exv10w3



 




Confidential information has been omitted from this Exhibit and filed
separately with the Commission pursuant to a confidential treatment request
under Rule 24b-2.




Exhibit 10.3




KEC # 807




Master Coal Purchase and Sale Agreement




between




Otter Tail Power Company (“Otter Tail”), a division of

Otter Tail Corporation,

Montana-Dakota Utilities Co. (“MDU”), a division of MDU

Resources Group, Inc,

NorthWestern Corporation, doing business as

NorthWestern Energy (“NorthWestern”)




and




Kennecott Coal Sales Company




 









 








Master Coal Purchase and Sale Agreement Index



Article 1.   General Terms and Definitions



Article 2.   Term



Article 3.   Quantity



Article 4.   Delivery and Transportation



Article 5.   Title and Risk of Loss; Equipment Damage



Article 6.   Coal Quality Specifications



Article 7.   Sampling and Analysis



Article 8.   Weighing



Article 9.   Price and Price Adjustments



Article 10. Invoices, Payments, Netting, Set off, and Credit Ratings



Article 11. Force Majeure



Article 12. Records, Audits, Access



Article 13. Default, Remedies, and Termination



Article 14. Notices



Article 15. Cooperation



Article 16. Warranty, Limitation on Liability, Duty to Mitigate & Indemnification



Article 17. Limitation on Waiver



Article 18. Confidentiality



Article 19. Entirety, Amendments


2









 






 Article 20. Successors and Assigns



Article 21. Governing Laws



Article 22. Interpretation



Article 23. Resale and Buyer’s Obligations



Article 24. Survival




3









 








MASTER COAL PURCHASE AND SALE AGREEMENT



This MASTER COAL PURCHASE AND SALE AGREEMENT (“Agreement”) is entered into and
is effective as of the 1st day of June 2004, between Kennecott Coal Sales
Company (“Kennecott”), an Oregon corporation, and Otter Tail Power Company
(“Otter Tail”), a division of Otter Tail Corporation, a Minnesota corporation,
Montana-Dakota Utilities Co. (“MDU”), a division of MDU Resources Group, Inc, a
Delaware corporation, and NorthWestern Corporation, doing business as
NorthWestern Energy (“NorthWestern”), a Delaware corporation. Kennecott, Otter
Tail, MDU, and NorthWestern may be individually referred to herein as a “Party”
or collectively as “Parties”.




RECITALS



WHEREAS, each Party is engaged in the sale and/or purchase of Powder River
Basin (“PRB”) Coal or other Coal. The Parties believe it will be mutually
beneficial to set the terms and conditions under which such Coal sales and
purchases may be made between them.



IN CONSIDERATION of the mutual covenants and promises set forth hereafter, the
Parties to this Agreement, intending to legally bind themselves, agree now as
follows:




ARTICLE 1. GENERAL TERMS AND DEFINITIONS





	1.01	 	The terms of this Agreement shall govern all purchases and sales of Coal
between the Parties (hereinafter “Transactions”) or options thereon during
the term of this Agreement unless the Parties expressly indicate
otherwise. All amendments, modifications, revisions and changes to this
Agreement or any related Transaction or option must be in writing and
signed by both Parties. If the Parties enter into an option concerning
the purchase and/or





4









 











	 	 	sale of Coal, the terms and conditions of this
Agreement and the Confirmation Letter shall govern the Transaction once
the option has been exercised.
	 
	1.02	 	For individual Transactions, the Parties shall enter into a written
Confirmation Letter (hereinafter “Confirmation”) that sets forth and
defines the following: the Buyer, the Seller, the price, price
adjustments, quantity, term, quality specifications, mine(s), and any
other Transaction-specific provisions mutually agreed upon by the Parties.
All Confirmations shall be in writing, signed by both Parties. The
Parties intend the provisions of each individual Confirmation and the
provisions of this Agreement be construed as one single integrated
agreement and that without a written Confirmation the Parties would not
otherwise enter into a Transaction. Any inconsistency or conflict between
provisions of the individual Confirmation and provisions of this Agreement
shall be resolved in favor of any provisions of the Confirmation.
	 
	1.03	 	Each of the following terms when used in this Agreement will have the
meaning given to it in this section:






	 	a)	 	“Actual Btu” means the monthly ton-weighted average
as-received calorific value (stated in Btu/lb.).
	 
	 	b)	 	“Buyer” means the Party to a Transaction who is
obligated to purchase and receive Coal, or causes Coal to be
received.
	 
	 	c)	 	“Claim” means all claims or actions threatened or filed
that directly or indirectly relate to the subject matter of this
Agreement, including but not limited to indemnity, the resulting
losses, damages, expenses, reasonable attorneys’ fees and costs.
	 
	 	d)	 	“Coal” means any and all Coal to be sold by Seller and
purchased by Buyer pursuant to the terms and conditions of this
Agreement.
	 
	 	e)	 	“Electronic” means faxes, telegraphs, emails, and all
other forms of electronic data transfer.
	 
	 	f)	 	“Standard Btu” means the standard calorific value as
set forth in a Confirmation (stated in Btu/lb.) and is the basis
for a price adjustment as described in Section 9.03.





5









 





	 	g)	 	“Seller” means the Party to a Transaction who is
obligated to sell and deliver Coal or causes Coal to be
delivered.
	 
	 	h)	 	“Ton” means 2,000 pounds avoirdupois.
	 
	 	i)	 	“Loading Provisions” means the terms and conditions of
Buyer’s transportation contracts or excerpts thereof that Seller
has reviewed and approved. The Loading Provisions are further
described in Section 4.04 and attached as Exhibit A.





