must pay to the Main Escrow Account, for the
benefit of the Advancing Owner, a late fee equal to five percent (5%) of the
amount of the Curable Construction Period Payment Default (the “CPP Default Late
Fee”).      

  14.2.4.5 Interest for Curable Construction Period Payment Default.  The
Defaulting CPP Owner must pay to the Main Escrow Account, for the benefit of the
Advancing Owner, interest at the Late Payment Rate calculated on the basis of
annual compounding and the actual number of days elapsed on (i) the Advance made
by such Advancing Owner from the day such Advance was made by such Advancing
Owner through and including the date that the Defaulting CPP Owner cures the
Curable Construction Period Payment Default, and (ii) the CPP Default OPCs from
the day the related Advance was made by such Advancing Owner through and
including the date that the Defaulting CPP Owner cures the Curable Construction
Period Payment Default ((i) and (ii) are collectively referred to as the “CPP
Default Accrued Interest”).      

  14.2.4.6 Defaulting CPP Owner Advance Amounts.      

  14.2.4.6.1 Defaults. The Defaulting CPP Owner, upon its first and each
subsequent Curable Construction Period Payment Default, must pay to the Main
Escrow Account an amount equal to one-sixth (1/6th) of such Defaulting CPP
Owner’s estimated payment obligations for CM Costs under this Agreement, for the
twelve (12) Months immediately following the Month in which such Curable
Construction Period Payment Default occurred or, if less, the number of Months
immediately following the Month in which such Curable Construction Period
Payment Default occurred until the Substantial Completion Date of the Project
(the “Defaulting Owner Advance Amounts”).      

  14.2.4.6.2 [Reserved.]      

  14.2.4.6.3 Basis for Determining and Treatment of Defaulting Owner Advance
Amounts.  Any Defaulting Owner Advance Amounts will be determined by the
Non-defaulting Owner based on the most recent Project Budget.  Any Defaulting
Owner Advance Amounts will be held in the Main Escrow Account as security

 

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    for the  Defaulting CPP Owner’s payment obligations for CM Costs under this
Agreement.      

  14.2.4.7 Order of Application of Defaulting CPP Owner Payments.  All amounts
paid by the Defaulting CPP Owner pursuant to Sections 14.2.4.2 through 14.2.4.6,
will be applied in the following order:  (i) to the repayment of CPP Default
OPCs; (ii) to the payment of the CPP Default Accrued Interest; (iii) to the
payment of the CPP Default Late Fee; and (iv) to the payment of the Defaulting
Owner Advance Amounts.  The Defaulting Owner Advance Amounts, and any interest
accrued thereon, will be applied first to any payments due by such Defaulting
CPP Owner under this Agreement upon the occurrence of a subsequent Curable
Construction Period Payment Default by such Defaulting CPP Owner.  For the
avoidance of doubt, the application of the Defaulting Owner Advance Amounts
pursuant to this Section 14.2.4.7 will not constitute a cure of any subsequent
Curable Construction Period Payment Default by the Defaulting CPP Owner.  The
balance of any Defaulting Owner Advance Amounts will be refunded to the
Defaulting Owner upon Final Completion.      

  14.2.4.8 Restoration of Voting Rights Upon Cure of Curable Construction Period
Payment Default.  If a Defaulting CPP Owner cures its Curable Construction
Period Payment Default in accordance with Sections 14.2.4.1 through 14.2.4.6,
the rights suspended pursuant to Section 14.2.2 will be restored as provided in
Section 14.2.2.      

  14.2.4.9 Effect of Prior Cured Curable Construction Period Payment Default on
Subsequent Curable Construction Payment Period Defaults.  A Defaulting CPP
Owner’s cure of a Curable Construction Period Payment Default will not suspend
or modify the application of the terms set forth in Section 14.1.1.2 with
respect to any subsequent Curable Construction Period Payment Default by that
same Owner.      

  14.2.5 Automatic Freeze of Defaulting CPP Owner’s Interest if Curable
Construction Period Payment Default Not Cured or Uncurable Construction Period
Payment Default Occurs; Provisions Applicable to Automatic Freeze.  If the
Defaulting CPP Owner fails to cure a Curable Construction Period Payment Default
on or prior to the last day of the CPP Default Cure Period in accordance with
Section 14.2.4 or upon the occurrence of an Uncurable Construction Period
Payment Default, then the Defaulting CPP Owner’s right to make any further
payments in respect of all or a portion of the Deficiency Amount or any CM
Costs, immediately and automatically will be revoked on the day immediately
succeeding the (i) last day of the CPP Default Cure Period or (ii) occurrence of
the Uncurable Construction Period Payment Default (a “Freeze”).  In the event of
a Freeze the following will apply:

 

  14.2.5.1 [RESERVED].

 

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  14.2.5.2 [RESERVED].      

  14.2.5.3 [RESERVED].      

  14.2.5.4 Management Committee Determination in Absence of Completed
Project.  If, on the date of a Freeze, the Final Completion Date has not yet
occurred, then as soon as practicable after the occurrence of a Freeze, the
Management Committee will determine how the DO’s Deficiency Amount and Future
Payment Obligations will be paid. The Non-Defaulting CPP Owner must be given the
opportunity to pay the Deficiency Amount and subscribe to the DO’s Future
Payment Obligations.  In addition, (i) the Percentage of the Defaulting CPP
Owner will be reduced in accordance with the Formula to reflect payment by
others of its Deficiency Amount and Future Payment Obligations, (ii) the
Ownership Percentage of the Owners paying such Deficiency Amount and Future
Payment Obligations will be increased in accordance with the Formula on the day
of each such reduction in the Percentages of the Defaulting CPP Owner and (iii)
the Parties will revise Exhibit B to reflect the new Percentages of the Owners.
For purposes of applying the Formula and determining the new Percentages, the CM
Costs paid by the Owners will take into account all amounts advanced by the
Non-Defaulting CPP Owner and any applicable interest and fees owing to the
Non-Defaulting CPP Owner.      

14.3 [RESERVED].    

14.4 [RESERVED].

 

14.5 [RESERVED].

 

14.6 [RESERVED].

 

14.7 [RESERVED].

 

14.8        Additional Cure Period for Financing Instrument.  Notwithstanding
anything to the contrary in this Article 14, to the extent that any act or
action otherwise required by the terms of this Agreement, other than the payment
of monies, would cause an Owner to be in default under a facility mortgage as
the result of a Default governed by this Article 14, such act or action will be
stayed for a period not exceeding sixty (60) days to provide such Owner or its
Financing Party time to avoid or cure such default under such facility mortgage.

 

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ARTICLE 15

 

DEFAULTS RELATED TO OPERATIONS ACTIVITIES; GENERAL DEFINITIONS; COVENANT
DEFAULTS; INJUNCTIVE RELIEF, SPECIFIC PERFORMANCE, AND SET-OFF RIGHTS

 

15.1 General Provisions Related to Defaults.

 

  15.1.1 [RESERVED].

 

  15.1.2 [RESERVED].

 

  15.1.3 Covenant Default.  Each of the following is a “Covenant Default”:

 

  15.1.3.1 Failure of Covenants. The failure of an Owner to keep, observe or
perform in any material respect the terms, covenants or obligations under this
Agreement (other than a Construction Period Payment Default) or the breach by an
Owner in any material respect of any of the representations or warranties
contained in this Agreement, in each case if the Non-Defaulting Owner determines
that such failure or breach has occurred (the “Performing Owner”) and to:      

  (i) declare a default and that such failure or breach is not susceptible to
cure, upon notice by the Performing Owner to the Owner with respect to which
such failure or breach has occurred (the “Non-Performing Owner”); or      

  (ii) declare a default and that such failure or breach is susceptible to cure
within thirty (30) days after notice by the Performing Owner to the
Non-Performing Owner, if such Non-Performing Owner has not cured such failure or
breach within such thirty (30) day period; provided, however, that if the
Non-Performing Owner notifies the Performing Owner within five (5) days after
its receipt of such notice that it (a) reasonably and in good faith believes
that such failure or breach is not susceptible to cure within such thirty (30)
day period but is susceptible to cure within the number of days set forth in
such Non-Performing Owner’s notice which in no event may exceed ninety (90) days
and (b) will diligently and in good faith proceed to remedy such failure or
breach during the entirety of such period, then the Performing Owner, may extend
the period of time that such Non-Performing Owner has to cure such failure or
breach for such number of days as determined by the Performing Owner and will
provide notice of such extension to such Non-Performing Owner.      

  15.1.3.2 Failure of Individually Enforceable Obligations.  The failure of an
Owner to keep, observe or perform the terms, covenants or obligations

 

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          under Articles 16 (Third Party Claims; Shared Liability; Effect of
Insurance; and Contribution), 17 (Confidentiality) or 18 (Dispute Resolution for
Excluded Matters) or Sections 10.4 (First Negotiation), or 19.3.1.3 (Effect of
Wind-up Plan on Ownership Percentages) of this Agreement or Section 3
of Schedule 1 (collectively, the “Individually Enforceable Obligations”) in each
case if any Performing Owner determines:      

  (i) to declare a default and that such failure is not susceptible to cure,
upon notice by such Performing Owner to the Non-Performing Owner; or      

  (ii) to declare a default and that such failure is susceptible to cure within
thirty (30) days after notice by such Performing Owner to the Non-Performing
Owner, if such Non-Performing Owner has not cured such failure within such
thirty (30) day period; provided, however, that if the Non-Performing Owner
notifies such Performing Owner within five (5) days after its receipt of such
notice that it (a) reasonably and in good faith believes that such failure is
not susceptible to cure within such thirty (30) day period but is susceptible to
cure within the number of days set forth in such Non-Performing Owner’s notice
which in no event may exceed ninety (90) days and (b) will diligently and in
good faith proceed to remedy such failure during the entirety of such period,
then such Performing Owner may extend the period of time that such
Non-Performing Owner has to cure such failure for such number of days as
determined by the such Performing Owner and will provide notice of such
extension to such Non-Performing Owner.      

15.2 Provisions Governing Operations Payment Defaults.

 

  15.2.1 Requirements for Cure of Operations Payment Default. An Owner that
becomes a Defaulting Owner as a result of an Operations Payment Default may cure
the Operations Payment Default only by satisfying, within the period specified
in Section 15.2.1.1, the requirements of Sections 15.2.1.2, 15.2.1.3, 15.2.1.4,
and 15.2.1.5.

 

  15.2.1.1 Cure Period for Operations Payment Default.  A Defaulting Owner will
have a period of ten (10) Business Days after the occurrence of an Operations
Payment Default within which to take all actions required to cure the Operations
Payment Default.      

  15.2.1.2 Deficiency Amount for Operations Payment Default.  The Defaulting
Owner must pay to the Main Escrow Account the total amount of all Project Costs,
other than CM Costs, that the Defaulting Owner has not paid when due under this
Agreement.      

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  15.2.1.3 Out-of-Pocket Costs for Operations Payment Default.  The Defaulting
Owner must pay to the Main Escrow Account, for the benefit of the Non-Defaulting
Owner, all out-of-pocket costs incurred by such Non-Defaulting Owner as a result
of the Operations Payment Default (the “OP Default OPCs”).      

  15.2.1.4 Default Late Fee for Operations Payment Default.  The Defaulting
Owner must pay to the Main Escrow Account, for the benefit of the other Owner, a
late fee equal to five percent (5%) of the amount of the Project Costs that the
Defaulting Owner failed to pay.      

  15.2.1.5 Interest for Operations Payment Default.  The Defaulting Owner must
pay to the Main Escrow Account, for the benefit of the other Owner, interest at
the Late Payment Rate calculated on the basis of annual compounding and the
actual number of days elapsed on (i) the amount of the Project Costs that the
Defaulting Owner failed to pay from the day such Project Costs were due through
and including the date that the Defaulting Owner cures the Operations Payment
Default and (ii) the OP Default OPCs from the day such Project Costs were due
through and including the date that the Defaulting Owner cures the Operations
Payment Default.      

  15.2.2 Remedies Applicable to Operations Payment Default.  The remedies
applicable to an Operations Payment Default are as set forth in Sections 15.5
and 15.6.

 

15.3 [RESERVED].

 

15.4 [RESERVED].

 

15.5 Provisions Applicable to Certain Defaults.

 

  15.5.1 Available Damages.  In the event of an Operations Payment Default or
Covenant Default (collectively, the “Non-Exclusive Defaults”), the
Non-Defaulting Owner will be entitled to recover from the Defaulting Owner and
the Defaulting Owner will be liable and obligated to pay and reimburse the
Non-Defaulting Owner for Damages incurred by such Non-Defaulting Owner that
arise from, in connection with or incident to its Default, including amounts in
Section 15.2 with respect to an Operations Payment Default, subject to the
provisions of Section 15.5.2 below.

 

  15.5.2 No Consequential Damages.

 

  15.5.2.1 General Rule.  No Owner will be liable to any other Owner under this
Agreement or any other Project Agreement for any special, incidental,
consequential, indirect, exemplary, treble or punitive Damages, including loss
of revenue, loss of profits, diminution of value, cost of capital, loss of
goodwill or increased operating costs (collectively, “Consequential Damages”)
except as provided in Section 15.5.2.2.      

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  15.5.2.2 Exceptions. An Owner will be liable to another Owner for
Consequential Damages (i) arising for indemnification of Third Party Claims
pursuant to Section 16.1 (including a Shared Liability), (ii) arising from the
failure of an Owner to pay Damages that have been established by mutual
agreement or pursuant to the dispute resolution procedures in Article 18 or
Section 3 of Schedule 1 as due and owning hereunder or (iii) expressly provided
in any other Project Agreement.      

  15.5.3 Remedies Not Exclusive. In the event of a Non-Exclusive Default, the
Non-Defaulting Owner may exercise any remedies provided for in Section 15.5 or
15.6 or now or hereafter existing under Applicable Law, at law, in equity, by
statute or otherwise, and each and every such remedy will be cumulative and will
be in addition to every other such remedy.  In the event of any such
Non-Exclusive Default, the pursuit by an Owner of any specific remedy will not
be deemed to be an election of that remedy to the exclusion of any other,
whether provided hereunder or under Applicable Law, by law, equity or statute.

 

  15.5.4 Interest on Overdue Obligations.  If any amount due hereunder, other
than CM Costs or an Advance (which are addressed in Section 14.2) or Operations
Expenses (which are addressed in Section 15.2), is not paid by the due date
thereof, the Owner owing such obligation will pay to the other Owner that is not
then a Defaulting Owner or to the applicable Project Account for the benefit of
the Owner that is not then Defaulting Owner, as appropriate, interest thereon at
the Late Payment Rate concurrently with the payment of the amount, such interest
to begin to accrue as of the due date of such payment.  Any payment of interest
at the Late Payment Rate pursuant to this Agreement will not excuse or cure any
Default hereunder.  All payments will first be applied to the payment of accrued
but unpaid interest.  The amount of any judgment obtained by one Owner against
another Owner in any Proceeding arising out of a Non-Exclusive Default by such
other Owner under this Agreement will bear interest until paid at the greater of
(i) the Late Payment Rate or (ii) the judgment rate under Applicable Law.

 

15.6 Common Provisions Applicable to All Defaults.

 

  15.6.1 Injunctive Relief and Specific Performance. The Owners agree that in
the event of a Default, the Non-Defaulting Owner will be entitled to seek and
obtain a temporary or permanent injunction, specific performance or other
equitable relief specifically to enforce an Owner’s obligations under this
Agreement without the necessity of posting a bond.

 

  15.6.2 Right of Set-Off.  Each Non-Defaulting Owner will have the right to
set-off against any amount it owes to a Defaulting Owner under this Agreement or
any other Project Agreement, all amounts due to such Non-Defaulting Owner from
the Defaulting Owner pursuant to this Agreement or any other Project Agreement.

 

15.7          Additional Cure Period for Financing Instrument.  Notwithstanding
anything to the contrary in this Article 15, to the extent that any act or
action otherwise required by the terms of

 

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this Agreement, other than the payment of monies, would cause an Owner to be in
default under a facility mortgage as the result of a Default governed by this
Article 15, such act or action will be stayed for a period not exceeding sixty
(60) days to provide such Owner or its Financing Party time to avoid or cure
such default under such facility mortgage.  The foregoing will not be applicable
after the Substantial Completion Date of the Project.

 

ARTICLE 16 

THIRD PARTY CLAIMS; SHARED LIABILITY; EFFECT OF INSURANCE; AND CONTRIBUTION

 

16.1 Third Party Claims.

 

  16.1.1 Indemnification.  To the maximum extent permitted by Applicable Law,
each Owner (an “Indemnifying Owner”), will defend, indemnify and hold harmless,
the other Owner, its Affiliates and its respective directors, officers,
shareholders, members, partners, employees and agents (collectively, the
“Indemnified Persons”) from and against any and all Damages, including
Consequential Damages, arising from a claim or a Proceeding instituted by a
Third Party (a “Third Party Claim”) (other than Third Party Claims that are a
Shared Liability, in which case Section 16.2 will apply) as a result of or
arising out of or in connection with: (i) the Indemnifying Owner’s performance
of or failure to perform its obligations under this Agreement; (ii) the failure
of any representation or warranty made by the Indemnifying Owner in this
Agreement to be true and correct in all respects as of the date of this
Agreement; (iii) the Transfer by the Indemnifying Owner of any portion of its
Ownership Percentage (but excluding any and all (a) Damages arising out of acts
or omissions of the transferee once it becomes an Owner and (b) internal costs
incurred by an Owner that participates in any Proceedings relating to
Governmental Approvals being sought by an Indemnifying Owner in order for such
Indemnifying Owner to engage in a Permitted Transfer); (iv) a Non-Defaulting
Owner’s or the Management Committee’s exercise of any remedies permitted under
this Agreement as a result of a Default by the Indemnifying Owner; or (v) the
Indemnifying Owner’s acts or omissions that (a) are unrelated to the Project,
including acts or omissions of an Owner with respect to Non-Project
Modifications undertaken by an Owner, or (b) relate solely to the Indemnifying
Owner’s Discretely Owned Substation (the Damages described in this Section 16.1
are collectively referred to herein as “Third Party Claim Damages”).      

 

  16.1.1.1 Comparative Negligence.  With respect to Third Party Claims alleging
negligence by an Indemnified Person (other than Third Party Claims of negligence
that are a Shared Liability, in which case Section 16.2.1 will apply), an
Indemnifying Owner will not be responsible for that portion of any award as to
which it is determined (whether in the Proceeding brought by the Third Party or
in any subsequent Proceeding commenced by an Owner to determine the allocation
of liability) that the Indemnified Person was negligent to the extent of the
specific percentage of negligence allocated to such Indemnified Persons;

 

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    provided, however, the foregoing will not relieve the Indemnifying Owner of
its obligation to defend the Indemnified Persons in any such Third Party Claim
in accordance with Section 16.1.1, subject to a right of reimbursement from the
Indemnified Person for a proportionate share of defense costs including
attorneys’ fees.      

  16.1.2 Notice of Third Party Claims.  Any Indemnified Person will, promptly
after the receipt of notice of any Third Party Claim against such Indemnified
Person in respect of which indemnification may be sought pursuant to Section
16.1.1, notify the Indemnifying Owner of such Third Party Claim.  The
Indemnifying Owner will not be obligated to indemnify any Indemnified Person
with respect to any such Third Party Claim if the Indemnified Person fails to
notify the Indemnifying Owner thereof in accordance with the provisions of this
Section 16.1.2 in sufficient time to permit the Indemnifying Owner to defend
against such Third Party Claim and to make a timely response thereto, including
any responsive motion or answer to a complaint, petition, notice or other legal,
equitable or administrative process relating to the Third Party Claim, but only
insofar as such failure to notify the Indemnifying Owner has actually resulted
in material prejudice or damage to the Indemnifying Owner.

 

  16.1.3 Defense of Third Party Claims.  In case any such Third Party Claim is
made or brought against an Indemnified Person, the Indemnifying Owner will
assume the defense thereof with counsel, selected by the Indemnifying Owner, who
is free of any conflicts of interest, is competent and experienced to defend the
Indemnified Person and is reasonably acceptable to the Indemnified Person.  The
Indemnified Person will not have the right to be solely defended by such
counsel; such counsel may represent multiple clients in such circumstances, so
long as a conflict of interest in such representation does not exist during the
period of such representation. In such circumstances, the Indemnified Person
will (i) cooperate with the Indemnifying Owner and provide the Indemnifying
Owner with such information and assistance as the Indemnifying Owner(s)
reasonably requests in connection with such Third Party Claim and (ii) at its
own expense, have the right to participate and be represented by counsel of its
own choice (by attendance and observation only) in any such Proceeding and in
all conferences with all Persons (or their counsel), including Governmental
Bodies, with respect to any such Third Party Claim. If the Indemnifying Owner
assumes the defense of the relevant Third Party Claim, (a) the Indemnifying
Owner(s) will not be liable for any settlement thereof that is made without its
prior written consent, which consent will not be unreasonably withheld, delayed
or conditioned, and (b) the Indemnifying Owner will control the settlement of
such Third Party Claim; provided, however, that the Indemnifying Owner will not
conclude any settlement that requires any action or forbearance from action or
payment (unless paid in full by the Indemnifying Owner) or admission by the
Indemnified Person or any of its Affiliates without the prior approval of the
Indemnified Person. Any such contrary settlement will require the prior written
consent of the Indemnified Person, which consent will not be unreasonably
withheld, delayed or conditioned.

 

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  16.1.4 Prejudicial Actions.  The obligations of an Indemnifying Owner will not
extend to any Damages to the extent the same results from the act or omission of
the Indemnified Person (unless required by Applicable Law or applicable legal
process) after the Indemnified Person has received notice of the Third Party
Claim against it that materially prejudices the defense of the Third Party
Claim, without, in any such case, the prior written consent of the Indemnifying
Owner (such consent not to be required in a case where the Indemnifying Owner
has not assumed the defense of the Third Party Claim).  Subject to Section
16.1.1.1, good faith responses by the Indemnified Person to subpoenas and
discovery requests or good faith testimony or affidavits given in the course of
a Proceeding, in each case arising out of a Third Party Claim, will not be
considered such a prejudicial  act or omission of the Indemnified Person.

 

16.2 Exceptions and Clarifications.

 

  16.2.1 Shared Liability.  The Parties acknowledge that from time to time (i)
the Construction Manager may request an Owner to perform services or provide
information in furtherance of the Construction Manager’s ability to perform the
Services or a Contractor’s performance of Construction Work, or (ii) a
Maintenance Provider may request an Owner to perform services or provide
information in furtherance of the Maintenance Provider’s ability to perform its
obligations under the Operation and Maintenance Agreement, in each case which
services or information is for the benefit of the Project.  If a Third Party
Claim is brought or asserted against an Owner as a result of the provision by it
of requested assistance (a “Shared Liability Claim”), then except as provided in
Section 16.2.1.1 or, in connection with the settlement of a Shared Liability
Claim unless otherwise agreed by the unanimous vote of the Owners, any Damages
arising from such Third Party Claim will be shared between the Owners on the
basis of the Ownership Percentages (a “Shared Liability”).

 

  16.2.1.1 Exception Intentional Misconduct or Fraud.  If a judgment is rendered
in favor of a Third Party in connection with a Shared Liability Claim arising
from an Owner providing the requested assistance described in Section 16.2.1,
and such judgment is based solely on a finding in the judgment that such Owner
engaged in intentional misconduct or fraud, then the Owner that provided the
requested assistance will pay one hundred percent (100%) of all amounts awarded
in such judgment.      

  16.2.1.2 Notice of Shared Liability Claim.  Each Owner will promptly notify
the Management Committee of the Shared Liability Claim in writing (specifying in
reasonable detail the basis therefor) after such Owner receives notice of any
Shared Liability Claim.      

  16.2.1.3 Defense of Shared Liability Claim.  The Management Committee will
assume the defense of all Shared Liability Claims on behalf of the Owners with
counsel of its choice. All costs and expenses associated with the defense of a
Shared Liability Claim will be shared between the

 

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    Owners on the basis of the Ownership Percentages.  The Management Committee
may settle a Shared Liability Claim.  No Owner will pursue, defend, settle or
compromise a Shared Liability Claim on its own without the consent of the
Management Committee.  Each Owner will (i) at its own cost or expense cooperate
with the Management Committee and provide the Management Committee with such
information and assistance as the Management Committee reasonably requests in
connection with a Shared Liability Claim and (ii) at its own expense, have the
right to participate and be represented by counsel of its own choice (by
attendance and observation only) in connection therewith.      

  16.2.2 Effect of Insurance.  Any Damages due and payable under this Article 16
will be net of any amount paid to the Third Party from proceeds of insurance in
connection with a Shared Liability Claim or Third Party Claim under policies in
effect pursuant to the Insurance Plan.  The provisions of this Article 16 are
not to be construed so as to relieve any insurer of its obligation to pay any
insurance claims in accordance with insurance policies in effect.  The
obligations of the Owners under this Article 16 are not limited by an Owner’s
insurance coverage.

 

  16.2.3 Right of Contribution.  Each Owner will have a contractual right of
contribution hereunder against the other Owner pursuant to the provisions of
this Section 16.2.3.

 

  16.2.3.1 Basis for Owner Claim of Contribution Right.  If Third Party Claim
Damages or a Shared Liability is imposed on the Owners on a joint and several
basis (or a basis upon which an Owner is assigned an obligation to pay greater
than its Ownership Percentage) and such Third Party Claim Damages or a Shared
Liability is not covered by insurance or is not indemnified by another Owner,
then the Third Party Claim Damages or Shared Liability will be allocated pro
rata between the Owners in accordance with their Ownership Percentages, subject
to the indemnification provisions of Section 16.1.1 and the Shared Liability
provisions of Section 16.2.1.      

  16.2.3.2 Contribution Claim by Owner(s).  If an Owner (the “Owner Claiming
Contribution”) is obligated to pay or pays more than its Ownership Percentage in
connection with incurring or discharging Third Party Claim Damages or a Shared
Liability (as described in Section 16.2.3.1) of the other Owner to a Third Party
under this Agreement, then the Owner Claiming Contribution will have a right of
contribution against the other Owner (i) that is not obligated to pay to such
Third Party its Ownership Percentage in connection with such claim or liability,
(ii) that has not timely paid the full amount of its Ownership Percentage with
respect to such claim or liability or (iii) for whom the Owner Claiming
Contribution has paid all or a portion of another Owner’s obligation arising
from Third Party Claim Damages or a Shared Liability (the “Owner Subject To
Contribution”). The Owner Subject

 

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          To Contribution is obligated hereunder to promptly and timely pay its
pro rata Ownership Percentage of such claim or liability to the Third Party to
whom such payments are owed (in the case of an untimely unpaid claim or
liability) or to the Owner Claiming Contribution (in the case of payment by the
Owner Claiming Contribution of all or a portion of the Ownership Percentage owed
by the Owner Subject To Contribution).  In the cases of clauses (i) and (iii) of
this Section 16.2.3.2, all payments by the Owner Subject To Contribution will be
made to the Owner Claiming Contribution.  In the case of clause (ii) of this
Section 16.2.3.2, all payments by the Owner Subject To Contribution will be made
directly to the Third Party to whom the Third Party Claim Damages or the Shared
Liability is owed.  If payment is made by the Owner Subject To Contribution
directly to the Owner Claiming Contribution, then the Owner Claiming
Contribution is obligated to promptly remit the amount of such payment to the
proper Person for payment of the Third Party Claim Damages or Shared Liability.
     

  16.2.3.3 Notice and Right of Set-Off/Recoupment by Owner Claiming
Contribution.  If an Owner Subject To Contribution does not remit the amount it
is obligated to pay under Section 16.2.3.2 within thirty (30) days of a written
demand by the Owner Claiming Contribution, and thereby fully satisfy its payment
obligation to either (i) the Third Party to whom Third Party Claim Damages or a
Shared Liability is owed or (ii) the Owner Claiming Contribution, as applicable
(thereby continuing to expose the Owner Claiming Contribution to a payment
obligation not owing by it or non-payment of its right to contribution due to
its prior payment of the obligation(s) of an Owner Subject To Contribution),
then the Owner Claiming Contribution will have the right to set-off and
otherwise recoup any amount it owes to an Owner Subject To Contribution either
under this Agreement or any other Project Agreement.      

  16.2.3.4 Payment to Third Party by Owner Claiming Contribution.  If the Owner
Claiming Contribution is claiming such contribution right due to an unpaid
obligation to a Third Party, then any amount (i) of set-off by an amount owed
by, or (ii) directly paid to, the Owner Claiming Contribution with respect to
the Owner Subject To Contribution will be promptly remitted to such Third Party
by the Owner Claiming Contribution.      

  16.2.4 Project Costs.  Nothing in this Article 16 modifies each Owners
obligation to pay its Ownership Percentage of all Project Costs in accordance
with Section 5.1.

 

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ARTICLE 17

CONFIDENTIALITY

 

17.1 Confidentiality of Information.  It may be necessary for an Owner to
provide confidential or proprietary information with respect to its
participation in the Project or an Owner may agree to develop certain
confidential or proprietary information as part of or in connection with the
construction, operation or maintenance of the Project.  Each Owner covenants,
with respect to such confidential and proprietary information provided by such
Owner, that any and all confidential and proprietary information so provided for
use for this Agreement or the Project, whether or not it falls within the
definition of “Confidential Information” as defined below, does not infringe
upon or violate the rights or interests of any Third Party (including any trade
secret or confidentiality rights of such Third Party).  Each Owner agrees to use
the confidential and proprietary information it develops in connection with this
Agreement or the Project (provided that the cost of developing such information
has been treated as a Project Cost), and confidential and proprietary
information provided to it by any other Owner  or representative in connection
with this Agreement (“Confidential Information”), solely (i) in order to
participate in this Agreement and the Project or (ii) for other activities
contemplated by this Agreement (each a “Permitted Purpose”). Each Owner will
keep Confidential Information confidential and will not, and will advise its
Representatives (as defined below) not to, disclose to any Person any
Confidential Information in any manner whatsoever or otherwise use any
Confidential Information other than for a Permitted Purpose; provided, however,
that any Confidential Information may be disclosed to an Owner’s financial,
technical, legal and other professional advisors, members, employees, Financing
Parties and other lenders, Affiliates and other representatives (collectively
referred to as “Representatives”) who may need to know such Confidential
Information for the purpose of advising the Owner with respect to this Agreement
or the Project and potential transferees who are subject to a confidentiality
agreement; provided, further, however, that such Representatives are informed by
the Owner of the confidential nature of the Confidential Information and that
they will be bound by the confidentiality provisions of this Article 17 to the
same extent as if they were parties hereto.  Each Owner agrees that it will be
responsible for any breach of this Article 17 by any of its Representatives and
for any use of the Confidential Information by any of them for any purpose other
than a Permitted Purpose.  Written documents, electronic documents and other
physical information will be deemed Confidential Information and protected
hereby, only if clearly and prominently marked and identified as
“CONFIDENTIAL.”  Oral or other non-written communications will be deemed
Confidential Information only if they are declared to be Confidential
Information at the time disclosed.

 

17.2 Information Not Deemed Confidential Information.  Notwithstanding Section
17.1, the term “Confidential Information” does not include any information that
(i) is or becomes generally available to the public other than as a result of a
disclosure by an Owner, or any of its respective Representatives in violation of
Section 17.1; (ii) was within an Owner’s possession before its being furnished
to such Owner by or on behalf of any other Owner; (iii) becomes available to an
Owner on a non-confidential basis from a source other than any other Owner or
any of their respective Representatives, provided that such recipient does not
know that such source is bound by a confidentiality agreement with, or other

 

 

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contractual, legal or fiduciary obligation of confidentiality to, any other
Person with respect to such information; or (iv) is independently developed by
an Owner, without access to the Confidential Information.

 

17.3 Requirement to Disclose Confidential Information.  If an Owner (i) is
required by legal process, a Governmental Body, Arbitrator or otherwise by
operation of law to disclose any Confidential Information of another Owner
(“Disclosing Party”) or (ii) determines that it is necessary to disclose any
Confidential Information in connection with Proceedings before any Governmental
Body with jurisdiction over an Owner’s rates or operations, then to the extent
legally permissible, the Owner, as applicable, will give prompt prior notice of
such impending disclosure to the Disclosing Party so that the Disclosing Party
at its own cost may seek a protective Order or other appropriate remedy.  The
Owner (a) will disclose only that portion of the Confidential Information that
it is legally required to disclose or determines that is necessary to disclose
in connection with Proceedings before any Governmental Body with jurisdiction
over an Owner’s rates or operations, (b) will give prompt notice of same to the
Disclosing Party and (c) will reasonably cooperate with the Disclosing Party in
connection with the efforts of the Disclosing Party seeking a protective Order
or other appropriate remedy.  If the Disclosing Party fails to obtain a
protective Order or other appropriate remedy with respect to the extent of the
planned disclosure of Confidential Information by the Owner required or deeming
it necessary to disclose, such Owner may rely on advice of its legal counsel
(which may be its in-house counsel) with respect to its obligations of
disclosure or the necessity of its disclosure as contemplated herein.

 

17.4 Compliance with FERC Standards of Conduct.  Each Owner will not, directly
or indirectly, reveal any non-public transmission function information (as
defined in 18 C.F.R. §§ 358.3j, as such rules may be interpreted, amended or
replaced by FERC from time to time, and hereinafter referred to as “Transmission
Information”) in a manner that violates 18 C.F.R. §§ 358.6 and 358.7, as such
rules may be interpreted, amended or replaced by FERC from time to time (the
“FERC Standards of Conduct”).  To the extent applicable, a disclosure
(inadvertent or otherwise) of Transmission Information by an Owner must be
appropriately addressed by such Owner pursuant to 18 C.F.R. § 358.7 or any
successor provision.

 

17.5 Restrictions on Access to Critical Energy Infrastructure Information.  Each
Owner certifies for itself and its Representatives who may be granted access to
“critical energy infrastructure information” (“CEII”) as defined in 18 C.F.R. §
388.113(c)(1) or any successor provision that (i) it and each of its
Representatives are aware of the requirements of 18 C.F.R. Part 388 with regard
to CEII and (ii) it has no reason to believe that it or its Representatives
would be restricted from access to CEII.  To the extent applicable, a disclosure
(inadvertent or otherwise) of CEII by an Owner must be appropriately addressed
by such Owner pursuant to 18 C.F.R. § 358.7(a)(2) or any successor provision.

 

17.6 Property of Owner.  Except Confidential Information developed by an Owner
in connection with the Project, the costs of which were included as Project
Costs for which the Owner was reimbursed in accordance with this Agreement, all
Confidential Information will remain the Property of the Owner providing
it.  Notwithstanding any

 

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  provision in this Article 17 to the contrary, if such Owner’s Ownership
Percentage is at any time reduced to zero, such Owner will have no right to
demand that such Confidential Information be returned to such Owner or be
destroyed.

 

17.7 No Accuracy Warranty.  The Owner that discloses Confidential Information is
not providing any warranties or representations as to the accuracy of any such
Confidential Information.  Nothing herein is intended to, or will, obligate an
Owner to provide any Confidential Information to any other Owner;
provided, however, the foregoing will not abrogate or otherwise absolve a
disclosing Owner from the covenant set forth in Section 17.1 above regarding
non-infringement and prohibitions on use.

 

17.8 Breach of Confidentiality Provisions.  Each Owner expressly agrees that a
breach of any of the terms or conditions of this Article 17 would result in
irreparable harm and that money would not be a sufficient remedy for any such
breach.  Accordingly, in the event of a breach or threatened breach by an Owner
or by any of its Representatives of any of the provisions of this Article 17
(and in addition to any other remedy provided by law or in equity), each Owner
agrees that the Owner which such breach would harm will be entitled to seek
appropriate equitable relief, including injunctive relief and specific
performance.

 

17.9 Public Disclosure.  If an Owner intends to make, directly or indirectly,
any material public comment, statement, or communication (such as a press
release) with respect to the Project, or otherwise to disclose or to permit the
disclosure of a material non-public aspect of the Project, or any of the
material terms, conditions, or other material aspects of this Agreement, it will
use reasonable commercial efforts to first provide to the other Owner, or its
Representative, the content of the proposed disclosure, and the time and place
that the disclosure will be made and provide to the other Owner, or its
Representatives, a reasonable opportunity to comment on the proposed disclosure;
provided, however, that no such public comment, statement or communication will
include any Confidential Information, except as required by Applicable Law.

 

17.10 Public Disclosure Laws.  The Owners intend that nothing in this Agreement
and no action taken pursuant to this Agreement will (i) cause Confidential
Information that would otherwise have been exempt from public access or
inspection to become subject to public access or inspection under any Applicable
Law regarding public access to information or (ii) make unavailable or waive any
exception to or protection under public disclosure Applicable Laws that would
otherwise enable the Owners to preserve the confidentiality of the Confidential
Information.

 

ARTICLE 18 

DISPUTE RESOLUTION FOR EXCLUDED MATTERS

 

18.1 Excluded Matters.  Disputes with respect to a Percentage Calculation
arising under Section 3.1.3.3 (a “Percentage Calculation Dispute”) will be
resolved pursuant to this Article 18 and not pursuant to Section 3 of Schedule
1.

 

18.2 Appointment of Arbitrator.  Within ten (10) days after the Management
Committee’s receipt of a Notice from an Owner objecting to the Percentage
Calculation, the

  

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Management Committee will select and engage an independent certified public
accounting firm to act as arbitrator and to resolve the Percentage Calculation
Dispute (the “Arbitrator”).

 

18.3 Arbitration Process.  Within five (5) days following the engagement of the
Arbitrator or such other reasonable period of time determined by the Arbitrator,
the Arbitrator will convene a meeting at which each Owner may present to the
Arbitrator the factual basis for its agreement or disagreement with the
Percentage Calculation.  Prior to or at the meeting, either Owner may submit
written information to the Arbitrator in support of its position. If an Owner
submits any written information to the Arbitrator, it will contemporaneously
provide a copy to the other Owner. Neither Owner will make or knowingly cause or
permit to be made any oral or written ex-parte communication to the Arbitrator
about the Proceeding.  The Arbitrator will, with respect to the issues that are
disputed, make a written determination by independent calculation of the
Percentages as of the applicable date.  The Arbitrator must abide by the terms
of this Agreement and Applicable Law in making its determination.

 

18.4 Effect of Arbitrator’s Decision.  Subject to Section 18.3, the decision of
the Arbitrator will be final and binding on each Owner.

 

  18.4.1 Percentage Calculation Dispute.  If the Arbitrator determines that any
Percentages set forth in Exhibit B are incorrect, the Percentages of each
affected Owner immediately will be increased or decreased based on the
determination of the Arbitrator and promptly thereafter the Parties will revise
Exhibit B to reflect the same.

 

18.5 Fees of Arbitrator.  The fees and expenses of the Arbitrator incurred in
connection with its performance of the duties set forth in this Article 18 will
be borne by the Non-Prevailing Party.

 

18.6 Confidentiality.  The Percentage Calculation and any other reports, forms
or other information relating thereto or to the Project are Confidential
Information.  The Management Committee and the Owners will require the
Arbitrator to sign a confidentiality agreement containing the same or
substantially similar obligations of confidentiality as set forth in Article 17.

 

ARTICLE 19

TERMINATION

 

19.1 Termination.

 

  19.1.1 Termination of the Project.  If the In-Service Date has not occurred
with respect to the Project, the Project may be terminated in its entirety,
provided that such termination is in compliance with Applicable Law:  (i) by a
writing executed by each of the Owners (acting as Owners and not through their
Authorized Owner Representatives); or (ii) pursuant to Section 13.4.4 (Effect of
Partial Subscription).      

 

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  19.1.2 Termination of this Agreement.  This Agreement may be terminated with
respect to each of the Owners as follows:  (i) by a writing executed by each of
the Owners (acting as Owners and not through their Authorized Owner
Representatives) terminating this Agreement; or (ii) by the Management Committee
(including the Owner Representative of a Defaulting Owner) after (A) the Project
has been terminated in its entirety and the Wind-up Plan has been implemented;
or (B) the Project has been permanently decommissioned and disconnected from the
Transmission Grid in compliance with Applicable Law and all remaining
obligations have been paid and remaining assets included in the Project have
been disposed of.

 

19.2 Retirement and Retirement Costs.  The Management Committee will have the
right to decide to permanently decommission and disconnect from the Transmission
Grid all or a portion of the Project. Retirement of any of the Project will be
conducted in compliance with Applicable Law.  All costs (less salvage credits,
if any) associated with retirement of all or a portion of the Project, including
dismantling, demolishing, and removing Equipment and structures (including the
cost of transportation and handling incidental thereto), security, disposing of
debris, any site work necessary to effect retirement in accordance with Good
Utility Practice, and the costs of any remediation, site restoration or
monitoring, will constitute CM Costs or Operating Expenses as provided in
Section 19.3.1.1.

 

19.3 Effect of Project Termination.

 

  19.3.1 Wind-up Plan.  If the Project is terminated pursuant to Section 19.1.1,
then the Management Committee will adopt a wind-up plan (the “Wind-up Plan”)
which will include how it intends to accomplish the following and the Project
will remain in effect until the Management Committee determines that the Wind-up
Plan has been fully implemented and the Owners are notified of the Project
termination date. In connection with the Wind-up Plan, the Management Committee
will only have the authority to act with respect to the Project, except to the
extent necessary to enforce the rights and obligations of the Owners (i) in the
Project (including ingress and egress for parts of the Project that may be
physically connected to a Discretely Owned Substation Asset), (ii) under the
Project Agreements, or (iii) as otherwise required by Applicable Law.

 

  19.3.1.1 Costs.  All termination costs, including with respect to termination
of Project Agreements, Construction Agreements, Real Property Agreements and
other contracts that are part of the Project or which relate to the Project, in
accordance with the terms thereof, and any cancellation costs, termination costs
and Damages payable thereunder will constitute CM Costs if (i) such costs and
damages would have constituted CM Costs if the Project had not been terminated,
or (ii) the respective Wind-up Plan is adopted prior to the Substantial
Completion Date of the Project, in which event all such costs and damages will
be paid by the Owners in accordance with their respective Ownership Percentage;
provided that, to the extent such termination costs relate to

 

 

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    costs and expenses associated with Project Agreements, Construction
Agreements, Real Property Agreements, and other contracts that relate to
Discretely Owned Substation Assets which relate to the Project that is subject
to the Wind-up Plan, such termination costs and expenses will be the sole
responsibility of the applicable Discretely Owned Substation Owner.      

  19.3.1.2 Required Steps.  The following steps shall be taken as part of the
Wind-up Plan (i) timely disposition of the Property that constitutes the Project
subject to the Wind-up Plan, as applicable, by sale, auction, division of
assets, or otherwise; (ii) deposit of any proceeds of such disposition in the
account(s) specified by the Management Committee; (iii) taking of all action
required by Good Utility Practice to provide for the retirement from service of
any part of the Project that is not sold or disposed of, including any
remediation, restoration or other actions required by Applicable Law or
necessary or desirable for the protection of the Owners from liability; (iv)
payment of all liabilities related to the Project subject to such disposition
and establishment of any reserves necessary to satisfy any contingent
liabilities related to the Project (including those arising pursuant to
clause (iii) of this Section 19.3.1.2); (v) undertaking of other necessary steps
for the winding up of the Project; (vi) periodic reporting to the Owners on the
status of the Wind-up Plan; (vii) preparation of a final accounting for the
Project subject to the Wind-up Plan, and, in the event the Wind-up Plan does not
include all of the Project, to facilitate the proper calculation of the
Percentages upon completion of the Wind-up Plan and prior to disbursement of any
available funds in the Project Accounts and (viii) allocation and disbursement
of any available funds in the Project Accounts (after satisfaction of the
provisions of this Section 19.3.1.2) (the “Distributable Cash”) or costs to the
Owners in accordance with Section 19.3.2.      

  19.3.1.3 Effect of Wind-up Plan on Ownership Percentages.  The Owners will
take all actions or omit to take such actions to effect the provisions of the
Wind-up Plan, including (i) execution and delivery of such documents,
instruments and other documentation reasonably necessary for the Owners to take
the required steps under the Wind-up Plan, including those described in Section
19.3.1.2 above, and (ii) to cause the accounting and recalculation to update and
revise Exhibit B to reflect the then current Ownership Percentage of each Owner
in the event the Wind-up Plan does not result in termination of the Project and
promptly provide a copy of revised Exhibit B to each Owner and take all other
necessary actions to reflect the matters contemplated by the provisions of
Section 19.3.      

  19.3.2 Allocations and Distributions Upon Termination of
Project. Distributable Cash and costs will be allocated and paid to each Owner
in accordance with its      

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  Ownership Percentages, subject to a Party’s right of contribution from the
other Party.    

  19.3.2.1 Effect of Wind-up Plan on Discretely Owned Substation Assets. Without
the consent of the Discretely Owned Substation Owner, no Discretely Owned
Substation Assets will become subject to the Wind-up Plan.      

  19.3.2.2 Effect of Payment to Financing Party.  If any remittance is made from
Distributable Cash of the Project with respect to payment of a Financing Party
of either Owner in connection with the Wind-up Plan, then the amount of
Distributable Cash that is remitted to a Financing Party from what would
otherwise be Distributable Cash available for remittance to the Owners (or to
otherwise satisfy Project debt obligations of the Owners) will be treated as if
a cash distribution was made to such Owner and such amount will be (i)
subtracted in determining the amount of Distributable Cash available to such
Owner and (ii) the amount of Distributable Cash that was remitted to a Financing
Party will be allocated pro rata based on the applicable Owner’s respective
Ownership Percentage.

 

ARTICLE 20 

MISCELLANEOUS

 

20.1 Survival.  Schedule 1 (Generally Applicable Provisions), Articles 14
(Defaults Related to Construction Activities), 15 (Defaults Related to
Operations Activities; General Definitions; Covenant Defaults; Injunctive
Relief, Specific Performance, and Set-off Rights), 16 (Third Party Claims;
Shared Liability; Effect of Insurance; and Contribution), 17 (Confidentiality),
18 (Dispute Resolution for Excluded Matters), 19 (Termination) and
20 (Miscellaneous), 7.1.2 (Sales, Consumer and Use Taxes), 7.3 (Sharing of Taxes
and Related Payments), 7.4 (Tax Credits or Other Tax Benefits), 7.5
(Non-creation of Taxable Entity), 8.1 (Insurance), 8.3 (Insurance
Proceeds), 9.5 (Condemnation Awards) and 12.2.6 (Risk of Loss and Damage) will
survive the termination of this Agreement in its entirety with respect to all
Owners or termination of this Agreement with respect to any individual Owner
pursuant to the terms of this Agreement.

 

20.2 Forward Contracts; Single Agreement. The Owners acknowledge and agree that
this Agreement and the other Project Agreements are “forward contracts” and that
the Owners are “forward contract merchants,” as those terms are defined in the
United States Bankruptcy Code. The Owners further acknowledge and agree that
this Agreement and the other Project Agreements form a single, integrated
agreement, and this Agreement and the other Project Agreements are entered into
in reliance on the fact that this Agreement and the other Project Agreements
collectively form a single agreement between the Owners.

 

20.3 Force Majeure.  No Party (in any capacity) will be liable hereunder to the
extent that its performance of an obligation hereunder is delayed or prevented
by an event of Force Majeure.  Such Party will use its commercially reasonable
efforts to overcome the

 

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  limitations imposed by the occurrence of such event of Force Majeure and to
mitigate the consequences of its inability to perform on the other Parties.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Owners have caused this Agreement to be executed as of
the date above recited.

 

OWNERS:       OTTER TAIL POWER COMPANY       BY:  /S/ TIMOTHY ROGELSTAD   NAME:
TIMOTHY ROGELSTAD   ITS: PRESIDENT       MONTANA – DAKOTA UTILITIES   COMPANY, A
DIVISION OF MDU   RESOURCES GROUP, INC.       BY:  /S/ DAVID L. GOODIN   NAME:
DAVID L. GOODIN   ITS: PRESIDENT AND CEO OF MDU   RESOURCES GROUP, INC.  

 

[SIGNATURE PAGE TO PROJECT OWNERSHIP AGREEMENT]

 

 

 

 

Execution Version

 

SCHEDULE 1

 

GENERALLY APPLICABLE PROVISIONS

 

ARTICLE 1
DEFINITIONS

 

The following terms, whether in the singular or in the plural, when used in this
Schedule 1 or in notices given under any Project Agreement and initially
capitalized, have the meanings specified below. All other initially capitalized
terms used in this Schedule 1 have the meanings specified in the Project
Ownership Agreement, and if not specified therein, then in the Construction
Management Agreement, and if not specified therein, then in the Operation and
Maintenance Agreement.

 

“Arbitration Procedures” has the meaning given in Section 3.3.

 

“Arbitrator” has the meaning given in Section 3.4.1.

 

“Claim Subject to Mandatory Arbitration” has the meaning given in Section 3.3.1.

 

“Commercial Arbitration Rules” means the Commercial Arbitration Rules of the
American Arbitration Association amended and effective June 1, 2009.

 

“Complying Party” has the meaning given in Section 3.2.5.

 

“Construction Industry Arbitration Rules” means the Construction Industry
Arbitration Rules set forth by the American Arbitration Association.

 

“Dispute” has the meaning given in Section 3.1.

 

“Dispute Notice” has the meaning given in Section 3.2.1.

 

“Disputing Parties” has the meaning given in Section 3.2.1.

 

“Initiating Party” has the meaning given in Section 3.2.1.

 

“Proceeding(s)” means any suit, litigation, arbitration, hearing, audit,
investigation or other action (whether civil, criminal, administrative or
investigative) commenced, brought, conducted, heard by or before, or otherwise
involving, any Governmental Body or Arbitrator.

 

“Responding Parties” has the meaning given in Section 3.2.1.

 

“Senior Executive(s)” means a representative of an Owner who is authorized to
settle the applicable dispute and who is not an Authorized Owner Representative.

 

“Transfer” has the meaning given in Section 10.1 of the Project Ownership
Agreement.

 

Schedule 1-1

 

 

Execution Version

 

ARTICLE 2
NOTICES

 

2.1Notices Generally. All notices, requests or other communications required
under any Project Agreement will be in writing and will be deemed “given”:
(i) if delivered in person or by courier, upon receipt by the intended recipient
or upon the date of delivery (as confirmed by, if delivered by courier, the
records of such courier); (ii) if sent by facsimile transmission, when the
sender receives confirmation from the sending facsimile machine that such
facsimile transmission was transmitted to the facsimile number of the addressee;
(iii) if mailed, upon the date of delivery as shown by the return receipt
therefor; or (iv) if delivered by a nationally recognized mail delivery service,
upon the date of delivery. Notices must be sent to the addresses of the Persons
set forth on Exhibit 1 attached to this Schedule 1.    2.2[Reserved].   
2.3Designation of Different Addresses and Persons. A party may, at any time, by
written notice to each other party, designate different or additional Persons or
different addresses for giving of notices, demands or requests to it under a
Project Agreement.

 

ARTICLE 3
DISPUTE RESOLUTION

 

3.1 Scope of Dispute Resolution Provisions. Except for Excluded Matters, or any
dispute, claim or controversy arising under Articles 14 or 15 of the Project
Ownership Agreement, the provisions of this Article 3 will govern any dispute,
claim or controversy arising out of, or relating to, a Project Agreement or
relating to a decision of the Management Committee (a “Dispute”) between or
among (i) the Owners under any Project Agreement; (ii) the Owners acting through
the Management Committee and the Construction Manager under the Construction
Management Agreement; or (iii) the Owners acting through the Management
Committee and the Maintenance Provider or Control Center Authority under the
Operation and Maintenance Agreement; provided, however, that an Owner in any
capacity (including as an Owner, a Construction Manager, a Maintenance Provider
or a Control Center Authority) may, at any time seek appropriate equitable
relief, including injunctive relief and specific performance, without first
complying with the provisions of this Article 3.       3.2 Required Steps Before
Initiating Arbitration or Other Remedies. Except for Disputes arising under
Sections 4.1.2.4 or 4.2.2.4 of the Project Ownership Agreement, no Owner in any
capacity (including as an Owner, a Construction Manager, a Maintenance Provider
or a Control Center Authority) may seek any remedy in connection with a Dispute
subject to Article 3 without first complying with the provisions of this Section
3.2;         3.2.1 Notice of Dispute. Any Owner in any capacity wishing to
assert a claim or pursue any other remedy in connection with a Dispute (the
“Initiating Party”) will provide written notice (a “Dispute Notice”), which
must: (i) be dispatched at

 

Schedule 1-2

 

 

Execution Version

 

    the same time and in the same manner to all other Parties; (ii) describe in
reasonable detail the nature of the Dispute; (iii) identify all Parties that are
indispensable to the resolution of the Dispute (the “Responding Parties”);
(iv) specify the resolution sought by the Initiating Party; (v) provide the
name, title and contact information of the Senior Executive appointed by the
Initiating Party; and (vi) indicate the proposed place, date and time (within
the limits set forth in Section 3.2.3) for Senior Executives of the Initiating
Party and Responding Parties (together, the “Disputing Parties”) to conduct an
initial meeting to discuss and attempt to resolve the Dispute.         3.2.2
Appointment of Senior Executives. Within three (3) Business Days following
receipt of a Dispute Notice, each Responding Party will appoint and provide
written notice to the other Disputing Parties of a Senior Executive assigned to
participate in efforts to settle the Dispute.         3.2.3 Initial Meeting of
Senior Executives. Within five (5) Business Days following receipt of a Dispute
Notice, the Senior Executives will meet in accordance with the place within
Barnes County, North Dakota, date and time specified in the Dispute Notice,
unless all Disputing Parties agree to modify one or more of the place, date and
time for the initial meeting. Any Senior Executive who is unable to attend the
initial meeting in person will be entitled to participate by telephone
conference or any other means by which all Senior Executives can simultaneously
hear one another. The purpose of the initial meeting will be for the Senior
Executives to attempt in good faith to reach a mutually acceptable resolution of
the Dispute.         3.2.4 Additional Meeting of Senior Executives. If the
Disputing Parties are unable to resolve the Dispute at the initial meeting of
Senior Executives held in accordance with Section 3.2.3, the Senior Executives
will hold at least one (1) additional meeting, which all Senior Executives must
attend in person during the ten (10) Business Days following the initial
meeting, to continue to attempt in good faith to reach a mutually acceptable
resolution of the Dispute unless the Disputing Parties agree otherwise. The
Senior Executives may by mutual agreement use a mediator to facilitate an
acceptable resolution at the additional meeting and to schedule subsequent
additional meetings. If the Disputing Parties have not resolved the Dispute by
the end of the additional meeting held in accordance with this Section 3.2.4,
and any subsequent additional meetings scheduled by mutual agreement, then if
the Dispute is a Claim Subject to Mandatory Arbitration or if all Disputing
Parties agree to resolve the Dispute through binding arbitration, the Disputing
Parties will proceed to binding arbitration in accordance with Section 3.3. If
the Dispute is not a Claim Subject to Mandatory Arbitration or there is no
agreement to resolve the Dispute through binding arbitration, all Disputing
Parties will retain all rights and remedies available at law or in equity.      
  3.2.5 Deemed Satisfaction of Obligations Under Section 3.2. If a party has
made good faith efforts to comply with the requirements set forth in Sections
3.2.1 through 3.2.4 (the “Complying Party”), but has been unable to do so
because of

 

Schedule 1-3

 

 

Execution Version

 

    another party’s failure or refusal to comply for a period of not less than
fifteen (15) Business Days following delivery of a Dispute Notice, the
obligations set forth in Section 3.2 will be deemed satisfied for purposes of
the Complying Party’s right to pursue other remedies or invoke the Arbitration
Procedures set forth in Section 3.3, as applicable.         3.2.6 Tolling of
Statute of Limitations. If an Initiating Party provides the Dispute Notice prior
to the expiration of the statute of limitations applicable to the Dispute that
is the subject of the Dispute Notice and otherwise complies with the
requirements set forth in Sections 3.2.1 through 3.2.4, then the statute of
limitations for such Dispute will be tolled by the number of days that have
lapsed between the date of the Dispute Notice and (i) the last additional
meeting of Senior Executives held in accordance with Section 3.2.4 if the Senior
Executives hold one or more additional meetings, (ii) the tenth (10th) Business
Day following the initial meeting of Senior Executives held in accordance with
Section 3.2.3 if the Senior Executives do not hold an additional meeting or
(iii) the fifteenth (15th) Business Day following the Dispute Notice if the
Senior Executives do not hold the initial meeting of Senior Executives in
accordance with Section 3.2.3 on or prior to such date.       3.3 Arbitration
Procedures. The arbitration provisions set forth in Section 3.4 (the
“Arbitration Procedures”) will be the sole and exclusive remedy for: (i) any
Claim Subject to Mandatory Arbitration and (ii) any Dispute that all Disputing
Parties agree in writing to submit to binding arbitration. Any provision of
these Arbitration Procedures may be modified with respect to a specific
arbitration by agreement of all of the Disputing Parties.           3.3.1
Disputes Subject to Mandatory Arbitration. For purposes of each Project
Agreement, the term “Dispute Subject to Mandatory Arbitration” means a Dispute
subject to Article 3 except: (i) to the extent specifically provided otherwise
by a Project Agreement; (b) to the extent a Party claims monetary relief in
excess of two million dollars ($2,000,000); or (c) any issue concerning the
extent to which any Dispute is subject to arbitration under Article 3.       3.4
Arbitration Rules. Any Dispute Subject to Mandatory Arbitration will be
conclusively decided by binding arbitration pursuant to (i) the Commercial
Arbitration Rules for all Project Agreements other than the Construction
Management Agreement and other than the Project Ownership Agreement with respect
to Disputes arising under Section 4.1.2.4 or 4.2.2.4 thereof, and (ii) the fast
track procedures of the Construction Industry Arbitration Rules for the
Construction Management Agreement and the Project Ownership Agreement with
respect to Disputes arising under Section 4.1.2.4 or 4.2.2.4 thereof, in each
case of the American Arbitration Association, except as modified and to the
extent supplemented below. The place of arbitration shall be located in Barnes
County in the State of North Dakota or such other place as the Disputing Parties
may agree.         3.4.1  [Reserved].