ARTICLE 2. TERM





	2.01	 	This Agreement shall begin on the date first set forth above and shall
continue in effect until terminated by either Party upon sixty (60) days
written notice to the other Party, which right of termination shall be
each Party’s absolute right to exercise. Termination of this Agreement
under this Article shall not affect either Party’s rights and obligations
with respect to any Transactions that have been agreed to in writing in a
Confirmation prior to termination.





ARTICLE 3. QUANTITY





	3.01	 	Buyer shall be obligated to purchase and pay for, and Seller shall be
obligated to sell and tender for delivery, the amount of Coal agreed to in
a Confirmation, except as may be limited by Article 11 of this Agreement.
	 
	3.02	 	Unless otherwise limited in the Confirmation, Buyer has the right to ship
or use the Coal delivered under this Agreement at any location or for any
such purpose Buyer designates.





ARTICLE 4. DELIVERY AND TRANSPORTATION





	4.01	 	For each Transaction, Seller agrees to tender to Buyer and Buyer agrees
to accept from Seller the quantity of Coal as provided in the relevant
Confirmation. Seller shall tender the 




6









 






	 	 	Coal to Buyer in accordance with
reasonable monthly delivery schedules to be submitted by Buyer in
accordance with the Agreement and the Confirmation. Schedules shall be
based on a ratable monthly basis unless otherwise agreed to by both
Parties. In addition, Buyer shall provide Seller with monthly schedules
at least sixty (60) days prior to the beginning of each applicable month.
If the Seller objects to a schedule submitted by Buyer, Seller shall
notify Buyer of its objections within fifteen (15) days of Seller’s
receipt of such schedule and the Parties shall work together in good faith
to agree on a reasonable and mutually acceptable schedule. The mine(s)
used to source the Coal supplied under this Agreement shall be any mine
set forth in the Confirmation.
	 
	4.02	 	Buyer shall supply the appropriate unit train railcars. Said railcars
shall be of a size compatible with the loading requirements set forth in
this Agreement. Unit train sizes will normally vary from 105 to 135
railcars per train; however, depending on railcar availability, shorter or
longer trains may occasionally be operated by mutual agreement.
	 
	4.03	 	Unless excused by Article 11 of this Agreement, if Buyer fails over a
quarterly basis to schedule the appropriate unit trains for delivery of an
amount of Coal scheduled under a Transaction, Seller shall have the right
at Seller’s sole option to reduce the annual quantities of that
Transaction by the deficit from the scheduled amount. This right shall be
in addition to any other rights available to Seller hereunder.
	 
	4.04	 	Seller shall cause Coal to be loaded and delivered at the loading
facilities into railcars supplied by Buyer. Seller agrees to comply with
the weighing and railcar Loading Provisions. Said Loading Provisions are
subject to Seller’s ability to load the required net tonnages in Buyer’s
railcar without significant risk of spillage or exceeding railcar limits
and shall be in general compliance with industry standards for the
applicable coal region. Seller shall have
at least 48 hours notice of any changes to the Loading Provisions. If
the changes to the Loading Provisions are inconsistent with Seller’s
commitments as otherwise set forth in this 




7









 






	 	 	Agreement and Seller’s then
current operating practice, Seller shall not be liable for noncompliance
with such changes unless expressly accepted by Seller. Should the
obligations as set forth in this Article 4 not be met, and as a result,
Buyer incurs costs under its transportation agreement with the rail
carrier as a direct result of Seller’s not meeting its obligation
hereunder and such failure is not the fault of either Buyer or the
railroad, then Seller shall reimburse Buyer for any such costs as set
forth in Exhibit A.
	 
	4.05	 	The scheduled Coal shall be F.O.B. loaded in Buyer-provided railcars at
the delivery point located at each individual mine (“Delivery Point”).
Buyer’s railcars and unit train shall be compatible with Seller’s
trackage, storage and loading facilities, and shall be ready to load upon
arrival at the individual mine. Seller shall load each railcar at
Seller’s expense and shall complete the loading of all railcars in each
unit train within four hours after the first empty railcar is actually
placed by the railroad under the Seller’s loading chute. Unless excused
by Article 11 or due to actions of Buyer or Buyers rail carrier, Seller
shall be responsible for demurrage or other charges invoiced to Buyer by
Buyer’s rail carrier resulting directly from Seller’s failure to load
Buyer’s trains as provided above.
	 
	4.06	 	Seller is required to load each railcar to the gross weight(s) designated
in the Confirmation; however, under no circumstances will the gross weight
exceed the maximum limit established by the rail carrier(s) for the
railcar type and for the designated train routes. Should Seller load any
railcar on Buyer’s behalf outside of these specified limits, the Seller
assumes any and all reasonable costs which may be charged by the rail
carrier(s) and paid by Buyer as a direct result of such underloading or
overloading of these railcars.





ARTICLE 5. TITLE AND RISK OF LOSS; EQUIPMENT DAMAGE





	5.01	 	Title to the Coal and all risk of loss shall pass to Buyer upon
completion of loading all railcars in each unit train at the Delivery
Point.




8









 












	5.02	 	Seller shall be responsible for, and shall indemnify Buyer for, any and
all direct reasonable costs resulting from damage to: (i) Buyer’s or its
contracted rail carriers’ equipment if such equipment is damaged while on
Seller’s property except to the extent such damage is caused by the
negligence or recklessness of Buyer or its contracted rail carrier; and
(ii) Buyer’s equipment, including mobile railcars and stationary equipment
at Buyer’s electric generating station, if said equipment is damaged as a
result of non-Coal material having been interspersed with the tendered
Coal prior to leaving Seller’s mine property.