 

Schedule 1-4

 

 

Execution Version

 

  3.4.2 Demand for Arbitration. Demand for arbitration will be filed in writing
with the parties against whom the claim is made or relief is sought. A demand
for arbitration must be made within ten (10) Business Days following the last
meeting of Senior Executives held in accordance with Section 3.2.4 (if the
Dispute has not been settled and if the Dispute is subject to the provisions of
Section 3.2.4), and in any case no later than the date when institution of legal
or equitable Proceedings based on the underlying Dispute would be barred by the
applicable statutes of limitations (as extended, if applicable, pursuant to
Section 3.2.6).         3.4.3 No Joinder. No arbitration arising out of, or
relating to, a Project Agreement will include, by consolidation, joinder, or in
any manner, an additional Person without the written consent of the Disputing
Parties, except that additional Person(s) may be joined without all Disputing
Parties’ consent if: (i) the additional Person(s) have furnished services, labor
or materials to the Project and (ii) the joinder of the additional Person(s)
will not cause any remedy sought in the arbitration to be other than monetary or
the aggregate amount in dispute to be greater than the limit specified in
Section 3.3.1. Further, nothing in these Arbitration Procedures will create any
privity between the Disputing Parties or create or give rise to a duty owed by
one Disputing Party to another that does not otherwise arise by operation of law
or by the terms of the contract(s) between the Disputing Parties to which these
Arbitration Procedures have been attached and made a part. Consent to
arbitration involving an additional Person will not constitute consent to
arbitrate any claim, dispute or other matter, or with a Person not named or
described in the written consent, and will be subject to all of the terms and
limitations set forth in these Arbitration Procedures, including the waiver and
other provisions set forth in Section 3.4.9.         3.4.4 Procedures. The
Arbitrator will establish reasonable procedures and requirements for the
arbitration process; provided, however, unless all Disputing Parties agree
otherwise, the procedures established by the Arbitrator will provide for: (i) a
one hundred twenty (120) day time standard for case completion (measured from
the date of the Arbitrator’s appointment); (ii) direct testimony to be submitted
in writing, provided that the proponent thereof is made available for cross
examination; (iii) the requirement of a hearing within ninety (90) calendar days
following the Arbitrator’s appointment; (iv) a binding decision to be rendered
in no more than thirty (30) days after completion of the hearing; provided,
however, in the case of a Dispute subject to fast track procedures pursuant to
Section 3.4(ii), (1) the time period specified in clause (i) shall be reduced to
sixty (60) days, (2) the time period specified in clause (iv) shall be reduced
to thirty (30) days, (3) the time period specified in clause (i) shall be
reduced to fourteen (14) days, and (4) the Arbitrator shall provide for a single
day hearing unless the Arbitrator determines a single day hearing is
unreasonable in the circumstances.         3.4.5 Prehearing Meeting. Unless all
Disputing Parties agree otherwise, within ten (10) days (or in the case of a
Dispute subject to fast track procedures pursuant to Section 3.4(ii), five (5)
days) following appointment of the Arbitrator, the

 

Schedule 1-5

 

 

Execution Version

 

    Arbitrator will convene a prehearing meeting, at which each Disputing Party
will present a memorandum disclosing the factual basis of its claims and
defenses and all legal issues raised. At the prehearing meeting, the Arbitrator
will set a schedule for submissions and hearings consistent with the
Arbitrator’s powers as set forth in these Arbitration Procedures.         3.4.6
Discovery. Subject to any reasonable time limitations and expedition procedures
established by the Arbitrator to comply with Section 3.4.5, the Disputing
Parties will be entitled to discover all documents and information reasonably
necessary for a full understanding of any legitimate issue raised in the
arbitration, and the parties may use all methods of discovery available under
the Federal Rules of Civil Procedure and will be governed thereby.         3.4.7
  Abuse of Discovery. If the Arbitrator finds, after affording an opportunity to
be heard, that a Disputing Party has abused the discovery process or has failed
to act in good faith with regard to discovery or these Arbitration Rules, the
Arbitrator will have, in addition to any other powers conferred by law or the
Construction Industry Arbitration Rules of the American Arbitration Association,
those powers conferred upon trial courts by the Federal Rules of Civil
Procedure, subject to the same conditions and limitations set forth therein.    
    3.4.8 Rules of Evidence. The Arbitrator will apply the Federal Rules of
Evidence, but construe them liberally to allow for the admission of evidence
that is helpful in resolving the Dispute. Rulings on the admission of evidence
made by the Arbitrator at the hearing will be final, binding and not subject to
any appeal.         3.4.9 Authority of Arbitrator. Unless the Disputing Parties
agree otherwise, in deciding the substance of the Dispute brought before the
Arbitrator, the Arbitrator will have the authority, power and right to award
damages and provide for other remedies as are available at law or in equity,
except that: (i)  the Arbitrator will have no authority to award monetary relief
greater than that sought by the Initiating Party as stated in its Dispute Notice
or to award non-monetary relief (except to the extent otherwise authorized under
Section 3.4.7); (ii) the Arbitrator will not have the authority to grant
temporary or permanent injunctive relief; (iii) the Arbitrator will have the
authority only to interpret and apply the provisions of a Project Agreement but
shall have no authority to make an award or impose a remedy that is inconsistent
with the terms and conditions of the applicable Project Agreement; and (iv) in
all cases the Arbitrator will have no authority to award Consequential Damages
against any Party under any circumstances other than in accordance with the
Project Agreements. All Parties hereby waive their right, if any, to recover
such excluded damages in connection with any Dispute sought to be resolved under
these Arbitration Procedures.         3.4.10 Award Final and Binding; No
Precedential Effect. At the time of the award, the Arbitrator will prepare and
provide to the Disputing Parties findings of fact and conclusions of law
supporting the award. The award of the Arbitrator, as well as the findings of
fact and conclusions of law, will be final, binding and not 

 

Schedule 1-6

 

 

Execution Version

 

    subject to any appeal, but will have no precedential effect with respect to
any matter or Proceeding other than the arbitration to which they relate;
provided, however, an award shall be subject to an judicial action to vacate on
grounds the award was not within the Arbitrator’s authority or any other grounds
permitted under the United States Arbitration Act; and provided, further,
however, that any issue or claim that was or could have been raised in the
arbitration by a party to the Project Agreements that were the subject of the
Dispute for which the Arbitrator has issued an award, shall be given preclusive
effect and shall be deemed to be res judicata in any subsequent Proceeding.    
    3.4.11 Costs and Expenses. Except as otherwise decided by the Arbitrator
under the provisions of Section 3.4.7, and as otherwise permitted by the terms
of any Project Agreement, each Disputing Party will bear its own costs and
expenses of the arbitration, including attorneys and expert witness fees, and
will equally share the expense of the Arbitrator and the administrative expenses
of the arbitration.       3.5 Enforcement. These Arbitration Procedures,
together with a final award of the Arbitrator, will be enforceable in any state
or federal court of competent jurisdiction in the states of North Dakota or
South Dakota. Except as otherwise provided in this Article 3, enforcement of the
Parties’ agreement to arbitrate and all procedural aspects thereof, including
the construction and interpretation of these Arbitration Procedures, the scope
of issues subject to arbitration, allegations of waiver, delay or defenses as to
arbitrability, and the rules (except as otherwise provided in these Arbitration
Procedures) governing the conduct of the arbitration will be governed by and
construed pursuant to the United States Arbitration Act.       3.6
Confidentiality of Proceedings. All Proceedings related to resolution of a
Dispute pursuant to these Arbitration Procedures, including all documents
prepared or obtained during discovery or produced during a hearing or meeting
(other than documents already in the public domain) and all testimony or
recordings of testimony, including depositions, affidavits and expert reports
exchanged by the Disputing Parties or produced during a hearing or meeting, will
be deemed to be Confidential Information. In addition to the enforcement powers
set forth in Section 3.5, the courts described in Section 3.5 will have
jurisdiction to enter and enforce such protective Orders and to grant and
enforce such appropriate injunctive relief sought by a Disputing Party to
maintain the confidentiality of the Proceedings and to protect the Disputing
Parties from inappropriate disclosure. No bond or other security will be
required in connection with such injunctive relief. The prevailing Party in any
such action will be entitled to all of its reasonable attorneys’ fees and other
costs and expenses associated with the enforcement of these confidentiality
provisions.    

 

ARTICLE 4
MISCELLANEOUS PROVISIONS

 

4.1 Headings. The headings of the articles, sections and subsections of each
Project Agreement are intended for the convenience of the Owners only and will
in no way be held to explain, modify, construe, limit, amplify or aid in the
interpretation of the

 

Schedule 1-7

 

 

Execution Version

 

  provisions hereof. The terms “this Agreement,” “hereof,” “herein,”
“hereunder,” “hereto,” “hereby” and similar expressions refer to, as applicable,
each Project Agreement as a whole and not to any particular article, section,
subsection or other portion thereof and include the appendices, schedules and
exhibits thereto and any document, instrument or agreement executed and/or
delivered pursuant thereto unless expressly so limited, and the terms “this
Section” or “this Article” refer to the section or article in which such words
occur.     4.2 Scope of Agreement. Unless the context otherwise requires, all
references in a Project Agreement or in any appendix, schedule, exhibit or
instrument thereto, to the assets, Property interests, operations, business,
financial statements, employees, books and records, accounts receivable,
accounts payable, contracts or other attributes thereunder will mean such items
or attributes as they are used in, apply to, or relate to such Project
Agreement.     4.3 Interpretation. The Owners have participated jointly in the
negotiation and drafting of each Project Agreement. If an ambiguity or question
of intent or interpretation arises, each Project Agreement is to be construed as
if drafted jointly by the Parties and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of such Project Agreement. The terms and phrases used in each
Project Agreement, unless the context otherwise requires, are to be interpreted
as follows: (i) the words “including,” “include” or “includes” mean including
without limitation; (ii) reference to any agreement (including a Project
Agreement), appendix, schedule, exhibit, instrument or coverage policy means as
such is amended, modified or supplemented, including by Change Order, waiver or
consent; (iii) reference to any Applicable Law or Applicable Energy Regulation
means such Applicable Law or Applicable Energy Regulation as amended, modified,
codified or reenacted, in whole or part, and in effect from time to time;
(iv) reference to any Owner includes such Owner’s successors and assigns, to the
extent that such successors and assigns are permitted by the applicable Project
Agreement; (v) pronouns in masculine, feminine and neuter genders are to be
construed to state and include any other gender; (vi) the words “will” and
“shall” have the same meaning; and (vii) unless the context otherwise requires,
all defined terms in this Schedule 1 or in any Project Agreement include the
singular and the plural.     4.4 Relationship of Owners; New Owners. The
covenants, obligations and liabilities of the parties to each Project Agreement
are several, and not joint or collective, and nothing contained in any Project
Agreement will ever be construed to create an association, joint venture, trust,
partnership or other legal relationship, or to impose a trust or partnership
covenant, obligation or liability on or with regard to any of the parties to a
Project Agreement. The Owners agree that every Person that desires to acquire an
interest in the Project will do so in accordance with the terms of the Project
Ownership Agreement and will become a signatory to all of the Project Agreements
by executing the applicable Transfer Agreement. Each Owner, the Construction
Manager, each Maintenance Provider and each Control Center Authority will be
individually responsible for its own covenants, obligations and liabilities in
each Project Agreement to which it is a party. No Owner will be under the
control of, or will be deemed to control, the other Owner or the Owners

 

Schedule 1-8

 

 

Execution Version

 

  as a group. No Owner acting in any capacity is the agent of, or has a right or
power to bind, the other Owner without its express written consent, except to
the extent Agency Authority has been granted to an Owner by the other Owner.    
4.5 No Rights or Benefits to Third Parties. Except as otherwise specifically
provided in a Project Agreement, the Owners do not intend to create rights in,
or to grant remedies to, any Third Party as a beneficiary of any Project
Agreement or to create any duty to, or standard of care on behalf of, any Third
Party by any covenant, obligation or undertaking established in any Project
Agreement. There are no incidental Third Party beneficiaries to any Project
Agreement and, by way of clarification and not of limitation, no Governmental
Body, customer or member of an Owner or customer of an Owner’s member is an
intended or incidental Third Party beneficiary thereof.     4.6 Binding
Obligations. Each Project Agreement is binding upon and inures to the benefit of
the permitted successors and assigns, if any, of the Owners.     4.7
Severability. If any term, covenant or condition of a Project Agreement or the
application of such term, covenant or condition is held invalid or unenforceable
as to any Person or circumstance by any Governmental Body, all other terms,
covenants or conditions of such Project Agreement and their application will not
be affected thereby, but will remain in force and effect unless such a
Governmental Body holds that the provisions are not separable from all other
provisions of such Project Agreement. The Owners and each other party to a
Project Agreement specifically consent to the “blue- penciling” of such Project
Agreement by any Governmental Body to construe as valid and enforceable the
terms and conditions of such Project Agreement, consistent with the intent of
the parties thereto. Such Governmental Body will have the authority to reform
and interpret the terms and conditions of a Project Agreement to find a valid
and enforceable construction of such Project Agreement that is consistent with
the intent of the parties thereto and hold all invalid and unenforceable
provisions, if any, as separable from all other remaining provisions.     4.8
Amendment and Waiver. No purported amendment of a Project Agreement will be
effective unless in a writing specifically referring to such Project Agreement,
which is executed and delivered by all of the parties to such Project Agreement.
The terms, conditions, warranties, representations and covenants contained in a
Project Agreement, including the documents, instruments and agreements executed
and delivered by any of the parties thereto pursuant to such Project Agreement,
may be waived only by a written instrument executed by the Party against whom
such waiver is sought to be enforced. Any such waiver will only be effective in
the specific instance and for the specific purpose for which it was given and
will not be deemed a waiver of any other provision thereof or of the same breach
or default upon any recurrence thereof. No failure on the part of any Party to a
Project Agreement, as applicable in the circumstances, to exercise, and no delay
in exercising, any right thereunder will operate as a waiver thereof nor will
any single or partial exercise of any right thereunder preclude any other or
further exercise thereof or the exercise of any other right.

 

Schedule 1-9

 

 

Execution Version

 

4.9  Execution in Counterparts and Delivery of Electronic Signatures. Each
Project Agreement may be executed in any number of counterparts. All such
counterparts will be deemed to be originals and will together constitute but one
and the same instrument. Each Project Agreement will become effective upon its
execution by the applicable Parties thereto. The executed counterparts of a
Project Agreement and any ancillary documents thereto, such as amendments, may
be delivered by electronic means, such as email and/or facsimile, and the
receiving Party may rely on the receipt of such executed counterpart as if the
original had been received.     4.10 Governing Law; Venue; Waiver of Jury Trial.
Each Project Agreement will be governed by and construed in accordance with the
laws of the State of South Dakota (exclusive of conflicts of law provisions of
any jurisdiction and the principles of comity), except for those Applicable Laws
relating to Project Real Property which govern within the state of location of
such Property. With respect to disputes that are not governed by the dispute
resolution provisions in Article 3 or Article 18 of the Project Ownership
Agreement or if the dispute resolution provisions in Article 3 or Article 18 of
the Project Ownership Agreement are not enforceable for any reason, the parties
to each Project Agreement agree and consent that any Proceeding seeking to
enforce any provision of such Project Agreement will be instituted and
adjudicated solely and exclusively in any state or federal court of competent
jurisdiction located in the State of North Dakota or South Dakota. Each party to
a Project Agreement agrees that each such court will have personal jurisdiction
over it with respect to such Proceeding, and waives any objections it may have,
and expressly consents, to such personal jurisdiction. EACH PARTY TO A PROJECT
AGREEMENT WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH ANY PROJECT AGREEMENT.  
  4.11 Assignment. No party to a Project Agreement may Transfer its interest in
such Project Agreement, except an Owner may assign it’s interest in a Project
Agreement as part of and to the extent is Ownership Percentage in the Project is
transferred as provided in the Project Ownership Agreement.     4.12 Payment in
Business Days. Notwithstanding anything to the contrary in any Project
Agreement, if any payment required to be made under a Project Agreement falls
due on a day that is not a Business Day, such payment will be due on the next
succeeding Business Day.     4.13 Further Assurances. Each Party to a Project
Agreement will use its commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
or advisable under Applicable Law to consummate and make effective the
transactions contemplated by each Project Agreement to which it is a Party in a
manner consistent with Applicable Law.     4.14 Cooperation. Each Owner will
make good faith efforts to cooperate with the other Owner to comply with the
terms and conditions of the Project Agreements, Project

 

Schedule 1-10

 

 

Execution Version

 

  Construction Contracts, Real Property Agreements, other agreements between the
Owners relating to the Project, and all critical permits, contracts and
agreements entered into in connection with the Project, and other obligations
and commitments arising in connection with the Project.     4.15 [Reserved].    
4.16 Currency. All payments under all Project Agreements will be made in such
currency as is legal tender for the payment of debts in the United States.      
4.17 Entire Agreement. Each Project Agreement, together with all other Project
Agreements, constitutes the entire agreement between or among, as applicable,
the respective Parties thereto, with respect to the subject matter thereof, and
supersedes all prior oral or written agreements, understandings, representations
and warranties, and courses of conduct and dealings between or among, as
applicable, the Parties thereto, on the subject matter thereof. Each Owner
acknowledges and agrees that it would not have entered into any individual
Project Agreement in its capacity as an Owner without the execution and delivery
of all of the other Project Agreements to which it is a Party in its capacity as
an Owner.

 

Schedule 1-11

 

 

Execution Version

 

EXHIBIT 1

 

NOTICES

 

TO OWNERS OR DISCRETELY OWNED SUBSTATION OWNERS:

 

If to Otter Tail POWER COMPANY: 

 

Otter Tail Power Company 

215 S. Cascade St. 

P.O. Box 496 

Fergus Falls, MN 56538-0496 

ATTENTION: vICE pRESIDENT of transmission 

Fax: 218-739-8625 

TELEPHONE: 218-739-8594 

 

with a mandatory copy to: 

 

Otter Tail Power Company 

215 S. Cascade St. 

P.O. Box 496 

Fergus Falls, MN 56538-0496 

ATTENTION: GENERAL COUNSEL 

Fax: 218- 998-3165 

TELEPHONE: 218-739-8350

 

If to MONTANA-DAKOTA UTILITIES CO.:  

 

MONTANA DAKOTA UTILITIES 

400 N. 4TH ST. 

BISMARCK, ND 58501-4092 

ATTENTION: VICE PRESIDENT – ELECTRIC SUPPLY 

Phone: (701) 530-1016 

 

with a mandatory copy to: 

 

MDU RESOURCES GROUP, INC. 

P.O. Box 5650 

1200 West Century Avenue 

Bismarck, ND 58506 

ATTENTION: GENERAL COUNSEL 

Phone: (701) 530-1016 

 

TO THE CONSTRUCTION MANAGER:

 

Otter Tail Power Company 

215 S. Cascade St. 

P.O. Box 496

 

Exhibit 1-1

 

 

Execution Version

 

Fergus Falls, MN 56538-0496 

ATTENTION: vICE pRESIDENT of transmission 

Fax: 218-739-8625 

TELEPHONE: 218-739-8594 

  

with a mandatory copy to: 

  

Otter Tail Power Company 

215 S. Cascade St. 

P.O. Box 496 

Fergus Falls, MN 56538-0496 

ATTENTION: GENERAL COUNSEL 

Fax: 218- 998-3165 

TELEPHONE: 218-739-8350 

 

TO THE RESPONSIBLE ENTITIES:  

 

If to Otter Tail POWER COMPANY:

 

Otter Tail Power Company 

215 S. Cascade St. 

P.O. Box 496 

Fergus Falls, MN 56538-0496 

ATTENTION: vICE pRESIDENT of transmission 

Fax: 218-739-8625 

TELEPHONE: 218-739-8594 

 

with a mandatory copy to: 

 

Otter Tail Power Company 

215 S. Cascade St. 

P.O. Box 496 

Fergus Falls, MN 56538-0496 

ATTENTION: GENERAL COUNSEL 

Fax: 218- 998-3165 

TELEPHONE: 218-739-8350

 

If to MONTANA-DAKOTA UTILITIES CO.:

 

MONTANA DAKOTA UTILITIES 

400 N. 4TH ST. 

BISMARCK, ND 58501-4092 

ATTENTION: VICE PRESIDENT – ELECTRIC SUPPLY 

Phone: (701) 530-1016 

 

with a mandatory copy to: 

 

Exhibit 1-2

 

 

Execution Version

  

MDU RESOURCES GROUP, INC. 

P.O. Box 5650 

1200 West Century Avenue 

Bismarck, ND 58506 

ATTENTION: GENERAL COUNSEL 

Phone: (701) 530-1016 

 

TO THE AUTHORIZED OWNER REPRESENTATIVES: 

 

If to Otter Tail POWER COMPANY:

 

Representative: Joann thompson 

Fax: 218-739-8594 

email: jthompson@otpco.com 

 

Alternate: Al koeckeritz 

Fax: 218-739-8416 

email: akoeckeritz@otpco.com 

 

ADDRESS: 

Otter Tail Power Company 

215 S. Cascade St. 

P.O. Box 496 

Fergus Falls, MN 56538-0496 

 

If to MONTANA-DAKOTA UTILITIES CO.: 

 

REPRESENTATIVE: JAY SKABO 

FAX: 701-222-7606 

EMAIL: JAY.SKABO@MDU.COM 

 

ALTERNATE: DAN ALBRECHT 

FAX: 701-221-3990 

EMAIL: DAN.ALBRECHT@MDU.COM 

 

ADDRESS: 

MONTANA DAKOTA UTILITIES 

400 N. 4TH ST. 

BISMARCK, ND 58501-4092

 

Exhibit 1-3

 

 

Execution Version

  

SCHEDULE 3.2.3.1.8

 

AUTHORIZED OWNER REPRESENTATIVES 

 

TO THE AUTHORIZED OWNER REPRESENTATIVES: 

 

FOR Otter Tail POWER COMPANY: 

 

Representative: Joann thompson 

Fax: 218-739-8594 

email: jthompson@otpco.com 

 

Alternate: Jason Weiers 

Fax: 218-739-8311 

email: jweiers@otpco.com 

 

ADDRESS: 

Otter Tail Power Company

215 S. Cascade St. 

P.O. Box 496 

Fergus Falls, MN 56538-0496

FOR Montana Dakota Utilities: 

 

Representative: Jay skabo 

Fax: 701-222-7606 

email: jay.skabo@mdu.com 

 

Alternate: Dan Albrecht 

Fax: 701-221-3990 

EMAIL: dan.albrecht@mdu.com 

 

ADDRESS: 

MOntana Dakota Utilities 

400 N. 4th st. 

bismarck, nd 58501-4092

 

 

   

 

 

 

Execution Version

 

Exhibit A

 

Development Period Assets 

 

Engineering Assets 

 

1)Design Criteria

2)Conductor Optimization Study

3)Corona & EMF Study

4)Structure Study

5)5mA Study

6)Preliminary P&P Drawings

7)Preliminary Typical Structure Drawings

8)Cost Estimate

9)LiDAR Specification

10)OHGW Segmentation Memo

11)South Dakota Pre-Filed Testimony

12)RCR Spotting & Cost Estimates

13)Preliminary Soil Boring Locations

14)Soil Borings

15)Access plan

  

Environmental Assets 

 

1)Completed studies and reports

a)Routing analysis – November 2012 to June 2013

b)Ellendale 345kV Substation wetland jurisdictional determination – December
2012

c)Habitat classification model analysis – November 2012

d)Bald Eagle Stick Nest & Sharp-tailed Grouse Lek Survey Report – May 2013

e)Draft line marking recommendations – July 2013

f)Class I cultural resources literature search, North Dakota – July 2013

g)Level I cultural resources literature search, South Dakota – July 2013

h)Dakota Skipper Survey Report – September 2013

i)Ellendale 345kV Substation noise assessment – October 2013

j)THPO windshield review – November 2013

k)2014 Dakota skipper and Poweshiek skipperling Survey Report – A Supplement to
the 2013 Report – October 2014

l)Public Hearing Questions/Response: Relative to HVTL Project Impact(s) To
Federal Crop Insurance Program Participation – August 2014

m)Landowner packets for SD and ND

n)Cultural Discovery action plan

o)Soybean cyst nematode field survey

p)Soybean cyst nematode mitigation plans for environmental surveys and soil
borings.

 

2)Anticipated reports

a)Soybean cyst nematode final field survey

b)Soybean cyst nematode mitigation plan for construction Wetland verification
and delineation report – future completion depends on when field work is
complete

 

 

 

 

 

Execution Version

 

c)Class III cultural resources literature search, North Dakota – future
completion depends on when field work is complete; includes THPO findings

d)Level III cultural resources literature search, South Dakota – future
completion depends on when field work is complete; includes THPO findings

e)Historic structure report

f)Cultural Resources unanticipated discovery plan

  

3)Anticipated permit/approval documents

a)USFWS EA

b)SD COE 404 permit application

c)ND COE 404 permit application

d)ND NPDES

e)SD NPDES

f)ND State Engineer – Drain Permit Application

g)NRCS approval

  

4)Anticipated surveys

a)Cultural resources - April – May 2015

b)Wetlands - April – May 2015

c)SCN – April – May 2015

d)Raptor nest survey – before tree clearing

e)ND tree inventory – Fall 2015

f)Dakota skipper and Poweshiek skipperling survey – July 2015

g)Bats – only if trees are not cleared in the winter

h)Sharp-tailed grouse lek surveys – March to May of each construction year

i)Migratory nesting bird surveys – April to August of each construction year

j)Piping plover surveys – May and June of each construction year

  

State and local permits

1)ND

a)ND PSC Route Permit

b)VanMeter Township

i)Setback Variance

ii)Conditional Use Permit

2)SD

a)SD PSC Route Permit

  

Right-of-Way Assets

1)Real Property Plan

2)Completed Landowner SORs

3)Condemnation appraisals

 

 

 

 

Execution Version

  

REAL ESTATE FORMS

Form
Number Form Title 1

Survey  

A.          First Contact /Landowner Interview 

B.          Survey Permission Forms – Land, Environmental, Cultural

2

Title  

A.     Surface Ownership and Encumbrance Report

3

Options 

A.          SD Option Agreement with Exhibits 

B.           ND Option Agreement (Right to annual installment payments)with
Exhibits

4

Easements 

A.     SD Transmission Easement 

B.     ND Transmission Easement 

C.     SD Overhang Easement 

D.     ND Overhand Easement 

E.     SD Permanent Ingress/Egress Easement 

F.      SD Temporary Ingress/Egress Easement 

G.     ND Permanent Ingress/Egress Easement 

H.     ND Temporary Ingress/Egress Easement

5

Consents/Subordination 

A.          Consent of Mortgagee to Subordinate Mortgage to Easement 

B.          Subordination/Utility Crossing Agreement

6

Compensation 

A.     Payment Schedule Calculator - spreadsheet to be populated 

B.     SD Easement Payment Agreement 

C.     ND Easement Payment Agreement 

D.     Final Release

7

Encroachments 

A.     SD Encroachment Agreement 

B.     ND Encroachment Agreement

8

Condemnation 

A.      Final Offer Letter

9

Construction 

A.     Construction Contact/Special Request/By-products Report 

B.     New Name for Change in Centerline 

C.     Temporary Storage/Staging Area/Field Office Locations Lease

 

10

Damages 

A.     Damage Worksheet 

B.      SD General Release and Damage Settlement 

C.     ND General Release and Damage Settlement

11

Trees 

A.      Tree Replacement Inventory Form

 

Real Property Interests

 

 

 

 

Execution Version

  

Dickey County, ND

 

Parcel ID Landowner Name Twp Rng Sec Legal
Description Crop Acres Pasture Acres Total Acres Option Status [**] [**] [**]
[**] [**] [**] 6.04 0 6.04 Signed [**] [**] [**] [**] [**] [**] 0 3.55 3.55
Signed [**] [**] [**] [**] [**] [**] 2.62 1.93 4.55 Signed [**] [**] [**] [**]
[**] [**] 7.35 1.74 9.09 Signed [**] [**] [**] [**] [**] [**] 1.28 0 1.28 Signed
[**] [**] [**] [**] [**] [**] 7.84 0 7.84 Signed [**] [**] [**] [**] [**] [**]
0.73 0 0.73 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Denied [**] [**]
[**] [**] [**] [**] 1.85 0.58 2.43 Signed [**] [**] [**] [**] [**] [**] 4.76
0.69 5.45 Signed [**] [**] [**] [**] [**] [**] 6.71 3.14 9.85 Signed [**] [**]
[**] [**] [**] [**] 7.94 1.15 9.09 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934. 