ARTICLE 6. COAL QUALITY SPECIFICATIONS



If the Parties set forth coal quality specifications in a Confirmation, the
following Sections 6.01 – 6.03 shall apply with respect to those
specifications.





	6.01	 	At the Delivery Point, all tendered Coal shall be raw, substantially free
of magnetic material and other foreign material impurities, and crushed to
a maximum size as set forth in the Confirmation as determined in
accordance with applicable American Society of Testing and Materials
(ASTM) standards.
	 
	6.02	 	If there are three (3) Non-Conforming Shipments as defined in Section
6.04, whether rejected or not, under a Transaction in any three (3) month
period or, if two (2) out of four (4) consecutive shipments under a
Transaction are Non-Conforming Shipments, Buyer may upon notice confirmed
in writing and sent to Seller, suspend future shipments except those
shipments already loaded into railcars. Seller shall, within sixty (60)
days, provide Buyer with reasonable assurances that subsequent deliveries
of Coal shall meet or exceed the
specifications set forth in the Confirmation. If Seller fails to provide
such assurances within that sixty (60) day period, Buyer shall have the
right to terminate the Transaction without




9









 






	 	 	further obligation hereunder
on the part of either party. Termination shall be the sole remedy of
Buyer under this Section. Buyer’s waiver of this right for any one train
shall not constitute a waiver for subsequent trains. If Seller provides
such assurances to Buyer’s reasonable satisfaction, deliveries hereunder
shall resume and any tonnage deficiencies resulting from suspension may
be made up at Buyer’s sole option subject to a mutually agreeable
schedule. Buyer shall not unreasonably withhold its acceptance of
Seller’s assurances, or delay the resumption of shipment.
	 
	6.03	 	The Parties recognize during the performance of a Transaction,
legislative, regulatory bodies or the courts may adopt environmental laws,
rules, and regulations that will make it impossible or commercially
impracticable for Buyer to utilize or to remarket Coal purchased under
this Agreement. If, as a result of the adoption of such laws, rules, and
regulations or changes in the interpretation or enforcement thereof,
Buyer, in good faith, decides it will be impossible or commercially
impracticable for Buyer to utilize or to remarket such Coal, Buyer shall
promptly notify Seller in writing. After receiving such notification,
Buyer and Seller shall promptly consider whether corrective actions can be
taken in the mining and preparation of the Coal, in the operation of
Buyer’s generating station, or in Seller’s substituting different source
Coal. If in the Parties’ reasonable judgment such actions will, make it
impossible and commercially impracticable for Buyer to utilize or to
remarket tendered Coal without violating any applicable law, regulation,
policy, or order, Buyer shall have the right, upon sixty (60) days notice
to Seller, to terminate the Transaction without further obligation on the
part of either party. Termination shall be the sole remedy of Buyer and
Seller under this section.




If Rejection Limits are specified in the Confirmation, this Section 6.04 shall
apply.





	6.04	 	If any Shipment of Coal triggers any of the Rejection Limits specified in
the Confirmation for a Transaction (a “Non-Conforming Shipment”), Buyer
shall have the option, within twenty-four (24) hours of Buyer’s receipt of
the quality analysis of the Coal, of either (i) rejecting such




10









 








	        	 	Non-Conforming Shipment prior to unloading the Coal, or, (ii) accepting
the Non-Conforming Shipment and in addition to any quality adjustments
outlined in the Confirmation, reducing the price of Coal for such
trainload by (*) per ton. If Buyer fails to timely exercise its
rejection rights under this Section as to a Shipment, Buyer shall be
deemed to have waived such rights to reject with respect to that Shipment
only. Buyer’s failure to timely exercise such notice does not constitute
a waiver of its right to any penalty adjustment provided for herein or in
the relevant Confirmation. If Buyer timely rejects the Non-Conforming
Shipment, Seller shall be responsible for promptly transporting the
rejected Coal to an alternative destination determined by Seller and, if
applicable, promptly unloading such Coal. Seller shall reimburse Buyer
for all reasonable costs and expenses associated with the transportation,
storage, handling and removal of the Non-Conforming Shipment. Buyer shall
cooperate with Seller in minimizing Seller’s cost of redirecting the
rejected Coal. Seller shall replace the rejected coal within a reasonable
period of time.





ARTICLE 7. SAMPLING AND ANALYSIS





	7.01	 	Seller shall cause, at its expense, the Coal in each unit train to be
sampled and analyzed at the individual mine in accordance with applicable
ASTM standards. Buyer shall have the right, at its own risk and expense,
to have a representative present at any and all times to observe sampling
and analysis procedures. All samples shall be divided into three (3)
parts and put in suitable airtight containers. One part shall be
furnished to Buyer or its designee for its analysis, one part shall be
retained for analysis by Seller or its designee (which analysis shall be
the basis for payment), and the third part shall be retained by Seller or
its designee in one of the aforesaid containers properly sealed and
labeled for a period thirty (30) days after the date of sample collection.
Buyer’s samples are to be clearly labeled as to mine, date of
sampling, date of preparation, and other identification as to shipment
(such as train identification number) and are to be sent within
forty-eight (48) hours of train loading to the address listed below
unless a different address is provided by Buyer in the Confirmation or




11









 






	        	 	otherwise in writing. Seller shall cause the following data, subject to
future adjustment, to be provided to Buyer by a mutually agreed upon
method of electronic data transmission within forty-eight (48) hours of
train loading: tonnage (gross, net, and tare average for each railcar and
the unit train in total), and the average calorific value, % moisture, %
ash, % sulfur, and % Na2O in ash (if set forth in the Confirmation),
(the “Short Proximate Analysis”). Any additional analysis requested by
Buyer that exceeds the information provided in the Short Proximate
Analysis shall be at Buyer’s expense.