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 2.2 1.27 3.47 Signed [**] [**] [**] [**] [**] [**]
6.43 0 6.43 Signed [**] [**] [**] [**] [**] [**] 2.65 0 2.65 Signed [**] [**]
[**] [**] [**] [**] 4.61 2.05 6.66 Signed [**] [**] [**] [**] [**] [**] 13.76
1.55 15.31 Signed [**] [**] [**] [**] [**] [**] 8.87 0 8.87 Signed [**] [**]
[**] [**] [**] [**] 2.73 0 2.73 Signed [**] [**] [**] [**] [**] [**] 8.35 0 8.35
Signed [**] [**] [**] [**] [**] [**] 12.29 1.01 13.3 Signed [**] [**] [**] [**]
[**] [**] 4.32 2.1 6.42 Signed [**] [**] [**] [**] [**] [**] 6.24 0.41 6.65
Signed [**] [**] [**] [**] [**] [**] 2.23 0.21 2.44 Signed [**] [**] [**] [**]
[**] [**] 2.28 0 2.28 Signed [**] [**] [**] [**] [**] [**] 5.72 0 5.72 Signed
[**] [**] [**] [**] [**] [**] 9.57 0 9.57 Signed

   

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

  

  

 

 

 

Execution Version 

Brown County, SD

 

Parcel ID Landowner Name Twp Rng Sec Legal
Description Crop Acres Pasture Acres Total Acres Option Status [**] [**] [**]
[**] [**] [**] 6.42 2.67 9.09 Signed [**] [**] [**] [**] [**] [**] 6.82 2.27
9.09 Signed [**] [**] [**] [**] [**] [**] 7.26 1.83 9.09 Signed [**] [**] [**]
[**] [**] [**] 6.99 2.1 9.09 Signed [**] [**] [**] [**] [**] [**] 8.27 0.82 9.09
Signed [**] [**] [**] [**] [**] [**] 7.41 1.36 8.77 Signed [**] [**] [**] [**]
[**] [**] 7.78 1.31 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed
[**] [**] [**] [**] [**] [**] 0 9.09 9.09 Signed [**] [**] [**] [**] [**] [**]
7.63 1.46 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**]
[**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09
Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 5.25 0 5.25 Signed [**] [**]
[**] [**] [**] [**] 7.02 2.07 9.09 Denied [**] [**] [**] [**] [**] [**] 6.75
2.34 9.09 Denied [**] [**] [**] [**] [**] [**] 9.09   9.09 Signed [**] [**] [**]
[**] [**] [**] 7.53 1.56 9.09 Denied [**] [**] [**] [**] [**] [**] 9.09   9.09
Signed [**] [**] [**] [**] [**] [**] 5.6 3.49 9.09 Signed [**] [**] [**] [**]
[**] [**] 11.05 2.48 13.53 Signed [**] [**] [**] [**] [**] [**] 0 1.37 1.37
Negotiation [**] [**] [**] [**] [**] [**] 10.03 0 10.03 Signed [**] [**] [**]
[**] [**] [**] 7.81 1.22 9.03 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**]
6.37 2.72 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**]
[**] [**] [**] [**] 2.86 2.3 5.16 Signed [**] [**] [**] [**] [**] [**] 4.98 0
4.98 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Denied [**] [**] [**] [**]
[**] [**] 9.09 0 9.09 Denied [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed
[**] [**] [**] [**] [**] [**] 7.28 1.81 9.09 Signed [**] [**] [**] [**] [**]
[**] 5.28 3.57 8.85 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**]
[**] [**] [**] [**] [**] 3.87 0.14 4.01 Signed [**] [**] [**] [**] [**] [**]
6.57 0.7 7.27 Signed [**] [**] [**] [**] [**] [**] 2.62 0 2.62 Signed [**] [**]
[**] [**] [**] [**] 2.66 0 2.66 Signed [**] [**] [**] [**] [**] [**] 2.62 0 2.62
Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 6.45 2.64 9.09 Signed [**] [**] [**] [**] [**]
[**] 1.99 0 1.99 Signed [**] [**] [**] [**] [**] [**] 6.57 3.26 9.83 Signed [**]
[**] [**] [**] [**] [**] 6.57 3.26 9.83 Signed [**] [**] [**] [**] [**] [**] 1.9
0 1.9 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**]
[**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 6.07 3.02 9.09
Negotiation [**] [**] [**] [**] [**] [**] 6.82 3.07 9.89 Denied [**] [**] [**]
[**] [**] [**] 3.64 0 3.64 Signed [**] [**] [**] [**] [**] [**] 3.56 0 3.56
Signed [**] [**] [**] [**] [**] [**] 5.53 0 5.53 Signed [**] [**] [**] [**] [**]
[**] 5.45 0 5.45 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 3.26 0 3.26 Signed [**] [**] [**] [**] [**] [**]
2.65 0 2.65 Signed [**] [**] [**] [**] [**] [**] 6.25 0 6.25 Signed [**] [**]
[**] [**] [**] [**] 5.86 0 5.86 Signed [**] [**] [**] [**] [**] [**] 2.84 0 2.84
Signed [**] [**] [**] [**] [**] [**] 3.78 0 3.78 Signed [**] [**] [**] [**] [**]
[**] 5.31 0 5.31 Signed [**] [**] [**] [**] [**] [**] 6.09 0 6.09 Signed [**]
[**] [**] [**] [**] [**] 3.78 0 3.78 Signed [**] [**] [**] [**] [**] [**] 16.55
0 16.55 Denied [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**]
[**] [**] [**] 0.43 0 0.43 Signed [**] [**] [**] [**] [**] [**] 18.18 0 18.18
Signed [**] [**] [**] [**] [**] [**] 9.06 0 9.06 Signed [**] [**] [**] [**] [**]
[**] 3.3 1.26 4.56 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 4.56 0 4.56 Signed [**] [**] [**] [**] [**] [**]
9.08 0 9.08 Signed [**] [**] [**] [**] [**] [**] 9.08 0 9.08 Signed [**] [**]
[**] [**] [**] [**] 2.58 0 2.58 Signed [**] [**] [**] [**] [**] [**] 0 4.53 4.53
Signed [**] [**] [**] [**] [**] [**] 1.96 0 1.96 Signed [**] [**] [**] [**] [**]
[**] 3.95 0 3.95 Signed [**] [**] [**] [**] [**] [**] 2.57 0 2.57 Signed [**]
[**] [**] [**] [**] [**] 7.09 0 7.09 Signed [**] [**] [**] [**] [**] [**] 2.58 0
2.58 Signed [**] [**] [**] [**] [**] [**] 0.26 0 0.26 Signed [**] [**] [**] [**]
[**] [**] 9.09 0 9.09 Denied

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 0
18.18 18.18 Signed [**] [**] [**] [**] [**] [**] 14.75 0 14.75 Signed [**] [**]
[**] [**] [**] [**] 4.61 0 4.61 Signed [**] [**] [**] [**] [**] [**] 5.88 0 5.88
Signed [**] [**] [**] [**] [**] [**] 10.12 10.75 20.87 Signed [**] [**] [**]
[**] [**] [**] 4.54 0 4.54 Signed [**] [**] [**] [**] [**] [**] 4.54 0 4.54
Signed [**] [**] [**] [**] [**] [**] 6.81 0 6.81 Signed [**] [**] [**] [**] [**]
[**] 2.27 0 2.27 Signed [**] [**] [**] [**] [**] [**] 18.18 0 18.18 Signed [**]
[**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0
9.09 Denied [**] [**] [**] [**] [**] [**] 0 6.11 6.11 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 5.91 0 5.91 Signed [**] [**] [**] [**] [**] [**]
3.16 0 3.16 Signed [**] [**] [**] [**] [**] [**] 5.71 0 5.71 Signed [**] [**]
[**] [**] [**] [**] 0 5.43 5.43 Signed [**] [**] [**] [**] [**] [**] 3.66 0 3.66
Signed [**] [**] [**] [**] [**] [**] 3.4 0 3.4 Signed [**] [**] [**] [**] [**]
[**] 5.09 0 5.09 Signed [**] [**] [**] [**] [**] [**] 4.69 0 4.69 Signed [**]
[**] [**] [**] [**] [**] 4.41 0 4.41 Signed [**] [**] [**] [**] [**] [**] 3.42
0.57 3.99 Signed [**] [**] [**] [**] [**] [**] 0 9.09 9.09 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**]
6.24 3.51 9.75 Denied [**] [**] [**] [**] [**] [**] 1.15 0 1.15 Denied [**] [**]
[**] [**] [**] [**] 6.5 2.59 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0
9.09 Signed [**] [**] [**] [**] [**] [**] 13.63 0 13.63 Signed [**] [**] [**]
[**] [**] [**] 0 2.27 2.27 Signed [**] [**] [**] [**] [**] [**] 4.57 0 4.57
Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**]
[**] 4.52 0 4.52 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**]
[**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 18.18
0 18.18 Signed [**] [**] [**] [**] [**] [**] 5.46 3.63 9.09 Signed [**] [**]
[**] [**] [**] [**] 4.54 0 4.54 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 4.54 0 4.54 Signed [**] [**] [**] [**] [**] [**]
9.28 8.9 18.18 Signed [**] [**] [**] [**] [**] [**] 5.65 3.44 9.09 Signed [**]
[**] [**] [**] [**] [**] 2.67 6.42 9.09 Signed [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 7.93 1.16 9.09 Signed [**] [**]
[**] [**] [**] [**] 6.39 2.7 9.09 Signed [**] [**] [**] [**] [**] [**] 14.1 4.08
18.18 Signed [**] [**] [**] [**] [**] [**] 5.51 3.58 9.09 Signed [**] [**] [**]
[**] [**] [**] 0 18.18 18.18 Signed [**] [**] [**] [**] [**] [**] 0 9.09 9.09
Signed [**] [**] [**] [**] [**] [**] 15.54 1.69 17.23 Signed [**] [**] [**] [**]
[**] [**] 15.54 1.69 17.23 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09
Signed [**] [**] [**] [**] [**] [**] 7.13 1.96 9.09 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Denied [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 2.75 0 2.75 Signed [**] [**]
[**] [**] [**] [**] 7.28 1.96 9.24 Signed [**] [**] [**] [**] [**] [**] 9.09
9.09 18.18 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**]
[**] [**] [**] [**] 2.07 7.02 9.09 Denied [**] [**] [**] [**] [**] [**] 8.82
0.27 9.09 Easement Only [**] [**] [**] [**] [**] [**] 0 0.22 0.22 Signed

 

Day County, SD

 

[**] [**] [**] [**] [**] [**] Crop Acres Pasture Acres Total Acres Option Status
[**] [**] [**] [**] [**] [**] 3.96 0 3.96 Signed [**] [**] [**] [**] [**] [**]
12.33 5.85 18.18 Signed [**] [**] [**] [**] [**] [**] 1.66   1.66 Signed [**]
[**] [**] [**] [**] [**] 2.83 0.39 3.22 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 5.55 0 5.55 Signed [**] [**] [**] [**] [**] [**]
8.38 0.71 9.09 Signed [**] [**] [**] [**] [**] [**] 2.65 0 2.65 Signed [**] [**]
[**] [**] [**] [**] 4.89 1.38 6.27 Signed [**] [**] [**] [**] [**] [**] 9.09 0
9.09 Signed [**] [**] [**] [**] [**] [**] 13.55 4.46 18.01 Signed [**] [**] [**]
[**] [**] [**] 0.87 1.17 2.04 Signed [**] [**] [**] [**] [**] [**] 4.36 2.83
7.19 Signed [**] [**] [**] [**] [**] [**] 4.71 0.47 5.18 Signed [**] [**] [**]
[**] [**] [**] 3.49 0.51 4 Signed [**] [**] [**] [**] [**] [**] 0.66 1.35 2.01
Easement Only [**] [**] [**] [**] [**] [**] 5.52 1.63 7.15 Signed [**] [**] [**]
[**] [**] [**] 5.57 3.61 9.18 Signed [**] [**] [**] [**] [**] [**] 7.89 8.61
16.5 Signed [**] [**] [**] [**] [**] [**] 0.5 0 0.5 Signed [**] [**] [**] [**]
[**] [**] 0 9.32 9.32 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 14.76 3.42 18.18 Signed [**] [**] [**] [**] [**]
[**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 7.9 1.19 9.09 Denied [**]
[**] [**] [**] [**] [**] 9.09 0 9.09 Denied [**] [**] [**] [**] [**] [**] 9.09 0
9.09 Signed [**] [**] [**] [**] [**] [**] 15.09 3.09 18.18 Signed [**] [**] [**]
[**] [**] [**] 10.85 0 10.85 Signed [**] [**] [**] [**] [**] [**] 3.37 0.41 3.78
Signed [**] [**] [**] [**] [**] [**] 2.01 1.38 3.39 Signed [**] [**] [**] [**]
[**] [**] 1.89 2.66 4.55 Signed [**] [**] [**] [**] [**] [**] 1.55 4.17 5.72
Signed [**] [**] [**] [**] [**] [**] 2.11 2.62 4.73 Signed [**] [**] [**] [**]
[**] [**] 3.56 0 3.56 Signed [**] [**] [**] [**] [**] [**] 1.86 0 1.86 Signed
[**] [**] [**] [**] [**] [**] 11.34 4.51 15.85 Signed [**] [**] [**] [**] [**]
[**] 9.09 0 9.09 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 15.91 0 15.91 Signed [**] [**] [**] [**] [**] [**]
0 0 0 Signed [**] [**] [**] [**] [**] [**] 2.27 0 2.27 Signed [**] [**] [**]
[**] [**] [**] 4.71 8.85 13.56 Signed [**] [**] [**] [**] [**] [**] 0 4.55 4.55
Signed [**] [**] [**] [**] [**] [**] 3.94 5.34 9.28 Signed [**] [**] [**] [**]
[**] [**] 7.81 1.47 9.28 Signed [**] [**] [**] [**] [**] [**] 6.61 2.48 9.09
Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**]
[**] 8.26 0.83 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Denied [**]
[**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 15.36
1.52 16.88 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Denied [**] [**]
[**] [**] [**] [**] 4.16 0.39 4.55 Signed [**] [**] [**] [**] [**] [**] 0 4.43
4.43 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 0 9.72 9.72 Denied [**] [**] [**] [**] [**] [**] 0
9.09 9.09 Signed [**] [**] [**] [**] [**] [**] 2.76 0 2.76 Signed [**] [**] [**]
[**] [**] [**] 13.64 0 13.64 Signed [**] [**] [**] [**] [**] [**] 4.55 0 4.55
Signed [**] [**] [**] [**] [**] [**] 4.05 0.5 4.55 Signed [**] [**] [**] [**]
[**] [**] 7.74 1.35 9.09 Denied [**] [**] [**] [**] [**] [**] 3.21 1.34 4.55
Signed [**] [**] [**] [**] [**] [**] 0 9.09 9.09 Denied [**] [**] [**] [**] [**]
[**] 6.41 2.68 9.09 Denied [**] [**] [**] [**] [**] [**] 0 4.55 4.55 Denied [**]
[**] [**] [**] [**] [**] 0 1.78 1.78 Signed [**] [**] [**] [**] [**] [**] 8.87
0.22 9.09 Signed [**] [**] [**] [**] [**] [**] 6.28 3.15 9.43 Signed [**] [**]
[**] [**] [**] [**] 16.64 1.54 18.18 Denied [**] [**] [**] [**] [**] [**] 6.1
2.99 9.09 Denied [**] [**] [**] [**] [**] [**] 6.46 2.63 9.09 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 6.93 2.16 9.09 Signed [**] [**] [**] [**] [**]
[**] 6.1 2.99 9.09 Signed [**] [**] [**] [**] [**] [**] 1.65 4.37 6.02 Denied
[**] [**] [**] [**] [**] [**] 4.76 4.33 9.09 Denied [**] [**] [**] [**] [**]
[**] 0 0.52 0.52 Easement Only [**] [**] [**] [**] [**] [**] 7.25 1.84 9.09
Signed [**] [**] [**] [**] [**] [**] 1.03 3.83 4.86 Signed [**] [**] [**] [**]
[**] [**] 3.15 1.4 4.55 Signed [**] [**] [**] [**] [**] [**] 8.12 0.97 9.09
Signed [**] [**] [**] [**] [**] [**] 6.81 2.28 9.09 Signed [**] [**] [**] [**]
[**] [**] 12.3 6.03 18.33 Signed [**] [**] [**] [**] [**] [**] 6.24 11.82 18.06
Signed [**] [**] [**] [**] [**] [**] 0.63 1.37 2 Easement Only [**] [**] [**]
[**] [**] [**] 1 1.14 2.14 Signed [**] [**] [**] [**] [**] [**] 7.12 3.52 10.64
Denied [**] [**] [**] [**] [**] [**] 0.36 4.74 5.1 Signed [**] [**] [**] [**]
[**] [**] 1.95 0 1.95 Denied

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 1.75 2.88 4.63 Signed [**] [**] [**] [**] [**]
[**] 4.02 2.73 6.75 Signed [**] [**] [**] [**] [**] [**] 3.37 3.48 6.85 Signed
[**] [**] [**] [**] [**] [**] 6.94 0 6.94 Denied [**] [**] [**] [**] [**] [**] 0
4.85 4.85 Signed [**] [**] [**] [**] [**] [**] 6.06 0 6.06 Signed [**] [**] [**]
[**] [**] [**] 4.85 0 4.85 Signed [**] [**] [**] [**] [**] [**] 4.4 0 4.4 Signed
[**] [**] [**] [**] [**] [**] 0 2.39 2.39 Signed [**] [**] [**] [**] [**] [**]
6.72 0 6.72 Denied [**] [**] [**] [**] [**] [**] 0 12.97 12.97 Signed [**] [**]
[**] [**] [**] [**] 2.68 1.45 4.13 Signed [**] [**] [**] [**] [**] [**] 0 1.79
1.79 Signed [**] [**] [**] [**] [**] [**] 6.69 2.4 9.09 Signed [**] [**] [**]
[**] [**] [**] 9.09 0 9.09 Denied [**] [**] [**] [**] [**] [**] 8.27 0.82 9.09
Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 18.18 0 18.18 Signed [**] [**] [**] [**] [**] [**]
18.26 0 18.26 Denied [**] [**] [**] [**] [**] [**] 0.03 0 0.03 Easement Only
[**] [**] [**] [**] [**] [**] 4.88 0 4.88 Signed [**] [**] [**] [**] [**] [**]
1.64 11.22 12.86 Signed [**] [**] [**] [**] [**] [**] 1.4 2.56 3.96 Denied [**]
[**] [**] [**] [**] [**] 0.85 4.32 5.17 Signed [**] [**] [**] [**] [**] [**]
4.04 1.14 5.18 Signed [**] [**] [**] [**] [**] [**] 4.75 0.43 5.18 Signed [**]
[**] [**] [**] [**] [**] 3.96 0 3.96 Denied [**] [**] [**] [**] [**] [**] 3.96
0.4 4.36 Signed [**] [**] [**] [**] [**] [**] 3.88 0 3.88 Signed [**] [**] [**]
[**] [**] [**] 3.88 0 3.88 Signed [**] [**] [**] [**] [**] [**] 5.08 0 5.08
Signed [**] [**] [**] [**] [**] [**] 4.78 0.3 5.08 Signed [**] [**] [**] [**]
[**] [**] 0.07 0.89 0.96 Signed [**] [**] [**] [**] [**] [**] 0.38 0 0.38
Easement Only

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 4.56 0 4.56 Signed [**] [**] [**] [**] [**] [**]
9.99 0 9.99 Signed [**] [**] [**] [**] [**] [**]     0 Signed [**] [**] [**]
[**] [**] [**] 5.19 0 5.19 Signed [**] [**] [**] [**] [**] [**] 4.62 0 4.62
Signed

 

Grant County, SD

                    Parcel ID Landowner Name Twp Rng Sec Legal
Description Crop
Acres Pasture
Acres Total
Acres Option
Status [**] [**] [**] [**] [**] [**] 8.43 0.66 9.09 Signed [**] [**] [**] [**]
[**] [**] 4.6 0 4.6 Signed [**] [**] [**] [**] [**] [**] 2.27 0 2.27 Signed [**]
[**] [**] [**] [**] [**] 0 8.94 8.94 Signed [**] [**] [**] [**] [**] [**] 0.6
0.79 1.39 Signed [**] [**] [**] [**] [**] [**] 2.29 5.48 7.77 Signed [**] [**]
[**] [**] [**] [**] 0.53 5.29 5.82 Signed [**] [**] [**] [**] [**] [**] 8.34
0.75 9.09 Signed [**] [**] [**] [**] [**] [**] 3 6.09 9.09 Signed [**] [**] [**]
[**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09
Signed [**] [**] [**] [**] [**] [**] 20.42 5.88 26.3 Signed [**] [**] [**] [**]
[**] [**] 0 0 0 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 0 9.09 9.09 Signed [**] [**] [**] [**] [**] [**]
4.55 0 4.55 Signed [**] [**] [**] [**] [**] [**] 0 0 0 Signed [**] [**] [**]
[**] [**] [**] 4.25 0 4.25 Signed [**] [**] [**] [**] [**] [**] 5.82 3.27 9.09
Signed [**] [**] [**] [**] [**] [**] 0 3.67 3.67 Signed [**] [**] [**] [**] [**]
[**] 18.18 0 18.18 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Denied [**]
[**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 4.84 0
4.84 Signed [**] [**] [**] [**] [**] [**] 0.47 0 0.47 Easement Only [**] [**]
[**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 9.09
18.18 Signed [**] [**] [**] [**] [**] [**] 9.21 0 9.21 Signed [**] [**] [**]
[**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 1.42 0.69 2.11
Signed [**] [**] [**] [**] [**] [**] 5.81 0 5.81 Signed [**] [**] [**] [**] [**]
[**] 5.04 0 5.04 Signed [**] [**] [**] [**] [**] [**] 2.3 0 2.3 Signed [**] [**]
[**] [**] [**] [**] 0.31 0 0.31 Easement Only [**] [**] [**] [**] [**] [**] 4.67
0 4.67 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 9.39 2.3 11.69 Signed [**] [**] [**] [**] [**]
[**] 10.91 0.31 11.22 Signed [**] [**] [**] [**] [**] [**] 0 9.09 9.09 Signed
[**] [**] [**] [**] [**] [**] 0 0.05 0.05 Easement Only [**] [**] [**] [**] [**]
[**] 2.99 6.1 9.09 Signed [**] [**] [**] [**] [**] [**] 0 2.07 2.07 Signed [**]
[**] [**] [**] [**] [**] 1.57 0 1.57 Signed [**] [**] [**] [**] [**] [**] 3.54 1
4.54 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**]
[**] [**] 6.87 0 6.87 Signed [**] [**] [**] [**] [**] [**] 1.57 0 1.57 Signed
[**] [**] [**] [**] [**] [**] 20 10 30 Signed [**] [**] [**] [**] [**] [**] 0
1.95 1.95 Signed [**] [**] [**] [**] [**] [**] 0 4.55 4.55 Signed [**] [**] [**]
[**] [**] [**] 0 0.17 0.17 Easement Only [**] [**] [**] [**] [**] [**] 7.36 1.42
8.78 Signed [**] [**] [**] [**] [**] [**] 8.67 0 8.67 Signed [**] [**] [**] [**]
[**] [**] 9.09 0 9.09 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 7.65 1.44 9.09 Signed [**] [**] [**] [**] [**]
[**] 6.22 2.87 9.09 Signed [**] [**] [**] [**] [**] [**] 3.67 5.42 9.09 Signed
[**] [**] [**] [**] [**] [**] 0.83 0 0.83 Signed [**] [**] [**] [**] [**] [**] 0
9.09 9.09 Signed [**] [**] [**] [**] [**] [**] 10.01 3.63 13.64 Signed [**] [**]
[**] [**] [**] [**] 0 0 0 Easement Only [**] [**] [**] [**] [**] [**] 3.65 3.03
6.68 Signed [**] [**] [**] [**] [**] [**] 6.5 0 6.5 Signed [**] [**] [**] [**]
[**] [**] 13.64 0 13.64 Signed [**] [**] [**] [**] [**] [**] 1.65 0 1.65 Signed
[**] [**] [**] [**] [**] [**] 1.9 1.74 3.64 Signed [**] [**] [**] [**] [**] [**]
8.6 0.49 9.09 Signed [**] [**] [**] [**] [**] [**] 2.2 0 2.2 Signed [**] [**]
[**] [**] [**] [**] 2.33 0 2.33 Signed [**] [**] [**] [**] [**] [**] 6.49 2.6
9.09 Signed [**] [**] [**] [**] [**] [**] 13.31 0 13.31 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 3.98 0.57 4.55 Denied [**] [**] [**] [**] [**]
[**] 3.03 0 3.03 Signed [**] [**] [**] [**] [**] [**] 5.68 0 5.68 Signed [**]
[**] [**] [**] [**] [**] 7.77 0 7.77 Signed [**] [**] [**] [**] [**] [**] 0 8.48
8.48 Signed [**] [**] [**] [**] [**] [**] 7.42 1.67 9.09 Signed [**] [**] [**]
[**] [**] [**] 1.64 2.91 4.55 Signed [**] [**] [**] [**] [**] [**] 1.81 0 1.81
Signed [**] [**] [**] [**] [**] [**] 9.12 2.8 11.92 Signed [**] [**] [**] [**]
[**] [**] 4.55 0 4.55 Signed [**] [**] [**] [**] [**] [**] 4.55 0 4.55 Signed
[**] [**] [**] [**] [**] [**] 5.76 0 5.76 Signed [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 0 0.1 0.1 Easement Only

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 5.04 13.14 18.18 Signed [**] [**] [**] [**] [**]
[**] 0 9.09 9.09 Signed [**] [**] [**] [**] [**] [**] 0 9.09 9.09 Signed [**]
[**] [**] [**] [**] [**] 4.55 0 4.55 Signed [**] [**] [**] [**] [**] [**] 1.16 0
1.16 Signed [**] [**] [**] [**] [**] [**] 6.83 5.78 12.61 Signed [**] [**] [**]
[**] [**] [**] 0.39 4.16 4.55 Signed [**] [**] [**] [**] [**] [**] 0 0.3 0.3
Easement Only [**] [**] [**] [**] [**] [**] 13.64 0 13.64 Signed [**] [**] [**]
[**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 8.69 0 8.69
Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**]
[**] 7.6 1.42 9.02 Signed [**] [**] [**] [**] [**] [**] 3.33 0 3.33 Signed [**]
[**] [**] [**] [**] [**] 4.63 4.46 9.09 Signed [**] [**] [**] [**] [**] [**]
4.53 4.56 9.09 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

[**] [**] [**] [**] [**] [**] 7.94 1.15 9.09 Signed [**] [**] [**] [**] [**]
[**] 8.3 0.52 8.82 Denied [**] [**] [**] [**] [**] [**] 17.95 0 17.95 Denied
[**] [**] [**] [**] [**] [**] 7.64 0 7.64 Denied

 

Legal/Regulatory Assets 

 

1.ND PSC Route Permit

2.SD PUC Route Permit

3.ND CPCN

4.SD Intervention Hearing Testimonies

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 

 

 

Execution Version

 

Exhibit B

 

Ownership Percentages

 

Big Stone South to Ellendale Project Owners Ownership
Percentages Otter Tail Power 50.0% Montana Dakota Utilities 50.0%

 

 

 

 

Execution Version

 

Exhibit C

 

Discretely Owned Substation Assets and Discretely Owned Substation Owners

 

Facility Owner Big Stone South Substation (See DOSA description and diagram
below) OTP Ellendale 345 Substation (See DOSA description and diagram below) MDU

 

The descriptions of the Discretely Owned Substation Assets (DOSA) as set forth
above and as described and depicted below are current as of the date of
execution of the Project Agreements, including this Agreement.

 

Big Stone South Discretely Owned Substation Assets

 

The Big Stone South  Substation DOSA consists of the 345 kV and the 230 kV
portions of the Big Stone South Substation which includes structural steel,
transformers, foundations, deadend structure for the Ellendale 345 kV
transmission line and associated insulators, jumpers from the jointly owned 345
kV transmission line to the 345 kV bus, the 345 kV bus including future
expansion of the 345 kV bus,  345 kV  and 230 kV breakers and associated
switches, line switch 3713, protection and control equipment, wave traps, fiber
patch panel and associated terminations, all as indicated in the diagram on
Exhibit C page C-2 below.

 

Ellendale 345 kV Substation Discretely Owned Substation Assets

 

The Ellendale 345 kV Substation DOSA consists of the 345 kV and the 230 kV
portions of the Ellendale 345 kV Substation which includes structural steel,
transformers, foundations, deadend structures for the Big Stone 345 kV
transmission line and associated insulators, jumpers from the jointly owned 345
kV transmission line to the 345 kV bus, the 345 kV and 230 kV bus including
future expansion of the 345 kV and 230 kV bus, 345 kV and 230 kV breakers with
associated switches, line switches, protection and control equipment, reactive
compensation, wave traps, fiber patch panel and associated terminations,
metering equipment, all as indicated in the diagram on Exhibit C page C-3 below.