Mailing address for sample splits:



Big Stone Plant

P.O. Box 218

48450 144th Street

Big Stone City, SD 57216




	7.02	 	In the event a dispute arises between Buyer and Seller within thirty (30)
days of Seller’s analysis due to a difference between Buyer and Seller’s
short proximate analyses of a sample that exceeds the ASTM interlab
repeatability limits, an independent testing laboratory, mutually
agreeable to Buyer and Seller, will be retained to analyze the third part
of such sample. The Party whose calorific value analysis is closest to
the independent analysis shall prevail and such Party’s calorific value
analysis shall govern for the trainload in question. In such case, the
cost of the analysis made by such independent testing laboratory will be
borne by the Party whose calorific value analysis is furthest from the
independent analysis and therefore, not used. In the event both Parties’
calorific value analyses differ from the independent testing laboratory’s
result by the same amount, the independent testing laboratory’s result
shall govern for the trainload in question and the Parties shall share
equally the cost of the independent testing.





ARTICLE 8. WEIGHING





	8.01	 	Certified commercial scales at Seller’s train loading facility at each
individual mine will determine weights. Scales shall be calibrated and
tested as customary in industry practice 




12









 






	         	 	with copies of calibration and
testing reports provided to Buyer upon request. If Seller’s scales are
not available to determine the valid net weight of all of the railcars in
a unit train but valid weights are obtained for thirty (30) or more
railcars in such train, the arithmetic average of all of the valid net
weights of the thirty or more railcars in such train shall be used as the
net weight for each railcar in such train for which a valid net weight was
not determined by Seller’s scales. If Seller’s scales are inoperative or
fail to determine the valid net weight of at least thirty (30) railcars in
a unit train, the weighted arithmetic average of the net railcar weights
of the previous ten (10) unit trainloads of Coal shipped to Buyer shall be
used as the net weight for each of the unweighed railcars in such train.
The calculation of the weighted arithmetic average net weight for the
previous ten (10) unit trainloads shall exclude all bad-order railcars,
which were not loaded, and any trainload of Coal for which the net weights
were estimated on thirty (30) or more railcars. The Buyer shall be
notified electronically immediately after the above instance occurs.





ARTICLE 9. PRICE AND PRICE ADJUSTMENTS





	9.01	 	For all Coal delivered under this Agreement, Buyer shall pay Seller the
base price as set forth in the Confirmation.
	 
	9.02	 	Seller shall be solely responsible for all assessments, fees, costs,
expenses, and taxes relating to the mining, production, sale, use, loading
and tender of Coal to Buyer or in any way accruing or levied prior to
transfer of title to the Coal to Buyer and including, without limitation,
severance taxes, royalties, ad valorem, black lung fees, reclamation fees
and other costs, charges and liabilities. The base price includes
reimbursement to Seller of all environmental, land restoration and
regulatory costs, including without limitation any
reclamation costs required under applicable federal, state or local law
as of the date of the Transaction. Buyer shall be responsible for any
sales and/or use tax unless Buyer provides Seller an appropriate
exemption certificate or similar document. The base price shall be




13









 






	 	 	subject to adjustments for changes in existing laws and regulations
(including changes in levies and rates), or new laws or regulations, or
changes in interpretations thereof enacted and in force during the term
of sale set forth in the Confirmation that change Seller’s costs of
producing Coal for delivery pursuant to any Confirmation.
Notwithstanding the above, no price adjustment will occur under this
Section until the cumulative effect of all such changes equals or exceeds
(*) per ton for any calendar year under a Transaction. Seller shall use
commercially reasonable best efforts to inform Buyer of any such change
as soon as Seller becomes aware of such change and its effect on the base
price of Coal hereunder.
	 
	9.03	 	The base price may also include an adjustment based upon the calorific
value, sulfur content or other qualities of the Coal as the Parties may
mutually agree upon and as set forth in the Confirmation.





ARTICLE 10. INVOICES, PAYMENTS, NETTING, SET OFF, AND CREDIT RATINGS





	10.01	 	Based on Seller’s weights, Seller will invoice Buyer twice a month for
all Coal delivered. Invoices for quality adjustment, as provided in a
Transaction, shall be issued monthly, based on Seller’s analyses. Seller
shall clearly indicate Buyer’s applicable purchase order number on all
invoices. Each invoice shall state for each trainload of Coal: the
quantity of Coal delivered, the Actual Btu and SO2, %
Na2O in ash (if set
forth in the Confirmation) and the invoice price and any other required
quality adjustment. Invoices shall be mailed or electronically
transmitted, as applicable, to:





Invoices to Otter Tail Power Company, as agent for the Big Stone Plant Owners:

Big Stone Plant

Attn: Fuel Supervisor

P.O. Box 218

48450 144th Street

Big Stone City, SD 57216



Invoices to Kennecott:

Kennecott Coal Sales Company

Attn: Revenue Accounting

Caller Box 3017 (82717-3017)

405 West Boxelder Road, Suite D



14









 





Gillette, WY 82718

ACH/Wires to Kennecott:

Kennecott Energy and Coal

Account (*)

Wells Fargo Bank

41 East 100 South

ACH ABA (*)

Wire ABA (*)



Payment Detail:

To ensure proper allocation of payments to appropriate invoice,
e-mail invoice numbers and amounts to: keccash@kenergy.com or
information may be faxed to (307) 687-6010




	10.02	 	For all invoices, payment will be made within 5 business days of receipt
of that invoice. Amounts shall be paid via electronic means (i.e., ACH or
Federal Reserve wire transfer of funds). The wire transfer of funds shall
be sent to Seller’s bank as indicated on the invoice.
	 
	10.03	 	In the event Buyer in good faith disputes part or all of an invoice,
notice of the disputed portion, with reasons for dispute, must be given
prior to the due date of the invoice and the undisputed portion shall be
paid by the due date. If the disputed portion is determined to have been
properly due and payable, interest on that portion in dispute and which
has not been paid shall accrue from the date that portion was due and
payable. If a disputed portion is paid and is later determined not to
have been properly due and payable, interest will similarly be refunded
from the date payment had been received. Interest shall be paid at one
(1) percentage point over the then current U.S. prime rate as listed in
the Money Rates section of The Wall Street Journal. All invoices will be
final and not subject to further adjustments or correction unless
objection to the accuracy thereof is made prior to the lapse of one (1)
year after the termination of the applicable Transaction.
	 
	10.04	 	If each Party or Party’s affiliate is required to pay an amount to the
other Party in the same invoice period, then such amounts with respect to
each Party may be aggregated and the Parties may discharge their
obligations to pay through netting; in which case, the Party owing 




15









 






	 	 	the
greater aggregate amount shall pay to the other Party the difference
between the amounts owed.
	 
	10.05	 	Each Party reserves to itself all rights, setoffs, counterclaims, and
other remedies and defenses to the extent not expressly denied or waived
herein which such Party has or may be entitled to arising from or out of
this Agreement. All outstanding Transactions and the obligations to make
payment in connection under this Agreement may be offset against each
other, set off, or recouped therefrom.
	 
	10.06	 	If a Party fails to pay amounts under this Agreement within 5 business
days after receipt of invoice, unless such amount is the subject of a
dispute as provided above, or is excused by Article 11, in addition to the
rights and remedies otherwise provided in this Agreement, the aggrieved
Party shall have the right to suspend performance under any or all
Transactions under this Agreement. If such failure to pay continues for
an additional 5 business days, the aggrieved Party shall have the right to
terminate this Agreement and all Transactions and shall be entitled to all
other rights under this Agreement.
	 
	10.07	 	Should the creditworthiness or either Party’s ability to perform become
unsatisfactory to the other Party, or if situations develop where either
Party could reasonably conclude that a credit downgrade or protection
under bankruptcy code is imminent, then the failing Party will provide
satisfactory security or assurances.
	 
	10.08	 	If a Party’s or any of its affiliates’ credit falls below investment
grade (BBB- as defined by Standard & Poor’s, Moody’s, or the equivalent),
the failing Party shall provide the non-failing Party with a mutually
agreed upon credit enhancement in the form of, but not limited to,
letters of credit, compressed payment terms or cash on delivery. If the
failing Party does not provide an acceptable credit enhancement within 48
hours of notice, the non-failing Party shall have the right to suspend
shipments and seek remedies as set forth in this Master 




16









 






	 	 	Agreement.
	 
	10.09	 	The Parties acknowledge that NorthWestern is currently in bankruptcy and
its credit rating is below investment grade. Unless there is a material
adverse change in NorthWestern’s current financial condition, no credit
enhancement, security, or assurances shall be required. In the event of
a material adverse change in NorthWestern’s current financial condition
and NorthWestern is unable to provide an acceptable credit enhancement as
required in Section 10.08, either MDU and/or Otter Tail shall provide such
credit enhancement, which may, in that event, be an assurance of payment
from either MDU and/or Otter Tail.





ARTICLE 11. FORCE MAJEURE





	11.01	 	The term “Force Majeure” as used herein shall mean an act or event that
is not reasonably within the control and is without the fault of the party
claiming Force Majeure including without limitation, acts of God; acts of
the public enemy; insurrections; terrorism; riots; labor disputes;
boycotts; fires; explosions; floods; breakdowns of or damage to major
components or equipment of Buyer’s generating station, Seller’s mine, or
transmission systems or Buyer’s transportation; embargoes; acts of
judicial or military authorities; acts of governmental authorities;
inability to obtain necessary permits, licenses, and governmental
approvals after applying for same with reasonable diligence; or other
causes which prevent the producing, processing, and/or loading of Coal by
Seller, or the receiving, accepting, unloading and/or utilizing of Coal by
Buyer. Force Majeure includes the failure of a Party’s contractor(s) to
furnish labor, services, Coal, materials or equipment in accordance with
its contractual obligations (but solely to the extent such failure is
itself due to Force Majeure).
	 
	11.02	 	If, because of Force Majeure, either Party fails to perform any of its
obligations under this Agreement (other than the obligation of a Party to
pay money), and if such Party shall promptly give to the other Party
written notice of such Force Majeure, then the obligation of




17









 






	 	 	the Party
giving such notice shall be suspended to the extent made necessary by such
Force Majeure and during its continuance; provided, the Party giving such
notice shall use good faith efforts to eliminate such Force Majeure,
insofar as reasonably possible, with a minimum of delay. Should the
situation of Force Majeure exceed sixty (60) consecutive days, the Party
not affected by the Force Majeure event may, at its option, terminate the
Transaction in whole or in part and neither Party shall have any further
obligation to the other Party; however, each Party shall be obligated to
make any payments which had become due and payable prior to such
termination. Any deficiencies in deliveries of Coal caused by an event of
Force Majeure shall not be made up, except by mutual consent. The
affected Party shall provide suitable proof to the other Party to
substantiate any claim made under this Article 11.
	 