 

C-1

 

 

Execution Version

 

EXHIBIT C (CONTINUED)

 

Big Stone South Discretely Owned Substation Assets

 

[**]

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

C-2

 

 

Execution Version

 

EXHIBIT C (CONTINUED)

 

Ellendale 345 kV Substation Discretely Owned Substation Assets

 

[**]

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

C-3

 

 

Execution Version

 

EXHIBIT E-1

 

FORM OF ASSIGNMENT, ASSUMPTION, PARTIAL NOVATION AND JOINDER AGREEMENT

 

[Use this form when an Owner is transferring less than 100% of its Ownership
Percentage.]

 

THIS ASSIGNMENT, ASSUMPTION, PARTIAL NOVATION AND JOINDER AGREEMENT (this
“Agreement”), dated as of ________________, _____ (the “Assignment Effective
Date”), by and among ___________________, a ___________ (“Assignor”),
___________________, a _________________ (“Assignee”) and [insert the name of
the then- current other Owner of the Project, excluding the Assignor] (the
“Other Owner”).  Capitalized terms not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Project Ownership Agreement,
dated as of [___________, 20__], by and between Otter Tail Power Company, a
corporation organized and existing under the laws of the State of Minnesota, and
Montana-Dakota Utilities Co., a division of MDU Resources Group, Inc., a
Delaware corporation (the “Project Ownership Agreement”).

 

RECITALS

 

A.           Assignor is the Owner of a ____ percent (___%) Ownership Percentage
under the Project Ownership Agreement;

 

B.           Assignor and Assignee have entered into the ______________
Agreement, dated as of _____________, ____ (the “Purchase Agreement”), pursuant
to which Assignor has agreed to sell and transfer to Assignee (the “Assignment”)
___ percent (___%) (the “Transferred Ownership Percentage”) of the right, title
and interest in and to Assignor’s Ownership Percentage (representing an
Ownership Percentage of ___ percent (___%)), together with all associated
rights, obligations, liabilities and interests of Assignor in and to the Project
with respect to such Ownership Percentage, except for Assignor’s obligations
that arose prior to the Assignment Effective Date, which shall remain the
obligation of Assignor (all such rights, obligations, liabilities and interests
to be transferred hereunder are collectively referred to as the “Assigned
Interests”), and Assignee has agreed to purchase the Assigned Interests, all as
more fully provided in the Purchase Agreement and herein;

 

C.           Assignor will retain ___ percent (___%) of the right, title and
interest in and to Assignor’s Ownership Percentage (representing an Ownership
Percentage of ___ percent (___%)) as set forth on revised Exhibit B to the
Project Ownership Agreement, a copy of which is attached hereto as Schedule 2,
together with all associated rights, obligations, liabilities and interests of
Assignor thereto and all of Assignor’s obligations that arose prior to the
Assignment Effective Date (the “Retained Interests”), and Assignor will, with
respect to and to the extent of the Retained Interests, remain an Owner under
the Project Ownership Agreement;

 

D.           Pursuant to Section 10.3.1.3 of the Project Ownership Agreement, it
is a condition precedent to the Transfer from Assignor to Assignee that this
Agreement be executed and delivered by the parties hereto.

 

 

 

 

Execution Version

 

AGREEMENT

 

In consideration of the foregoing Recitals, the definitions of which are
incorporated by reference herein, the mutual covenants set forth in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each of the parties to this Agreement agrees
as follows.

 

1.           Assignment.  Assignor hereby transfers, assigns, conveys and
delivers the Assigned Interests to Assignee, effective from and after the
Assignment Effective Date.

 

2.           Assumption.  Assignee hereby assumes the Assigned Interests,
effective from and after the Assignment Effective Date, all with full force and
effect as if Assignee had signed the Project Agreements originally with respect
to the Assigned Interests.

 

3.           Joinder.  Assignee hereby acknowledges, agrees and confirms that,
by its execution of this Agreement, it has, as of the Assignment Effective Date,
(a) become a party to the Project Agreements in the capacity of an Owner for all
purposes thereof, (b) made the representations and warranties set forth in the
Project Agreements to the Other Owner and Assignor, (c) agreed that the
representations and warranties made with respect to the Project Agreements shall
be deemed to be included in this Agreement with the same force and effect as if
such representations and warranties were reproduced herein, (d) agreed to pay
its Ownership Percentage as set forth on revised Exhibit B to the Project
Ownership Agreement attached hereto as Schedule 2, of all Project Costs incurred
on or after the Assignment Effective Date in accordance with the terms of the
Project Agreements, (e) consented to all actions requiring the approval of the
Owners up to, and including, the Assignment Effective Date, including the
approval of the Maximum CM Cost Amount in effect on the Assignment Effective
Date, (f) all of the rights, remedies, powers, privileges, liabilities and
obligations of an Owner  as if it had executed the Project Agreements originally
with respect to the Assigned Interests and will be treated for all purposes of
the Project Agreements as if it has paid CM Costs in an amount equal to the
Transferred Ownership Percentage multiplied by the amount of all CM Costs in
respect of the Facilities paid to a Project Account by Assignor prior to the
Assignment Effective Date (the “Assigned CM Costs”), (g) acquired an Ownership
Percentage of ______ percent (___%), (h) granted the agency authority set forth
in the Project Agreements, including agency authority under Section 2.3 of the
Construction Management Agreement, and (i) received written copies of, and
become a party to, each of the agreements listed on Schedule 3 hereto.

 

4.           Certifications.  Assignor and Assignee hereby acknowledge and
confirm that (a) the Transfer will not result in (i) a default that is immediate
under any Project Agreement, or (ii) a violation of Applicable Law, (b) the
Transfer will not cause the Project or any Other Owner to be subject to any
Applicable Law to which it was not previously subject which could reasonably be
expected to adversely affect (i) the ability of the Project to proceed in
accordance with the Project Budget or Project Plan or (ii) any Governmental
Approvals previously obtained or to be obtained by the Project or any Owner, (c)
Assignee has delivered an opinion of counsel in form and substance and from a
law firm or in-house counsel reasonably satisfactory to the Management Committee
with respect to Assignee’s (i) organization and good standing in its
jurisdiction of organization, (ii) legal authority to conduct its business in
each jurisdiction in which the Facilities are or will be located, (iii)
authorization to enter into this Agreement and to perform its obligations
hereunder, and (iv) compliance with its organizational and other governing
instruments and documents and its financing contracts, commitments and
arrangements in connection with its assumption of Assignor’s obligations as set
forth hereunder,

 

 

 

 

Execution Version

 

in each case subject to qualifications of legal opinions of the kind and nature
used in comparable transactions, and (d) they have delivered to the Management
Committee Final Orders for all Governmental Approvals required for the Transfer
and assumption of the related rights, obligations, liabilities and interests
under the Project Agreements.  Assignee hereby certifies to the Other Owner and
Assignor that (w) its corporate name as it appears on its organizational
documents and its taxpayer identification number is __________________________,
(x) its Taxpayer Identification Number (TIN) is ____________________, (y) its
address for purposes of giving notice under the Project Agreements is
_____________________________________, and (z) if and to the extent allowed by
the Project Agreements, it hereby designates ___________________________ as its
Owner Representative and _____________________ as its Alternate.

 

5.           Acknowledgements by Other Owner and Assignor.  The Other Owner and
Assignor hereby acknowledges, agrees and confirms that, by its execution of this
Agreement, it agrees with and consents to the transaction between Assignee and
Assignor contemplated by this Agreement, and that Assignee shall, as of the
Assignment Effective Date: (a) be deemed to be a party to the Project Agreements
for all purposes thereof, (b) have such of the rights, remedies, powers,
privileges, liabilities and obligations of an Owner as provided by the Project
Agreements as if it had executed the Project Agreements originally with respect
to the Assigned Interests, and (c) have the Percentages set forth opposite its
name on revised Exhibit B to the Project Ownership Agreement attached hereto as
Schedule 2.

 

6.           Partial Novation.  The Other Owner hereby accepts the admission of
Assignee as a counterparty to the Project Agreements, and agrees that this
Agreement constitutes a novation of the Project Agreements from Assignor to
Assignee solely to the extent of the Assigned Interests.

 

7.           Further Assurances.  The parties hereto mutually agree to cooperate
at all times from and after the Assignment Effective Date with respect to any of
the matters described herein, and to execute such further deeds, assignments,
assumptions, notifications, or other documents as may be legally requested or
reasonably necessary for the purpose of giving effect to, evidencing, or giving
notice of the transactions evidenced by this Agreement.

 

8.           Execution in Counterparts and Delivery of Electronic
Signatures.  This Agreement may be executed in any number of counterparts.  All
such counterparts will be deemed to be originals and will together constitute
but one and the same instrument.  This Agreement will become effective upon its
execution by the parties hereto.  The executed counterparts of this Agreement
and any ancillary documents thereto, such as amendments, may be delivered by
electronic means, such as email and/or facsimile, and the receiving party may
rely on the receipt of such executed counterpart as if the original had been
received.

 

9.           Governing Law; Venue; Waiver of Jury Trial.  This Agreement,
including the interpretation, construction and validity hereof, shall be
governed by the laws of the State of South Dakota, without regard to any
conflicts of law rules that might apply the laws of any other
jurisdiction.  Each party hereto agrees and consents that any proceeding seeking
to enforce any provision of this Agreement will be instituted and adjudicated
solely and exclusively in any state or federal court of competent jurisdiction
located in the States of South Dakota or North Dakota.  Each party hereto
further agrees that each such court will have personal jurisdiction over it with

 

 

 

 

Execution Version

 

respect to such proceeding, and waives any objections it may have, and expressly
consents, to such personal jurisdiction.  EACH PARTY HERETO WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION THIS AGREEMENT.

 

10.           Successor and Assigns.  This Agreement shall be binding upon and
inure to the benefit of Assignor, Assignee, the Other Owner, and their
respective successors and assigns.

 

[Signature Pages Follow]

 

 

 

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed by
their respective duly authorized officers as of the date first above written.

        ASSIGNOR       By:     Name:     Title:           ASSIGNEE         By:  
  Name:     Title:           OTHER OWNER:         [Insert signature blocks as
appropriate]

 

[SIGNATURE PAGE TO ASSIGNMENT, ASSUMPTION,

PARTIAL NOVATION AND JOINDER AGREEMENT]

 

 

 

 

SCHEDULE 2

 

Exhibit B to the Project Ownership Agreement

 

[insert]

 

 

 

 

SCHEDULE 3

 

List Of Agreements That Are Not  Project Agreements To Which Assignee Will
Become A Party

 

[insert]

 

 

 

 

EXHIBIT E-2

 

FORM OF ASSIGNMENT, ASSUMPTION, NOVATION AND JOINDER AGREEMENT

 

[Use this form when an Owner is transferring 100% of its Ownership Percentage
held as of the date of this Agreement.

 

THIS ASSIGNMENT, ASSUMPTION, NOVATION AND JOINDER AGREEMENT (this “Agreement”),
dated as of ________________, _____ (the “Assignment Effective Date”), by and
among ___________________, a ___________ (“Assignor”), ___________________, a
_________________ (“Assignee”) and [insert the names of the then–current other
Owner of the Project excluding the Assignor] (the “Other Owner”).  Capitalized
terms not otherwise defined herein shall have the respective meanings ascribed
to such terms in the Project Ownership Agreement, dated as of [___________,
20__], by and between Otter Tail Power Company, a corporation organized and
existing under the laws of the State of Minnesota, and Montana-Dakota Utilities
Co., a division of MDU Resources Group, Inc., a Delaware corporation (the
“Project Ownership Agreement”).

 

RECITALS

 

A.           Assignor is the Owner of a ____ percent (___%) Ownership Percentage
under the Project Ownership Agreement;

 

B.           Assignor and Assignee have entered into the ______________
Agreement, dated as of _____________, ____ (the “Purchase Agreement”), pursuant
to which Assignor has agreed to sell and transfer to Assignee (the “Assignment”)
one hundred percent (100%) (the “Transferred Ownership Percentage”) of the
right, title and interest in and to Assignor’s Ownership Percentage
(representing an Ownership Percentage of ___ percent (___%)), together with all
associated rights, obligations, liabilities and interests of Assignor in and to
the Project with respect to such Ownership Percentage, except for Assignor’s
residual interest in any Discretely Owned Substation Assets and obligations that
arose prior to the Assignment Effective Date, which shall remain the obligation
of Assignor (all such rights, obligations, liabilities and interests to be
transferred hereunder are collectively referred to as the “Assigned Interests”),
and Assignee has agreed to purchase the Assigned Interests, all as more fully
provided in the Purchase Agreement and herein; and

 

C.           Pursuant to Section 10.3.1.3 of the Project Ownership Agreement, it
is a condition precedent to the Transfer from Assignor to Assignee that this
Agreement be executed and delivered by the parties hereto.

 

AGREEMENT

 

In consideration of the foregoing Recitals, the definitions of which are
incorporated by reference herein, the mutual covenants set forth in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each of the parties to this Agreement agrees
as follows.

 

 

 

 

1.           Assignment.  Assignor hereby transfers, assigns, conveys and
delivers the Assigned Interests to Assignee, effective from and after the
Assignment Effective Date.

 

2.           Assumption.  Assignee hereby assumes the Assigned Interests
effective from and after the Assignment Effective Date, all with full force and
effect as if Assignee had signed the Project Agreements originally.

 

3.           Joinder.  Assignee hereby acknowledges, agrees and confirms that,
by its execution of this Agreement, it has, as of the Assignment Effective Date,
(a) become a party to the Project Agreements in the capacity of an Owner  for
all purposes thereof, (b) made the representations and warranties set forth in
the Project Agreements to the Other Owner and Assignor, (c) agreed that the
representations and warranties made with respect to the Project Agreements shall
be deemed to be included in this Agreement with the same force and effect as if
such representations and warranties were reproduced herein, (d) agreed to pay
its Ownership Percentage (as set forth on revised Exhibit B to the Project
Ownership Agreement attached hereto as Schedule 2), of all Project Costs
incurred on or after the Assignment Effective Date in accordance with the terms
of the Project Agreements, (e) consented to all actions requiring the approval
of the Owners up to, and including, the Assignment Effective Date, including the
approval of the Maximum CM Cost Amount in effect on the Assignment Effective
Date, (f) all of the rights, remedies, powers, privileges, liabilities and
obligations of an Owner  as if it had executed the Project Agreements originally
with respect to the Assigned Interests  and will be treated for all purposes of
the Project Agreements as if it has paid all of the CM Costs paid by Assignor
prior to the Assignment Effective Date (collectively, the “Assigned CM Costs”),
(g) acquired one hundred percent (100%) of the Ownership Percentage of the
Assignor as set forth on revised Exhibit B to the Project Ownership Agreement
attached hereto as Schedule 2, (h) granted the agency authority set forth in the
Project Agreements, including agency authority under Section 2.3 of the
Construction Management Agreement, and (i) received written copies of, and
become a party to, each of the agreements listed on Schedule 3 hereto.

 

4.           Exhibit B to the Project Ownership Agreement.  Assignee, the Other
Owner and Assignor hereby acknowledge and agree that Exhibit B to the Project
Ownership Agreement is hereby amended in its entirety and replaced with revised
Exhibit B attached hereto as Schedule 2.

 

5.           Certifications. Assignor and Assignee hereby acknowledge and
confirm that (a) the Transfer will not result in (i) a default that is immediate
under any Project Agreement, or (ii) a violation of Applicable Law, (b) the
Transfer will not cause the Project or any Other Owner to be subject to any
Applicable Law to which it was not previously subject which could reasonably be
expected to adversely affect (i) the ability of the Project to proceed in
accordance with the Project Budget or Project Plan or (ii) any Governmental
Approvals previously obtained or to be obtained by the Project or any Owner, (c)
Assignee has delivered an opinion of counsel in form and substance and from a
law firm or in-house counsel reasonably satisfactory to the Management Committee
with respect to Assignee’s (i) organization and good standing in its
jurisdiction of organization, (ii) legal authority to conduct its business in
each jurisdiction in which the Facilities are or will be located, (iii)
authorization to enter into this Agreement and to perform its obligations
hereunder, and (iv) compliance with its organizational and other governing
instruments and documents and its financing contracts, commitments and
arrangements in connection with its assumption of Assignor’s obligations as set
forth hereunder,

 

 

 

 

in each case subject to qualifications of legal opinions of the kind and nature
used in comparable transactions, and (d) they have delivered to the Management
Committee Final Orders for all Governmental Approvals required for the Transfer
and assumption of the related rights, obligations, liabilities and interests
under the Project Agreements.  Assignee hereby certifies to the Other Owner and
Assignor that (w) its corporate name as it appears on its organizational
documents and its taxpayer identification number is __________________________,
(x) its Taxpayer Identification Number (TIN) is ____________________, (y) its
address for purposes of giving notice under the Project Agreements is
_____________________________________, and (z) it hereby designates
___________________________ as its Owner Representative and
_____________________ as its Alternate.

 

6.           Acknowledgements by Other Owner.  The Other Owner hereby
acknowledges, agrees and confirms that, by its execution of this Agreement, it
agrees with and consents to the transaction between Assignee and Assignor
contemplated by this Agreement, and that Assignee shall, as of the Assignment
Effective Date: (a) be deemed to be a party to the Project Agreements for all
purposes thereof, (b) have all of the rights, remedies, powers, privileges,
liabilities and obligations of an Owner as if it had executed the Project
Agreements originally, and (c) have the Percentages set forth opposite its name
on revised Exhibit B to the Project Ownership Agreement attached hereto as
Schedule 2.

 

7.           Acknowledgements by Assignor.  Assignor hereby acknowledges, agrees
and confirms, by its execution of this Agreement, that Assignor shall, as of the
Assignment Effective Date: (a) have no Ownership Percentage or other interests,
and (b) no longer be an Owner or a party to the Project Agreements, other than
the Project Transmission Capacity Exchange Agreement to which Assignor shall
continue to be bound and obligated to perform its obligations thereunder to the
extent of Assignor’s interest in any Discretely Owned Substation, and except
Assignor shall remain obligated to perform its obligations under the Project
Agreements that arose prior to the Assignment Effective Date.

 

8.           Novation.  The Other Owner hereby accepts the substitution of
Assignee in place of Assignor as a counterparty to the Project Agreements, and
agrees that this Agreement constitutes a novation of the Project Agreements from
Assignor to Assignee, except for Assignor’s obligations that arose prior to the
Assignment Effective Date, which shall remain the obligation of Assignor.

 

9.           Further Assurances.  The parties hereto mutually agree to cooperate
at all times from and after the Assignment Effective Date with respect to any of
the matters described herein, and to execute such further deeds, assignments,
assumptions, notifications, or other documents as may be legally requested or
reasonably necessary for the purpose of giving effect to, evidencing, or giving
notice of the transactions evidenced by this Agreement.

 

10.           Execution in Counterparts and Delivery of Electronic
Signatures.  This Agreement may be executed in any number of counterparts.  All
such counterparts will be deemed to be originals and will together constitute
but one and the same instrument.  This Agreement will become effective upon its
execution by the parties hereto.  The executed counterparts of this Agreement
and any ancillary documents thereto, such as amendments, may be delivered by
electronic means, such as email and/or facsimile, and the receiving party may
rely on the receipt of such executed counterpart as if the original had been
received.

 

 

 

 

11.           Governing Law; Venue; Waiver of Jury Trial.  This Agreement,
including the interpretation, construction and validity hereof, shall be
governed by the laws of the State of South Dakota, without regard to any
conflicts of law rules that might apply the laws of any other
jurisdiction.  Each party hereto agrees and consents that any proceeding seeking
to enforce any provision of this Agreement will be instituted and adjudicated
solely and exclusively in any state or federal court of competent jurisdiction
located in in the States of South Dakota or North Dakota.  Each party hereto
further agrees that each such court will have personal jurisdiction over it with
respect to such proceeding, and waives any objections it may have, and expressly
consents, to such personal jurisdiction.  EACH PARTY HERETO WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION THIS AGREEMENT.

 

12.           Successor and Assigns.  This Agreement shall be binding upon and
inure to the benefit of Assignor, Assignee, the Other Owner, and their
respective successors and assigns.

 

[Signature Pages Follow]

 

 

 

 

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed by
their respective duly authorized officers as of the date first above written.

        ASSIGNOR       By:     Name:     Title:           ASSIGNEE         By:  
  Name:     Title:           OTHER OWNER:         [Insert signature blocks as
appropriate]

 

[SIGNATURE PAGE TO ASSIGNMENT, ASSUMPTION,

NOVATION AND JOINDER AGREEMENT]

 

 

 

 

SCHEDULE 2

 

Exhibit B to the Project Ownership Agreement

 

[insert]

 

 

 

 

SCHEDULE 3

 

List Of Agreements That Are Not  Project Agreements To Which Assignee Will
Become A Party

 

[insert]

 

 

 

 

Execution Version

 

EXHIBIT F

TO

PROJECT OWNERSHIP AGREEMENT

 

INSURANCE

 

Capitalized terms that are not defined in this Exhibit or the Agreement to which
it is attached have their respective meanings defined in the applicable policies
of insurance.  This Exhibit F establishes the initial insurance plan under this
Agreement.  The Management Committee has the authority to amend the insurance
requirements for the Project.

 

I.           CONSTRUCTION PHASE

 

  A. Project Specific Insurance The Construction Manager (the “CM”) shall be
responsible for implementing a controlled insurance program (the “CIP”) at a
time to be determined by the CM, in consultation with the Management Committee,
prior to the beginning of Construction Work.  The CIP will be administered by
the Project’s designated insurance broker (the “CIP Administrator”).  Unless
otherwise provided herein, the CM shall procure and maintain the following
insurance coverages set forth in this Section A, the cost of which (including
premiums, deductibles and self-insured retentions) will constitute a CM Cost:

 

  1. Commercial General Liability (“CGL”) insurance (on form ISO CG 00 01 or its
equivalent) including contractual liability coverage per above- referenced
policy form, with primary limits of $2,000,000 per occurrence / $4,000,000
aggregate and excess liability limits, as approved by the Management Committee,
of not less than $25,000,000 per occurrence and in the aggregate.  General
Aggregate Limits will reinstate annually during the multi-year policy
period.  The Products Completed Operations Aggregate Limit of $4,000,000 will
apply annually during the construction period and once for the ten year
completed operations extension which begins on the In-Service Date.  This
insurance shall include the Enrolled Parties as named insureds.

 

CGL Self-insured Retention or Deductible:  $25,000 to $50,000 per occurrence.

 

Project Site means Project Real Property and other sites incidental and/or
adjacent to the Construction Work, as further defined in the CIP Manual.

 

Enrolled Parties means the CM; each Owner, irrespective of the capacities in
which it participates in the Project; eligible Contractors and Subcontractors
who perform on site construction operations on the Project Site; and such other
persons

 

F-1

 

 

or entities as the CM may designate as enrolled parties, who perform on-site
labor at the Project Site.  Eligible temporary labor services and leasing
companies who have on-site labor are to be included as Subcontractors and
enrolled in the program.  The CM requires all eligible Contractors and
Subcontractors to comply with the requirements set forth in the CIP Enrollment
Manual, a copy of which will be provided by the CM.  The CIP Enrollment Manual
requirements include the submittal of forms and documentation necessary for
enrollment into the Controlled Insurance Program which will be evidenced by a
confirmation of enrollment letter and certificates of insurance evidencing on
site coverage issued by the CIP Administrator.

 

CIP is defined as the above-described general liability and excess liability
insurance coverage to be procured by the CM for on-site construction along the
entirety of the Project Site.

 

Each Owner should ensure that its practice policies will apply excess and
difference in conditions of the Project Specific Insurance.  Additionally, each
owner should evaluate potential sharing of limits under the AEGIS Excess
Liability Insurance policy.

 

  2. Contractor’s Pollution Liability (“CPL”) insurance with total limits of
$10,000,000 each Loss and in the aggregate.  The policy aggregate limits will
not reinstate annually.  The CM will obtain the maximum policy term reasonably
available from the selected insurer.  CPL insurance will insure Third Party
bodily injury, Third Party property damage (including loss of use) and/or Third
Party clean-up costs claims arising from any new pollution condition and/or
exacerbation of a pre-existing pollution condition resulting from covered
operations performed on the Project Site.  This policy shall also provide
coverage for Third Party claims arising from the transportation of materials
and/or waste to and from the Project Site.  Coverage will also respond to Third
Party claims arising from the disposal of materials at non-owned disposal sites
that meet the criteria outlined in the policy.  This insurance shall include as
insureds the CM; each Owner, irrespective of the capacities in which it
participates in the Project; and Contractors and Subcontractors performing work
on the Project Site.

 

CPL deductible:  $50,000 to $250,000 each Loss.

 

  3. Marine Cargo insurance:  If ocean transit is utilized for equipment or
materials for which risk of loss will pass to the buyer before transit occurs,
Marine Cargo insurance on a “warehouse to warehouse” basis must be procured,
insuring the materials to be used by the Contractors in the performance of the
Construction Work against loss or damage arising from customary “all risk”
marine perils (including war, strikes, riots, and

 

 F-2Confidential

 

 

    civil commotion, if readily available) while in transit.  The Marine Cargo
policy shall be subject to a physical damage deductible not to exceed
$25,000.  The CM and each Owner, irrespective of capacities in which it
participates in the Project, will be named insureds, as their interests may
appear.  The CM shall either provide this insurance or cause such insurance to
be procured, in each case prior to the time the risk being insured arises. If
the insurance is provided by a Contractor or Subcontractor, premiums,
deductibles and self-insured retentions will be a CM Cost by inclusion of such
cost in the cost of goods or services being provided.

 

  4. Non-Owned Aircraft Liability insurance:  In addition to the requirements
for Contractors that use aircraft contained in Section B(7) below,  the CM shall
procure a non-owned aviation policy with a $25,000,000  limit of liability to
insure the vicarious risk of the Owners, irrespective of the capacities in which
it participates in the Project, and the CM associated with such aircraft.

 

  5. Professional Liability insurance:  This insurance will substantially
provide the following coverages:

 

  (a) Errors & Omissions By Outside Firms – First Party Excess Indemnity

 

Subject to its terms, conditions, and exclusions, the policy will cover economic
damages suffered by the Owners that an outside professional service firm is
legally obligated to pay due to a professional error or omission, to the extent
that such costs exceed the available professional liability insurance from the
outside firm.  In the event that a contractual limitation of liability applies
to an error or omission in favor of the outside firm and such limitation is less
than the available professional liability insurance, the policy will pay covered
damages in excess of the limitation of liability.  However, if such limitation
of liability is less than $1,000,000, the policy will only pay covered damages
in excess of $1,000,000.

 

This coverage relates only to errors and omissions by outside firms – no
entities with an ownership interest in the Project (or their Affiliates) can
make claims against each other under the policy.

 

  (b) Professional Liability – Claims from Third Parties Against Owners

 

Subject to its terms, conditions, and exclusions, the policy will cover claims
for damages from Third Parties (excluding all entities with an ownership
interest in the Project and their Affiliates) against the Owners arising out of
the rendering of or failure to render professional services.  This coverage
relates only to claims

 

 F-3Confidential

 

 

from outside parties – no entities with an ownership interest in the Project (or
their Affiliates) can make claims under this coverage.

 

Extended Reporting Period

An extended reporting period (a “tail”) of up to five years will be provided,
allowing for claims to be made and reported after the policy has expired.  If
the construction period lasts longer than five years, then the length of the
tail may be reduced by the amount of construction time in excess of five years.

 

Program Structure

  • The policy period of each policy will match the construction period for the
Project.

  • Limits of coverage:  Not less than $5,000,000 and not more than
$10,000,000.  These limits apply to each claim and aggregate and the aggregate
limit applies for the entire term of the Construction Management Agreement.

  • Self-Insured Retention (“SIR”):  Not to exceed $1,000,000 each Claim for
coverage under Section A(5)(a) and (b).

 

For coverage (a), the SIR is not in addition to the outside firm’s available
insurance, but rather applies if the outside firm’s insurance has been exhausted
or has not been maintained in compliance with the carrier’s minimum insurance
requirements.  The SIR shall also apply in the instance where the policy is
broader than the outside firm’s primary insurance.

 

  6. Project Property insurance:  Builders Risk insurance shall be procured by
the CM for Equipment and Materials located on the Project Real Property and any
temporary locations owned, leased or borrowed during the course of construction
(the Project Site).  The insurance shall include the perils of theft, vandalism,
transit, off-site storage, flood, earthquake, windstorm, and testing/start up on
the work with a policy limit in a range of $30,000,000 to $50,000,000 as
determined appropriate by the CM.  Coverage shall include mechanical and
electrical breakdown coverage during the start-up and commissioning and testing
prior to final acceptance.  The Project Owners will be the named insureds. 
Contractors and their Subcontractors will be additional insureds to the extent
that such parties have an interest in the construction work.  Delay in Start Up
insurance is not included in this policy.  The deductible associated with claims
resulting from contractor/subcontractor negligence will be chargeable to the
negligent contractor.