	11.03	 	Both Parties agree significant capital expenditures and settlement of
strikes and lockouts shall be entirely within the discretion of the Party
having the difficulty. The above requirement that any Force Majeure shall
be remedied with all reasonable dispatch shall not require significant
capital expenditure or settlement of strikes and lockouts by acceding to
the demands of the opposing Party when such course is inadvisable in the
discretion of the Party having difficulty.
	 
	11.04	 	The loss of Buyer’s markets or Buyer’s inability to economically use or
resell Coal purchased hereunder, the loss of Seller’s supply or Seller’s
ability to sell Coal to a market at a more advantageous price, the change
in the market price of Coal or price of power, or regulatory or
contractual disallowance of the pass-through of the costs of Coal or other
related costs shall not constitute events of Force Majeure.





ARTICLE 12. RECORDS, AUDITS, ACCESS




18









 









	12.01	 	Seller shall maintain books and records relating to the supply of Coal
under this Agreement and the applicable Transaction for a period of not
less than two (2) years after the end of each calendar year for all Coal
tendered during such calendar year.
	 
	12.02	 	Upon reasonable notice and during normal business hours, Buyer and/or
Buyer’s independent auditors shall have the right to inspect Seller’s
books and records relating to all provisions of this Agreement which
include Coal quality, quantity shipped, and price adjustments or as may be
necessary to satisfy inquiries from governmental or regulatory agencies,
but only to the extent necessary to verify the accuracy of any statement,
charges or computations made pursuant to this Agreement and/or a
Transaction. Seller shall make a reasonable effort to facilitate Buyer’s
inspection of such records in Seller’s possession. Buyer and its
auditors, to the extent permitted by law or regulation, shall treat all
such information as confidential.





ARTICLE 13. DEFAULT, REMEDIES, AND TERMINATION





	13.01	 	The remedies set forth in this Section 13.01 shall cover the
non-defaulting Party’s remedies for the defaulting Party’s failure to
perform prior to any termination for default that may occur.






	 	a)	 	As an alternative to the damages provision below, if the
Parties mutually agree in writing, the non-performing Party may
schedule deliveries or receipts, as the case may be, pursuant to
such terms as the Parties agree in order to discharge some or all
of the obligation to pay damages. In the absence of such
agreement, the damages provision of this Article shall apply.
	 
	 	b)	 	Unless excused by Force Majeure, if Seller fails to
deliver the quantity of Coal in accordance with the applicable
Confirmation and this Agreement, Seller shall pay to
Buyer an amount for each ton of Coal of such deficiency equal to (i)
the lowest




19









 






	 	 	 	reasonable market price on an equivalent per mmBtu SO2
adjusted basis at which Buyer is able, or (ii) at the time of
Seller’s breach, would be able to purchase or otherwise receive
comparable supplies of Coal of comparable quality minus the base
price agreed to for the specific Transaction; except that if such
difference is negative, then neither Party shall have any obligation
to make any deficiency payment to the other.
	 
	 	c)	 	Unless excused by Force Majeure, if Buyer fails to accept
delivery of the quantity of Coal in accordance with the applicable
Confirmation and this Agreement, Buyer shall pay to Seller an
amount for each ton of Coal of such deficiency equal to (i) the
base price agreed to for the specific Transaction minus the
highest reasonable market price on an equivalent per mmBtu SO2
adjusted basis at which Seller is able, or (ii) would be able, to
sell or otherwise dispose of the Coal at the time of Buyer’s
breach; except that if such difference is negative, then neither
Party shall have any obligation to make any deficiency payment to
the other.
	 
	 	d)	 	Buyer and Seller shall be subject to commercially
reasonable good faith obligation to mitigate any damages
hereunder.






	13.02	 	The occurrence of any of the following shall constitute an “Event of
Default”:






	 	a)	 	Failure by either Party to pay any amounts due.
	 
	 	b)	 	Either Party materially breaches any contractual
obligation under this Agreement.
	 
	 	c)	 	Either Party (i) makes any general assignment or any
general arrangement for the benefit of creditors, (ii) files a
petition or otherwise commences, authorizes or
acquiesces in the commencement of a proceeding or cause of action
under any 




20









 






	 	 	 	bankruptcy or similar law for the protection of creditors
or has such a petition involuntarily filed against it and such
petition is not withdrawn or dismissed within thirty (30) days after
such filing, (iii) otherwise becomes bankrupt or insolvent (however
evidenced), or (iv) is unable to pay its debts as they fall due.






	13.03	 	In addition to the non-defaulting Party’s remedies under this Article,
in the Event of Default with respect to a specific Transaction, the
non-defaulting Party shall have the same rights with respect to such
specific Transaction as it has under this Agreement in addition to the
right to exercise all other rights and remedies available under applicable
law.





ARTICLE 14. NOTICES





	14.01	 	Except as expressly provided otherwise, any notice, election or other
correspondence required or permitted hereunder shall become effective upon
receipt and, except invoices and payments, shall be deemed to have been
properly given or delivered when made in writing and delivered personally
to the Party to whom directed, or when sent by United States certified
mail with all necessary postage prepaid and a return receipt requested, or
by a nationally recognized overnight delivery service with charges fully
prepaid and addressed to the Party at the below-specified address:





Notices to Kennecott:

Kennecott Coal Sales Company

Attn: Contract Administration

Caller Box 3009 (82717-3009)

505 South Gillette Avenue

Gillette, WY 82716

Phone: (307) 687-6019

Fax: (307) 687-6009



Scheduling to Kennecott:

Kennecott Coal Sales Company

Attn: Customer Service Department

Caller Box 3009 (82717-3009)

505 South Gillette Avenue

Gillette, WY 82716

Phone: (307) 685-6110

Fax: (307) 687-6009



21









 





Notices to Buyer:

Otter Tail Power Company

Production Services

P.O. Box 496

215 South Cascade Street

Fergus Falls, MN 56538-0496



Scheduling to Buyer:

Big Stone Plant

Fuel Supervisor

P.O. Box 218

48450 144th Street

Big Stone City, SD 57216




	          	 	The addresses may be changed upon written notice in the manner provided
above, and no amendment hereof shall be required for a change of address
under this Article 14.





ARTICLE 15. COOPERATION





	15.01	 	Each Party agrees to take all further action that may be reasonably
necessary to perform and to effectuate the purposes and intent of the
Agreement, the Confirmation, and any particular Transaction.





ARTICLE 16. WARRANTY, LIMITATION ON LIABILITY, DUTY TO MITIGATE &

INDEMNIFICATION





	16.01	 	In no event shall either Party be liable to the other Party for
incidental, consequential or punitive damages however and wherever arising
out of, or in connection with, this Agreement or any Transaction.
	 
	16.02	 	EXCEPT AS EXPRESSLY WARRANTED HEREIN, IT IS EXPRESSLY AGREED THAT SELLER
MAKES NO WARRANTY EXPRESSED OR IMPLIED AS TO THE QUALITY, MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF THE COAL TO BE DELIVERED UNDER THIS
AGREEMENT OR AS TO THE RESULTS TO BE OBTAINED FROM THE USE OF SUCH COAL.
SELLER SHALL NOT BE LIABLE FOR




22









 






	 	 	ANY INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL
DAMAGES, INCLUDING WITHOUT LIMITATION LOSS OF PROFITS OR OVERHEAD, BY
VIRTUE OF ITS BREACH OF ANY OF ITS OBLIGATIONS UNDER THE AGREEMENT.
NOTHING IN THIS ARTICLE SHALL BE CONSTRUED AS LIMITING BUYER’S RIGHT,
SUBJECT TO THE TERMS OF THIS AGREEMENT, TO SEEK DIRECT DAMAGES FOR
SELLER’S BREACH OF ANY OF ITS OBLIGATIONS HEREUNDER.
	 
	16.03	 	Each Party agrees it has a duty to mitigate damages and covenants. Each
Party will use commercially reasonable efforts to minimize any damages it
may incur as a result of the other Party’s performance or non-performance
of the Agreement (except that neither Party shall be required to enter
into a replacement transaction as provided under this Agreement).
	 
	16.04	 	Each Party shall indemnify, defend, and hold the other Party harmless
from and against any and all Claims arising out of or resulting from the
willful acts or negligence of such Party, its agents, and employees.





ARTICLE 17. LIMITATION ON WAIVER





	17.01	 	No waiver by either Party of any one or more defaults of the other Party
in the performance of this Agreement or any Transaction shall operate or
be construed as a waiver of any future default, or defaults, whether of a
like or different character.





ARTICLE 18. CONFIDENTIALITY





	18.01	 	This Agreement and any Confirmation are deemed confidential. The
Parties shall protect the confidentiality of the terms of this Agreement
and neither this Agreement or any of its terms shall be disclosed to any
other person unless such disclosure is: (i) agreed to in writing by the
Parties prior to release, (ii) required by law, (iii) required by
jurisdictional regulation 




23









 






	          	 	pursuant to the request of any regulatory
authorities (including, without limitation, state utility commissions or
boards, the Federal Energy Regulatory Commission, the U.S. Securities and
Exchange Commission and tax authorities); to attorneys, auditors,
consultants or other outside experts of the parties if said individuals
are advised of the confidential nature of the information and said
individuals agree to maintain the confidentiality of the information; or
to generating unit co-owner(s). Where the law requires such disclosure,
notice shall be given to the other Party, and to the extent possible, such
notice shall be given in advance of disclosure.





ARTICLE 19. ENTIRETY, AMENDMENTS





	19.01	 	This Agreement constitutes the entire agreement between the Parties.
This Agreement may not be amended except in a written instrument making
reference hereto signed by the Parties.





ARTICLE 20. SUCCESSORS AND ASSIGNS





	20.01	 	This Agreement shall inure to the benefit of and be binding upon the
Parties hereto and their respective successors and assigns; provided,
however, this Agreement may not be assigned by either Party without the
prior written consent of the other Party, which consent shall not be
unreasonably withheld or delayed.





ARTICLE 21. GOVERNING LAWS





	21.01	 	This Agreement shall be governed by and construed in accordance with the
laws in the State of Wyoming.





ARTICLE 22. INTERPRETATION




24









 









	22.01	 	The Parties acknowledge that each Party and its counsel have reviewed
this Agreement and that the rule of construction to the effect that any
ambiguities are to be resolved against the drafting Party shall not be
employed in the interpretation of this Agreement.