 

  B. Individually Procured Insurance

 

Subject to Section D, the CM and each Owner, irrespective of the capacities in
which it participates in the Project, and each Contractor and Subcontractor,
upon the effective date

 

 F-4Confidential

 

 

of its respective Construction Agreement, shall individually procure and
maintain the additional insurance coverages as provided below:

 

  1. Workers’ Compensation and Employers Liability insurance:  Each of the CM;
Owners, irrespective of the capacities in which it participates in the Project;
Contractors; and Subcontractors will procure and maintain its own Workers’
Compensation policy to comply with this Section B (1).  Workers’ compensation
will cover no less than the statutory liability under the workers’ compensation
laws of the states in which the work or services are performed.  The Employers
Liability limits on these policies will be no less than $5,000,000 each
accident, $5,000,000 disease policy limit, and $5,000,000 disease each employee;
except as respects Subcontractors in which case limits on this policy will be as
determined by the CM but will be no less than $1,000,000 each accident,
$1,000,000 disease policy limit, and $1,000,000 disease each employee.

 

  The above limits may be met by any combination of primary and/or excess
liability insurance limits.

 

Each of the above policies will include a waiver of subrogation in favor of the
CM; each Owner, irrespective of the capacities in which it participates in the
Project; Contractors; and Subcontractors.

 

Coverage shall include United States Longshore and Harbor Workers (“USL&H”) and
Maritime coverage endorsements if each such exposure exists.

 

  2. Business Automobile insurance.  The CM; each Owner, irrespective of the
capacities in which it participates in the Project; each Contractor; and each
Subcontractor shall procure and maintain its own business automobile policy to
comply with this Section B(2).  This insurance shall contain a combined single
limit of at least $10,000,000 per occurrence (except as respects Subcontractors
in which case limits on this policy will be as determined by the CM but will not
be less than $2,000,000 per occurrence), and include coverage for:

 

  (a) Bodily injury and property damage; and

  (b) Any and all vehicles owned, used or hired.

 

The above limits may be met by any combination of primary and/or excess
liability insurance limits.

 

Each policy will include a waiver of subrogation in favor of the CM and each
Owner, irrespective of the capacities in which it participates in the Project.

 

 F-5Confidential

 

 

  3. Commercial General Liability insurance:  The CM; each Owner, irrespective
of the capacities in which it participates in the Project; each Contractor; and
each Subcontractor will procure and maintain its own general liability and/or
excess liability insurance to comply with this Section B(3).  For Contractors
and all Subcontractors, such insurance shall be on form ISO CG 00 01 or its
equivalent.  For Enrolled Parties, such insurance will cover premises and
operations away from the Project Site.  For all parties, other than Enrolled
Parties, coverage will apply to all work or services performed.  Limits of
liability shall be $10,000,000 per occurrence and in the aggregate (except as
respects Subcontractors in which case limits on this policy will be as
determined by the CM but will not be less than $2,000,000 per
occurrence).  Contractors and Subcontractors shall include the CM and each
Owner, irrespective of the capacities in which it participates in the Project,
as additional insureds (unless otherwise included as a named insured) on the
most current version of ISO CG 20 10 and CG 20 37 or their equivalents.
Contractors and Subcontractors insurance shall be considered primary, without
right of contribution, from any other insurance, which is carried by CM and each
Owner.

 

The above limits may be met by any combination of primary and/or excess
liability insurance limits.

 

Each policy will include a waiver of subrogation in favor of the CM and each
Owner, irrespective of the capacities in which it participates in the Project.

 

  4. Professional Liability insurance shall be procured and maintained by any
party performing professional services for the Project that has no ownership
interest in the Project with total limits of $5,000,000 each claim/$5,000,000
annual aggregate with discretion for the CM to require less insurance for
smaller contracts.  This coverage must remain in force and effect for a minimum
of five years after completion of the professional services being performed or
contract termination.

 

  5. Contractors Equipment insurance:  All Contractors (including a Contractor
that is also an Owner) shall be required to release the CM and each
Owner, irrespective of the capacities in which it participates in the Project,
(or otherwise accept the full risk of loss or damage therefor), from all claims
for loss or damage to or loss of use of such Contractor’s tools, machinery,
equipment, motor vehicles or any other property whether owned, rented, or leased
by the Contractor in or about the Project Site and shall purchase such insurance
in respect thereto as the Contractor deems appropriate.  Contractors shall
require similar releases in favor of the CM

 

 F-6Confidential

 

 

    and each Owner, irrespective of the capacities in which it participates in
the Project, from Subcontractors.

 

  6. Railroad Protective Liability insurance:  Where required by the CM,
applicable Contractors will purchase and maintain Railroad Protective Liability
insurance in the name of the specific railroad in connection with all work
across, under or adjacent to railroad tracks or right-of-way.  Limits of
liability for this insurance shall be as required by the railroad.

 

  7. Watercraft and Aircraft Liability insurance:  If watercraft or aircraft of
any kind is used by any Contractor, or by anyone else on a Contractor’s behalf
or otherwise as part of the Construction Work, the Contractor shall maintain, or
cause the operator of the watercraft or aircraft to maintain, watercraft or
aircraft public liability insurance covering bodily injury, property damage and
passenger liability for any watercraft or aircraft owned, used, operated or
hired in connection with the Construction Work.  The policy(ies) shall provide
limits of not less than $10,000,000 combined single limit for bodily injury and
property damage per occurrence (& aggregate) and list the CM and each Owner,
irrespective of the capacities in which it participates in the Project, as
additional insureds.

 

  C. Additional Provisions:

 

  1. All of the above insurance shall be placed with insurance companies with a
current A.M. Bests Insurance Guide Rating of A- and Class VII, or better.  Each
policy shall provide that it will not be cancelled, unless at least 60 days’
prior written notice (10 days for non-payment of premium) has been received by
the CM and each Owner, irrespective of the capacities in which it participates
in the Project.

 

  2. Certificates of Insurance:  Each CM and Owner, irrespective of the
capacities in which it participates in the Project, shall, on or before the
date on which insurance required hereunder is to become effective, furnish to
the CM and other Owners certificates of insurance evidencing (i) its compliance
with applicable requirements hereunder, and (ii) compliance by its Contractors
and Subcontractors with applicable requirements hereunder.  Each Contractor and
Subcontractor shall, on or before the date on which insurance required hereunder
is to become effective, furnish to the CM certificates of insurance evidencing
compliance by it and its Subcontractors with applicable requirements
hereunder.  The CM shall maintain copies of certificates of insurance provided
to it by the Owners, Contractors and Subcontractors and shall maintain
certificates of insurance evidencing the CM’s compliance with the requirements
applicable to the CM hereunder.  The CM shall make such certificates available
for

 

 F-7Confidential

 

 

    inspection and copying upon request by any Owner or by the Management
Committee and as otherwise required to facilitate implementation of the
applicable requirements hereunder.  Compliance with “applicable requirements”
includes specification of coverages, limits, insured status and applicable
waivers or releases.

 

In addition, the CM shall, promptly following the enrollment of an Enrolled
Party under the CIP, deliver to the Enrolled Party certificates of insurance and
other evidence, as appropriate, documenting the Enrolled Party’s enrollment in
the CIP.

 

  3. Costs:  Premiums, deductibles and self-insured retentions incurred by each
Owner, in all capacities in which it participates in the Project, to provide the
insurance required by Section B(1), (2), and (3) hereof do not constitute CM
Costs, except to the extent that the Owner serving in the capacity as CM
includes the costs of those standard insurance policies in its A&G costs
reflected in Appendix D of the CMA.   Premiums, deductibles and self-insured
retentions incurred by each Contractor or Subcontractor, each specifically in
such capacity, to provide the insurance required by Section B(1), (2), (3), (4),
(5), (6) and (7) hereof, will be borne as provided in the applicable
Construction Agreement as a part of the provision of goods or services.

 

  4. Unaffiliated Third Party Contractors:  For Project Construction Contracts
between the CM and Third Party Contractors (and their Subcontractors), the
insurance requirements approved by the Management Committee for such Contractors
and Subcontractors will constitute part of the template documents to be
negotiated with such Contractors and Subcontractors by the CM.  The CM shall
also require Owners that become Contractors to utilize such insurance
requirements in the negotiation of Subcontracts with their Subcontractors.

 

II.          OPERATIONAL PHASE INSURANCE

A.           On or before the In-Service Date, the insurance coverages set forth
below will be procured and maintained as indicated:

 

  1. Workers’ Compensation and Employers Liability Insurance:  Each of the
Responsible Entities, Owners, contractors and subcontractors will procure and
maintain its own policy to comply with this Section A(1). Workers’ Compensation
will cover no less than the statutory liability under the workers’ compensation
laws of the states in which the work or services are performed. The Employers
Liability limits on these policies will be no less than $5,000,000 each
accident, $5,000,000 disease policy limit, and $5,000,000 disease each employee;
except as respects contractors or subcontractors in which case limits on their

 

 F-8Confidential

 

 

    policies will be no less than $1,000,000 each accident, $1,000,000 disease
policy limit, and $1,000,000 disease each employee.  Each of these policies will
include a waiver of subrogation in favor of each Owner and each Responsible
Entity.  Coverage shall include USL&H and Maritime coverage endorsements if each
such exposure exists.

 

The above limits may be met by any combination of primary and/or excess
liability insurance limits.

 

  2. Commercial General Liability (“CGL”) Insurance:  Each of the Responsible
Entities, Owners, contractors and subcontractors will procure and maintain its
own policy to comply with this Section A(2).  CGL, including contractual
liability coverage, must have total limits of $20,000,000 per occurrence and in
the aggregate for each Responsible Entity and Owner, and each Maintenance
Provider will require any contractor or subcontractor engaged to procure and
maintain CGL with limits at least equal to $5,000,000, or as otherwise approved
by the Management Committee, per occurrence and in the aggregate. Each
Responsible Entity, contractor and subcontractor will list each Owner as an
additional insured (unless otherwise included as a named insured).  The
Responsible Entities, contractors and subcontractors policies shall be deemed as
primary insurance and not excess over or contributing with any insurance
purchased or maintained by the Owners collectively.  Each of these policies will
include a waiver of subrogation in favor of each Owner.  The above limits may be
met by any combination of retention and excess liability insurance limits.

 

  Each owner should evaluate potential sharing of limits under the AEGIS Excess
Liability Insurance policy.

 

  3. Business Automobile Insurance:  This insurance shall contain a combined
single limit of at least $5,000,000 per occurrence, shall be procured and
maintained by the Responsible Entities, contractors and subcontractors and
include coverage for, but not be limited to, the following:

 

  (a) Bodily injury and property damage; and

(b) Any and all vehicles owned, used or hired

 

The Owners must be added as additional insureds (unless otherwise included as a
named insured).

 

Each of these policies will include a waiver of subrogation in favor of the
Owners.

 

The above limits may be met by any combination of primary and/or excess
liability insurance limits.

 

 F-9Confidential

 

 

  4. Watercraft and Aircraft Liability insurance:  If watercraft or aircraft of
any kind will be used by a Responsible Entity or by anyone else on a Responsible
Entity’s behalf, the Responsible Entity will require that the operator of the
watercraft or aircraft maintain watercraft or aircraft public liability
insurance covering bodily injury, property damage and passenger liability for
any aircraft used, operated or hired in connection with the operating
services.  The policy(ies) shall provide limits of $10,000,000 to $25,000,000
combined single limit for bodily injury and property damage per occurrence (&
aggregate) and list the Responsible Entities and the Owners as additional
insureds (unless otherwise included as a named insured).

 

  B. Additional Provisions

 

  1. All of the above insurance shall be placed with insurance companies with a
current A.M. Best Insurance Guide Rating of A- and Class VII, or better. Each
policy shall provide that it shall not be cancelled unless at least 60 days’
prior written notice (10 days for non-payment of premium) has been received by
the Owners.

 

  2. Certificates of Insurance; Proof of Loss:  Each Responsible Entity and
Owner shall, on or before the date on which insurance required hereunder is to
become effective, furnish to the other Responsible Entities and Owners
certificates of insurance evidencing (i) its compliance with applicable
requirements hereunder, and (ii) compliance by its contractors and
subcontractors with applicable requirements hereunder.  Each contractor and
subcontractor shall, on or before the date on which insurance required hereunder
is to become effective, furnish to the Responsible Entity, Owner, or contractor
by which it has been engaged as a contractor or subcontractor (as applicable)
certificates of insurance evidencing compliance by it and its subcontractors
with applicable requirements hereunder.  Each Responsible Entity and Owner shall
maintain copies of certificates of insurance required to be furnished by it
hereunder and shall maintain certificates of insurance evidencing its compliance
with the requirements applicable to it hereunder.  Each Responsible Entity and
Owner shall make such certificates available for inspection and copying upon
request by any Responsible Entity, Owner or by the Management Committee and as
otherwise required to facilitate implementation of the requirements hereunder.

 

The party maintaining each insurance policy shall make proofs of loss under each
such policy and shall take all other action reasonably required to ensure
collection from insurers for any loss under any such policy.

 

  3. Costs:  The costs (including premiums, deductibles and self-insured
retentions) of insurance required by Sections II.A(1), (2) and (3) to be
provided by the Maintenance Provider will constitute a Maintenance Cost
(premiums to be

 

 F-10Confidential

 

 

    reimbursed through A&G  charges as provided in Appendix D of the OMA).  The
costs of insurance required by Sections II.A(1), (2) and (3) borne by the
Control Center Authority or the Owner not serving as Maintenance Provider will
not constitute a Maintenance Cost, except as provided in Section 4.2 of this
Agreement, which will be considered Control Center Costs.  The costs of
insurance required by Sections A(1), (2) and (3) incurred by each Contractor and
Subcontractor will be borne as provided in the applicable agreement with such
Contractor or Subcontractor as part of the provision of goods and services under
such agreement.  If the insurance required by Section IIA(4) of this Exhibit F
is required , the cost thereof will be a Maintenance Cost and charged directly
to the Project.

 

 F-11Confidential

 

 

Execution Version

 

EXHIBIT G

 

NERC REQUIREMENTS

 

Section 1.1     Establishment of Guidelines

 

The Owners and Responsible Entities are committed to maintaining and operating
the Facilities in full compliance with NERC reliability standards in effect from
time to time.  Because the Project is commonly owned, the Parties to this
Agreement have identified the segments that comprise the Project and have
assigned responsibility for each segment to the specific Responsible Entity set
forth in Appendix A of the Operation and Maintenance Agreement.  Initially, the
Responsible Entity for NERC compliance with respect to the Project is also
designated in Appendix A of the Operation and Maintenance Agreement.  Each Owner
is responsible, however, for NERC compliance with respect to its own Discretely
Owned Substation Assets as specified in Exhibit 1 to this Exhibit G.  The Owners
agree to promptly modify Appendix A of the Operation and Maintenance Agreement
and Exhibit 1 to this Exhibit G as necessary to reflect any changes in
Responsible Entities or their assigned responsibilities (including the specific
NERC reliability standards for which each such Person is responsible).  Because
the Project may be maintained or operated by multiple Responsible Entities, each
of which will employ its own utility-wide procedures to comply with Applicable
Energy Regulations, including NERC reliability standards, the parties hereby
establish this initial set of guidelines.  Because the regulation of
transmission facilities and their maintenance and operation exists in a fluid
regulatory environment, these guidelines must be examined and adjusted from time
to time to reflect Applicable Energy Regulations then in effect.  Aside from
establishing an actual set of procedures to govern the manner in which the
Owners and the Responsible Entities intend to effect compliance with NERC
reliability standards, this Exhibit G embodies a set of principles intended to
guide the Owners and Responsible Entities as changes in Applicable Energy
Regulations occur and modifications to the Owners’ compliance-related practices
and procedures become necessary.  The Parties intend that responsibility for
compliance with NERC reliability standards applicable to the Project be managed
in a way that (i) is compatible with the compliance programs and existing
compliance responsibilities of each of the Owners and Responsible Entities, (ii)
minimizes the collective and individual exposure of the Owners and Responsible
Entities to liability for NERC-related violations and penalties, and (iii)
avoids unnecessary duplication of NERC compliance efforts.  The Parties further
intend to satisfy the NERC Rules of Procedure (NERC ROP, Section 501.1.4.3)
requiring that only one party be responsible for compliance with the applicable
reliability standard requirements for each line segment.

 

Section 1.2     Assigned Responsibilities

 

1.2.1           Maintenance Provider and Control Center Authority
Responsibilities.  As of the Effective Date, the Parties agree that each
Responsible Entity shall be responsible under this Agreement for compliance with
Applicable Energy Regulations, including the NERC Transmission Owner (“TO”),
Transmission Operator (“TOP”), and Transmission Planner (“TP”) reliability
standards identified as its responsibility in Appendix A of the Operation and
Maintenance Agreement as such standards relate to the line segments for which
such

 

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Responsible Entity is responsible.  When necessary, each Responsible Entity
shall advise all appropriate Governmental Bodies of its assigned
responsibility.  Notwithstanding anything to the contrary herein, an Owner that
is not named as the Responsible Entity for NERC TO, TOP or TP compliance shall
not be responsible to Governing Bodies for compliance obligations of a
“Transmission Owner”, “Transmission Operator” or “Transmission Planner”  under
NERC reliability standards applicable to such line segment; provided, however,
that the foregoing shall not release the Owners from or modify the pro-rata
contribution obligations expressly set forth in Section 1.3.1 of this Exhibit G.

 

1.2.2           E&O Committee Responsibilities.  Compliance by the E&O Committee
with this Section 1.2.2 is a collective responsibility of the Owners.  Each
Responsible Entity and Owner shall provide the information necessary to allow
full compliance with the NERC reliability standards.  The E&O Committee shall be
responsible for maintaining and updating, no less than annually, Exhibit 1,
Checklist of NERC Standards Applicability Form, to this Exhibit G.  Exhibit 1 is
intended to serve as a reference guide for NERC standards in effect and
applicable at the time of the E&O Committee update.  Once modified by the E&O
Committee, Exhibit 1 will be presented to the Management Committee for
approval.  For the avoidance of doubt, the Parties do not intend that the E&O
Committee be constituted as a NERC Registered Entity, but rather that the
Responsible Entity, identified in Appendix A of the Operation and Maintenance
Agreement, for each applicable line segment shall be responsible for performing,
or causing to be performed and reporting, or causing to be reported, such
ratings and other information as may be required by the NERC reliability
standards.

 

1.2.3           Periodic E&O Committee Review.  The E&O Committee shall
periodically assess the allocation of responsibilities for compliance with NERC
reliability standards as assigned pursuant to Appendix A and update Exhibit 1 in
light of the current status of Applicable Energy Regulations and the related
regulatory environment.  Such assessment shall take place no less frequently
than annually in connection with a Services Plan Review.  The E&O Committee
shall formulate, as appropriate, modifications to:  (i) the assignments of
responsibility for NERC reliability standards in Appendix A and Exhibit 1, and
(ii) this Appendix F, for presentation to the Management Committee for
consideration.  The assessment by the E&O Committee must be sufficiently timely
and comprehensive to evaluate and respond, if appropriate, to changes in
Applicable Energy Regulations.  The E&O Committee shall make such
recommendations as it from time to time deems necessary to assure that the
responsibilities for compliance with Applicable Energy Regulations have been
allocated to foster overall compliance in as efficient and cost effective a
manner as possible.

 

Section 1.3     Compliance Failure

 

1.3.1           Responsibility.  If a Governmental Body concludes that there has
been failure to comply with Applicable Energy Regulations and such failure
relates to any segment, responsibility for economic penalties imposed on account
of such failure will be as follows:

 

  (i) if the failure arises from the willful misconduct or intentional
misconduct of the Responsible Entity that is responsible for such segment and
compliance with the applicable standard, such Responsible Entity shall bear full
responsibility for such violation;

 

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  (ii) if the failure arises because the written procedures adopted by the
Responsible Entity that is responsible for such segment are found to be
deficient, such Responsible Entity shall bear full responsibility for such
violation; or

 

  (iii) if the failure arises from any cause other than as described in clause
(i) or (ii) above, each of the Owners shall bear responsibility in accordance
with their respective Ownership Percentages.

 

For the avoidance of doubt, (a) violations of Applicable Energy Regulations,
including NERC reliability standards, relating solely to Discretely Owned
Substation Assets are the sole responsibility of the Discretely Owned Substation
Owner and are not the responsibility of the Parties to this Agreement in their
respective capacities under this Agreement, and (b), as specified in Exhibit 1
to this Exhibit G, each of the Owners shall bear responsibility according to
their respective Ownership Percentages with respect to those accountability
standards identified as  “Both-Penalty sharing if root cause event”, if the
event investigation finds that execution of the standards for the Project to be
the root cause of the event.

 

1.3.2           Enforcement.1  If any violation of Applicable Energy
Regulations, including NERC reliability standards, are either self-certified or
reported by a Responsible Entity or alleged by a Governmental Body and such
violation is of the nature described in Section 1.3.1(iii) of this Exhibit G
(“Possible Violations”), then the Responsible Entity for the segment or segments
to which such Possible Violations relate is entitled to contribution from the
Owners for the economic penalty that could be imposed as a consequence of such
Possible Violations by complying with the procedures set forth in this Section
1.3.2.

 

1.3.2.1  Notice of Possible Violations.  If a Responsible Entity either:
(i) self- certifies or reports the existence of a Possible Violation to a
Governmental Body or (ii) receives a formal written advisement that a
Governmental Body believes there is a Possible Violation pertaining to the
Facilities (e.g., a Notice of Potential Violation issued by the Midwest
Reliability Organization), then the Responsible Entity, within thirty (30) days
of delivering or receiving any such certification, report, or notice, shall give
notice to the other Owner (a) describing such Possible Violation in reasonable
detail; (b) indicating whether the Possible Violation involves only the Project
(or a portion thereof) or other transmission facilities as well as the Project
(or a portion thereof).

 

1.3.2.2  Contribution.  If the Responsible Entity either (a) fails to give the
notice required pursuant to Section 1.3.2.1 or (b) gives notice that it will not
demand contribution from the Owners, then, it shall bear the full responsibility
for any such Possible Violations. If the Responsible Entity will demand
contribution from the other Owners and receives a proposed penalty from the
Governmental Bodies (e.g. Notice of Alleged Violation and Proposed Penalty or
Sanction issued by the Midwest Reliability Organization) exceeding $20,000 USD
(adjusted for inflation from the date of this

 

 

1This Section 1.3.2 is intended to address the Midwest Reliability
Organization’s compliance and enforcement process in effect as of the Effective
Time as shown in Attachment 1 to this Appendix G.

 

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Agreement), the Responsible Entity shall notify the other Owner within fifteen
(15) days of how the Responsible Entity intends to settle the Possible
Violation.

 

1.3.2.3  Settlement.

 

1.3.2.3.1  Project Only Settlement.  [**]  Because the Responsible Entity  is
obligated to pay the penalty (or alternate settlement) to the Governmental
Bodies, [**] in a timely manner provided the Responsible Entity has provided the
Management Committee with reasonable notice to consider and act upon any
proposed penalty (or alternate settlement). [**] The Owners shall bear their
share of any economic penalty assessed and/or costs associated with any remedies
approved in lieu of  assessed penalty in such settlement in proportion to their
respective Ownership Percentage upon issuance of a final notice (e.g. Notice of
Penalty Payment Due issued by the Midwest Reliability Organization) by the
Governmental Bodies confirming the terms of such settlement, subject only to the
right of any Owner to challenge the categorization of the conduct of the
Responsible Entity as falling within the requirements of Section 1.3.1(iii)
pursuant to the dispute resolution procedures set forth in Section 3 of Schedule
1 to this Agreement.

 

1.3.2.3.2  Apportionment of Certain Settlements.  If the Responsible
Entity intends to pursue a settlement of Possible Violation and has given notice
that it will demand contribution from the Owners, then, subject to Section
1.3.2.3.4, if the violation(s) involve both the Project (or a portion thereof)
and transmission facilities other than the Project, upon reaching a settlement
it intends to accept, it shall request that the Governmental Bodies with which
it has reached agreement apportion culpability for each violation as between the
affected Project and the other transmission facilities of the Responsible Entity
implicated in such violations.  The Responsible Entity shall not communicate its
views of the appropriate apportionment to such Governmental Bodies in any manner
whatsoever.  The Responsible Entity shall disclose to the other Owner all
reports prepared by Governmental Bodies that relate to their investigations,
evaluations, or conclusions about the Possible Violation(s), any written
responses or other written defenses presented to such Governmental Bodies by the
Responsible Entity and the full and complete written terms of the proposed
settlement (including correspondence and memoranda relating thereto).  The
apportionment of responsibility by the Governmental Bodies will be final and
binding on the

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

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Responsible Entities and the Owners.  Owners shall bear their respective
Ownership Percentage of any economic penalty and/or costs associated with any
remedies adopted in lieu of economic penalty assessed in such settlement
apportioned to the Project.

 

1.3.2.3.3  Failure to Apportion.  If a Governmental Body refuses or fails to
apportion culpability for a violation between the Project and the other
transmission facilities of the Responsible Entity, then the Responsible Entity
demanding contribution shall use its reasonable effort to fairly allocate any
economic penalty imposed on account of such violation and present said
allocation methodology to the other Owner for discussion.  Any Owner may utilize
the dispute resolution procedures set forth in Article 3 of Schedule 1 to
this Agreement to challenge the allocation of such penalty; however, the Owners
shall promptly pay the penalty (or alternate settlement) in a timely manner
based on the Responsible Entity’s allocation even if the dispute resolution
process remains ongoing. The Responsible Entity has the burden of proving its
entitlement to contribution and the fair allocation of the penalty by a
preponderance of the evidence.

 

1.3.2.3.4  Limitation on Settlement.  Notwithstanding anything to the contrary
herein, no Responsible Entity has the authority to enter into a settlement of
any Possible Violation that could constitute an admission of culpability by any
Owner (other than the Owner that is and solely in its capacity as the
Responsible Entity) without the prior written consent of such Owner.

 

1.3.2.4    Contest.  If the Responsible Entity and any Governmental Body
considering Possible Violations do not reach a settlement and at any point the
Responsible Entity contests any finding of violation or penalty before a
Governmental Body that has final administrative power to impose such penalty
(e.g., the Federal Energy Regulatory Commission), the Responsible Entity shall
give notice to the other Owner prior to initiating such contest and thereafter
it shall not oppose the intervention or other participation before such
Governmental Body or in respect of any appeal of the decision of such
Governmental Body by another Owner.

 

1.3.2.5  Independent Rights of Owners.

 

1.3.2.5.1  Actions in Defense.  Nothing in this Exhibit G shall be construed to
prevent or restrict any Owner that becomes subject to any request, inquiry or
investigation of a Governmental Body from taking any action (or determining not
to take any action) it deems appropriate in connection therewith; provided,
however, no such Owner has the authority to take any action, including entering
into any settlement, that could constitute an admission of culpability by any
other Owner without the prior written consent of such Owner.

 

1.3.2.5.2  Contribution for Misallocation.  If  a penalty is paid, in whole or
in part, by an Owner for a violation of Applicable Energy Regulations, which
violation arises from the operation or maintenance of any segment of the Project

 

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for which another Owner, as a Responsible Entity, had the responsibility for
compliance with Applicable Energy Regulations, then if the penalty imposed on
the Owner exceeds the amount it would have borne had the penalty been allocated
as provided pursuant to Section 1.3.1 of this Exhibit G, then such Owner will be
entitled to contribution from the other Owner under Section 16.2.3 of this
Agreement, the Responsible Entity, or both, as appropriate.

 

Section 1.4     Certain Amendments.

 

Notwithstanding anything in the Agreement (including this Exhibit G) to the
contrary, the Parties agree that:  (i) the Owners will be entitled to make the
administrative changes to Appendix A of the Operation and Maintenance Agreement
to comply with the provisions of Section 1.1 of this Exhibit G with the consent
of the E&O Committee, subject to approval by the Management Committee and (ii)
the E&O Committee, subject to approval by the Management Committee, will be
entitled to amend the provisions of Section 1.2 of this Exhibit G; provided,
however, any such amendment that imposes additional obligations on a party (in
any capacity) or reduces the obligation of a party (in any capacity) must also
be consented to by such affected party.