ARTICLE 23. RESALE AND BUYER’S OBLIGATIONS





	23.01	 	The Parties agree, unless specifically provided otherwise in a specific
Confirmation, Buyer may resell the Coal purchased under a particular
Transaction to another party (“Buyer’s Customer”). The Parties agree that
Buyer’s Customer may perform some of Buyer’s obligations; nevertheless,
Buyer shall remain liable for all of Buyer’s obligations hereunder and
Buyer shall indemnify and hold Seller harmless from and against any and
all Claims made by Buyer’s Customer against Seller. In addition, Buyer
agrees to the following:






	 	a)	 	Buyer shall inform Seller at least twenty-four (24) hours
in advance of arrival of each unit train at the mine of the
identification number of the unit train, identification of Buyer’s
Customer, and destination of such unit trains.
	 
	 	b)	 	The loading of such unit train shall be in accordance
with the loading provisions set forth herein unless Buyer notifies
Seller in advance of different loading provisions and such
different loading provisions are in general accordance with
general operating parameters in the mine’s region, and do not, in
Seller’s reasonable opinion, impose an undue operating or economic
burden on Seller.




25









 












	 	c)	 	All information to be supplied by Seller to Buyer under
this Agreement including but not limited to analysis, weights,
train manifest and invoicing information shall be supplied to
Buyer and Buyer shall be responsible for transmitting such
information to Buyer’s Customer. Buyer is specifically released
from its confidentiality obligations (Article 18) with respect to
quality and weighing information provided by Buyer to Buyer’s
Customer.
	 
	 	d)	 	If Buyer claims a Force Majeure event at or associated
with Buyer’s generating station, such claim shall not apply to
Coal taken under this Agreement and sold by Buyer to Buyer’s
Customer. Force Majeure events occurring at or associated with
generating stations or other facility to which Buyer has resold
Coal, shall not affect the tonnage obligation of the Buyer under
this Agreement. (Paragraph worded differently.)





ARTICLE 24. SURVIVAL





	24.01	 	The provisions of Articles 12 through 22 and Article 24 shall survive
the termination of this Agreement.




IN WITNESS WHEREOF, the parties have executed this Agreement by their
respective, duly authorized representatives effective as of the date first
written above.




	 	 	 
	Kennecott Coal Sales Company

	 	Otter Tail Power Company, a division
	

	 	of Otter Tail Corporation
	 
	 	 
	By: /s/ Kelly A. Cosgrove

	 	By: /s/ Ward Uggerud
	
 

	 	
 
	Kelly A. Cosgrove
	 	 
	Vice President, Marketing & Sales

	 	Title: Sr. Vice President, Supply
	 
	 	 
	Date: 6/1/04

	 	Date: June 22, 2004







26









 






	 	 	 	 	 
	 	NorthWestern Corporation, doing

business as NorthWestern Energy

 	 
	 	By:  	/s/ Michael J. Hanson
 	 
	 	Title: Chief Operating Officer 	 
	 	Date: July 14, 2004	 
	 



	 	 	 	 	 
	 	Montana-Dakota Utilities Co., a

division of MDU Resources Inc.

 	 
	 	By:  	/s/ Andrea Stomberg
 	 
	 	Title: V.P. Electric Supply 	 
	 	Date: June 29, 2004	 



27









 






	 	 	 	 	 



EXHIBIT A




THRALL CAR MANUFACTURING COMPANY

CHICAGO HEIGHTS, ILLINOIS 60411

SPECIFICATION GT-4530-95-0946

121-TON, 4,530 CUBIC FOOT,

MAXGON, ALLUMINUM GONDOLA CAR

OTTER TAIL POWER COMPANY

November 13, 1995 (Revised September 11, 1996)




GENERAL DIMENSIONS




	 	 	 
	LENGTH BETWEEN PULLING FACE OF COUPLERS

	 	53’ – 1”
	LENGTH OVER STRIKERS

	 	50’ – 5-1/2”
	TRUCK CENTERS

	 	40’ – 6”
	INSIDE LENGTH

	 	47” – 9”
	TUB LENGTH

	 	28’ – 0-1/4”
	INSIDE WIDTH

	 	9’ – 10-7/16”
	EXTREME WIDTH

	 	10’ – 8”
	HEIGHT RAIL TO BOTTOM OF TUBS

	 	1’ – 1-3/4”
	CENTERLINE OF COUPLERS (NOM.) W/2”
  CENTER
PLATE ENGAGEMENT

	 	2’ – 10-3/4”
	HEIGHT RAIL TO TOP OF TOP CHORD

	 	12’ – 8-1/2”
	EXTREME HEIGHT

	 	12’ – 9-3/8”
	NOTE: LONGITUDINAL BODY DIMENSIONS CARRY A TOLERANCE OF ± 1/2”
	 	 
	          LATERAL BODY DIMENSIONS CARRY A TOLERANCE OF +0, -1/2”
	 	 
	AAR CLEARANCE DIAGRAM

	 	PLATE “B”
	ESTIMATED LIGHT WEIGHT

	 	43,000 LBS.
	CUBIC CAPACITY (NOMINAL, LEVEL FULL)

	 	4,530 CU. FT.
	CUBIC CAPACITY (10” AVG. HEAP)

	 	4,923 CU. FT.
	GROSS RAIL LOAD

	 	286,000 LBS.
	     CURVE DATA
	 	 
	HORIZONTAL –COUPLED TO LIKE CAR

	 	174’ RADIUS
	HORIZONTAL – COUPLED TO BASE CAR

	 	158’ RADIUS
	HORIZONTAL - UNCOUPLED

	 	150’ RADIUS
	VERTICAL – UNCOUPLED

	 	300’ RADIUS






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





28