 

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Exhibit 1

Checklist of NERC Standards Applicability Form

 

 

Accountable
NERC
Functional
Registry

Obligations Applicable to   Standard TO TOP TP

Line -

Potential
for
Sharing
Penalties*

Substation
-

No sharing
of
penalties**

Both -

Penalty
sharing if
root cause
of event***

  BAL-005-0.2b   TOP     X     CIP-002-3 TO TOP     X     CIP-003-3 TO TOP     X
    CIP-004-3a TO TOP     X     CIP-005-3a TO TOP     X     CIP-006-3c TO TOP  
  X     CIP-007-3a TO TOP     X     CIP-008-3 TO TOP     X     CIP-009-3 TO TOP
    X     COM-001-1.1   TOP     X     COM-002-2   TOP       X   EOP-001-2.1b  
TOP     X     EOP-003-2   TOP     X     EOP-004-2 TO TOP   X       EOP-005-2 TO
TOP     X     EOP-008-1   TOP     X     FAC-001-1 TO         X   FAC-002-1 TO  
TP     X   FAC-003-3 TO     X       FAC-008-3 TO     X       FAC-014-2   TOP TP
X       IRO-001-1.1   TOP       X   IRO-004-2   TOP     X     IRO-005-3.1a   TOP
      X   IRO-010-1a TO TOP     X    

 

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MOD-001-1a   TOP       X   MOD-004-1     TP     X   MOD-008-1   TOP       X  
MOD-010-0 TO   TP X       MOD-012-0 TO   TP X       MOD-018-0     TP   X    
MOD-019-0.1     TP   X     MOD-020-0     TP   X     MOD-021-1     TP   X    
MOD-026-1     TP N/A N/A N/A Generator Modeling MOD-027-1     TP N/A N/A N/A
Generator Modeling MOD-028-2   TOP   N/A N/A N/A MISO doesn’t use MOD-029-1a  
TOP   N/A N/A N/A MISO doesn’t use MOD-030-2   TOP       X   NUC-001-2.1 TO TOP
TP N/A N/A N/A No nuclear facilities connected PER-001-0.2   TOP     X    
PER-003-1   TOP     X     PER-005-1   TOP     X     PRC-001-1.1   TOP     X    
PRC-004-2.1a TO       X     PRC-005-1.1b TO       X     PRC-006-1 TO       X    
PRC-008-0 TO       X     PRC-010-0 TO TOP     X     PRC-011-0 TO       X    
PRC-015-0 TO       X     PRC-016-0.1 TO       X     PRC-017-0 TO       X    
PRC-018-1 TO       X     PRC-021-1 TO       X    

 

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PRC-022-1   TOP     X     PRC-023-3 TO       X     PRC-025-1 TO     N/A N/A N/A
Generator Relay Loadability TOP-001-1a   TOP     X     TOP-002-2.1b   TOP   X  
    TOP-003-1   TOP   X       TOP-004-2   TOP       X   TOP-005-2a   TOP     X  
  TOP-006-2   TOP     X     TOP-007-0   TOP       X   TOP-008-1   TOP       X  
TPL-001-0.1     TP     X   TPL-002-0b     TP     X   TPL-003-0b     TP     X  
TPL-004-0a     TP     X   VAR-001-4   TOP     X                     * -
Standards in this column are recognized as applicable to ongoing operations of
the Facilities.  This agreement assumes potential for sharing of penalties
resulting from standards violations directly associated with the Facilities, as
specified in Section 1.3.2 of this Exhibit G.   ** - Standards in this column
apply each Owner’s Discretely Owned Substation Assets.  Penalties from
violations of these standards would be borne by the Discretely Owned Substation
Owner.   *** - Standards in this column require consideration of both the
Facilities and the Discretely Owned Substation Assets. There is potential for
sharing of penalties arising from an event, as specified in Section 1.3.2 of
this Exhibit G, if an event investigation finds the execution of the standard
requirements on the Facilities to be the root cause of the event giving rise to
the penalty.  

 

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(flow chart) [t82833001_v1.jpg] 

 

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EXHIBIT J

 

FORM OF TRANSMISSION EASEMENT AGREEMENT

AND

MEMORANDUM OF PROJECT OWNERSHIP AGREEMENT

 

Drafted by and upon

recording return to:

 

Otter Tail Power Company

215 South Cascade Street

Fergus Falls, MN 56537

 

The space above this line is reserved for recording purposes.

 

TRANSMISSION EASEMENT AGREEMENT

AND

MEMORANDUM OF PROJECT OWNERSHIP AGREEMENT

 

THIS TRANSMISSION EASEMENT AGREEMENT AND MEMORANDUM OF PROJECT OWNERSHIP
AGREEMENT (this “Agreement”) is entered into and effective as of June 12,  2015
(the “Effective Date”) by and between Montana-Dakota Utilities Co., a division
of MDU Resources Group, a Delaware corporation (“MDU”), and Otter Tail Power
Company, a corporation organized and existing under the laws of the State of
Minnesota (“OTP”).  MDU and OTP shall be referred to herein individually as an
“Owner” and collectively as the “Owners.”

 

RECITALS

 

A.           The Owners are party to that certain Project Ownership Agreement
(the “POA”) dated as of June 12, 2015, and the Project Transmission Capacity
Exchange Agreement (the “ Project TCEA”) dated as of June 12, 2015, pursuant to
which the Owners have agreed to participate in the electric transmission project
described therein (the “Project”) which establishes the respective rights,
duties and obligations of the Owners with respect to their ownership of the
various components of the Project, including the use of (i) the real
property:  (a) described on Exhibit A (legal description of DOSA real
property),  and (b) referenced in Recital E below (the “Project Real Property”),
and (ii) the Discretely Owned Substation Assets, as described on Exhibit A-1 and
A-2 (the "Discretely Owned Substation Assets”).  Capitalized terms not otherwise
defined herein shall have the meaning ascribed to such terms in the Project
Agreements (as such term is defined in the POA).

 

B.           The POA allows that the existence of such Project Agreements,
including the waiver of the right to partition set forth in the POA, as the same
are more fully described below, be evidenced of record by a filing with the
appropriate Governmental Bodies (as defined in the POA) in all relevant
jurisdictions.

 

C.           The POA and that certain Construction Management Agreement by and
between the Owners in various legal capacities (the “CMA”) provides for the
construction of and/or certain improvements to the Real Property, including the
Project as defined in the POA.

 

D.           The Owners are each also designated individually as a “Discretely
Owned Substation Owner” on Exhibit A.  OTP owns the Big Stone South Substation
and MDU owns the Ellendale 345 kV Substation.  Each Discretely Owned Substation
Owner acts in its capacity as a Discretely Owned

 

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Substation Owner separate and apart from its capacity as an Owner.  Each
Discretely Owned Substation Owner owns the real Property identified and legally
described in the attached Exhibit A.  The Discretely Owned Substation Assets are
located on and will be constructed or improved, as applicable, on such real
Property.  Each Owner is separately granted certain easements across portions of
the real Property of the other Owner on which the respective Exhibit A
Discretely Owned Substation Assets are or will be located.

 

E.           The Owners have an undivided ownership interest as
tenants-in-common in the Project located on the Project Real Property identified
and legally described on Exhibit B. 

 

F.           The Owners, as both Owners and Discretely Owned Substation Owners
acting in their respective capacities as such, have agreed pursuant to the
Project Agreements, including the POA and the Project TCEA, to grant certain
easements relating to the Project and the Discretely Owned Substation Assets,
and the real Property upon which the Project and Discretely Owned Substation
Assets are situated, upon the terms and conditions described herein.

 

AGREEMENT

 

In consideration of the foregoing Recitals, the definitions and references to
definitions of which are incorporated by reference herein, the mutual covenants
set forth in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each Owner, in its
capacity as an Owner and a Discretely Owned Substation Owner, agrees as follows:

 

·           Memorandum of POA.  As of the Effective Date, the provisions of this
Section 1 evidence of record the POA, which may affect the rights of the Owners,
including Discretely Owned Substation Owners, and other persons dealing with the
Project Real Property.

 

·           Project Property Interests.  The Project property interests  are
owned by the Owners as tenants-in-common and  the Discretely Owned Substation
Assets are owned individually as follows:

 

·           Project.  In accordance with Section 3.1.1.1 of the POA, all
Property interests constituting the Project are owned by the Owners as
tenants-in-common in undivided ownership interests.  Such ownership interests
shall be (i) in accordance with the Ownership Percentages described in Section
3.1.3.1.1 of the POA, and (ii) subject to being adjusted as provided by the POA.

 

·           Discretely Owned Substation Assets.  In accordance with
Section 3.1.1.2 of the POA, all Property interests constituting Discretely Owned
Substation Assets are owned individually by each of the Owners as reflected in
Exhibit A-1 and A-2.  The Discretely Owned Substation Assets are not part of the
Project.

 

·           Other Rights.  Each Owner acknowledges and agrees that it does not
have and will not claim, either through itself or any other Person (including
any Financing Parties or any trustee of its bankruptcy estate), any right, title
or other interest in or to any property interest in the Discretely Owned
Substation Assets of the other Owner. Each Owner further acknowledges and agrees
that any assertion by any Owner, or any Person claiming interests through an
Owner (including any of its Financing Parties or any trustee of its bankruptcy
estate), of any right, title or other interest in another Owner’s Ownership
Percentage or such other Owner’s Property interests inconsistent with the
preceding sentence will be null and void ab initio.

 

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·           Waiver of Right to Partition. Each of the Owners has agreed under
Section 3.1.5 of the POA that it will not take any action at any time by a
Proceeding or otherwise exercise any right available under Applicable Law to
partition the Project or any part thereof in any way, whether by partition in
kind or by sale and division of the proceeds thereof.  Each of the Owners
has further irrevocably waived the right of partition and the benefit of all
Applicable Law (including statutory and common law) that may now or hereafter
authorize such partition of the Project or any part thereof pursuant to Section
3.1.5 of the POA.  If any such right of partition accrues, after the Effective
Time, each Owner has agreed to, from time to time upon the written request of
the other Owner, execute and deliver such further instruments as may be
necessary to confirm the foregoing waiver and release of its right to partition
pursuant to Section 3.1.5 of the POA. By way of clarification, the Owners
acknowledge and agree that the waiver of the right to partition the Project
contained in Section 3.1.5 of the POA only applies to those Property interests
that are owned as tenants-in-common by the Owners and does not apply to Property
interests that are owned individually by the Owners, including the Discretely
Owned Substation Assets.  The provisions of Section 3.1.5 of the POA are binding
upon and inure to the benefit of the Owners, their respective successors and
assigns, including Financing Parties and their respective successors and
assigns, and will run with the Project Real Property.  Each Owner has agreed
under Section 3.1.5 of the POA to insert a similar covenant in any contract with
any Person (other than the other Owner) that acquires all or any portion of its
Ownership Percentage, which covenant will be enforceable by either or both of
the other Owner or by the Management Committee established by the Owners
pursuant to the POA.

 

·           Permitted Transfers and Right of First Negotiation.  Each of the
Owners has agreed under Article 10 of the POA that, except for Permitted
Transfers, such Owner will not make transfers of its Ownership Percentage and
also that Permitted Transfers may only be engaged in if the rules and conditions
to transfer of Article 10 are satisfied or (if waiver is permitted) waived. 
Section 10.4 of the POA provides that certain Permitted Transfers are subject to
a right of first negotiation. In addition, an Owner’s rights under this
Agreement are appurtenant to the Owner’s Ownership Percentage, and, accordingly,
(i) if an Owner Transfers all or part of its Ownership Percentage to a Third
Party or an Affiliate, the Owner must also Transfer a corresponding and
equivalent portion of all associated rights, obligations and interests of the
transferring Owner in and to this Agreement, and (ii) an Owner may not Transfer
any of its rights under this Agreement except in connection with a corresponding
and equivalent Transfer of the Owner’s Ownership Percentage which is permitted
under the POA.

 

·           Discretely Owned Substation Assets Easement.  Subject to Applicable
Law and Applicable Energy Regulations, each Discretely Owned Substation Owner
hereby grants the other Owner and its respective successors, assigns, heirs,
personal representatives, tenants, or any Persons claiming through them, (i) a
ninety-nine year, irrevocable and non-exclusive, easement over the real Property
owned by such Owner and described in Exhibit A and such Owner’s Discretely owned
Substation Assets for the transmission of electrical power and energy and data
to and through the Discretely Owned Substation Assets (such easements being
labeled on Exhibit A as the “Ellendale 345 kV Substation DOSA Easement Area”  in
the case of the Ellendale  230 kV Substation, and as the “Big Stone South
Substation DOSA Easement Area” in the case of the Big Stone South Substation);
(ii) a ninety-nine year, irrevocable and non-exclusive easement to a share equal
to its Ownership Percentage of the Original Base MVA over the Discretely Owned
Substation Assets as described in Exhibit A-1 and A-2, including the real
Property upon which such Discretely Owned Substation Assets are situated as
described in Exhibit A-1 and A-2, for all purposes necessary and appurtenant to
the transmission of electrical power, energy and data to and through such
Discretely Owned Substation Assets as provided in the Project Agreements,
including the Project TCEA; and (iii) a ninety-nine year, non-exclusive easement
over the real Property on which such Owner’s Discretely Owned Substation Assets
are situated as described in Exhibit A-1 and A-2 for the purpose of accessing
the fiber data transmission line(s) within the Discretely Owned Substation
Assets as

 

 3Confidential

 

 

Execution Version

 

described in Exhibit A-1 and A-2, provided, however, the access rights described
in this clause (iii) shall be subject to reasonable advance notice by the other
Owner to the Discretely Owned Substation Owner and compliance by the other Owner
with reasonable safety and security policies relating to such access.  The
easements granted in this Agreement are not intended to and do not expand upon
the rights granted in the TCEA.

 

·           Project Easement.  Each Owner grants to the other Owner(s) a
non-exclusive, ninety-nine year, irrevocable easement over the Project Real
Property described in Exhibit B and the Project to be located on such Project
Real Property for the transmission of electrical power and energy and data
through the Project, and a non-exclusive easement to its Ownership Percentage of
the Original Base MVA for all purposes necessary and appurtenant to the
transmission of electrical power, energy and data through the Project as
provided in the Project Agreements, including the Project TCEA.

 

·           No Merger.  There shall be no merger of this Agreement or of the
easements granted herein with the fee estate in the real Property described in
Exhibit A or Exhibit B by reason of the fact that this Agreement or any interest
in the easements may be held, directly or indirectly, by or for the account of
any Person or Persons who shall own any interest in the fee estate.  No merger
shall occur unless and until all parties at the time having an interest in the
fee estate and all parties (including any mortgagee) having an interest in this
Agreement shall sign and record a written instrument effecting such merger.

 

·           Runs with the Land.  This Agreement shall run with the land affected
and shall be binding on, and inure to the benefit of the Discretely Owned
Substation Owners in their capacities as such, the Owners and their respective
successors and assigns, heirs, personal representatives, tenants, or any
other Persons claiming through them; provided, however, in the event of a
Transfer as a result of or upon exercise of a Collateral Assignment, the
monetary obligations of the Discretely Owned Substation Owner that accrued prior
to the date of Transfer will not run with the land affected and will remain the
obligation of the Discretely Owned Substation Owner.  No Discretely Owned
Substation Assets can be transferred without binding the transferee to this
Agreement, provided, however, the grant of a Collateral Assignment shall not be
deemed a Transfer for purposes of this Agreement, provided further, however, in
the event of a Transfer of Discretely Owned Substation Assets as a result of or
upon exercise of a Collateral Assignment, the monetary obligations of the
Discretely Owned Substation Owner that accrued prior to the date of Transfer
will not be included in such Transfer and will remain the obligation of the
Discretely Owned Substation Owner.

 

·           No Consequential Damages.  The Discretely Owned Substation Owner
will not be liable to any Owner under this Agreement for Consequential Damages
except Consequential Damages arising from any Third Party Claims.

 

·           Forward Contract.  The Owners acknowledge and agree that this
Agreement and the other Project Agreements are “forward contracts” and that the
Owners are “forward contract merchants”, as those terms are defined in the
United States Bankruptcy Code.  The Owners further acknowledge and agree that
this Agreement and the other Project Agreements form a single, integrated
agreement, and this Agreement and the other Project Agreements are entered into
in reliance on the fact that this Agreement and the other Project Agreements
collectively form a single agreement among the Owners.

 

·           Recording.  This Agreement may be recorded in each county in which
the Real Property described in Exhibit A or Exhibit B is located.

 

·           Counterparts.  This contract may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.

 

 4Confidential

 

 

Execution Version

 

[SIGNATURE PAGES FOLLOW]

 

 5Confidential

 

 

IN WITNESS WHEREOF, the undersigned Owner and Discretely Owned Substation Owner
has caused this Agreement to be executed as of the date above recited.

 

OTTER TAIL POWER COMPANY

        BY         NAME: Timothy Rogelstad   ITS: President      

 

        STATE OF ______________ )       ) ss.   COUNTY OF ____________ )  

 

The foregoing instrument was acknowledged before me this ______ day of
________________________________, 2015, by _____________________________________
of OTTER TAIL POWER COMPANY, a corporation organized and existing under the laws
of the State of Minnesota, on behalf of the company.

 

  Notary Public

 

[SIGNATURE PAGE TO TRANSMISSION EASEMENT AGREEMENT AND
MEMORANDUM OF PROJECT OWNERSHIP AGREEMENT]

 

 PAGE 1 OF 4Confidential

 

 

IN WITNESS WHEREOF, the undersigned Owner and Discretely Owned Substation Owner
has caused this Agreement to be executed as of the date above recited.

 

MONTANA-DAKOTA UTILITIES CO., A DIVISION OF MDU RESOURCES GROUP, INC.

        BY:         NAME: David L. Goodin   ITS: President and CEO of MDU
Resources Group, Inc.      

 

        STATE OF ______________ )       ) ss.   COUNTY OF ____________ )  

 

The foregoing instrument was acknowledged before me this ______ day of
________________________________, 2015, by _____________________________________
of Montana-Dakota Utilities Co., a Division of MDU Resources Group, Inc., on
behalf of the company.

 

  Notary Public

 

[SIGNATURE PAGE TO TRANSMISSION EASEMENT AGREEMENT AND
MEMORANDUM OF PROJECT OWNERSHIP AGREEMENT]

 

 PAGE 2 OF 4Confidential

 

 

Exhibit A

To

 

TRANSMISSION EASEMENT AGREEMENT

AND

MEMORANDUM OF PROJECT AGREEMENT

 

EXHIBIT A-1

 

BIG STONE SOUTH SUBSTATION ASSETS AND

LEGAL DESCRIPTION OF REAL PROPERTY

 

The Big Stone South Substation owned by OTP and located on the Premises
identified below, which substation is not part of the Project.

 

Big Stone South Discretely Owned Substation Assets

 

The Big Stone South  Substation DOSA consists of the 345 kV and the 230 kV
portions of the Big Stone South Substation which includes structural steel,
transformers, foundations, deadend structure for the Ellendale 345 kV
transmission line and associated insulators, jumpers from the jointly owned 345
kV transmission line to the 345 kV bus, the 345 kV bus including future
expansion of the 345 kV bus,  345 kV  and 230 kV breakers and associated
switches, line switch 3713, protection and control equipment, wave traps, fiber
patch panel and associated terminations.

 

Big Stone South Substation DOSA Premises Description

 

All the tract of land lying in and being in the County of Grant and State of
South Dakota, described as follows, to wit:

 

The Northeast Quarter (NE ¼) of the Northwest Quarter (NW ¼) EXCEPT Lot H-1 and
EXCEPT a strip of land seventeen (17) feet wide on the West side of the
Northeast Quarter (NE ¼)  of the Northwest Quarter (NW ¼), in Section
Twenty-four (24), Township One Hundred Twenty-one (121) North, Range Forty-seven
(47) West of the 5th P.M.

AND

Lot H1 in the Northeast Quarter (NE ¼) of the Northwest Quarter (NW ¼), Section
Twenty-four (24), Township One Hundred Twenty-one (121) Range Forty-seven (47),
Grant County, South Dakota.

 

 A-8Confidential

 

 

Big Stone South Substation DOSA Easement Area

 

A parcel of land situated in the Northeast Quarter of the Northwest Quarter of
Section Twenty-four (24), Township One Hundred Twenty-one (121) North, Range
Forty-seven (47) West of the Fifth Principal Meridian, Grant County, South
Dakota, the Substation Premises being more particularly described as follows:

 

     The North boundary of said Premises being 348 feet South of and parallel to
the North line of Section 24; the East boundary being 331 feet West of and
parallel to the North-South Quarter line of Section 24; the South boundary being
1018 feet South of and parallel to the North line of Section 24; and the West
boundary being 336 feet East of the West line of the Northeast Quarter of the
Northwest Quarter of Section 24.

 

     TOGETHER WITH

 

     The South 25 feet of the North 580 feet of the West 336 feet of the
Northeast Quarter of the Northwest Quarter of Section 24.

 

 A-9Confidential

 

 

Big Stone South Substation DOSA Easement Area Site View

 

[**]

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 A-10Confidential

 

 

EXHIBIT A-2

 

ELLENDALE 345 kV SUBSTATION ASSETS AND

LEGAL DESCRIPTION OF REAL PROPERTY

 

The Ellendale 345 kV Substation owned by MDU and located on the Premises
identified below, which substation is not part of the Project.

 

Ellendale 345 kV Substation Discretely Owned Substation Assets

 

The Ellendale 345 kV Substation DOSA consists of the 345 kV and the 230 kV
portions of the Ellendale 345 kV Substation which includes structural steel,
transformers, foundations, deadend structures for the Big Stone 345 kV
transmission line and associated insulators, jumpers from the jointly owned 345
kV transmission line to the 345 kV bus, the 345 kV and 230 kV bus including
future expansion of the 345 kV and 230 kV bus, 345 kV and 230 kV breakers with
associated switches, line switches, protection and control equipment, reactive
compensation, wave traps, fiber patch panel and associated terminations,
metering equipment.

 

Ellendale 345 kV Substation DOSA Premises Description

 

All the tract of land lying in and being in the County of Dickey and State of
North Dakota, described as follows, to wit:

 

The Northeast Quarter (NE ¼) of the Northeast Quarter (NE ¼) of Section Nine
(9), Township One Hundred Twenty-nine (129) North, Range Sixty-three (63) West
of the 5th P.M.

 

Ellendale 345 kV Substation DOSA Easement Area

 

A parcel of land situated in the Northeast Quarter of the Northeast Quarter of
Section Nine (9), Township One Hundred Twenty-nine (129) North, Range
Sixty-three (63) West of the Fifth Principal Meridian, Dickey County, North
Dakota, the Substation Premises being more particularly described as follows:

 

     Commencing at a found rebar at the Northeast Corner of Section 9, T129N,
R63W, Dickey County, North Dakota; thence south 89⁰37’38” West along the North
Line of Section 9 for a distance of 33.00 to the West Right of Way Line of 87th
Avenue SE; thence South 01⁰17’22” East for a distance of 33.00 feet to a set
rebar and Cap. No. 4019 on the South Right of Way Line of 97th Street SE and the
Point of Beginning; thence continuing South 01⁰17’22” East along the West Right
of Way Line of 87th Avenue SE for a distance of 1200.00 feet to a set rebar and
Cap No. 4019; thence South 89⁰37’38” West parallel with the North Line of
Section 9 for a distance of 575.00 feet to a set rebar and Cap No. 4019; thence
North 01⁰17’22” West parallel with the East Line of Section 9 for a distance of
1200.00 feet to a set rebar and Cap. 4019; thence North 89⁰37’38” East parallel
with and 33.00 feet distant from the North Line of Section 9 for a distance of
575.00 to the Point of Beginning; This parcel contains 15.84 acres or 689,912
square feet more or less, excluding road rights of way and is subject to all
prior exceptions, reservations, easements, right of way, restrictions covenants
and conveyances for highway purposes.

 

 A-11Confidential

 

 

Ellendale 345 kV Substation DOSA Easement Area Site View

 

Montana Dakota Utilities Company’s Ellendale 345 kV Substation DOSA

 

 A-12Confidential

 

 

 (graphic) [t82833002_v1.jpg]

 

 A-13Confidential

 

 

Exhibit B
To
TRANSMISSION EASEMENT AGREEMENT
AND
MEMORANDUM OF PROJECT AGREEMENT

Project Owned as Tenants-in-Common and Owners

  

Transmission Line Miles Conductor Structure Type Configuration A 345 kV
transmission  line running between the Otter Tail Power’s Big Stone South
Substation and the Montana-Dakota Utilities’ Ellendale 345 kV Substation along a
route on the Real Property described in the easement listing set forth in this
Exhibit B, upon which such transmission line will be situated Approximately 162
miles 2-T2-477 kcmil ACSR Monopole on concrete foundations Single circuit

  

The above description of the Project, including the easement listing set forth
below, is current as of the date of execution of the Project Agreements,
including this Agreement

  

 C-1Confidential

 

 

EXHIBIT B TO EXHIBIT J-1 

PROJECT OWNED AS TENANTS-IN-COMMON AND OWNERS 

(Roster of Easements)

  

Dickey County, ND

Parcel ID Landowner
Name Twp Rng Sec Legal
Description Crop Acres Pasture Acres Total Acres Option Status [**] [**] [**]
[**] [**] [**] 6.04 0 6.04 Signed [**] [**] [**] [**] [**] [**] 0 3.55 3.55
Signed [**] [**] [**] [**] [**] [**] 2.62 1.93 4.55 Signed [**] [**] [**] [**]
[**] [**] 7.35 1.74 9.09 Signed [**] [**] [**] [**] [**] [**] 1.28 0 1.28 Signed
[**] [**] [**] [**] [**] [**] 7.84 0 7.84 Signed [**] [**] [**] [**] [**] [**]
0.73 0 0.73 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Denied [**] [**]
[**] [**] [**] [**] 1.85 0.58 2.43 Signed [**] [**] [**] [**] [**] [**] 4.76
0.69 5.45 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-2Confidential

 

 

[**] [**] [**] [**] [**] [**] 6.71 3.14 9.85 Signed [**] [**] [**] [**] [**]
[**] 7.94 1.15 9.09 Signed [**] [**] [**] [**] [**] [**] 2.2 1.27 3.47 Signed
[**] [**] [**] [**] [**] [**] 6.43 0 6.43 Signed [**] [**] [**] [**] [**] [**]
2.65 0 2.65 Signed [**] [**] [**] [**] [**] [**] 4.61 2.05 6.66 Signed [**] [**]
[**] [**] [**] [**] 13.76 1.55 15.31 Signed [**] [**] [**] [**] [**] [**] 8.87 0
8.87 Signed [**] [**] [**] [**] [**] [**] 2.73 0 2.73 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-3Confidential

 

 

[**] [**] [**] [**] [**] [**] 8.35 0 8.35 Signed [**] [**] [**] [**] [**] [**]
12.29 1.01 13.3 Signed [**] [**] [**] [**] [**] [**] 4.32 2.1 6.42 Signed [**]
[**] [**] [**] [**] [**] 6.24 0.41 6.65 Signed [**] [**] [**] [**] [**] [**]
2.23 0.21 2.44 Signed [**] [**] [**] [**] [**] [**] 2.28 0 2.28 Signed [**] [**]
[**] [**] [**] [**] 5.72 0 5.72 Signed [**] [**] [**] [**] [**] [**] 9.57 0 9.57
Signed

  

Brown County, SD

Parcel ID Landowner
Name Twp Rng Sec Legal
Description Crop Acres Pasture Acres Total Acres Option Status [**] [**] [**]
[**] [**] [**] 6.42 2.67 9.09 Signed [**] [**] [**] [**] [**] [**] 6.82 2.27
9.09 Signed [**] [**] [**] [**] [**] [**] 7.26 1.83 9.09 Signed [**] [**] [**]
[**] [**] [**] 6.99 2.1 9.09 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-4Confidential

 

 

[**] [**] [**] [**] [**] [**] 8.27 0.82 9.09 Signed [**] [**] [**] [**] [**]
[**] 7.41 1.36 8.77 Signed [**] [**] [**] [**] [**] [**] 7.78 1.31 9.09 Signed
[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 0
9.09 9.09 Signed [**] [**] [**] [**] [**] [**] 7.63 1.46 9.09 Signed [**] [**]
[**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09
Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**]
[**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-5Confidential

 

 

[**] [**] [**] [**] [**] [**] 5.25 0 5.25 Signed [**] [**] [**] [**] [**] [**]
7.02 2.07 9.09 Denied [**] [**] [**] [**] [**] [**] 6.75 2.34 9.09 Denied [**]
[**] [**] [**] [**] [**] 9.09   9.09 Signed [**] [**] [**] [**] [**] [**] 7.53
1.56 9.09 Denied [**] [**] [**] [**] [**] [**] 9.09   9.09 Signed [**] [**] [**]
[**] [**] [**] 5.6 3.49 9.09 Signed [**] [**] [**] [**] [**] [**] 11.05 2.48
13.53 Signed [**] [**] [**] [**] [**] [**] 0 1.37 1.37 Negotiation [**] [**]
[**] [**] [**] [**] 10.03 0 10.03 Signed [**] [**] [**] [**] [**] [**] 7.81 1.22
9.03 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-6Confidential

 

 

[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**]
6.37 2.72 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**]
[**] [**] [**] [**] 2.86 2.3 5.16 Signed [**] [**] [**] [**] [**] [**] 4.98 0
4.98 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Denied [**] [**] [**] [**]
[**] [**] 9.09 0 9.09 Denied [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed
[**] [**] [**] [**] [**] [**] 7.28 1.81 9.09 Signed [**] [**] [**] [**] [**]
[**] 5.28 3.57 8.85 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**]
[**] [**] [**] [**] [**] 3.87 0.14 4.01 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-7Confidential

 

 

[**] [**] [**] [**] [**] [**] 6.57 0.7 7.27 Signed [**] [**] [**] [**] [**] [**]
2.62 0 2.62 Signed [**] [**] [**] [**] [**] [**] 2.66 0 2.66 Signed [**] [**]
[**] [**] [**] [**] 2.62 0 2.62 Signed [**] [**] [**] [**] [**] [**] 6.45 2.64
9.09 Signed [**] [**] [**] [**] [**] [**] 1.99 0 1.99 Signed [**] [**] [**] [**]
[**] [**] 6.57 3.26 9.83 Signed [**] [**] [**] [**] [**] [**] 6.57 3.26 9.83
Signed [**] [**] [**] [**] [**] [**] 1.9 0 1.9 Signed [**] [**] [**] [**] [**]
[**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-8Confidential

 

 

[**] [**] [**] [**] [**] [**] 6.07 3.02 9.09 Negotiation [**] [**] [**] [**]
[**] [**] 6.82 3.07 9.89 Denied [**] [**] [**] [**] [**] [**] 3.64 0 3.64 Signed
[**] [**] [**] [**] [**] [**] 3.56 0 3.56 Signed [**] [**] [**] [**] [**] [**]
5.53 0 5.53 Signed [**] [**] [**] [**] [**] [**] 5.45 0 5.45 Signed [**] [**]
[**] [**] [**] [**] 3.26 0 3.26 Signed [**] [**] [**] [**] [**] [**] 2.65 0 2.65
Signed [**] [**] [**] [**] [**] [**] 6.25 0 6.25 Signed [**] [**] [**] [**] [**]
[**] 5.86 0 5.86 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-9Confidential

 

 

[**] [**] [**] [**] [**] [**] 2.84 0 2.84 Signed [**] [**] [**] [**] [**] [**]
3.78 0 3.78 Signed [**] [**] [**] [**] [**] [**] 5.31 0 5.31 Signed [**] [**]
[**] [**] [**] [**] 6.09 0 6.09 Signed [**] [**] [**] [**] [**] [**] 3.78 0 3.78
Signed [**] [**] [**] [**] [**] [**] 16.55 0 16.55 Denied [**] [**] [**] [**]
[**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 0.43 0 0.43 Signed
[**] [**] [**] [**] [**] [**] 18.18 0 18.18 Signed [**] [**] [**] [**] [**] [**]
9.06 0 9.06 Signed [**] [**] [**] [**] [**] [**] 3.3 1.26 4.56 Signed [**] [**]
[**] [**] [**] [**] 4.56 0 4.56 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-10Confidential

 

 

[**] [**] [**] [**] [**] [**] 9.08 0 9.08 Signed [**] [**] [**] [**] [**] [**]
9.08 0 9.08 Signed [**] [**] [**] [**] [**] [**] 2.58 0 2.58 Signed [**] [**]
[**] [**] [**] [**] 0 4.53 4.53 Signed [**] [**] [**] [**] [**] [**] 1.96 0 1.96
Signed [**] [**] [**] [**] [**] [**] 3.95 0 3.95 Signed [**] [**] [**] [**] [**]
[**] 2.57 0 2.57 Signed [**] [**] [**] [**] [**] [**] 7.09 0 7.09 Signed [**]
[**] [**] [**] [**] [**] 2.58 0 2.58 Signed [**] [**] [**] [**] [**] [**] 0.26 0
0.26 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-11Confidential

 

 

[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Denied [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 0 18.18 18.18 Signed [**] [**]
[**] [**] [**] [**] 14.75 0 14.75 Signed [**] [**] [**] [**] [**] [**] 4.61 0
4.61 Signed [**] [**] [**] [**] [**] [**] 5.88 0 5.88 Signed [**] [**] [**] [**]
[**] [**] 10.12 10.75 20.87 Signed [**] [**] [**] [**] [**] [**] 4.54 0 4.54
Signed [**] [**] [**] [**] [**] [**] 4.54 0 4.54 Signed [**] [**] [**] [**] [**]
[**] 6.81 0 6.81 Signed [**] [**] [**] [**] [**] [**] 2.27 0 2.27 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-12Confidential

 

 

[**] [**] [**] [**] [**] [**] 18.18 0 18.18 Signed [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Denied [**] [**]
[**] [**] [**] [**] 0 6.11 6.11 Signed [**] [**] [**] [**] [**] [**] 5.91 0 5.91
Signed [**] [**] [**] [**] [**] [**] 3.16 0 3.16 Signed [**] [**] [**] [**] [**]
[**] 5.71 0 5.71 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-13Confidential

 

 

[**] [**] [**] [**] [**] [**] 0 5.43 5.43 Signed [**] [**] [**] [**] [**] [**]
3.66 0 3.66 Signed [**] [**] [**] [**] [**] [**] 3.4 0 3.4 Signed [**] [**] [**]
[**] [**] [**] 5.09 0 5.09 Signed [**] [**] [**] [**] [**] [**] 4.69 0 4.69
Signed [**] [**] [**] [**] [**] [**] 4.41 0 4.41 Signed [**] [**] [**] [**] [**]
[**] 3.42 0.57 3.99 Signed [**] [**] [**] [**] [**] [**] 0 9.09 9.09 Signed [**]
[**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 6.24
3.51 9.75 Denied [**] [**] [**] [**] [**] [**] 1.15 0 1.15 Denied

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-14Confidential

 

 

[**] [**] [**] [**] [**] [**] 6.5 2.59 9.09 Signed [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 13.63 0 13.63 Signed [**] [**]
[**] [**] [**] [**] 0 2.27 2.27 Signed [**] [**] [**] [**] [**] [**] 4.57 0 4.57
Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**]
[**] 4.52 0 4.52 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**]
[**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 18.18
0 18.18 Signed [**] [**] [**] [**] [**] [**] 5.46 3.63 9.09 Signed [**] [**]
[**] [**] [**] [**] 4.54 0 4.54 Signed [**] [**] [**] [**] [**] [**] 4.54 0 4.54
Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-15Confidential

 

 

[**] [**] [**] [**] [**] [**] 9.28 8.9 18.18 Signed [**] [**] [**] [**] [**]
[**] 5.65 3.44 9.09 Signed [**] [**] [**] [**] [**] [**] 2.67 6.42 9.09 Signed
[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**]
7.93 1.16 9.09 Signed [**] [**] [**] [**] [**] [**] 6.39 2.7 9.09 Signed [**]
[**] [**] [**] [**] [**] 14.1 4.08 18.18 Signed [**] [**] [**] [**] [**] [**]
5.51 3.58 9.09 Signed [**] [**] [**] [**] [**] [**] 0 18.18 18.18 Signed [**]
[**] [**] [**] [**] [**] 0 9.09 9.09 Signed [**] [**] [**] [**] [**] [**] 15.54
1.69 17.23 Signed [**] [**] [**] [**] [**] [**] 15.54 1.69 17.23 Signed [**]
[**] [**] [**] [**] [**] 9.09 0 9.09 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-16Confidential

 

 

[**] [**] [**] [**] [**] [**] 7.13 1.96 9.09 Signed [**] [**] [**] [**] [**]
[**] 9.09 0 9.09 Denied [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**]
[**] [**] [**] [**] [**] 2.75 0 2.75 Signed [**] [**] [**] [**] [**] [**] 7.28
1.96 9.24 Signed [**] [**] [**] [**] [**] [**] 9.09 9.09 18.18 Signed [**] [**]
[**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 2.07 7.02
9.09 Denied [**] [**] [**] [**] [**] [**] 8.82 0.27 9.09 Easement Only

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-17Confidential

 

 

[**] [**] [**] [**] [**] [**] 0 0.22 0.22 Signed

  

Day County, SD

Parcel ID Landowner Name Twp Rng Sec Legal
Description Crop Acres Pasture Acres Total Acres Option Status [**] [**] [**]
[**] [**] [**] 3.96 0 3.96 Signed [**] [**] [**] [**] [**] [**] 12.33 5.85 18.18
Signed [**] [**] [**] [**] [**] [**] 1.66   1.66 Signed [**] [**] [**] [**] [**]
[**] 2.83 0.39 3.22 Signed [**] [**] [**] [**] [**] [**] 5.55 0 5.55 Signed [**]
[**] [**] [**] [**] [**] 8.38 0.71 9.09 Signed [**] [**] [**] [**] [**] [**]
2.65 0 2.65 Signed [**] [**] [**] [**] [**] [**] 4.89 1.38 6.27 Signed [**] [**]
[**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 13.55 4.46
18.01 Signed [**] [**] [**] [**] [**] [**] 0.87 1.17 2.04 Signed [**] [**] [**]
[**] [**] [**] 4.36 2.83 7.19 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-18Confidential

 

 

[**] [**] [**] [**] [**] [**] 4.71 0.47 5.18 Signed [**] [**] [**] [**] [**]
[**] 3.49 0.51 4 Signed [**] [**] [**] [**] [**] [**] 0.66 1.35 2.01 Easement
Only [**] [**] [**] [**] [**] [**] 5.52 1.63 7.15 Signed [**] [**] [**] [**]
[**] [**] 5.57 3.61 9.18 Signed [**] [**] [**] [**] [**] [**] 7.89 8.61 16.5
Signed [**] [**] [**] [**] [**] [**] 0.5 0 0.5 Signed [**] [**] [**] [**] [**]
[**] 0 9.32 9.32 Signed [**] [**] [**] [**] [**] [**] 14.76 3.42 18.18 Signed
[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**]
7.9 1.19 9.09 Denied

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-19Confidential

 

 

[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Denied [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 15.09 3.09 18.18 Signed [**]
[**] [**] [**] [**] [**] 10.85 0 10.85 Signed [**] [**] [**] [**] [**] [**] 3.37
0.41 3.78 Signed [**] [**] [**] [**] [**] [**] 2.01 1.38 3.39 Signed [**] [**]
[**] [**] [**] [**] 1.89 2.66 4.55 Signed [**] [**] [**] [**] [**] [**] 1.55
4.17 5.72 Signed [**] [**] [**] [**] [**] [**] 2.11 2.62 4.73 Signed [**] [**]
[**] [**] [**] [**] 3.56 0 3.56 Signed [**] [**] [**] [**] [**] [**] 1.86 0 1.86
Signed [**] [**] [**] [**] [**] [**] 11.34 4.51 15.85 Signed [**] [**] [**] [**]
[**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 15.91 0 15.91 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-20Confidential

 

 

[**] [**] [**] [**] [**] [**] 0 0 0 Signed [**] [**] [**] [**] [**] [**] 2.27 0
2.27 Signed [**] [**] [**] [**] [**] [**] 4.71 8.85 13.56 Signed [**] [**] [**]
[**] [**] [**] 0 4.55 4.55 Signed [**] [**] [**] [**] [**] [**] 3.94 5.34 9.28
Signed [**] [**] [**] [**] [**] [**] 7.81 1.47 9.28 Signed [**] [**] [**] [**]
[**] [**] 6.61 2.48 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed
[**] [**] [**] [**] [**] [**] 8.26 0.83 9.09 Signed [**] [**] [**] [**] [**]
[**] 9.09 0 9.09 Denied [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**]
[**] [**] [**] [**] [**] 15.36 1.52 16.88 Signed [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Denied

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-21Confidential

 

 

[**] [**] [**] [**] [**] [**] 4.16 0.39 4.55 Signed [**] [**] [**] [**] [**]
[**] 0 4.43 4.43 Signed [**] [**] [**] [**] [**] [**] 0 9.72 9.72 Denied [**]
[**] [**] [**] [**] [**] 0 9.09 9.09 Signed [**] [**] [**] [**] [**] [**] 2.76 0
2.76 Signed [**] [**] [**] [**] [**] [**] 13.64 0 13.64 Signed [**] [**] [**]
[**] [**] [**] 4.55 0 4.55 Signed [**] [**] [**] [**] [**] [**] 4.05 0.5 4.55
Signed [**] [**] [**] [**] [**] [**] 7.74 1.35 9.09 Denied [**] [**] [**] [**]
[**] [**] 3.21 1.34 4.55 Signed [**] [**] [**] [**] [**] [**] 0 9.09 9.09 Denied
[**] [**] [**] [**] [**] [**] 6.41 2.68 9.09 Denied [**] [**] [**] [**] [**]
[**] 0 4.55 4.55 Denied [**] [**] [**] [**] [**] [**] 0 1.78 1.78 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-22Confidential

 

 

[**] [**] [**] [**] [**] [**] 8.87 0.22 9.09 Signed [**] [**] [**] [**] [**]
[**] 6.28 3.15 9.43 Signed [**] [**] [**] [**] [**] [**] 16.64 1.54 18.18 Denied
[**] [**] [**] [**] [**] [**] 6.1 2.99 9.09 Denied [**] [**] [**] [**] [**] [**]
6.46 2.63 9.09 Signed [**] [**] [**] [**] [**] [**] 6.93 2.16 9.09 Signed [**]
[**] [**] [**] [**] [**] 6.1 2.99 9.09 Signed [**] [**] [**] [**] [**] [**] 1.65
4.37 6.02 Denied [**] [**] [**] [**] [**] [**] 4.76 4.33 9.09 Denied [**] [**]
[**] [**] [**] [**] 0 0.52 0.52 Easement Only [**] [**] [**] [**] [**] [**] 7.25
1.84 9.09 Signed [**] [**] [**] [**] [**] [**] 1.03 3.83 4.86 Signed [**] [**]
[**] [**] [**] [**] 3.15 1.4 4.55 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-23Confidential

 

 

[**] [**] [**] [**] [**] [**] 8.12 0.97 9.09 Signed [**] [**] [**] [**] [**]
[**] 6.81 2.28 9.09 Signed [**] [**] [**] [**] [**] [**] 12.3 6.03 18.33 Signed
[**] [**] [**] [**] [**] [**] 6.24 11.82 18.06 Signed [**] [**] [**] [**] [**]
[**] 0.63 1.37 2 Easement Only [**] [**] [**] [**] [**] [**] 1 1.14 2.14 Signed
[**] [**] [**] [**] [**] [**] 7.12 3.52 10.64 Denied [**] [**] [**] [**] [**]
[**] 0.36 4.74 5.1 Signed [**] [**] [**] [**] [**] [**] 1.95 0 1.95 Denied [**]
[**] [**] [**] [**] [**] 1.75 2.88 4.63 Signed [**] [**] [**] [**] [**] [**]
4.02 2.73 6.75 Signed [**] [**] [**] [**] [**] [**] 3.37 3.48 6.85 Signed [**]
[**] [**] [**] [**] [**] 6.94 0 6.94 Denied [**] [**] [**] [**] [**] [**] 0 4.85
4.85 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-24Confidential

 

 

[**] [**] [**] [**] [**] [**] 6.06 0 6.06 Signed [**] [**] [**] [**] [**] [**]
4.85 0 4.85 Signed [**] [**] [**] [**] [**] [**] 4.4 0 4.4 Signed [**] [**] [**]
[**] [**] [**] 0 2.39 2.39 Signed [**] [**] [**] [**] [**] [**] 6.72 0 6.72
Denied [**] [**] [**] [**] [**] [**] 0 12.97 12.97 Signed [**] [**] [**] [**]
[**] [**] 2.68 1.45 4.13 Signed [**] [**] [**] [**] [**] [**] 0 1.79 1.79 Signed
[**] [**] [**] [**] [**] [**] 6.69 2.4 9.09 Signed [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Denied [**] [**] [**] [**] [**] [**] 8.27 0.82 9.09 Signed [**] [**]
[**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 18.18 0
18.18 Signed [**] [**] [**] [**] [**] [**] 18.26 0 18.26 Denied

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-25Confidential

 

 

[**] [**] [**] [**] [**] [**] 0.03 0 0.03 Easement Only [**] [**] [**] [**] [**]
[**] 4.88 0 4.88 Signed [**] [**] [**] [**] [**] [**] 1.64 11.22 12.86 Signed
[**] [**] [**] [**] [**] [**] 1.4 2.56 3.96 Denied [**] [**] [**] [**] [**] [**]
0.85 4.32 5.17 Signed [**] [**] [**] [**] [**] [**] 4.04 1.14 5.18 Signed [**]
[**] [**] [**] [**] [**] 4.75 0.43 5.18 Signed [**] [**] [**] [**] [**] [**]
3.96 0 3.96 Denied [**] [**] [**] [**] [**] [**] 3.96 0.4 4.36 Signed [**] [**]
[**] [**] [**] [**] 3.88 0 3.88 Signed [**] [**] [**] [**] [**] [**] 3.88 0 3.88
Signed [**] [**] [**] [**] [**] [**] 5.08 0 5.08 Signed [**] [**] [**] [**] [**]
[**] 4.78 0.3 5.08 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-26Confidential

 

 

[**] [**] [**] [**] [**] [**] 0.07 0.89 0.96 Signed [**] [**] [**] [**] [**]
[**] 0.38 0 0.38 Easement Only [**] [**] [**] [**] [**] [**] 4.56 0 4.56 Signed
[**] [**] [**] [**] [**] [**] 9.99 0 9.99 Signed [**] [**] [**] [**] [**] [**]  
  0 Signed [**] [**] [**] [**] [**] [**] 5.19 0 5.19 Signed [**] [**] [**] [**]
[**] [**] 4.62 0 4.62 Signed

  

Grant County, SD

Parcel ID Landowner Name Twp Rng Sec Legal
Description Crop Acres Pasture Acres Total Acres Option Status [**] [**] [**]
[**] [**] [**] 8.43 0.66 9.09 Signed [**] [**] [**] [**] [**] [**] 4.6 0 4.6
Signed [**] [**] [**] [**] [**] [**] 2.27 0 2.27 Signed [**] [**] [**] [**] [**]
[**] 0 8.94 8.94 Signed [**] [**] [**] [**] [**] [**] 0.6 0.79 1.39 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-27Confidential

 

 

[**] [**] [**] [**] [**] [**] 2.29 5.48 7.77 Signed [**] [**] [**] [**] [**]
[**] 0.53 5.29 5.82 Signed [**] [**] [**] [**] [**] [**] 8.34 0.75 9.09 Signed
[**] [**] [**] [**] [**] [**] 3 6.09 9.09 Signed [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**]
[**] [**] [**] [**] 20.42 5.88 26.3 Signed [**] [**] [**] [**] [**] [**] 0 0 0
Signed [**] [**] [**] [**] [**] [**] 0 9.09 9.09 Signed [**] [**] [**] [**] [**]
[**] 4.55 0 4.55 Signed [**] [**] [**] [**] [**] [**] 0 0 0 Signed [**] [**]
[**] [**] [**] [**] 4.25 0 4.25 Signed [**] [**] [**] [**] [**] [**] 5.82 3.27
9.09 Signed [**] [**] [**] [**] [**] [**] 0 3.67 3.67 Signed [**] [**] [**] [**]
[**] [**] 18.18 0 18.18 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Denied
[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**]
4.84 0 4.84 Signed [**] [**] [**] [**] [**] [**] 0.47 0 0.47 Easement Only

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-28Confidential

 

 

[**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**]
9.09 9.09 18.18 Signed [**] [**] [**] [**] [**] [**] 9.21 0 9.21 Signed [**]
[**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 1.42
0.69 2.11 Signed [**] [**] [**] [**] [**] [**] 5.81 0 5.81 Signed [**] [**] [**]
[**] [**] [**] 5.04 0 5.04 Signed [**] [**] [**] [**] [**] [**] 2.3 0 2.3 Signed
[**] [**] [**] [**] [**] [**] 0.31 0 0.31 Easement Only [**] [**] [**] [**] [**]
[**] 4.67 0 4.67 Signed [**] [**] [**] [**] [**] [**] 9.39 2.3 11.69 Signed [**]
[**] [**] [**] [**] [**] 10.91 0.31 11.22 Signed [**] [**] [**] [**] [**] [**] 0
9.09 9.09 Signed [**] [**] [**] [**] [**] [**] 0 0.05 0.05 Easement Only [**]
[**] [**] [**] [**] [**] 2.99 6.1 9.09 Signed [**] [**] [**] [**] [**] [**] 0
2.07 2.07 Signed [**] [**] [**] [**] [**] [**] 1.57 0 1.57 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-29Confidential

 

 

[**] [**] [**] [**] [**] [**] 3.54 1 4.54 Signed [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 6.87 0 6.87 Signed [**] [**]
[**] [**] [**] [**] 1.57 0 1.57 Signed [**] [**] [**] [**] [**] [**] 20 10 30
Signed [**] [**] [**] [**] [**] [**] 0 1.95 1.95 Signed [**] [**] [**] [**] [**]
[**] 0 4.55 4.55 Signed [**] [**] [**] [**] [**] [**] 0 0.17 0.17 Easement Only
[**] [**] [**] [**] [**] [**] 7.36 1.42 8.78 Signed [**] [**] [**] [**] [**]
[**] 8.67 0 8.67 Signed [**] [**] [**] [**] [**] [**] 9.09 0 9.09 Signed [**]
[**] [**] [**] [**] [**] 7.65 1.44 9.09 Signed [**] [**] [**] [**] [**] [**]
6.22 2.87 9.09 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-30Confidential

 

 

[**] [**] [**] [**] [**] [**] 3.67 5.42 9.09 Signed [**] [**] [**] [**] [**]
[**] 0.83 0 0.83 Signed [**] [**] [**] [**] [**] [**] 0 9.09 9.09 Signed [**]
[**] [**] [**] [**] [**] 10.01 3.63 13.64 Signed [**] [**] [**] [**] [**] [**] 0
0 0 Easement Only [**] [**] [**] [**] [**] [**] 3.65 3.03 6.68 Signed [**] [**]
[**] [**] [**] [**] 6.5 0 6.5 Signed [**] [**] [**] [**] [**] [**] 13.64 0 13.64
Signed [**] [**] [**] [**] [**] [**] 1.65 0 1.65 Signed [**] [**] [**] [**] [**]
[**] 1.9 1.74 3.64 Signed [**] [**] [**] [**] [**] [**] 8.6 0.49 9.09 Signed
[**] [**] [**] [**] [**] [**] 2.2 0 2.2 Signed [**] [**] [**] [**] [**] [**]
2.33 0 2.33 Signed [**] [**] [**] [**] [**] [**] 6.49 2.6 9.09 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-31Confidential

 

 

[**] [**] [**] [**] [**] [**] 13.31 0 13.31 Signed [**] [**] [**] [**] [**] [**]
3.98 0.57 4.55 Denied [**] [**] [**] [**] [**] [**] 3.03 0 3.03 Signed [**] [**]
[**] [**] [**] [**] 5.68 0 5.68 Signed [**] [**] [**] [**] [**] [**] 7.77 0 7.77
Signed [**] [**] [**] [**] [**] [**] 0 8.48 8.48 Signed [**] [**] [**] [**] [**]
[**] 7.42 1.67 9.09 Signed [**] [**] [**] [**] [**] [**] 1.64 2.91 4.55 Signed
[**] [**] [**] [**] [**] [**] 1.81 0 1.81 Signed [**] [**] [**] [**] [**] [**]
9.12 2.8 11.92 Signed [**] [**] [**] [**] [**] [**] 4.55 0 4.55 Signed [**] [**]
[**] [**] [**] [**] 4.55 0 4.55 Signed

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-32Confidential

 

 

[**] [**] [**] [**] [**] [**] 5.76 0 5.76 Signed [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 0 0.1 0.1 Easement Only [**]
[**] [**] [**] [**] [**] 5.04 13.14 18.18 Signed [**] [**] [**] [**] [**] [**] 0
9.09 9.09 Signed [**] [**] [**] [**] [**] [**] 0 9.09 9.09 Signed [**] [**] [**]
[**] [**] [**] 4.55 0 4.55 Signed [**] [**] [**] [**] [**] [**] 1.16 0 1.16
Signed [**] [**] [**] [**] [**] [**] 6.83 5.78 12.61 Signed [**] [**] [**] [**]
[**] [**] 0.39 4.16 4.55 Signed [**] [**] [**] [**] [**] [**] 0 0.3 0.3 Easement
Only

 

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

 

 C-33Confidential

 

 

[**] [**] [**] [**] [**] [**] 13.64 0 13.64 Signed [**] [**] [**] [**] [**] [**]
9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 8.69 0 8.69 Signed [**] [**]
[**] [**] [**] [**] 9.09 0 9.09 Signed [**] [**] [**] [**] [**] [**] 7.6 1.42
9.02 Signed [**] [**] [**] [**] [**] [**] 3.33 0 3.33 Signed [**] [**] [**] [**]
[**] [**] 4.63 4.46 9.09 Signed [**] [**] [**] [**] [**] [**] 4.53 4.56 9.09
Signed [**] [**] [**] [**] [**] [**] 7.94 1.15 9.09 Signed [**] [**] [**] [**]
[**] [**] 8.3 0.52 8.82 Denied [**] [**] [**] [**] [**] [**] 17.95 0 17.95
Denied [**] [**] [**] [**] [**] [**] 7.64 0 7.64 Denied

  

[**] Denotes confidential information that has been omitted from the exhibit and
filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.

  

 

 C-34Confidential

 

 

Execution Version

 

EXHIBIT P 

 

METHODOLOGY FOR RECALCULATING INTERESTS FOR UPGRADES 

 

A.RULES OF CONSTRUCTION

  

This Exhibit P is referenced by and incorporated by reference to Section
4.4.1(ix)(ii) of this Agreement. Conversely, Section 4.4.1(ix)(ii) is
incorporated by reference to this Exhibit P. As a result, the provisions of
Section 4.4.1(ix)(ii) and Exhibit P will be read and interpreted as an
aggregated whole, without priority or preference to either the section or
the exhibit. 

 

B.PRELIMINARY CALCULATIONS AND METHODS OF COMPUTATION

  

1.Project Capacity / Units of Measure. For purposes of recalculation of
Ownership Percentages, Project Capacity will be expressed in Megavolt Amps
(“MVA”).

 

(a)Base Project Capacity. “Base MVA” means the MVA associated with the Project
Capacity in effect from time to time determined without giving effect to any
adjustments to MVA resulting from an MVA Increment (as defined below)
corresponding to a pending Upgrade, except as such adjustment is given effect
pursuant to clause (ii) of this Section 1(a) below.

 

(i)Promptly following the Substantial Completion Date, the Maintenance Provider
will determine the Base MVA as of such date.

  

(ii)Base MVA will be adjusted (increased) following the recalculation of
Ownership Percentages as a result of an MVA Increment (defined below), which
adjustment will be upon completion of the Non-Pro Rata Upgrade.

  

(b)Effect of Upgrades on Base MVA. The incremental increase from the Base MVA
resulting from an Upgrade (“MVA Increment”) will be allocated to the Owners
based on the percentages agreed upon by the Owners (“Upgrade OP”).

  

(c)Effect of Upgrades on Ownership Percentage.

 

Page 1 of 2

 

 

Execution Version

 

(i)Pro Rata Upgrade. In the event of a Pro Rata Upgrade (an Upgrade in which the
Owners contributions toward Upgrade Costs are in proportion to each such Owner’s
Ownership Percentage immediately prior to the Upgrade (“Base OP)), the Ownership
Percentages of the Owners will not be adjusted to reflect the additional capital
investment made by the Owners.

  

(ii)Non-Pro Rata Upgrade. In the event of a Non-Pro Rata Upgrade, the Ownership
Percentage of the Owners will be recalculated and adjusted (“Adjusted OP”). The
Adjusted OP will be calculated by weighting and apportioning (y) the Base OP and
(z) the Upgrade OP of such Owner in the Upgrade. The Owner Incremental MVA of
the Upgrade is expressed in the following formula: [Upgrade OP x MVA Increment].
The Adjusted OP is expressed in the following formula: [(Owner’s Base MVA +
Owner Incremental MVA)/(Base MVA + Incremental MVA)]. For purposes of future
recalculations of Ownership Percentages, the Adjusted OP will become the Base OP
and the Adjusted OP shall become effective on the later of (A) the date on which
a revised Schedule 2 to the Transmission Capacity Exchange Agreement reflecting
the change is accepted for filing by the FERC, or (B) the date specified by the
Owners as the effective date of the change.

 

2.Effect of Certain Upgrades on Ownership Percentage. If an Upgrade increases
the Project Capacity to only a portion of the Project, the Owners will cooperate
in determining the appropriate Ownership Percentages on the various portions of
the Project. Any such change in the Ownership Percentages shall become effective
on the later of (A) the date on which a revised Schedule 2 to the Transmission
Capacity Exchange Agreement reflecting the change is accepted for filing by the
FERC, or (B) the date specified by the Owners as the effective date of the
change.

  

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